Exhibit 10.1
AMENDMENT NO. 1
AMENDMENT NO. 1, dated as of June 29, 2007, among EMPIRE RESOURCES,
INC., a corporation duly organized and validly existing under the laws of the
State of Delaware (the "Company"); each of the lenders that is a signatory
hereto (individually, a "Bank" and, collectively, the "Banks"); and JPMORGAN
CHASE BANK, N.A., as agent for the Banks (in such capacity, together with its
successors in such capacity, the "Agent").
The Company, the Banks and the Agent are parties to an Amended and
Restated Credit Agreement, dated as of June 13, 2006 (as heretofore modified and
supplemented and in effect on the date hereof, the "Credit Agreement"),
providing, subject to the terms and conditions thereof, for extensions of credit
to be made by said Banks to the Company. The Company, the Banks and the Agent
now wish to amend the Credit Agreement in certain respects and, accordingly, the
parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this Amendment
No. 1, terms defined in the Credit Agreement are used herein as defined therein.
Section 2. Amendments. Subject to the occurrence of the Amendment
Effective Date and effective on such date, the Credit Agreement shall be amended
as follows:
2.01. New Definitions. Section 1.01 of the Credit Agreement
(Definitions) shall be amended by inserting the following definitions in the
appropriate alphabetical sequence:
"Imbali Facility" shall mean Indebtedness of Imbali Metals
Bvba consisting of a revolving working capital facility provided by
Fortis Bank S.A./N.V., New York Branch, in a principle amount not to
exceed (euro)10,000,000 at any one time outstanding, that is either
governed by the Promissory Note dated June 29, 2007 (a copy of which
has been furnished to the Agent) or is substantially on the terms set
forth in the term sheet attached as Exhibit A to Amendment No. 1
hereto, and any renewal or extension of such revolving working capital
facility (so long as the terms and conditions thereof are substantially
the same as set forth in said term sheet).
"Imbali Guarantee" shall mean a Guarantee by the Company of
the Imbali Facility, which Guarantee shall be subordinated to the
obligations of the Company under this Agreement and the other Basic
Documents pursuant to the Subordination Agreement.
"Subordination Agreement" shall mean a Subordination
Agreement, substantially in the form attached hereto as Exhibit B to
Amendment No. 1 hereto, among the Company, the Agent and the lenders
under the Imbali Facility (or an agent on their behalf).
2.02. Definition of "Tangible Net Worth." The definition of "Tangible
Net Worth" in Section 1.01 of the Credit Agreement (Definitions) shall be
amended by inserting the following new clause (c) immediately after clause (b)
therein:
"(c) accumulated other comprehensive income (as set forth in
the most recent financial statements of the Company); plus"
and by relettering former clauses (c) and (d) to be clauses (d) and (e).
2.03. Financial Statements. The parenthetical phrase in Section 8.01(h)
of the Credit Agreement (Financial Statements; Etc.) shall be amended in its
entirety to read as follows:
"(including, without limitation, any Plan or Multiemployer Plan, any
reports or other information required to be filed under ERISA, and the
financial information described on Exhibit D to Amendment No. 1
hereto)"
2.04. Limitation on Liens. Section 8.06 of the Credit Agreement
(Limitation on Liens) shall be amended by deleting the word "and" at the end of
clause (f) thereof, by replacing the period at the end of clause (g) thereof
with " ; and" and by inserting the following clause (h) immediately after clause
(g) therein:
"(h) the following:
(i) Liens on Property of Imbali Metals Bvba securing
the Imbali Facility, and
(ii) Liens on Property of the Company securing the
Imbali Guarantee, so long as such Lien is subject to the
Subordination Agreement."
2.05. Limitation on Indebtedness. Section 8.07 of the Credit Agreement
(Indebtedness) shall be amended by deleting the word "and" at the end of clause
(e) thereof, by replacing the period at the end of clause (f) thereof with ";
and" and by inserting the following clause (g) immediately after clause (f)
therein:
"(g) the following:
(i) Indebtedness of Imbali Metals Bvba under the
Imbali Facility, and
(ii) Indebtedness of the Company under the Imbali
Guarantee, so long as such Indebtedness is subject to the
Subordination Agreement."
2.06. Investments. Section 8.08 of the Credit Agreement (Investments)
shall be amended in its entirety to read as follows:
"8.08 Investments. The Company will not, nor will it permit
any of its Subsidiaries to, make or permit to remain outstanding any
Investments except:
(a) the following: (i) Investments outstanding on the
date hereof and identified on Schedule II hereto, and (ii)
Investments in Empire Resources Extrusions LLC outstanding on
March 31, 2006;
(b) deposit accounts with banks;
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(c) Interest Rate Protection Agreements and
commodities hedge agreements entered into in the ordinary
course of business and not for speculative purposes;
(d) Investments by the Company in Imbali Metals Bvba
in an aggregate amount not to exceed (euro)2,000,000, and
Investments by the Company under the Imbali Guarantee; and
(e) other Investments in an aggregate outstanding
principal amount not exceed at any time $500,000."
