THIRD AMENDMENT, dated effective as of June 30, 1997,
to the Credit Agreement, dated as of December 19, 1995 (as amended to
the date hereof, the "Credit Agreement"), among International Mill
Service, Inc., a Pennsylvania corporation (the "Borrower"),
EnviroSource, Inc., a Delaware corporation (the "Parent"), the several
banks and other financial institutions parties thereto (the
"Lenders"), NationsBank, N.A., as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and Credit Lyonnais
New York Branch, the New York branch of a banking organization
organized under the laws of the Republic of France, as syndication
agent for the Lenders.
PRELIMINARY STATEMENTS:
(1) The Borrower has requested that the Lenders agree to make various
changes in the Loan Documents.
(2) The parties hereto have agreed, subject to the terms and conditions
hereof, to grant the requests of the Borrower and to amend the Loan
Documents as provided herein.
(3) Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1.01. Amendments to Section 7.
-----------------------
(a) Subsection 7.1(a) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"(a) Interest Coverage. Permit the ratio of (i) EBITDA for the Reference
-------- --------
Period with respect to the last day of any fiscal quarter of the Parent referred
to below to (ii) Consolidated Interest Expense for such Reference Period to be
less than the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters from and including fourth
quarter of fiscal 1995 through and including
first quarter of fiscal 1996 2.35:1.00
Fiscal quarters from and including second
quarter of fiscal 1996 through and including
third quarter of fiscal 1996 2.25:1.00
Fiscal quarters from and including fourth
quarter of fiscal 1996 through and including
first quarter of fiscal 1997 1.95:1.00
Fiscal quarters from and including second
quarter of fiscal 1997 through and including
third quarter of fiscal 1997 1.75:1.00
Fiscal quarters from and including fourth
quarter of fiscal 1997 through and including
third quarter of fiscal 1998 1.85:1.00
Fiscal quarters from and including fourth
quarter of fiscal 1998 through and including
first quarter of fiscal 1999 2.15:1.00
Second quarter of fiscal 1999 and all fiscal
quarters thereafter 3.00:1.00
(b) Subsection 7.1(c) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"(c) Debt Service Coverage. Permit the ratio of (i) EBITDA for
---- ------- ---------
the Reference Period with respect to the last day of any fiscal quarter of
the Parent referred to below, plus any income tax refunds received by the
Parent and its Subsidiaries during such Reference Period, plus (without
duplication) IU Cash Inflows received by the Parent and its Subsidiaries
during such Reference Period, less (without duplication) IU Cash Outflows
from the Parent and its Subsidiaries during such Reference Period, less
Cash Taxes for such Reference Period, less (without duplication) Landfill
Permit Expenditures during such Reference Period, less Closure Trust Fund
Payments during such Reference Period to (ii) Consolidated Interest Expense
for such Reference Period, plus scheduled principal payments under
Indebtedness of the Parent and its Subsidiaries for such Reference Period
to be less than the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters from and including fourth
quarter of fiscal 1995 through and including
third quarter of fiscal 1996 1.35:1.00
Fiscal quarters from and including fourth
quarter of fiscal 1996 through and including
first quarter of fiscal 1997 1.40:1.00
Fiscal quarters from and including second
quarter of fiscal 1997 through and including
third quarter of fiscal 1998 1.05:1.00
Fiscal quarters from and including fourth
quarter of fiscal 1998 through and including
first quarter of fiscal 1999 1.60:1.00
Fiscal quarters from and including second
quarter of fiscal 1999 through and including
third quarter of fiscal 1999 2.45:1.00
Fourth quarter of fiscal 1999 and all fiscal
quarters thereafter 2.50:1.00"
(c) Subsection 7.1(d) of the Credit Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"(d) Debt to EBITDA Ratio. Permit the ratio of (i) Consolidated Total Debt
--------------------
as of the last day of any fiscal quarter of the Parent referred to below to (ii)
EBITDA for the Reference Period with respect to such day to be more than the
ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters from and including fourth
quarter of fiscal 1995 through and including
first quarter of fiscal 1996 4.75:1.00
Fiscal quarters from and including second
quarter of fiscal 1996 through and including
third quarter of fiscal 1996 5.00:1.00
Fourth quarter of fiscal 1996 5.50:1.00
First quarter of fiscal 1997 4.80:1.00
Fiscal quarters from and including second
quarter of fiscal 1997 through and including
third quarter of fiscal 1998 5.70:1.00
Fiscal quarters from and including fourth
quarter of fiscal 1998 through and including
first quarter of fiscal 1999 4.70:1.00
Fiscal quarters from and including second
quarter of fiscal 1999 through and including
third quarter of fiscal 1999 3.75:1.00
Fourth quarter of fiscal 1999 and all fiscal
quarters thereafter 3.50:1.00"
SECTION 1.02. Addition of Section 6.11. The following is hereby added as
-------------------------
Section 6.11 of the Credit Agreement:
"6.11 Machinery, Equipment and Rolling Stock. By October 31, 1997, the
----------------------------------------
Parent and the Borrower will cause the Security Documents to be amended in form
and substance satisfactory to the Administrative Agent, and will take any and
