EXHIBIT 99.1
SECOND AMENDMENT AND FIFTH WAIVER
TO POSTPETITION CREDIT AGREEMENT
This SECOND AMENDMENT AND FIFTH WAIVER, dated as of November 15, 2002 (this
"Agreement"), refers to that certain Postpetition Credit Agreement, dated as of
April 26, 2002 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the financial institutions from time to
time party thereto (such financial institutions, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), CREDIT LYONNAIS NEW YORK BRANCH, as
a Lender, as Issuing Bank with respect to the Letters of Credit, and as agent
for the Lenders and the Issuing Bank thereunder (the "Agent"), SPECIAL METALS
CORPORATION, a Delaware corporation, in its capacity as a debtor and a debtor in
possession on behalf of the estate created upon the commencement of the
Bankruptcy Cases ("SMC"), A-1 WIRE TECH, INC., an Illinois corporation, in its
capacity as a debtor and a debtor in possession on behalf of the estate created
upon the commencement of the Bankruptcy Cases ("Wire"), SPECIAL METALS DOMESTIC
SALES CORPORATION, a Delaware corporation, in its capacity as a debtor and a
debtor in possession on behalf of the estate created upon the commencement of
the Bankruptcy Cases ("Sales"), and HUNTINGTON ALLOYS CORPORATION, formerly
known as Inco Alloys International, Inc., a Delaware corporation, in its
capacity as a debtor and a debtor in possession on behalf of the estate created
upon the commencement of the Bankruptcy Cases ("Alloys," and together with SMC,
Wire and Sales, each a "Borrower" and collectively, the "Borrowers").
Capitalized terms used and not defined in this Agreement shall have the meanings
given such terms in the Credit Agreement.
RECITALS
A. WHEREAS, the Borrowers have requested that the Lenders agree, subject to
the conditions and upon the terms set forth in this Agreement, to the amendments
and waivers to the Credit Agreement and the Pledge and Security Agreement
described below; and
B. WHEREAS, the Lenders are willing to agree to such amendments and waiver,
subject to the conditions and on the terms set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
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ARTICLE I
AMENDMENT AND WAIVER
SECTION 1.1. Amendment. Subject to the conditions and upon the terms set
forth in this Agreement and in reliance on the representations and warranties of
the Borrowers set forth in this Agreement, the Lenders hereby agree that:
(a) in subsection 1.1 of the Credit Agreement, the definition of the term
"Revolver Termination Date" is amended by deleting the words "April 30, 2003"
appearing therein and inserting in lieu thereof the words "May 31, 2003";
(b) in subsection 1.1 of the Credit Agreement, the definition of the term
"Consolidated Net Cash Flow" is amended by (i) deleting the words "'13-Week Cash
Forecast' through June 28, 2002" appearing therein and inserting in lieu thereof
the words "consolidated cash forecast worksheet included as a component or as
part of the Budget" and (ii) inserting, after the words "of any Person that is
not a Borrower on the Closing Date" in the last sentence of such definition, the
words ", and any payment made by the Borrowers to the administrative agent under
the Existing Credit Agreement as an adequate protection payment,";
(c) subsection 1.1 of the Credit Agreement is amended to insert, as a new
defined term in the appropriate alphabetical order, the term "'ORIGINAL BUDGET':
as defined in the first sentence of subsection 6.1(c).";
(d) in subsection 1.1 of the Credit Agreement, the definition of the term
"DIP Loan Availability" is amended by deleting the figure "$10,000,000" for
"Letter of Credit Availability" in the last row of the table included therein
(such row titled "August 1, 2002 and thereafter") and inserting in lieu thereof
the figure "$15,000,000";
(e) subsection 4.1(A) of the Credit Agreement is amended by deleting the
figure "$10,000,000," appearing therein and inserting in lieu thereof the figure
"$15,000,000";
(f) subsection 6.1(C) of the Credit Agreement is amended by (i) inserting
the word "Original" after the open quotation xxxx and before the word "Budget"
appearing in the first sentence of such subsection, (ii) inserting as a new
second sentence of such subsection the words "The Borrower Representative has
