EXECUTION
AMENDMENT NO. 1 TO
LOAN AND SECURITY AGREEMENT
AMENDMENT dated as of September 7, 2001 by and among Titanium Metals
Corporation, a Delaware corporation ("Timet") and Titanium Hearth Technologies,
Inc., a Delaware corporation ("THT", and together with Timet, each individually,
a "Borrower" and, collectively, "Borrowers"), TIMET Millbury Corporation, an
Oregon corporation ("TIMET Millbury"), TIMET Castings Corporation, a Delaware
corporation ("TIMET Castings"), TIMET Finance Management Company, a Delaware
corporation ("TIMET Finance"), TMCA International, Inc., a Delaware corporation
("TMCA", and together with TIMET Millbury, TIMET Castings and TIMET Finance,
each individually, a "Guarantor" and, collectively, "Guarantors"), and Congress
Financial Corporation (Southwest), a Texas corporation ("Lender").
W I T N E S S E T H
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WHEREAS, Lender, Borrowers and Guarantors have entered into financing
arrangements pursuant to which Lender has made and may make loans and advances
and provide other financial accommodations to Borrowers as set forth in the Loan
and Security Agreement, dated February 25, 2000, by and among Lender and
Borrowers (as the same now exists and may hereafter 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"); and
WHEREAS, Borrowers and Guarantors have requested that Lender agree to
certain amendments to the Loan Agreement and Lender is willing to agree to such
amendments, subject to the terms and conditions contained herein;
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:
Section 1. Definitions.
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1.1 Additional Definitions. As used herein, the following terms shall have
the respective meanings given to them below and the Loan Agreement shall be
deemed and is hereby amended to include, in addition and not in limitation, each
of the following definitions:
(a) "Amendment No. 1" shall mean this Amendment No. 1 to the Loan and
Security Agreement by and among Borrowers, Guarantors, and Lender, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(b) "Deposit Account Control Agreement" shall mean a Deposit Account
Control Agreement by and among Lender, a Borrower or Restricted Subsidiary (as
applicable), and the financial institution which maintains a deposit account for
such Borrower and Restricted Subsidiary, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
(c) "Investment Property Control Agreement" shall mean an Investment
Property Control Agreement by and among Lender, a Borrower or Restricted
Subsidiary (as applicable), and the financial institution which maintains a
securities account for such Borrower and Restricted Subsidiary, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.2 Amendment to Definition. The definition of "Excess Availability" shall
be deleted in its entirety and replaced as follows:
"Excess Availability" shall mean the amount, as determined
by Lender, calculated at any time, equal to: (a) the lesser of:
(i) the Borrowing Base and (ii) the Maximum Credit, minus (b) the
sum of: (i) the amount of all then outstanding and unpaid
Obligations plus (ii) the aggregate amount of all then
outstanding and unpaid trade payables and other obligations of
Borrowers which are more than sixty (60) days past due as of such
time (unless the trade payable or other obligation is being
contested in good faith), including the amount of checks issued
by Borrowers to pay trade payables and other obligations which
are more than sixty (60) days past due as of such time, but not
yet sent. So long as Lender is only receiving reports with
respect to sales made, credits issued and cash received pursuant
to Section 7.1(a)(i) every month, reports with respect to
Inventory pursuant to Section 7.1(a)(ii) every month and agings
of the accounts payable pursuant to Section 7.1(a)(ii) every
month, the Borrowing Base used for determining Excess
Availability at any time shall be calculated based on the sales
made, credits issued and cash received as of the end of each such
immediately preceding month and Inventory as of the end of the
immediately preceding month and the outstanding and unpaid trade
payables which are more than sixty (60) days past due for
purposes of determining Excess Availability at any time shall be
based on such agings of accounts payable as of the end of the
immediately preceding month. If Lender does not receive any of
the reports or agings referred to above, the Borrowing Base used
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for determining Excess Availability shall be calculated in such
other manner as Lender may determine, without limiting any other
rights or remedies of Lender."
1.3 Interpretation. For purposes of this Amendment, all terms used herein,
including but not limited to, those terms used and/or defined herein or in the
recitals hereto shall have the respective meanings assigned thereto in the Loan
Agreement as amended by this Amendment No. 1.