all other actions that are necessary, or that are advisable in the reasonable
opinion of the Administrative Agent or any Lender, so as to grant to the
Administrative Agent for the benefit of the Secured Parties a security interest
in all machinery, equipment, motor vehicles and other rolling stock of the
Parent and its Subsidiaries (including all items of machinery, equipment, tools,
parts, supplies, furnishings and fixtures of every kind, whether affixed to
real property or not, as well as all automobiles, trucks, vehicles and rolling
stock of every description, trailers, handling and delivery equipment, all
additions to, substitutions for, replacements of or accessions to any of
the foregoing, all attachments, components, parts (including spare parts)
and accessories whether installed thereon or affixed thereto and all fuel for
any thereof). All such security interests shall be first priority security
interests, except to the extent that Liens are permitted by the terms of
Section 7.3 of the Credit Agreement. Additionally, by October 31, 1997,
the Parent and the Borrower will cause Uniform Commercial Code financing
statements to be filed by the Parent and its Subsidiaries in all applicable
jurisdictions, will cause the lien of the Security Documents to be noted
on the certificates of title for motor vehicles or other rolling stock of the
Parent and its Subsidiaries and will take any and all other actions that are
necessary, or that are advisable in the reasonable opinion of the Administrative
Agent or any Lender, so as to perfect such security interests in the collateral
described on Exhibit A attached hereto (collectively, the "Perfected
Collateral"). In connection with the foregoing, the Parent shall, and shall
cause its Subsidiaries to, deliver to the Administrative Agent such
documents, legal opinions, instruments and certificates as it shall reasonably
request and such documents, legal opinions, instruments and certificates shall
be reasonably satisfactory, both in form and substance, to the Administrative
Agent and its counsel. All corporate and other proceedings taken or to be taken
in connection with the foregoing and all documents incidental thereto,
whether or not referred to herein, shall be satisfactory in form and substance
to the Administrative Agent and its counsel. Notwithstanding anything to the
contrary contained herein, the Borrower and its Subsidiaries shall not be
required to perfect security interests granted to the Administrative Agent in
the Perfected Collateral that, in the aggregate, has a book value of less than
$3,000,000. Administrative Agent and Lenders agree to release any such security
interests provided for herein in property sold by the Borrower or any Subsidiary
in connection with any transaction permitted by the Credit Agreement, including,
without limitation, Section 7.12."
SECTION 1.03. Amendment of Section 7.9. Section 7.9 of the Credit Agreement
------------------------
is hereby amended by the deletion of the word "and" at the end of paragraph (h)
thereof, by the deletion of the period at the end of paragraph (i) thereof and
the substitution of a semi-colon in lieu thereof, by the addition to Section
7.9(f) after "10,000,000" of the phrase "(plus the amount of any investment
specifically permitted by Sections 7.9(j) through (m))", and by the addition of
the following new paragraphs at the end of such Section:
(j) equity investments in Envirosafe Services of Idaho, Inc. and
Envirosafe Services of Ohio, Inc. (and equity investments in such Persons'
direct or indirect parent which are ultimately contributed to such Persons)
made by converting to equity all or any portion of the Indebtedness of such
Persons outstanding on June 30, 1997, which is represented by Intercompany
Notes outstanding on such date; provided that any such investment is made
--------
solely by contributing such Indebtedness on the books of the holder of such
Indebtedness and not through any cash transaction;
(k) the contribution by Conversion Systems, Inc. of all or
substantially all of its assets (and related liabilities), other than those
related to its Super Detox(R) business, to a newly-formed Wholly Owned
Subsidiary of Conversion Systems, Inc.;provided that(i) such Wholly Owned
Subsidiary is a Restricted Company and (ii) no investment shall be
permitted under this paragraph (k) after the initial contribution of assets
to such Wholly Owned Subsidiary;
(l) equity investments in Envirosafe Services of Idaho, Inc. (and
equity investments in such Person's direct or indirect parent which are
immediately contributed to such Person) made after June 30, 1997; provided
that(i) such equity investments (A) shall not exceed an aggregate amount of
$10,000,000 at any one time outstanding and (B) shall not be made in
connection with any acquisition of common stock, property, business or
assets of any Person and (ii) Envirosafe Services of Idaho, Inc. shall be a
Restricted Company; and
(m) equity investments in Envirosafe Services of Ohio, Inc. (and
equity investments in such Person's direct or indirect parent which are
immediately contributed to such Person) made after June 30, 1997; provided
that (i) such equity investments (A) shall not exceed an aggregate amount
of $10,000,000 at any one time outstanding and (B) shall not be made in
connection with any acquisition of common stock, property, business or
assets of any Person and (ii) Envirosafe Services of Ohio, Inc. shall be a
Restricted Company.
