Execution
AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT
AMENDMENT dated as of October 23, 2002 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
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 amended by Amendment No. 1 to Loan and Security Agreement dated
September 7, 2001 and 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.
1.1 Additional Definition. As used herein, the following term shall have
the meanings given to it below and the Loan Agreement shall be deemed and is
hereby amended to include, in addition and not in limitation, the following
definition:
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"Amendment No. 2" shall mean this Amendment No. 2 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.
1.2 Amendments to Definitions.
(a) The definition of "Equipment Availability" set forth in
Section 1.28 of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:
""Equipment Availability" shall mean, as to Borrowers, (a) for
the period from the date hereof through and including February
28, 2003, the amount equal to $30,890,000, provided, that,
commencing on March 1, 2000 and continuing through February 1,
2003, such amount shall be reduced effective as of the first day
of each month by an amount equal to $429,028 and (b) for the
period from March 1, 2003 and at all times thereafter, the amount
equal to the Equipment Availability pursuant to subsection (a) of
this definition as of February 28, 2003 (the "Remaining
Balance"), provided, that, commencing on March 1, 2003, the
Remaining Balance shall be reduced effective as of the first day
of each month by an amount equal to the Remaining Balance divided
by seventy-two (72)."
(b) The definition of "Maximum Credit" set forth in Section 1.60
of the Loan Agreement is hereby deleted in its entirety and replaced
with the following:
""Maximum Credit" shall mean $90,000,000 and Borrowers may from
time to time after the date hereof, at their option, increase
such amount; provided, that, as to any such increase, each of the
following conditions shall be satisfied as determined by Lender:
(a) after giving effect to all of such increases, in no event
shall the Maximum Credit exceed $125,000,000, (b) any increase
shall be in an amount not less than $10,000,000 or an integral
multiple thereof (except that if the Maximum Credit has been
increased to $120,000,000, then in an amount not less than
$5,000,000), (c) Lender shall have received a written request
from Borrowers, in form and substance satisfactory to Lender,
requesting such increase and specifying the amount of the
increase requested in accordance with the terms hereof, (d) any
increase shall be effective on the date specified in the notice
from Lender to Borrowers that each of the conditions set forth in
this Section 1.60 with respect to such increase has been
satisfied, (e) as to each such increase, Lender shall have
received, from a financial institution acceptable to Lender, a
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participation agreement and any such other agreements, documents
and instruments requested by Lender, each in form and substance
reasonably satisfactory to Lender, duly authorized, executed and
delivered by such financial institution with respect to the
purchase by such financial institution of an interest in the
Loans and Letter of Credit Accommodations in the amount of such
increase, (f) Lender shall have received, in cash or other
immediately available funds, the fee in respect of such increase
in an amount acceptable to Lender, and (g) 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."
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. 2.
Section 2. Amendments to Loan Agreement.
2.1 Adjusted Net Worth. Section 9.18 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"Section 9.18 Adjusted Net Worth.
(a) At any time during the period commencing on the date
hereof through and including February 25, 2003, on and after
Excess Availability (which for purposes of this Section 9.18
shall be determined without regard to the Maximum Credit) is
equal to or less than $35,000,000, Timet shall, at all times,
maintain Adjusted Net Worth of not less than $347,000,000.
(b) At any time after February 25, 2003, on and after Excess
Availability (which for purposes of this Section 9.18 shall be
determined without regard to the Maximum Credit) is equal to or
less than $30,000,000, Timet shall, at all times, maintain
Adjusted Net Worth of not less than $300,000,000."
2.2 Term.
(a) Section 12.1(a) of the Loan Agreement is hereby amended to delete the
reference to "three (3) years" in the third line of the first sentence of such
section and to replace it with "six (6) years".
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(b) Section 12.1(c)(i) through (iii) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"Amount Period
(i) One (1%) percent of From the date hereof to and including
the Maximum Credit as in the fourth anniversary of the date
effect on the date of such hereof
termination
(ii) One-half (1/2%) percent From the fourth anniversary of the
of the Maximum Credit as date hereof to and including the fifth
in effect on the date of anniversary of the date hereof
such termination
(iii) One-quarter (1/4%) percent From the fifth anniversary of the date
of the Maximum Credit as hereof to but not including the sixth
in effect on the date of anniversary of the date hereof."
such termination
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. 2 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. 2.