2.07. Limitation on Payments on Imbali Guarantee. Section 8.15 of the
Credit Agreement (Subordinated Debt) shall be amended by adding the following
sentence at the end thereof:
"The Company will not purchase, redeem, retire or otherwise acquire for
value, or set apart any money for any sinking, defeasance, or other
analogous fund for, the purchase, redemption, retirement or other
acquisition of, or make any payment or repayment of the principal of or
interest on, or any other amounts owing in respect of, the Imbali
Guarantee."
2.08. Imbali Matters. The following new Section 8.18 shall be added to
the Credit Agreement:
"8.18 Imbali Matters.
(a) By no later than 60 days after the date of
Amendment No. 1 hereto, the Company shall have granted to the
Agent for the benefit of the Banks a first priority perfected
Lien on 65% of the equity interests in Imbali Metals Bvba,
pursuant to documentation in form and substance satisfactory
to the Agent.
(b) The Company shall,
(x) by no later than July 6, 2007, cause
Imbali Metals Bvba to purchase for cash at least
$4,000,000 of inventory then held by it on
consignment for the Company (and upon such purchase
the Agent's Lien on such inventory so purchased shall
terminate), and
(y) by no later than September 30, 2007,
cause Imbali Metals Bvba to purchase for cash all
inventory in excess of (euro)2,000,000 then held by
it on consignment for the Company (and upon such
purchase the Agent's Lien on such inventory so
purchased shall terminate).
(c) The Company shall, promptly after entering into
the same, furnish to the Agent copies of each document or
instrument governing or evidencing the Imbali Facility, the
Imbali Guarantee or any collateral security therefor."
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Section 3. Representations and Warranties. The Company represents and
warrants to the Banks as of the Amendment Effective Date that (x) the
representations and warranties set forth in Section 7 of the Credit Agreement
and in Article III the Amended and Restated Security Agreement are true and
complete on the date hereof as if made on and as of the date hereof and as if
each reference in said Section 7 to "this Agreement" included reference to this
Amendment No. 1 except (i) changes resulting from transactions contemplated by
or permitted by the Credit Agreement, and (ii) those applicable to a specific
date or period and (y) no Default has occurred and is continuing.
Section 4. Conditions Precedent. As provided in Section 2 above, the
amendments to the Credit Agreement set forth in said Section 2 shall become
effective, as of June 29, 2007 (the "Amendment Effective Date"), upon the
satisfaction of the following conditions:
(a) the execution of this Amendment No. 1 by the Company,
Banks constituting the Required Banks and the Agent,
(b) the delivery by the Company of board of director
resolutions approving this Amendment No. 1 and the transactions
contemplated herein, in form and substance satisfactory to the Agent,
and
(c) the Agent and the Company shall have entered into an
Amendment to the Security Agreement substantially in the form of
Exhibit C hereto.
Section 5. Miscellaneous. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 1 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 1 by signing any such counterpart. This
Amendment No. 1 shall be governed by, and construed in accordance with, the law
of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be duly executed and delivered as of the day and year first above written.
EMPIRE RESOURCES, INC.
By: /s/ Sandra Kahn
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Sandra R. Kahn
Vice President
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JPMORGAN CHASE BANK, N.A.,
as Agent
By: /s/ Thomas S. Drake
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Thomas S. Drake
Vice President
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BROWN BROTHERS HARRIMAN & CO.
By:
----------------------------------------------
Michael L. Velluci
Vice President
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CITICORP USA, INC.
By: /s/ Keith Pallmann
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Keith Pallmann
Vice President
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JPMORGAN CHASE BANK, N.A.
By: /s/ Thomas S. Drake
----------------------------------------------
Thomas S. Drake
Vice President
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COOPERATIVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH
By: /s/ Eva Rushkevich
----------------------------------------------
Eva Rushkevich
Executive Director
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FORTIS CAPITAL CORP.
By: /s/ Kimberly Oates
----------------------------------------------
Kimberly Oates
Director
Fortis Capital Corp.
By /s/ Michiel V.M. Van Der Voort
----------------------------------------------
Michiel V.M. Van Der Voort
Managing Director
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EXHIBIT A
[Term Sheet]
EXHIBIT B
[Form of Subordination Agreement]
SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT, dated as of June 29, 2007, among:
(i) FORTIS BANK, S.A./N.V., NEW YORK BRANCH, the New York
branch of a Belgian bank (the "Subordinated Creditor");
(ii) EMPIRE RESOURCES, INC., a Delaware corporation (the
"Company"); and
(iii) JPMORGAN CHASE BANK, N.A., a national banking
association, as agent for the Banks party to the Empire Credit
Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Agent").