delivered to each Lender the budget dated as of September 28, 2002, as attached
hereto as Exhibit Q (the "Budget")." (which budget is attached to this Agreement
as Exhibit A) and (iii) deleting the word "The" appearing at the beginning of
the final sentence of such subsection and inserting in lieu thereof the words
"Each of the Original Budget and the";
(g) subsection 6.2 of the Credit Agreement is amended by inserting the word
"Original" before the word "Budget" appearing therein;
(h) subsection 8.16(B) of the Credit Agreement (as such subsection was
amended by that certain First Amendment and Second Waiver, dated as of July 26,
2002, among the Lenders and the Borrowers (the "First Amendment")) is amended by
deleting the words "November 27, 2002" appearing therein and inserting in lieu
thereof the words "January 10, 2003";
(i) subsection 8.16(C) of the Credit Agreement (as such subsection was
amended by the First Amendment) is amended by (i) deleting the words "January
17, 2003" appearing therein and inserting in lieu thereof the words "March 1,
2003"; (ii) deleting the words "April 1, 2003" appearing therein and inserting
in lieu thereof the words "April 30, 2003"; and (iii) deleting the words "April
30, 2003" appearing therein and inserting in lieu thereof the words "May 31,
2003";
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(j) subsection 9.1(A)(I) of the Credit Agreement is amended by (i) deleting
the words "beginning on April 1, 2002 and" and (ii) deleting the table therein
and inserting in lieu thereof the following table:
CONSOLIDATED
PERIOD REVENUE
------ ------------
Two (2) months ending November 30, 2002 $75,536,000
Three (3) months ending December 31, 2002 $119,274,000
Four (4) months ending January 31, 2003 $167,272,000
Five (5) months ending February 28, 2003 $214,747,000
Six (6) months ending March 31, 2003 $265,289,000
(k) subsection 9.1(A)(II) of the Credit Agreement is hereby deleted in its
entirety;
(l) subsection 9.1(B)(I) of the Credit Agreement is amended by (i) deleting
the words "beginning on April 1, 2002 and" and (ii) deleting the table therein
and inserting in lieu thereof the following table:
CONSOLIDATED
PERIOD EBITDA
------ ------------
One (1) month ending October 31, 2002 ($3,446,000)
Two (2) months ending November 30, 2002 ($1,303,000)
Three (3) months ending December 31, 2002 $48,000
Four (4) months ending January 31, 2003 $78,000
Five (5) months ending February 28, 2003 $1,446,000
Six (6) months ending March 31, 2003 $2,504,000
(m) subsection 9.1(B)(II) of the Credit Agreement is hereby deleted in its
entirety;
(n) subsection 9.1(D) of the Credit Agreement is amended by deleting the
table therein and inserting in lieu thereof the following table:
CAPITAL
PERIOD EXPENDITURES
------ ------------
Three (3) months ending December 31, 2002 $4,200,000
Six (6) months ending March 31, 2003 $6,700,000
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(o) subsection 9.1(E)(I) of the Credit Agreement is amended by (i) deleting
the words "beginning on April 1, 2002 and" and (ii) deleting the table therein
and inserting in lieu thereof the following table:
PERIOD NET CASH FLOW
------ --------------
One (1) month ending October 31, 2002 31,230,000
One (1) month ending November 30, 2002 23,050,000
One (1) month ending December 31, 2002 19,367,000
One (1) month ending January 31, 2003 7,077,000
One (1) month ending February 28, 2003 (1,462,000)
One (1) month ending March 31, 2003 (12,584,000)
(p) subsection 10.1(N) of the Credit Agreement is amended by inserting
after the word "respectively" the words ", or Xxxxxx Xxxxxxx shall fail to be
employed in his positions held as of November 13, 2002 with the Company"; and
(q) Schedule 3.1(E) to the Pledge and Security Agreement is
amended to add under the column beginning "Special Metals Corporation" the words
"Forged Metals, 00000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000 (in a cost value amount of
Inventory not to exceed $200,000 at any one time)", "Xxxxxx Xxxx, Xxxxxxxx, XX0
0XX Xxxxxxx (in a cost value amount of Inventory not to exceed $2,000,000 at any
one time)" and "Het Nahum, Haifa, Israel (in a cost value amount of Inventory
not to exceed $1,000,000 at any one time)."