3.2 Corporate Power and Authority. This Amendment No. 2 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. 2 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. 2.
3.4 Additional Item to Be Delivered. Borrowers and Guarantors hereby agree
that, in addition to all other terms, conditions and provisions set forth in the
other Financing Agreements, Borrowers and Guarantors shall deliver or cause to
be delivered to Lender, an original of Amendment No. 1 to Trademark Collateral
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Assignment and Security Agreement, by and between Timet and Lender with respect
to all of the trademarks used by the Timet Automotive division of Timet ("Timet
Automotive Trademarks"), duly authorized, executed and delivered by Timet, in
the form attached hereto as Exhibit B, not later than twenty (20) days after the
date that any application for the registration of any Timet Automotive
Trademarks is filed by Timet with the United States Patent and Trademark Office
or any similar office or agency in the United States.
3.5 Payment Upon Reduction of Maximum Credit. Borrowers and Guarantors
hereby agree that, in addition to all other terms, conditions and provisions set
forth in the other Financing Agreements, on date hereof, in the event that the
outstanding Loans and Letter of Credit Accommodations exceed the Maximum Credit
as reduced on the date of hereof pursuant to Section 1.2(b) hereof, Borrowers
shall immediately repay Lender, automatically and without notice or demand, an
amount equal to the entire amount of such excess.
Section 4. Conditions Precedent. The effectiveness of the amendments and
waiver contained herein shall be subject to, Lender having received, in form and
substance satisfactory to Lender, each duly authorized, executed and delivered
by the parties thereto (if applicable):
4.1 an original of this Amendment No. 2,
4.2 payment in full, in cash or other immediately available funds, of the
amount required, if any, pursuant to Section 3.5 hereof, and
4.3 an original of the letter agreement, dated of even date herewith, by
and among Borrowers, Guarantors and Lender in the form of the letter agreement
attached hereto as Exhibit A.
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. 2 and the other
Financing Agreements, the terms of this Amendment No. 2 shall control. The Loan
Agreement and this Amendment No. 2 shall be read and construed as one agreement.
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 notice and
cure period, if any, with respect thereto provided for in the Loan Agreement as
in effect on the date hereof).
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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. 2.
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. 2 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. 2 or any other document furnished in
connection with this Amendment No. 2 shall survive the execution and delivery of
this Amendment No. 2 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. 2 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
be duly executed and delivered by their authorized officers as of the date and
year first above written.
TITANIUM METALS CORPORATION
By: /s/ Mark A. Wallace
-------------------------------------
Title: Chief Financial Officer and
-------------------------------------
Executive Vice President
-------------------------------------
TITANIUM HEARTH TECHNOLOGIES, INC.
By: /s/ Mark A. Wallace
-------------------------------------
Title: Vice President
-------------------------------------
TMCA INTERNATIONAL, INC.
By: /s/ Mark A. Wallace
-------------------------------------
Title: Vice President
-------------------------------------
TIMET MILLBURY CORPORATION
By: /s/ Mark A. Wallace
-------------------------------------
Title: Vice President
-------------------------------------
TIMET CASTINGS CORPORATION
By: /s/ Mark A. Wallace
-------------------------------------
Title: Vice President
-------------------------------------
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
TIMET FINANCE MANAGEMENT COMPANY
By: /s/ Victoria L. Garrett
-------------------------------------
Title: President
-------------------------------------
AGREED TO:
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CONGRESS FINANCIAL CORPORATION (SOUTHWEST)
By: /s/ Mark M. Galovic, Jr.
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Title: Vice President
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EXHIBIT A
TO
AMENDMENT NO. 2
Form of Amendment No. 2 Fee Letter
See Attached
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EXHIBIT B
TO
AMENDMENT NO. 2
Form of Amendment No. 1 to
Trademark Collateral Assignment and Security Agreement
See Attached
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