Exhibit 6
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AMENDMENT NO. 3 TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT dated as of March 18,
2004 and effective as of February 12, 2004 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, Amendment No. 2 to Loan and Security Agreement dated as of
October 23, 2002 and as amended hereby and as the same 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 Definitions. As used herein, the following terms shall have
the meanings given to them below and the Loan Agreement shall be deemed and is
hereby amended to include, in addition and not in limitation, the following
definitions:
(a) "Amendment No. 3" shall mean this Amendment No. 3 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) "Capital Expenditures" shall mean, as applied to any Person, any
expenditures by such Person which in accordance with GAAP, are required to be
capitalized on the balance sheet of such Person.
(c) "Marketable Securities" shall mean securities registered under the
applicable securities laws that are publicly traded on the New York Stock
Exchange or other national securities exchange.
1.2 Amendment to Definitions. The definitions in the Loan Agreement are
amended as follows and each reference to such definitions in the Loan Agreement
and the other Financing Agreements shall be deemed to be a reference to such
definitions as so amended:
(a) The definition of "Adjusted Net Worth" set forth in Section 1.3 of
the Loan Agreement is hereby deleted in its entirety and replaced with the
following:
"1.3 "Adjusted Net Worth" shall mean as to any Person, at any
time, in accordance with GAAP (except as otherwise specifically set
forth below), on a consolidated basis for such Person and its
consolidated Subsidiaries (if any), the amount equal to (a) the
difference between: (i) the aggregate net book value of all assets of
such Person and its consolidated Subsidiaries, calculating the book
value of inventory for this purpose on a first-in-first-out or average
cost basis, after deducting from such book values all appropriate
reserves in accordance with GAAP (including all reserves for doubtful
receivables and obsolescence) and (ii) the aggregate amount of
Indebtedness and other liabilities of such Person and its consolidated
Subsidiaries (including tax and other proper accruals). For purposes
of Section 9.18 hereof, the calculation of Adjusted Net Worth for any
period (commencing after December 31, 2003) shall exclude: (i)
$270,000,000, (ii) all extraordinary non-cash charges and one-time
non-cash charges of Timet and its consolidated Subsidiaries in each
case arising after December 31, 2003 for the applicable period, (iii)
the amount equal to (A) the depreciation expense of Timet and its
consolidated Subsidiaries after December 31, 2003 for such period
minus (B) Capital Expenditures incurred by Timet and its consolidated
Subsidiaries after December 31, 2003 for such period, and (iv) accrued
but unpaid interest in respect to the Subordinated Debentures which
would have reduced Consolidated Net Income of Timet and its
consolidated Subsidiaries for the applicable period."
(b) The definition of the term "Cash Equivalents" set forth in Section 1.15
of the Loan Agreement is hereby deleted in its entirety and replaced with the
following:
"1.15 "Cash Equivalents" shall mean, at any time, (a) any
evidence of indebtedness with a maturity date of two (2) years or less
issued or directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof; provided,
that, the full faith and credit of the United States of America is
pledged in support thereof; (b) certificates of deposit or bankers'
acceptances with a maturity of one hundred eighty (180) days or less
of any financial institution that is a member of the Federal Reserve
System having combined capital and surplus and undivided profits of
not less than $200,000,000; (c) commercial paper (including variable
rate demand notes) with a maturity of one hundred eighty (180) days or
less issued by a corporation (except any Subsidiary or Affiliate of a
Borrower) organized under the laws of any State of the United States
of America or the District of Columbia and rated at least A-1 by
Standard & Poor's Ratings Service, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or at least P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.;
(d) repurchase and reverse repurchase obligations with a term of not
more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial
institution having combined capital and surplus and undivided profits
of not less than $200,000,000; (e) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the United States of America or
issued by any governmental agency thereof and backed by the full faith
and credit to the United States of America, in each case maturing
within two (2) years or less from the date of acquisition; provided,
that, the terms of such agreements comply with the guidelines set
forth in the Federal Financial Agreements of Depository Institutions
with Securities Dealers and Others, as adopted by the Comptroller of
the Currency on October 31, 1985; (f) investments in money market
funds and mutual funds which invest substantially all of their assets
in securities of the types described in clauses (a) through (e) above;
and (g) funds maintained by such Person in demand deposit accounts at
any national or state bank or trust company."