To induce said Banks to enter into Amendment No.1 to the
Empire Credit Agreement referred to below and to extend credit from time to time
under said Empire Credit Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Subordinated Creditor has agreed to subordinate the Subordinated Debt (as
hereinafter defined) to the Senior Debt (as so defined), and the Liens (as so
defined) of the Subordinated Creditor on the Collateral (as so defined) to the
Liens of the Agent on the Collateral, all in the manner and to the extent
hereinafter provided. Accordingly, the parties hereto agree as follows:
Section 1. Definitions. As used herein the following terms
shall have the following respective meanings:
"Bank" shall mean a "Bank" under the Empire Credit Agreement.
"Collateral" shall have the meaning given to that term in the
Security Agreement.
"Empire Credit Agreement" shall mean the Amended and Restated
Credit Agreement, dated as of June 13, 2006, among the Company, the Banks
referred to therein and the Agent, as the same may be modified and supplemented
and in effect from time to time.
"Empire Guarantee" shall mean a Guarantee by the Company of
the obligations of Imbali under the Imbali Credit Agreement.
"Imbali" shall mean Imbali Metals Bvba, a Belgian corporation.
"Imbali Credit Agreement" shall mean each agreement or
instrument evidencing or governing any indebtedness of Imbali to the
Subordinated Creditor.
"Insolvency Proceeding" shall mean any proceeding against the
Company under any bankruptcy, reorganization, readjustment or arrangement of
debt, suspension of payments, receivership, liquidation or insolvency or similar
law or statute now or hereafter in effect.
"Lien" shall mean any lien, mortgage, pledge, collateral
assignment, security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any option or
trust having the practical effect of any of the foregoing.
"Permitted Refinancing" shall mean any extension, renewal,
refunding or refinancing, or any restructuring, or any other modification
(collectively, a "Refinancing"), of any Senior Debt at any time outstanding
under the Empire Credit Agreement or of any Refinancing.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Reorganization Debt Securities" shall mean debt securities of
the Company as reorganized or readjusted or debt securities of the Company or
any other company, trust or organization provided for by a plan of
reorganization or readjustment that are subordinated, to at least the same
extent as the Subordinated Debt, to the payment of all Senior Debt that will be
outstanding after giving effect to such plan of reorganization or readjustment.
"Security Agreement" shall mean the Security Agreement
referred to in the Empire Credit Agreement.
"Senior Debt" shall mean, collectively, the following
indebtedness and obligations of the Company:
(a) all indebtedness and other obligations of the Company
under the Empire Credit Agreement and the other Senior Debt Documents,
including all interest, expenses, indemnities, penalties, fees and
other amounts payable from time to time under or in connection with the
Empire Credit Agreement,
(b) all obligations of the Company to any of the Banks (or any
affiliate of any Bank) under currency exchange agreements, interest
rate swap agreements, interest rate cap agreements and interest rate
collar agreements, and all other agreements or arrangements designed to
protect the Company against fluctuations in interest rates, currency
exchange rates or commodity prices,
(c) all other obligations of the Company (whether arising in
respect of extensions of credit or otherwise) to any Bank or any
affiliate of any Bank, other than the following:
(i) Subordinated Debt;
(ii) indebtedness of the Company secured by mortgages
on real property;
(iii) Capital Lease Obligations (as defined in the
Empire Credit Agreement); and
(iv) all purchase money indebtedness with original
stated tenor in excess of one year, and
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(d) any Permitted Refinancing.
The term "Senior Debt" shall include any interest accruing after the date of any
filing by the Company of any petition in, or other commencement of, any
Insolvency Proceeding, whether or not such interest is allowable as a claim in
any such proceeding. Without limiting the generality of the foregoing, the term
"Senior Debt" shall include all obligations under the Empire Credit Agreement to
pay fees, in respect of indemnification and to reimburse the Agent and the Banks
for expenses.
"Senior Debt Documents" means the Empire Credit Agreement and
the other Basic Documents referred to in the Empire Credit Agreement.
"Subordinated Debt" shall mean all obligations of the Company
under the Empire Guarantee in respect of (i) the principal of, and interest and
premium (if any) on, the loans made under the Imbali Credit Agreement, and (ii)
any other amounts owing under the Subordinated Debt Documents, including,
without limitation, any amounts owing in respect of a breach of the
representations, warranties or covenants thereunder by the Company, but shall
exclude obligations of Imbali Metals Bvba in respect thereof.
"Subordinated Debt Documents" shall mean the Imbali Credit
Agreement and each other agreement or instrument entered into in connection
therewith.
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York.
Section 2. Subordination.
2.01 Subordination of Subordinated Debt. The Company, for
itself and its successors and assigns, covenants and agrees, and the
Subordinated Creditor, for itself and its successors and assigns, likewise
covenants and agrees, that, to the extent and in the manner set forth in this
Agreement, the Subordinated Debt, is hereby expressly made subordinate and
subject in right of payment to the prior payment in full in cash of all Senior
Debt.