SECTION 1.04. Representations and Warranties. The Parent and the Borrower
------------------------------
hereby represent and warrant to each Lender that:
(a) The representations and warranties set forth in Section 4 of the
Credit Agreement, and in each other Loan Document, are true and correct in
all material respects on and as of the date hereof and on and as of the
Third Amendment Effective Date (as defined in Section 1.05) with the same
effect as if made on and as of the date hereof or the Third Amendment
Effective Date, as the case may be, except to the extent such
representations and warranties expressly relate solely to an earlier date
(in which case such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date).
(b) Each of the Loan Parties is in compliance with all the terms and
conditions of the Credit Agreement and the other Loan Documents on its part
to be observed or performed and no Default or Event of Default has occurred
or is continuing.
(c) The execution, delivery and performance by each of the Borrower
and the Parent of this Third Amendment have been duly authorized by such
party.
(d) This Third Amendment constitutes the legal, valid and binding
obligation of each of the Borrower and the Parent, enforceable against it in
accordance with its terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws affecting
creditors' rights generally.
(e) The execution, delivery and performance by each of the Borrower and the
Parent of this Third Amendment (i) do not conflict with or violate (A) any
provision of law, statute, rule or regulation, or of the certificate of
incorporation or by-laws of the Borrower or the Parent, (B) any order of any
Governmental Authority or (C) any provision of any indenture, agreement or other
instrument to which the Borrower or the Parent is a party or by which it or any
of its property may be bound and (ii) do not require any consents under, result
in a breach of or constitute (with notice or lapse of time or both) a default
under any such indenture, agreement or instrument.
SECTION 1.05. Effectiveness. This Third Amendment shall become effective
-------------
only upon satisfaction of the following conditions precedent on or prior to
June 30, 1997 (the first date upon which each such condition has been satisfied
being herein called the "Third Amendment Effective Date"):
(a) The Administrative Agent shall have received duly executed
counterparts of this Third Amendment which, when taken together, bear
the authorized signatures of the Borrower, the Parent and the Required
Lenders.
(b) (i) The representations and warranties set forth in Section
1.04 shall be true and correct on and as of the Third Amendment Effective
Date, (ii) no Default or Event of Default has occurred or is continuing
and (iii) there shall not be any action pending or any judgment, order or
decree in effect which is likely to restrain, prevent or impose
materially adverse conditions upon performance by any Loan Party of its
obligations under the Loan Documents.
(c) The Borrower shall have paid to each Lender which shall have
delivered an executed counterpart of this Third Amendment an amendment
fee equal to 0.50% of the total Revolving Credit Commitment (whether
used or unused) of such Lender.
(d) The Borrower shall have paid in full all fees and reasonable
expenses payable as of the Third Amendment Effective Date in connection
with the Credit Agreement and the other Loan Documents.
(e) The Administrative Agent shall have received from each of the
Guarantors duly executed Consents, in the form attached hereto as Exhibit
B, which bear the authorized signatures of such Guarantors.
(f) The Administrative Agent shall have received an opinion of
counsel to the Borrower, the Parent and the other Loan Parties in form
and substance satisfactory to the Administrative Agent.
(g) The Administrative Agent shall have received such other
documents, legal opinions, instruments and certificates as it shall
reasonably request and such other documents, legal opinions, instruments
and certificates shall be satisfactory in form and substance to the
Administrative Agent and its counsel. All corporate and other proceedings
taken or to be taken in connection with this Third Amendment and all
documents incidental thereto, whether or not referred to herein, shall be
satisfactory in form and substance to the Administrative Agent and its
counsel.
SECTION 1.06. APPLICABLE LAW. THIS THIRD AMENDMENT SHALL BE GOVERNED BY,
--------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.07. Fees; Expenses. On or prior to June 30, 1997, the Borrower
---------------
shall pay to each Lender which shall deliver an executed counterpart of this
Third Amendment an amendment fee equal to 0.50% of the total Revolving Credit
Commitment (whether used or unused) of such Lender. The Borrower shall pay
all reasonable out-of-pocket expenses incurred by the Agents in connection with
the preparation, negotiation, execution and delivery and the Agents' and the
Lenders' enforcement of this Third Amendment, including, but not limited to, the
reasonable fees and disbursements of counsel. The agreements set forth in this
Section 1.07 shall survive the termination of this Third Amendment and the
Credit Agreement.
SECTION 1.08. Counterparts. This Third Amendment may be executed in any
------------
number of counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one agreement.
SECTION 1.09. Reference to and Effect on the Loan Documents.