(c) The definition of "EBITDA" set forth in Section 1.22 of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:
"1.22 "EBITDA" shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the Consolidated Net Income of such
Person and its consolidated Subsidiaries for such period determined in
accordance with GAAP, plus (b) the amount of the cumulative effect of
changes in accounting principles for such period, plus (c ) the amount
of minority interest for such period, plus (d) depreciation,
amortization and other non-cash charges (including, but not limited
to, amortization of discount and amortization of deferred financing
fees and closing costs, imputed interest and deferred compensation)
for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person), all in accordance with GAAP,
plus (e) Interest Expense for such period (to the extent deducted in
the computation of Consolidated Net Income of such Person) plus (f)
interest on the Subordinated Debentures for such period (to the extent
deducted in the computation of Consolidated Net Income of such Person)
plus (g) charges for Federal, State, local and foreign income taxes
for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person)."
(d) The definition of the term "Fixed Charge Coverage Ratio" set forth in
Section 1.42 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following:
"1.42 "Fixed Charge Coverage Ratio" shall mean for any period the
ratio of (a) EBITDA of Timet and its consolidated Subsidiaries for
such period to (b) Fixed Charges of Timet and its consolidated
Subsidiaries for such period."
(e) The definition of the term "Fixed Charges" set forth in Section 1.43 of
the Loan Agreement is hereby deleted in its entirety and replaced with the
following:
"1.43 "Fixed Charges" for any period shall mean the sum of ,
without duplication , (a) all Interest Expense, (b) all Capital
Expenditures, (c ) all scheduled (as determined at the beginning of
the respective period) mandatory principal payments of Indebtedness
(including principal payments with respect to all Capital Leases) made
by a Borrower or its consolidated Subsidiaries during such period. The
foregoing shall not be construed to include mandatory principal
payments on Indebtedness arising pursuant to revolving loans and
advances."
(f) The definition of the term "Interest Expense" set forth in Section 1.51
of the Loan Agreement is hereby deleted in its entirety and replaced with the
following:
"1.51 "Interest Expense" shall mean, for any period, as to any
Person and its consolidated Subsidiaries, as determined in accordance
with GAAP, the total interest expense of such Person and its
consolidated Subsidiaries for such period, whether paid or accrued
(including the interest component of Capital Leases for such period),
including, without limitation, all bank fees, commissions, discounts
and other fees and charges owed with respect to letters of credit,
banker's acceptances or similar instruments, but excluding (a)
amortization of discount and amortization of deferred financing fees
and closing costs, (b) interest paid in property other than cash, (c)
any other interest expense not payable in cash, and (d) interest on
the Subordinated Debentures."
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. 3.
Section 2. Amendments to Loan Agreement.
2.1 Equipment Availability. Section 1.9 of the Loan Agreement is amended by
adding the following to the end of such section:
"Notwithstanding anything to the contrary contained in this Section
1.9 or otherwise, in no event shall any Equipment Availability of
Borrowers be included in the calculation of the Borrowing Base, except
for purposes of determining the Quarterly Average Excess Availability,
unless and until Lender shall have received a written appraisal with
respect to the Equipment in accordance with Section 7.4(a) hereof
within the twelve (12) consecutive months immediately preceding
calculation of the Borrowing Base including any Equipment
Availability."
2.2 Equipment Appraisals. Section 7.4(a) of the Loan Agreement is amended
by adding the following to the end of such section:
"Notwithstanding anything to the contrary contained in this Section
7.4, so long as the calculation of the Borrowing Base does not include
any Equipment Availability of Borrowers and/or as no Event of Default
or act, condition or event which with notice or passage of time would
constitute an Event of Default shall exist or have occurred, Borrowers
shall not be required at their expense to obtain an appraisal with
respect to the Equipment as otherwise required under this Section
7.4(a)."
2.3 Indebtedness. Section 9.9 (d)(i) is hereby deleted in its entirety and
replaced with the following:
"(i) the principal amount of such Indebtedness shall not exceed
$207,465,300, less the aggregate amount of all repayments, repurchases
or redemptions thereof, whether optional or mandatory, plus interest
thereon at the rate provided in the Subordinated Debentures as in
effect on the date hereof,"
2.4 Investments. Section 9.10 of the Loan Agreement is hereby amended by
deleting the word "and" in front of Section 9.10(o), changing the punctuation at
the end of Section 9.10(o) from a period to a semicolon followed by "and" and
adding the following new Section 9.10(p) at the end thereof:
"(p) investments by a Borrower or Restricted Subsidiary in any
Marketable Securities, provided, that, (i) the aggregate amount of all
such investments at any time shall not exceed $50,000,000, (ii) in no
event shall the total amount of Loans or Letter of Credit
Accommodation the proceeds of which are used for the purpose of
purchasing such Marketable Securities exceed $20,000,000 in the
aggregate, (iii) such Marketable Securities shall only be held in an
investment account or securities account established with a security
intermediary acceptable to Lender (except as Lender may otherwise
agree in writing), (iv) on or before the making of any such investment
(except as Lender may otherwise agree in writing) such Borrower or
Restricted Subsidiary shall as Lender may specify either (A) execute
and deliver, and cause to be executed and delivered to Lender, an
Investment Property Control Agreement in form and substance
satisfactory to Lender with respect to such investment account,
securities account or other similar account duly authorized, executed
and delivered by such Borrower or Restricted Subsidiary and such
securities intermediary or (B) arrange for Lender to become the
entitlement holder with respect to such investment property on terms
and conditions acceptable to Lender, (v) on or before the making of
such investment (except as Lender may otherwise agree in writing) such
Borrower or Restricted Subsidiary shall execute and deliver to Agent
an Investment Property Pledge and Security Agreement in form and
substance satisfactory to Lender with respect to such investment
account or securities account duly authorized, executed and delivered
by such Borrower or Restricted Subsidiary, and (vi) no Event of
Default shall exist or have occurred and be continuing."