2.02 Payment of Proceeds Upon Dissolution. In the event of any
of the following (a "Dissolution Event"): (a) any Insolvency Proceeding, or (b)
any liquidation, dissolution or other winding up of the Company, whether
voluntary or involuntary and whether or not involving an Insolvency Proceeding,
or (c) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company, then and in any such event:
(1) the Banks shall be entitled to receive payment in full in
cash of all amounts due or to become due on or in respect of all Senior
Debt before the Subordinated Creditor shall be entitled to receive any
payment on account of principal of, or interest or premium (if any) on,
the Subordinated Debt;
(2) any payment or distribution of assets of the Company
(other than assets of Imbali) of any kind or character, whether in
cash, property or securities, by set-off or otherwise, to which the
Subordinated Creditor would be entitled in respect of the Subordinated
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Debt but for the provisions of this Agreement, including any such
payment or distribution that may be payable or deliverable by reason of
the payment of any indebtedness subordinated to the Subordinated Debt
(other than Reorganization Debt Securities), shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the Agent (and the
Subordinated Creditor hereby authorizes each such payor to pay over to
the Agent, upon demand by the Agent, all such payments or distributions
without the necessity of any inquiry as to the status or balance of the
Senior Debt, and without further notice to or consent of the
Subordinated Creditor), with the Agent to promptly remit to the
Subordinated Creditor any amounts remaining after payment in full in
cash of all Senior Debt, giving effect to any concurrent payment or
distribution to the Agent, the Banks or both (and in furtherance of the
foregoing and of the following clause (3), but not by way of limitation
thereof, in the event the Company is subject to any Insolvency
Proceeding, with the result that the Company is excused from the
obligation to pay all or part of the interest otherwise payable in
respect of the Senior Debt during the period subsequent to the
commencement of such Insolvency Proceeding, the Subordinated Creditor
agrees that all or such part of such interest, as the case may be,
shall be payable out of, and to that extent diminish and be at the
expense of, reorganization dividends or distributions in respect of the
Subordinated Debt);
(3) in the event that, notwithstanding the foregoing
provisions of this Section 2.02, the Subordinated Creditor shall have
received, before all Senior Debt is paid in full in cash, any such
payment or distribution of assets of the Company (other than the assets
of Imbali) of any kind or character, whether in cash, property or
securities in respect of the Subordinated Debt (other than
Reorganization Debt Securities), including any such payment or
distribution arising out of the exercise by the Subordinated Creditor
of a right of set-off or counterclaim and any such payment or
distribution in respect of the Subordinated Debt received by reason of
any indebtedness subordinated to the Subordinated Debt, then, and in
such event, such payment or distribution shall not be commingled with
other funds of the Subordinated Creditor and shall be held in trust for
the benefit of, and shall be immediately paid over or delivered to, the
Agent, in precisely the form received (except for the endorsement or
assignment of the Subordinated Creditor where necessary), with the
Agent to promptly remit to the Subordinated Creditor any amounts
remaining after payment in full in cash of all Senior Debt, giving
effect to any concurrent payment or distribution to the Agent, the
Banks or both; and
(4) the Subordinated Creditor hereby irrevocably authorizes
and empowers the Agent to demand, sue for, collect and receive every
such payment or distribution and give acquittance therefor, to execute,
sign, endorse, transfer and deliver any and all receipts and
instruments, and to file claims and take such other actions, all in the
name of the Subordinated Creditor, or otherwise, as the Agent may deem
necessary or advisable for the enforcement of this Agreement, but the
Agent has no obligation to do so. The Subordinated Creditor hereby (A)
agrees to file appropriate proofs of claim in respect of the
Subordinated Debt; and (B) agrees to execute and deliver to the Agent
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or its representatives on demand such powers of attorney, proofs of
claim and other instruments as may be requested by the Agent or its
representatives in order to enable the Agent to (x) enforce any and all
claims upon or with respect to the Subordinated Debt; and (y) collect
and receive all such payments or distributions which may be payable or
deliverable at any time upon or with respect to the Subordinated Debt.
2.03 Actions When Senior Debt Outstanding.
(a) Actions Prohibited. No payment on account of the principal
of, or interest or premium (if any) on, the Subordinated Debt or any judgment
with respect thereto (and no payment on account of the purchase or redemption or
other acquisition of the Subordinated Debt) shall be made by the Company at any
time prior to the payment in full in cash of the Senior Debt.
(b) Payments Over. In the event that, notwithstanding the
foregoing provisions of this Section, the Subordinated Creditor shall have
received any payment prohibited by the foregoing provisions of this Section,
then, and in any such event, such payment shall not be commingled with other
funds of the Subordinated Creditor and shall be held in trust for the benefit
of, and shall be immediately paid over or delivered to, the Agent, in precisely
the form received (except for the endorsement or assignment of the Subordinated
Creditor where necessary), with the Agent to promptly remit to the Subordinated
Creditor any amounts remaining after payment in full in cash of all Senior Debt,
giving effect to any concurrent payment or distribution to the Agent, the Banks
or both.