SECTION 1.2. Waiver. Subject to the conditions and upon the terms set forth
in this Agreement and in reliance on the representations and warranties of the
Borrowers set forth in this Agreement, the Lenders hereby waive compliance by
Borrowers with the requirements of subsection 8.9(C) of the Credit Agreement and
subsection 3.1(H) and section 3.2 of the Pledge and Security Agreement only with
respect to the change of Alloys' name from Inco Alloys International, Inc. to
Huntington Alloys Corporation.
SECTION 1.3. Perfection. Notwithstanding anything in the Credit Agreement
or the Security Documents to the contrary, with respect to the Inventory located
outside of the United States that is the subject of Section 1.1(q) of this
Agreement, the Borrowers shall not be required to take any additional steps
under the law of the United Kingdom or Israel, as applicable, to perfect the
Lenders' security interest in such Inventory.
SECTION 1.4. Weekly Reporting. The weekly reporting requirements specified
in subsection 8.2(J) of the Credit Agreement shall not apply to the weeks ending
November 29, 2002 and December 27, 2002.
ARTICLE II
CONDITIONS PRECEDENT
The effectiveness of this Agreement shall be subject to the satisfaction of
each of the following conditions precedent:
SECTION 2.1. Waiver. Each of the Agent and the Required Lenders shall have
executed this Agreement and the Borrowers shall have delivered to the Agent duly
executed counterparts of this Agreement.
SECTION 2.2. Approval of the Bankruptcy Court. The Borrowers shall have
delivered to the Agent a true and correct copy of the final order(s) entered by
the Bankruptcy Court approving the payment of the Waiver Fee and the Adequate
Protection Payment (each as defined below) by the Borrowers to the Agent on
behalf of the Lenders.
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SECTION 2.3. Waiver Fee. The Borrowers shall have paid to the Agent a
waiver fee (the "Waiver Fee") equal to 0.375% applied to sum of the aggregate
(a) outstanding Revolving Credit Loans, plus (b) Letters of Credit Outstanding,
plus (c) Unused Revolving Credit Commitments of each Lender. Such fee (i) shall
be received by the Agent ratably for account of, and shall be remitted by the
Agent, to the Lenders and (ii) shall be fully earned and nonrefundable when
paid.
SECTION 2.4. Adequate Protection Payment. The Borrowers shall have paid to
the administrative agent (the "Prepetition Agent") under the Existing Credit
Agreement an adequate protection payment (the "Adequate Protection Payment") in
the amount of $22,500,000. Such payment (i) shall be received by the Prepetition
Agent and applied to repay the Deemed DIP Loans ratably for account of the
lenders under the Existing Credit Agreement and (ii) shall be fully earned and
nonrefundable when paid. The Adequate Protection Payment shall be deemed to have
been used to repay Prepetition Indebtedness for purposes of the proviso to the
first sentence of Section 5.1(b) of the Credit Agreement and shall therefore
apply dollar-for-dollar against the $30,000,000 basket specified therein.
SECTION 2.5. Representations and Warranties. Each Borrower shall have
confirmed to the Agent, by the signature of a Responsible Officer of such
Borrower below, that on and as of the date of this Agreement:
(a) each of the representations and warranties made by the Borrowers or
their Subsidiaries in or pursuant to the Loan Documents is true and correct in
all material respects (except that any such representation or warranty that is
expressly stated as being made only as of a specified earlier date shall be true
and correct in all material respects as of such earlier date);
(b) other than the Event of Default that is the subject of this Agreement,
no Default or Event of Default has occurred and is continuing; and
(c) none of the Bankruptcy Cases has been dismissed or converted to Chapter
7 of the Bankruptcy Code, no Person has filed an application for an order
dismissing any Borrower's Bankruptcy Case or converting any Borrower's
Bankruptcy Case to a case under Chapter 7 of the Bankruptcy Code, and no trustee
under Chapter 7 or Chapter 11 of the Bankruptcy Code or responsible officer or
examiner with powers beyond the duty to investigate and report, as set forth in
Sections 1106(a)(3) and (4) of the Bankruptcy Code has been appointed in any of
the Bankruptcy Cases. No application has been filed by any Borrower for the
approval of any other superpriority administrative claim in any Bankruptcy Case
which is pari passu with or senior to the claims of the Agent and/or any Lender
against the Borrowers (and, other than the Carve-Out, no such claim or lien has
arisen) and the Final Order is in full force and effect and has not been stayed,
modified, amended, reversed, rescinded or vacated.