2.5 Transactions with Affiliates. Section 9.12 of the Loan Agreement is
hereby amended by adding the following to the end of clause (a) as follows:
", provided further, that, this Section 9.12(a) shall not apply
to any transaction permitted under Section 9.10(p) hereof."
2.6 Excess Availability. Section 9 of the Loan Agreement is hereby amended
by adding a new Section 9.22 to the end thereof as follows:
"9.22 Excess Availability. Borrowers shall have at all times
Excess Availability of not less than $25,000,000; provided, that, such
amount shall be reduced to $20,000,000 at such time as Lender shall
have received an appraisal of the Equipment of Borrowers that
satisfies the requirements of Section 7.4(a) hereof within the
immediately preceding twelve (12) months."
2.7 Fixed Charge Coverage Ratio. Section 9 of the Loan Agreement is hereby
amended to add a new Section 9.23 to the end thereof as follows:
"9.23 Fixed Charge Coverage Ratio. Borrowers shall not permit the
Fixed Charge Coverage Ratio for Timet and its consolidated
Subsidiaries for any four (4) rolling fiscal quarter period to be less
than 1:1 calculated as of the end of any fiscal quarter in which the
Excess Availability of Borrowers is less than $40,000,000 at any time
during such fiscal quarter."
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. 3 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 effective date of this Amendment
No. 3.
3.2 Corporate Power and Authority. This Amendment No. 3 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. 3 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. 3.
Section 4. Conditions Precedent. The effectiveness of this Amendment No. 3
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. 3; and
4.2 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. Additional Deliveries. Each Borrower and Guarantor hereby agrees
that, in addition to all other terms, conditions and provisions set forth in the
other Financing Agreements, such Borrower or Guarantor shall deliver or cause to
be delivered to Lender each of the following, each in form and substance
satisfactory to Lender, duly authorized, executed and delivered by the parties
thereto, as soon as possible but in any event by no later than March 31, 2004:
5.1 an original of an Investment Property Pledge and Security Agreement
with respect to any investment accounts of TIMET Finance maintained at ▇▇▇▇▇
Trading Institutional Services and First Southwest Company;
5.2 an original of an Investment Property Control Agreement with respect to
the investment account of TIMET Finance maintained at JonesTrading Institutional
Services and an Investment Property Pledge Agreement with respect thereto; and
5.3 an original of an Investment Property Control Agreement with respect to
the investment account of TIMET Finance maintained at First Southwest Company
and an Investment Property Pledge Agreement with respect thereto.
Section 6. Provisions of General Application.
6.1 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. 3 and the other
Financing Agreements, the terms of this Amendment No. 3 shall control. The Loan
Agreement and this Amendment No. 3 shall be read and construed as one agreement.
6.2 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).
6.3 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. 3.
6.4 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.
6.5 Binding Effect. This Amendment No. 3 shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
6.6 Survival of Representations and Warranties. All representations and
warranties made in this Amendment No. 3 or any other document furnished in
connection with this Amendment No. 3 shall survive the execution and delivery of
this Amendment No. 3 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.
6.7 Counterparts. This Amendment No. 3 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. 3 to
be duly executed and delivered by their authorized officers as of the date and
year first above written.
TITANIUM METALS CORPORATION
By:_______________________________
Title:____________________________
TITANIUM HEARTH TECHNOLOGIES, INC.
By:_______________________________
Title:____________________________
TMCA INTERNATIONAL, INC.
By:_______________________________
Title:____________________________
TIMET MILLBURY CORPORATION
By:_______________________________
Title:____________________________
TIMET CASTINGS CORPORATION
By:_______________________________
Title:____________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
TIMET FINANCE MANAGEMENT
COMPANY
By:_______________________________
Title:____________________________
AGREED TO:
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By:_________________________________
Title:________________________________