(c) Payments by Imbali. Nothing in this Agreement shall limit
or restrict the rights or obligations of Imbali Metals Bvba to make payments
under the Imbali Credit Agreement.
2.04 Subordination of Liens.
(a) Priority of Liens. Notwithstanding the date, manner or
order of grant, attachment or perfection of any Liens securing the Subordinated
Debt granted on the Collateral or of any Liens securing the Senior Debt granted
on the Collateral and notwithstanding any provision of the UCC or any applicable
law or the Subordinated Debt Documents or any other circumstance whatsoever, the
Subordinated Creditor hereby agrees that: (a) any Lien on the Collateral
securing any Senior Debt now or hereafter held by or on behalf of the Agent,
regardless of how acquired, whether by grant, possession, statute, operation of
law, subrogation or otherwise, shall be senior in all respects and before any
Lien on the Collateral securing any of the Subordinated Debt; and (b) any Lien
on the Collateral now or hereafter held by or on behalf of the Subordinated
Creditor regardless of how acquired, whether by grant, possession, statute,
operation of law, subrogation or otherwise, shall be junior and subordinate in
all respects to all Liens on the Collateral securing any Senior Debt. All Liens
on the Collateral securing any Senior Debt shall be and remain senior in all
respects and before all Liens on the Collateral securing any Subordinated Debt
for all purposes, whether or not such Liens securing any Senior Debt are
subordinated to any Lien securing any other obligation of the Company.
(b) Contesting Claims and Liens. The Subordinated Creditor and
the Agent, for itself and on behalf of each Bank, agrees that it shall not (and
hereby waives any right to) contest or support any other Person in contesting,
in any proceeding (including any Dissolution Event), the validity or
enforceability of any Senior Debt or any Subordinated Debt, respectively, or the
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priority, validity or enforceability of a Lien held by or on behalf of any of
the Agent in the Collateral or by or on behalf of any of the Subordinated
Creditor in the Collateral, respectively.
2.05 Subrogation. Subject to the payment in full in cash of
all Senior Debt and the termination of all obligations (if any) of the Agent or
any Bank to extend credit to the Company pursuant to the Senior Debt Documents,
the Subordinated Creditor shall be subrogated to the rights of the Banks to
receive payments and distributions of cash, property and securities applicable
to the Senior Debt until the principal of, and interest and premium (if any) on,
the Subordinated Debt shall be paid in full in cash. For purposes of such
subrogation, no payments or distributions to the Banks of any cash, property or
securities to which the Subordinated Creditor would be entitled except for the
provisions of this Section 2, and no payments over pursuant to the provisions of
this Section 2 to the Banks by the Subordinated Creditor, shall, as between the
Company, its creditors other than the Banks, and the Subordinated Creditor, be
deemed to be a payment or distribution by the Company to or on account of the
Subordinated Debt.
2.06 No Waiver of Subordination Provisions. No right of the
Agent or any Bank to enforce the subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by the Agent
or any Bank (except to the extent required herein), or by any non-compliance by
the Company with the terms, provisions and covenants of this Agreement,
regardless of any knowledge thereof the Agent or any Bank may have or be
otherwise charged with.
2.07 Enforcement.
(a) So long as any Senior Debt shall be outstanding or any
Bank has any obligation to extend credit to the Company under the Empire Credit
Agreement:
(i) the Subordinated Creditor shall not, except as expressly
otherwise provided in this Agreement, (A) ask, demand, sue for, take or
receive, or retain, from the Company by setoff or in any other manner,
payment or prepayment of all or any part of the Subordinated Debt; (B)
sell, assign, pledge, encumber or otherwise dispose of any of the
Subordinated Debt; (C) forgive, cancel or discharge, or permit to be
converted into any evidence of equity or ownership, any of the
Subordinated Debt; (D) subordinate all or any part of the Subordinated
Debt to any indebtedness other than the Senior Debt; (E) subordinate
all or any part of the Liens securing all or any part of the
Subordinated Debt to the Liens securing any indebtedness other than the
Senior Debt; (F) ask, demand or receive any security (other than the
Collateral) for the Subordinated Debt; (G) exercise or seek to exercise
any rights or remedies (including setoff) with respect to any
Collateral (including the exercise of any right under any lockbox
agreement, control account agreement, landlord waiver or bailee's
letter or similar agreement or arrangement to which the Subordinated
Creditor is a party) or institute any action or proceeding with respect
to such rights or remedies (including any action of foreclosure); (H)
amend any agreement or instrument governing the Empire Guaranty or any
collateral security therefor; (I) declare the Subordinated Debt due and
payable by reason of any default or for any other reason; (J) contest,
protest or object to any foreclosure proceeding or action brought by
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the Agent or any other exercise by the Agent of any rights and remedies
relating to the Collateral or otherwise; (K) commence, or participate
with others in commencing, any Insolvency Proceeding with respect to
the Company; or (L) object to the forbearance by the Agent from
bringing or pursuing any foreclosure proceeding or action or any other
exercise of any rights or remedies relating to the Collateral;
(ii) the Company shall not, except as expressly otherwise
provided in this Agreement, (A) make any payment or prepayment of all
or any part of the Subordinated Debt; (B) accept any forgiveness,
cancellation of or discharge of, or permit to be converted into any
evidence of equity or ownership, any of the Subordinated Debt; (C)
grant any security (other than the Collateral) for the Subordinated
Debt; (D) amend any agreement or instrument governing the Empire
Guaranty or any collateral security therefor; or (E) take any other
action in contravention of this Agreement; and
(iii) the Agent shall, except as otherwise expressly provided
herein, have the exclusive right to enforce rights, exercise remedies
(including setoff and the right to credit bid their debt) and make
determinations regarding the release, disposition, or restrictions with
respect to the Collateral without any consultation with or the consent
of the Subordinated Creditor.