Section 2. Amendments to Loan Agreement.
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2.1 Collateral Reporting. Section 7.1(a)(i) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"(i) as soon as possible after the end of each month (but in
any event within ten (10) Business Days after the end thereof) so
long as Excess Availability is greater than $40,000,000 or more
frequently as Lender may reasonably request at any time that
Excess Availability is equal to or less than $40,000,000, a
schedule of sales made, credits issued and cash received (and
including information with respect to Accounts owing by ValTimet,
Accounts owing by account debtors located other than in the
United States of America and Accounts subject to xxxx and hold
arrangements);"
2.2 Inventory Covenants. Section 7.3(d) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"(d) upon Lender's request, at any time after August 30,
2000, each Borrower shall, at its expense, deliver or cause to be
delivered to Lender written appraisals as to the Inventory in
form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender, addressed to Lender and upon
which Lender is expressly permitted to rely (and to the extent
possible, Lender shall use reasonable efforts to have the same
appraisal firm as had previously done appraisals of the Inventory
of Borrowers conduct any such subsequent appraisals, so long as
it does not result in any material delay) provided, that (i) so
long as Excess Availability is greater than $40,000,000 and no
Event of Default exists and is continuing, Lender may only make
one such request in any twelve (12) consecutive month period; and
(ii) at any time Excess Availability is equal to or less than
$40,000,000 Lender may make such request no more than twice in
any twelve (12) month period; and (iii) on or after an Event of
Default exists and is continuing,
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Lender may request such additional appraisals as Lender may deem
necessary or desirable;"
2.3 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
(a) Section 9.7(b)(ii) of the Loan Agreement is hereby amended to delete
the reference to $750,000 contained therein and replace it with "$1,000,000".
(b) Section 9.7(b) of the Loan Agreement is hereby amended to add a new
Section 9.7(b)(xvi) as follows:
"(xvi) the sale by TIMET Millbury of the Equipment listed on
Exhibit A to Amendment No. 1 so long as (i) the proceeds, if any,
of such sale are paid to Lender for application to the Prime Rate
Loans (without any permanent reduction in the Maximum Credit as a
result of such application) or if no Prime Rate Loans are
outstanding as of the date of such sale, such proceeds shall be
delivered to TIMET, subject to applicable law or court order or
order of any governmental authority, (ii) such sales do not
involve any Equipment included in the Borrowing Base as a result
of the most recent acceptable appraisal of Equipment delivered by
Borrowers to Lender pursuant to Section 7.4 of the Loan
Agreement, and (iii) as of the date of such sale, no Event of
Default, or act, condition or event which with notice or passage
of time or both would constitute an Event of Default, shall exist
or have occurred;"
2.4 Indebtedness. Section 9.9(g)(iii) of the Loan Agreement is hereby
amended to delete the reference to "$5,000,000" contained therein and replace it
with "$25,000,000".
2.5 Loans and Investments, Etc.
(a) Section 9.10(b) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"(b) investments in cash or Cash Equivalents,
provided, that,
(i) no Loans are then outstanding, except that,
(A) notwithstanding that any Loans are
outstanding, (1) Borrowers or any Restricted Subsidiary may from
time to time in the ordinary course of business consistent with
the current practices of Borrowers or such Restricted Subsidiary
as of
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the date hereof have Cash Equivalents consisting of overnight
investments purchased with amounts received by such Borrower in
the Blocked Accounts (or in the case of a Restricted Subsidiary,
the applicable bank account), in each case to the extent required
as part of the cash management of Borrowers or such Restricted
Subsidiary so long as the aggregate amount of such Cash
Equivalents does not exceed $1,000,000 at any time, and (2)
Borrowers or any Restricted Subsidiary may from time to time in
the ordinary course of business consistent with the current
practices of Borrowers or such Restricted Subsidiary as of the
date hereof make deposits of cash or other immediately available
funds in operating demand deposit accounts used for disbursements
to the extent required to provide funds for amounts drawn or
anticipated to be drawn shortly on such accounts and such funds
may be held in Cash Equivalents consisting of overnight
investments until so drawn (so long as such funds and Cash