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ARTICLE III
MISCELLANEOUS
SECTION 3.1. Execution of this Agreement. This Agreement is executed and
shall be construed as the Second Amendment and Fifth Waiver to the Postpetition
Credit Agreement, and, as provided in the Credit Agreement, this Agreement forms
a part thereof and is a Loan Document.
SECTION 3.2. No Amendment and Waiver. This Agreement shall not constitute
an amendment or waiver of or consent to any provision of the Credit Agreement or
any other Loan Document not expressly referred to herein and shall not be
construed as an amendment, waiver or consent to any action on the part of the
Borrowers that would require an amendment, waiver or consent of the Agent or the
Lenders except as expressly stated herein. The execution, delivery and
performance by the parties hereto of this Agreement shall not constitute a
waiver, forbearance or other indulgence with respect to any Default or Event of
Default now existing or hereafter arising, except as expressly set forth herein.
Except as specifically modified pursuant to the terms of this Agreement, the
terms and conditions of the Credit Agreement and the other Loan Documents remain
in full force and effect. Nothing herein shall limit in any way the rights and
remedies of the Agent and the Lenders under the Credit Agreement and the other
Loan Documents.
SECTION 3.3. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement constitutes
the entire contract among the parties hereto relating to the subject matter
hereof and supersedes any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof. Upon the effectiveness of
this Agreement as set forth in Article II hereof, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and, subject to and
in accordance with subsection 12.6 of the Credit Agreement, their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by facsimile shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 3.4. Ratification. Subject to the waiver provided hereby, the Loan
Documents shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed.
SECTION 3.5. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 3.6. Expenses. The Borrowers agree to pay or reimburse the Agent
for all of its reasonable out-of-pocket costs and expenses incurred in
connection with this Agreement, any other documents prepared in connection
herewith and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel to the Agent.
SECTION 3.7. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF THAT WOULD
DIRECT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION, ALL TO THE EXTENT NOT
PREEMPTED BY THE FEDERAL BANKRUPTCY LAWS OF THE UNITED STATES; PROVIDED, THAT
THE LENDERS AND AGENT SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
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SECTION 3.8. Headings. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
SPECIAL METALS CORPORATION,
a Delaware corporation, as debtor and debtor in possession
on behalf of the estate created upon the commencement of the
Bankruptcy Cases
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
A-1 WIRE TECH, INC.,
an Illinois corporation, as debtor and debtor in possession
on behalf of the estate created upon the commencement of the
Bankruptcy Cases
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President of SMC 100% Owner
SPECIAL METALS DOMESTIC SALES CORPORATION,
a Delaware corporation, as debtor and debtor in possession
on behalf of the estate created upon the commencement of the
Bankruptcy Cases
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President of SMC 100% Owner
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HUNTINGTON ALLOYS CORPORATION, (F/K/A INCO ALLOYS
INTERNATIONAL, INC.),
a Delaware corporation, as debtor and debtor in possession
on behalf of the estate created upon the commencement of the
Bankruptcy Cases
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
as Agent, as a Lender and as Issuing Bank
By: /s/ Xxxx-Xxxxxxx van Essche
---------------------------
Name: Xxxx-Xxxxxxx van Essche
Title: Vice President
MANUFACTURERS AND TRADERS TRUST COMPANY, as Lender
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Administrative Vice President
THE BANK OF NOVA SCOTIA,
as Lender
By: /s/ Xxx Xxxxxx
-----------------
Name: Xxx Xxxxxx
Title: Director
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Duly Authorized Signature
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