(b) The Subordinated Creditor agrees that it will not take or
receive any Collateral or any proceeds of Collateral in connection with the
exercise of any right or remedy (including setoff) with respect to any
Collateral, unless and until the Senior Debt shall have been paid in cash in
full. Without limiting the generality of the foregoing, unless and until the
Senior Debt shall have been paid in cash in full the sole right of the
Subordinated Creditor with respect to the Collateral is to hold a Lien on the
Collateral pursuant to the Subordinated Debt Documents for the period and to the
extent granted therein and after the payment in full of the Senior Debt, to
receive a share of the proceeds thereof, if any, in accordance with the terms of
the Subordinated Debt Documents.
(c) The Subordinated Creditor (i) agrees that it will not take
any action that would hinder any exercise of remedies under the Senior Debt
Documents, including any sale, lease, exchange, transfer or other disposition of
the Collateral, whether by foreclosure or otherwise, and (ii) hereby waives any
and all rights it may have as a junior lien creditor (other than the right to
receive the proceeds of such sale, lease, exchange, transfer or other
disposition after the payment in full in cash of the Senior Debt) or otherwise
to object to the manner in which the Agent seeks to enforce or collect the
Senior Debt or the Liens granted in any of the Collateral, regardless of whether
any action or failure to act by or on behalf of the Agent is adverse to the
interest of the Subordinated Creditor.
(d) The Subordinated Creditor hereby acknowledges and agrees
that no covenant, agreement or restriction contained in the Subordinated Debt
Documents shall be deemed to restrict in any way the rights and remedies of the
Agent with respect to the Collateral as set forth in this Agreement and the
Senior Debt Documents.
7
(e) The Subordinated Creditor agrees that any Lien that it has
on any inventory held by Imbali Metals Bvba on consignment for the Company is
subordinated to the Lien on such inventory securing the Senior Debt as provided
in this Agreement.
2.08 Plan of Reorganization. The Agent and the Banks, on the
one hand, and the Subordinated Creditor, on the other hand, shall be entitled to
vote as separate classes with respect to any plan of reorganization in
connection with any Insolvency Proceeding; provided that the Subordinated
Creditor agrees that it will not take any action or vote in any way which
supports any plan of reorganization that is inconsistent with the terms of this
Agreement.
2.09 Subordinated Debt Remedies. Notwithstanding the
foregoing, the Subordinated Creditor may:
(a) file a proof of claim with respect to the Subordinated
Debt if an Insolvency Proceeding has been commenced by or against the Company;
(b) take any action (not adverse to the priority status of the
Liens on the Collateral securing the Senior Debt, or the rights of the Agent or
the holders of the Senior Debt to exercise remedies in respect thereof) in order
to create, perfect, preserve or protect its Lien on the Collateral;
(c) file any necessary responsive or defensive pleadings in
opposition to any motion , claim, adversary proceeding or other pleading made by
any person objecting to or otherwise seeking the disallowances of the claims of
the Subordinated Creditor, including any claims secured by Collateral, if any,
in each case in accordance with the terms of this Agreement;
(d) file any pleadings, objections, motions or agreements
which assert rights or interests available to unsecured creditors of the Company
in connection with any Insolvency Proceeding, but only if such pleading,
objection, motion or agreement is not inconsistent with the terms of this
Agreement; and
(e) vote on any plan of reorganization make other filings and
make any arguments and motions that are, in each case, in accordance with the
terms of this Agreement, with respect to the Subordinated Debt and Collateral.