---------------------------------------------
(a) On and after the Third Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended by this Third Amendment.
(b) Each of the amendments provided herein shall apply and be effective
only with respect to the provisions of the Credit Agreement specifically
referred to by such amendment. Except as specifically amended above, the Credit
Agreement and the Revolving Credit Notes, and all other Loan Documents, are and
shall continue to be in full force and effect and are hereby in all respects
ratified and confirmed.
(c) Except as specifically provided above, the execution, delivery and
effectiveness of this Third Amendment shall not operate as a waiver of any
right, power or remedy of any Lender, any Agent or any Secured Party under any
of the Loan Documents, nor constitute a waiver of any provision of any of the
Loan Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be duly executed by their duly authorized officers, all as of the date first
above written.
INTERNATIONAL MILL SERVICE, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
ENVIROSOURCE, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Vice President & Treasurer
NATIONSBANK, N.A., as Administrative
Agent, as Issuing Lender, as Swingline Lender
and as a Lender
By:/s/ Xxxxxx X. Xxxx
------------------
Title: Corporate Financial Officer
CREDIT LYONNAIS NEW YORK BRANCH, as
Syndication Agent and as a Lender
By:/s/ Xxxxxx Xxx
--------------
Title: Vice President
BANQUE PARIBAS, as a Lender
By:/s/ Pierre-Xxxx xx Xxxxxxxx
---------------------------
Title: Assistant Vice President
By:/s/ Xxxxxx X. Xxxxxx
--------------------
Title: Assistant Vice President
EXHIBIT A
All backhoes, pallet carriers, slag pot carriers, slab carriers, ladle
carriers, cranes, excavators, graders, fork lifts, rubber tired loaders, tracked
loaders, scrap container pallets, slag processing plants, railroad equipment,
scales, scarfing machines, shears, road sweepers, crawler dozer tractors,
off-highway trucks and vacuum trucks.
EXHIBIT B
CONSENT
Dated as of June 30, 1997
Each of the undersigned, as a Guarantor under one of the Guarantees, dated
as of December 19, 1995 (each, a "Guarantee") in favor of the Agent for the
Lenders parties to the Credit Agreement referred to in the foregoing Third
Amendment, hereby consents to the Third Amendment and hereby confirms and agrees
that (i) the Guarantee to which such Guarantor is a party is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all
respects except that, upon the effectiveness of, and on and after the date of,
the Third Amendment, each reference in such Guarantee to the Loan Documents or
any thereof, "thereunder", "thereof" or words of like import shall mean and be a
reference to the Loan Documents or such Loan Document as amended prior to the
date of and by the Third Amendment and (ii) the Security Documents (as defined
in the Credit Agreement referred to in the foregoing Third Amendment) to which
such Guarantor is a party and all of the Collateral described therein do, and
shall continue to, secure the payment of all of the Obligations (as defined
therein).
ALEXANDER MILL SERVICES, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Vice President
X. XXXXXX TERMINALS, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Vice President
CONVERSION SYSTEMS, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Vice President
ENVIROSOURCE MANAGEMENT SYSTEMS, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
ENVIROSOURCE MANAGEMENT CORP.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Vice President & Treasurer
ENVIROSOURCE TECHNICAL SERVICES, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
ENVIROSAFE SERVICES OF IDAHO, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
ENVIROSAFE SERVICES OF NORTH AMERICA, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
ENVIROSAFE SERVICES OF OHIO, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
ENVIROSAFE SERVICES OF TEXAS, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
ENVIROSOURCE CORP.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Vice President & Treasurer
ENVIROSOURCE TREATMENT & DISPOSAL SERVICES, INC.
By:/s/ Xxxxxxx X. Xxxxx
---------------------
Title: Treasurer
ETDS, INC.
By:/s/ Xxxx X. Xxxxxx
------------------
Title: Chairman of the Board
FOX XXXX FARMS, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
IU INTERNATIONAL CORPORATION
By:/s/ Xxxxxx X. Xxxxxx
--------------------
Title: Vice President
IU NORTH AMERICA FINANCE, INC.
By:/s/ Xxxx X. Xxxxxx
------------------
Title: Chairman of the Board
IU NORTH AMERICA, INC.
By:/s/ Xxxx X. Xxxxxx
------------------
Title: Chairman of the Board
MARCUS HOOK PROCESSING, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
McGRAW CONSTRUCTION COMPANY, INC.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
NEOAX INVESTMENT CORP.
By:/s/ Xxxx X. Xxxxxx
------------------
Title: Chairman of the Board
NOSROC CORP.
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
SONCOR CORP.
By:/s/ Xxxx X. Xxxxxx
-------------------
Title: Chairman of the Board
WAYLITE CORPORATION
By:/s/ Xxxxxxx X. Xxxxx
--------------------
Title: Treasurer