Equivalents are not held more than five (5) Business Days from
the date of the initial deposit thereof and do not exceed
$1,000,000 at any time) and (3) TFMC may hold cash or Cash
Equivalents purchased with amounts received by TFMC constituting
payment in respect of Indebtedness owing by certain of its
Affiliates to it, so long as such funds and Cash Equivalents are
not held for more than five (5) Business Days from the date of
the initial deposit thereof, and TFMC shall promptly use such
funds only to make loans, dividends, capital contributions or
other payments to a Borrower, and
(B) notwithstanding that Eurodollar
Rate Loans are outstanding, Borrowers or any Restricted
Subsidiary may from time to time in the ordinary course of
business consistent with the current practices of Borrowers or
such Restricted Subsidiary as of the date hereof, have cash or
Cash Equivalents so long as Excess Availability shall be not
less than $60,000,000 at all times that Borrowers or any
Restricted Subsidiary has such cash or Cash Equivalents, and
(ii) as to any of the foregoing, promptly upon
Lender's request or at any time such cash or Cash Equivalents
exceed $5,000,000 in the aggregate, Borrowers shall take such
actions as are deemed necessary by Lender to perfect the
security interest of Lender in such investments including, but
not limited to,
(A) as to any securities accounts,
investment accounts and similar accounts, the delivery to Lender
of an
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Investment Property Control Agreement with respect to such
account in which any of such cash or Cash Equivalents may at any
time be deposited, credited or held, duly authorized executed and
delivered by the Borrower or Restricted Subsidiary which owns the
account and the assets therein and the security intermediary and
other financial institution where such account is maintained and
(B) as to any deposit account, the
delivery to Lender of a Deposit Account Control Agreement with
respect to such account in which any of such cash or Cash
Equivalents may at any time be deposited, credited or held, duly
authorized executed and delivered by the Borrower or Restricted
Subsidiary which owns the account and the assets therein and the
financial institution where such deposit account is maintained."
(b) Sections 9.10(d) and (e) of the Loan Agreement are each hereby amended
to delete the reference to "$10,000,000" contained therein and to replace each
of such references with "$25,000,000".
(c) Section 9.10 of the Loan Agreement is hereby amended to change the
punctuation at the end of such Section from a period to a semicolon followed by
"and" and to add a new Section 9.10(o) thereto on the end thereof as follows:
"(o) loans and advances to, investments in, and purchases or
repurchases of Capital Stock or Indebtedness of all or a
substantial part of the assets of, any Restricted Subsidiary or
Unrestricted Subsidiary by Timet and/or any Restricted Subsidiary
(in addition to all such transactions otherwise permitted under
other subsections of this Section 9.9) provided, that, except as
Lender may otherwise agree, (i) at any time, the aggregate amount
of all such loans and advances to, investments in, and purchases
or repurchases of Capital Stock or Indebtedness of all or a
substantial part of the assets of, any Restricted Subsidiary or
Unrestricted Subsidiary by Timet and/or any Restricted Subsidiary
in the aggregate outstanding at such time, shall not exceed
$20,000,000, (ii) in the case of loans of money or property, in
an amount in excess of $1,000,000, the original of any promissory
note or other instrument evidencing the Indebtedness arising
pursuant to such loans shall be delivered, or caused to be
delivered, to Lender, at Lender's option, together with an
appropriate endorsement, provided, that, at Lender's option, all
promissory notes or other instruments evidencing Indebtedness
arising pursuant to loans of money or property in any amount
shall be delivered, or caused to be delivered to Lender, together
with an appropriate endorsement,
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promptly upon Lender's request, (iii) as of the date of any such
loan, advance or investment and after giving effect thereto
Excess Availability shall be not less than $60,000,000, (iv)
Lender shall have received (A) not less than ten (10) Business
Days' prior written notice thereof setting forth in reasonable
detail the nature and terms thereof, (B) true, correct and
complete copies of all agreements, documents and instruments
relating thereto and (C) such other information with respect
thereto as Lender may reasonably request; and (v) as of the date
of any such loan, advance or investment and after giving effect
thereto, no Event of Default or act, condition or event which
with notice or passage of time or both would constitute an Event
of Default shall exist or have occurred."