2.10 Adequate Protection. If, in any Insolvency Proceeding,
the holders of the Senior Debt (or any subset thereof) are granted adequate
protection in the form of additional collateral in connection with any use of
cash collateral, then the Subordinated Creditor may seek or request adequate
protection in the form of a Lien on such additional Collateral (and may not in
any other circumstance seek or request adequate protection in the form of a
Lien), which Lien will be subordinated to the Liens securing the Senior Debt and
such cash collateral use on the same basis as the other Liens securing the
Subordinated Debt are so subordinated to the Senior Debt under this Agreement.
Section 3. Representations and Warranties. The Subordinated
Creditor represents and warrants to the Banks and the Agent that:
8
3.01 Corporate Existence. The Subordinated Creditor is a bank
duly organized and validly existing under the laws of the Kingdom of Belgium.
3.02 No Breach. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, the organization documents of the
Subordinated Creditor, any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
agreement or instrument to which the Subordinated Creditor is a party or by
which the Subordinated Creditor is bound or to which the Subordinated Creditor
is subject, or constitute a default under any such agreement or instrument, or
result in the creation or imposition of any Lien upon any of the revenues or
assets of the Subordinated Creditor pursuant to the terms of any such agreement
or instrument.
3.03 Action; Execution and Delivery. The Subordinated Creditor
has all necessary power and authority to execute, deliver and perform its
obligations under this Agreement; the execution, delivery and performance by the
Subordinated Creditor of this Agreement have been duly authorized by all
necessary action on its part; and this Agreement has been duly and validly
executed and delivered by the Subordinated Creditor and constitutes the legal,
valid and binding obligation of the Subordinated Creditor, enforceable in
accordance with its terms. The Subordinated Creditor has, independently and
without reliance on the Agent or any Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.
3.04 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
or agency are necessary for the execution, delivery or performance by the
Subordinated Creditor of this Agreement or for the validity or enforceability
hereof.
3.05 Collateral. Other than Collateral, no Liens exist to
secure any of the Subordinated Debt.
3.06 Note. The Subordinated Creditor has delivered to the
Agent a true, correct and complete copy of the Subordinated Debt Documents
(including all amendments and supplements thereto) as in effect on the date
hereof. The Empire Guarantee bears a legend that it is subject to this
Agreement.
Section 4. Agreements. The Company and the Subordinated
Creditor hereby agree that, until the payment of the Subordinated Debt in cash
in full and the termination of all obligations (if any) of the Banks to extend
credit to the Company under the Credit Agreements:
4.01 Legend. The Empire Guarantee, including any replacement
thereof or substitution therefor, shall bear a legend that it is subject to this
Agreement.
4.02 Actions by Agent and Banks. The Agent and the Banks may,
at any time and from time to time, without the consent of or notice to the
Subordinated Creditor, (a) change the manner, place or terms of payment or
change or extend the time of payment of, or renew or alter, the Senior Debt or
the security therefor, or otherwise amend in any manner any Senior Debt
9
Document; (b) exercise or refrain from exercising any rights against the Company
and others; (c) apply any sums by whomsoever paid or however realized to the
Senior Debt; (d) sell, exchange, release, surrender, realize upon or otherwise
deal in any manner and in any order any property whatsoever and by whomsoever at
any time subject to a Lien to secure the Senior Debt; (e) release any Person
liable in any manner for the payment or collection of any part of the Senior
Debt, and (f) seller or compromise all or any part of the Senior Debt, and
subordinate the payment of any part of the Senior Debt to the payment of any
other indebtedness (including any other part of the Senior Debt). No invalidity,
irregularity or unenforceability of all or any part of the Senior Debt or any
Lien securing the Senior Debt shall affect, impair or be a defense to this
Agreement.
4.03 Collateral. No Lien (other than on the Collateral) will
arise or will be taken in the future to secure any Subordinated Debt.
4.04 Recovery of Funds. If at any time all or any part of any
payment previously applied by the Agent or the Banks to the Senior Debt must be
returned by the Agent or any Bank, or recovered from the Agent or any Bank, for
any reason (including the order of any bankruptcy court), this Agreement shall
automatically be reinstated to the same effect as if the prior application had
not been made, and, in addition, the Company agrees to indemnify the Agent and
each Bank against, and to same and hold each of them harmless from any required
return by it, or recovery from it, of any such payments because of its being
deemed preferential under applicable bankruptcy, receivership or insolvency
laws, or for any other reason.
4.05 Further Assurances. Each of the Company and the
Subordinated Creditor agrees that it will, and its expense and at any time and
from time to time, promptly execute, acknowledge and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Agent may reasonably request, in order to protect any
right or interest granted or purported to be granted hereby.
4.06 Expenses. The Company agrees upon demand to pay to the
Agent the amount of any and all expenses, including the reasonable fees and
expenses of its counsel and of any experts or agents, that the Agent or any Bank
may incur in connection with (a) the administration of this Agreement; (b) the
exercise or enforcement of any of the rights of the Agent or the Banks
hereunder, or (c) the failure by the Subordinated Creditor or the Company to
perform or observe any of the provisions of this Agreement.