2.6 Dividends and Redemptions. Section 9.11 of the Loan Agreement is hereby
amended to change the punctuation at the end of such Section from a period to a
semicolon followed by "and" and to add a new Section 9.11(h) thereto on the end
thereof as follows:
"(h) Timet may pay dividends in respect of its
Capital Stock; provided, that, as to any payment of such
dividends:
(i) such payment shall be made with funds legally
available therefor,
(ii) as of the date of the payment of such
dividend and immediately after giving effect thereto, Excess
Availability shall be not less than $40,000,000,
(iii) the aggregate amount of all payments of
such dividends shall not exceed $10,000,000 in any calendar
year,
(iv) such dividend shall not violate any law or
regulation or the terms of any indenture, agreement or
undertaking to which any Borrower or Guarantor is a party or by
which any Borrower or Guarantor or its properties are bound, and
(v) as of the date of the payment of such
dividend and after giving effect thereto, no Event of Default or
act, condition or event which with notice or passage of time or
both would constitute an Event of Default shall exist or have
occurred and be continuing."
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2.7 Transactions with Affiliates. Section 9.12 of the Loan Agreement is
hereby amended to change the punctuation at the end of such Section from a
period to a semicolon followed by "or" and to add a new Section 9.12(c) thereto
on the end thereof as follows:
"(c) make loans, advances or investments in any Restricted
Subsidiary or Unrestricted Subsidiary in accordance with Section
9.10(o) hereof."
Section 3. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrowers and Guarantors to Lender pursuant to the other Financing
Agreements, each Borrower and Guarantor hereby represents, warrants and
covenants with and to Lender as follows (which representations, warranties and
covenants are continuing and shall survive the execution and delivery of
Amendment No.1 and shall be incorporated into and made a part of the Financing
Agreements):
3.1 No Default. No Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred and be continuing on the date of this Amendment No. 1.
3.2 Corporate Power and Authority. This Amendment No. 1 has been duly
executed and delivered by each Borrower and Guarantor and is in full force and
effect as of the date of this Amendment No. 1 and the agreements and obligations
of each Borrower and Guarantor contained herein constitute legal, valid and
binding obligations of such Borrower and Guarantor enforceable against such
Borrower and Guarantor in accordance with their respective terms.
3.3 Consents. Borrowers and Guarantors have received all necessary consents
and approvals of third parties to the transactions contemplated by this
Amendment No. 1.
Section 4. Condition Precedent. The effectiveness of the amendments and
waiver contained herein shall be subject to, Lender having received, in form and
substance satisfactory to Lender, an original of this Amendment No. 1, duly
authorized, executed and delivered by each Borrower and Guarantor.
Section 5. Provisions of General Application
5.1 Effect of this Amendment. Except as modified pursuant hereto, no other
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 No. 1 and the other
Financing Agreements, the terms of this Amendment No. 1 shall control. The Loan
Agreement and this Amendment No. 1 shall be read and construed as one agreement.
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5.2 Additional Events of Default. The parties hereto acknowledge, confirm
and agree that the failure of Borrowers or Guarantors to comply with the
covenants, conditions and agreements contained herein shall constitute an Event
of Default under the Financing Agreements (subject to the applicable cure
period, if any, with respect thereto provided for in the Loan Agreement as in
effect on the date hereof).
5.3 Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment No. 1.
5.4 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 Texas.
5.5 Binding Effect. This Amendment No. 1 shall be binding upon and inure to
the benefit of each of the parties hereto and their respective
successors and assigns.
5.6 Survival of Representations and Warranties. All representations and
warranties made in this Amendment No. 1 or any other document furnished in
connection with this Amendment No. 1 shall survive the execution and delivery of
this Amendment No. 1 and the other documents, and no investigation by Lender or
any closing shall affect the representations and warranties or the right of
Lender to rely upon them.
5.7 Counterparts. This Amendment No. 1 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 hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be duly executed and delivered by their authorized officers as of the date and
year first above written.
TITANIUM METALS CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: Chief Financial Officer
TITANIUM HEARTH TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: Vice President
TMCA INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: Vice President
TIMET MILLBURY CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: Vice President
TIMET CASTINGS CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: Vice President
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
TIMET FINANCE MANAGEMENT
COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Title: Vice President
AGREED TO:
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CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By: : /s/ X. Xxxxxxx Xx.
--------------------------
X. Xxxxxxx Xx.
Title: Vice President