Section 5. Miscellaneous.
5.01 No Waiver. No failure on the part of the Agent or any
Bank to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Agent or any Bank of
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies herein
are cumulative and are not exclusive of any remedies provided by law.
10
5.02 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
5.03 Notices. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at the "Address for Notices" specified beneath its (or his or her, as
the case may be) name on the signature pages hereof or, as to any party, at such
other address as shall be designated by such party in a notice to each other
party. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telecopier or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
5.04 Waivers, Etc. The terms of this Agreement may be waived,
altered or amended (as to the Subordinated Creditor) only by an instrument in
writing duly executed by the Subordinated Creditor and (as to the Agent and the
Banks) by the Agent. Any such amendment or waiver shall be binding upon the
Agent and each Bank (and each other holder of Senior Debt) and the Subordinated
Creditor.
5.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Subordinated Creditor, the Agent and each Bank.
5.06 Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
5.07 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
5.08 Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws, the
legality, validity and enforceability of the remaining provisions of this
Agreement shall not be affected thereby, and this Agreement shall be liberally
construed so as to carry out the intent of the parties to it.
11
EXHIBIT C
[Form of Amendment to Security Agreement]
AMENDMENT NO. 1
AMENDMENT NO. 1, dated as of June 29, 2007, among EMPIRE RESOURCES,
INC., a corporation duly organized and validly existing under the laws of the
State of Delaware (the "Company"), the other Grantors party to Security
Agreement referred to below (together with the Company, individually, a
"Grantor" and, collectively, the "Grantors"), in favor of JPMORGAN CHASE BANK,
N.A., as the administrative agent (together with its successor(s) thereto in
such capacity, the "Agent") for each of the Secured Parties.
The Company, the Grantors and the Agent are parties to an Amended and
Restated Security Agreement, dated as of June 13, 2006 (as heretofore modified
and supplemented and in effect on the date hereof, the "Security Agreement").
The Grantors and the Agent now wish to amend the Security Agreement in certain
respects and, accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this Amendment
No. 1, terms defined in the Security Agreement are used herein as defined
therein.
Section 2. Amendments. The Security Agreement is hereby amended as
follows:
2.01. Definition of "Obligations." The definition of "Obligations" in
Section 1.1 of the Security Agreement (Definitions) shall be amended and
restated in its entirety as follows:
"Obligations" shall mean, collectively, the following:
(a) all obligations (monetary or otherwise, whether
absolute or contingent, matured or unmatured) of the Company
and each other Obligor arising under or in connection with the
Basic Documents, including Reimbursement Obligations and the
principal of and premium, if any, and interest (including
interest accruing during the pendency of any proceeding of the
type described in clauses (f) or (g) of Section 9 of the
Credit Agreement, whether or not allowed in such proceeding)
on the Loans, and
(b) all obligations of the Company to any of the
Banks (or any affiliate of any Bank) under currency exchange
agreements, Interest Rate Protection Agreements, and all other
agreements or arrangements designed to protect the Company
against fluctuations in interest rates, currency exchange
rates or commodity prices.
2.02. Capital Securities of the Subsidiaries, Investment Property.
Section 3.1(a) of the Security Agreement (As to Capital Securities of the
Subsidiaries, Investment Property), prior to clauses (i) and (ii) thereof, shall
be amended to read as follows:
(a) With respect to any direct Subsidiary of any Grantor
(other than Imbali Metals Bvba) that is"
2.03. Ownership, No Liens. Section 3.3 of the Security Agreement
(Ownership, No Liens, etc.) shall be amended by deleting the word "and" at the
end of clause (a) thereof, and replacing it with ",", by replacing the period at
the end of clause (b) thereof with ", and", and by inserting the following
clause (c) immediately after clause (b) therein:
"(c) with respect to the Capital Securities of Imbali Metals
Bvba."
2.04. Certain Remedies. Section 6.1(b) of the Security Agreement
(Certain Remedies) shall be amended by replacing clause (ii) with the following:
(ii) next, to the payment in full of all Obligations of the
type described in clause (a) of the definition thereof and all
Obligations in respect of Interest Rate Protection Agreements, in each
case equally and ratably in accordance with the respective amounts
thereof then due and owing or as the Banks holding the same may
otherwise agree;
(iii) next, to the payment in full of all other Obligations,
in each case equally and ratably in accordance with the respective
amounts thereof then due and owing or as the Banks holding the same may
otherwise agree; and"
and by re-numbering clause (iii) thereof to be clause (iv).
Section 3. Miscellaneous. Except as herein provided, the Security
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 1 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 1 by signing any such counterpart. This
Amendment No. 1 shall be governed by, and construed in accordance with, the law
of the State of New York.
2
EXHIBIT D
[Additional Financial Information]