AMENDMENT NO. 4 TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT dated as of June 2,
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 Amendment No. 3 to Loan and Security Agreement, dated as of
March 18, 2004 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. 4" shall mean this Amendment No. 4 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.
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(b) "BUCS Exchange Offer" shall mean the offer by Timet to issue New
Preferred Stock to each holder of the BUCS in exchange for the BUCS owned by
such holder pursuant to the BUCS Exchange Offer Registration Statement and the
Offer to Exchange 4,024,820 Shares of 6 3/4% Series A Convertible Preferred
Stock of Titanium Metals Corporation for all of the outstanding 6 5/8%
Convertible Preferred Securities, Securities, Beneficial Unsecured Convertible
Securities (including the associated guarantee of the Trust) attached as Exhibit
99.1 to the BUCS Exchange Offer Registration Statement.
(c) "BUCS Exchange Offer Registration Statement" shall mean the
registration statement on Form S-4 (File No. 333-114218) filed by Timet with the
U.S. Securities and Exchange Commission on April 6, 2004 for the BUCS Exchange
Offer, as such may be hereafter amended, modified or supplemented.
(d) "Freedom Forge Bonds" shall mean surety bond issued by Federal
Insurance Company on November 14, 1972 in favor of the Bureau of Workmen's
Compensation, Department of Labor and Industry of the Commonwealth of
Pennsylvania with respect to which Timet is the primary obligor, as amended as
of November 1, 1974, October 27, 1975, November 1, 1977, January 4, 1982, March
30, 1982 and November 1, 1984 (the "Federal Bond"), and the surety bond issued
by Insurance Company of North America on November 1, 1985 in favor of the Bureau
of Workers' Compensation, Department of Labor and Industry of the Commonwealth
of Pennsylvania with respect to which Timet is the primary obligor (the "▇▇▇
▇▇▇▇") and the related Application for Bond and Indemnity Agreement dated
November 1, 1985, copies of which bonds and indemnity agreement are attached
hereto as Exhibit A.
(e) "New Preferred Stock" shall mean, individually and collectively,
up to 4,024,820 shares of 6 3/4% Series A Convertible Preferred Stock authorized
to be issued pursuant to the Certificate of Designations, Rights and Preferences
of 6 3/4% Series A Convertible Preferred Stock attached as Exhibit 4.1 to the
BUCS Exchange Offer Registration Statement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(f) "Trust Common Securities" shall mean, collectively, the common
securities designated the 6 5/8% Trust Common Securities issued by the Trust, as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.2 Amendment to Definition. The definition "▇▇▇▇▇▇▇" set forth in Section
1.84 of the Loan Agreement is amended as follows and each reference to such
definition in the Loan Agreement and the other Financing Agreements shall be
deemed to be a reference to such definition as so amended:
"1.84 "▇▇▇▇▇▇▇" means, collectively, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and his spouse,
and their respective heirs, executors, administrators, successors and
assigns."
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. 4.
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Section 2. Consent. Subject to the terms and conditions hereof, notwithstanding
anything to the contrary contained in the Loan Agreement (as in effect prior to
the date hereof), Lender hereby consents to the issuance of the New Preferred
Stock and the consummation of the BUCS Exchange Offer pursuant to terms
described in the BUCS Exchange Offer Registration Statement. Timet will use its
best effort to consummate such transactions on or before December 31, 2004,
provided however, Timet may request an extension of such date and such request
shall not be unreasonably denied by Lender.
Section 3. Amendments to Loan Agreement.
3.1 Collection of Accounts. Section 6.3(a) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"(a) Borrowers shall establish and maintain, at their expense, blocked
accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are
acceptable to Lender into which Borrowers shall promptly deposit and
direct their account debtors to directly remit all payments on
Receivables and all payments constituting proceeds of Inventory or
other Collateral in the identical form in which such payments are
made, whether by cash, check or other manner. The banks at which the
Blocked Accounts are established shall enter into an agreement, in
form and substance satisfactory to Lender, providing that all items
received or deposited in the Blocked Accounts are the property of
Lender, that the depository bank has no lien upon, or right to setoff
against, the Blocked Accounts, the items received for deposit therein,
or the funds from time to time on deposit therein and upon the written
instruction of Lender, the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all funds
received or deposited into the Blocked Accounts to such bank account
of Lender as Lender may from time to time designate for such purpose
("Payment Account"), provided, that, without limiting any other rights
or remedies of Lender, Lender may, at its option, send such written
instruction to depository banks at which the Blocked Accounts are
maintained to transfer all available funds received or deposited into
the Blocked Accounts to the Payment Account at any time that either:
(A) an 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, or (B) the Excess
Availability is less than $40,000,000. Each Borrower agrees that all
payments made to such Blocked Accounts or other funds received and
collected by Lender, whether in respect of the Receivables, as
proceeds of Inventory or other Collateral or otherwise shall be
treated as payments to Lender in respect of the Obligations and
therefore shall constitute the property of Lender to the extent of the
then outstanding Obligations."
3.2 Sale of Assets, Consolidation, Merger, Dissolution, Etc.. Section
9.7(b) of the Loan Agreement is hereby amended by changing the end of Section
9.7(b)(xvi) from a semicolon to a semicolon followed by "and" and adding the
following new Section 9.7(b)(xvii) at the end thereof:
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"(xvii) the issuance by Timet of New Preferred Stock to any
holders of the BUCS pursuant to the BUCS Exchange Offer as described
in the BUCS Exchange Offer Registration Statement; provided, that, (A)
as of the date one (1) Business Day prior to any such issuance, Lender
shall have received written notice of the intention of Timet to issue
such New Preferred Stock, (B) Borrowers shall not be required to pay
any cash dividends or repurchase or redeem such New Preferred Stock or
make any other payments in respect thereof except to the extent
permitted under Section 9.11 hereof, (C) the terms of such New
Preferred Stock, and the terms and conditions of the issuance and
exchange of the BUCS therefor, shall not include any terms that
include any limitation on the right of Borrowers to request or receive
Loans or Letter of Credit Accommodations or the right of Borrowers to
amend or modify any of the terms and conditions of this Agreement or
any of the other Financing Agreements, and (D) as of the date of such
issuance and exchange 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;"
3.3 Indebtedness.
(a) Section 9.9 (d)(i) of the Loan Agreement 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 principal amount of all repayments,
repurchases or redemptions or exchanges thereof (including pursuant to
the BUCS Exchange Offer to the extent permitted under Section
9.7(b)(xvii) hereof), whether optional or mandatory, plus interest
thereon at the rate provided in the Subordinated Debentures as in
effect on the date hereof,"
(b) Section 9.9(d)(iii)(B) of the Loan Agreement is hereby deleted in
its entirety and replaced with the following:
"(B) Timet may from time to time purchase BUCS in the open market
or pursuant to privately negotiated purchases and, notwithstanding
anything to the contrary in this Agreement or the Subordinated
Debentures, may redeem the Subordinated Debentures, provided, that, as
to any such purchase or redemption each of the following conditions is
satisfied as reasonably determined by Lender in good faith (except as
Lender may otherwise agree): (1) as of the date three (3) Business
Days prior to the date of any payment in respect of such purchase or
redemption, the daily average of the Excess Availability for the
immediately preceding thirty (30) consecutive days shall have been not
less than $25,000,000, (2) as of the date three (3) Business Days
prior to any payment in respect of such purchase or redemption and
after giving effect to the amount to be paid in respect of such
purchase or redemption, the Excess Availability shall be not less than
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$25,000,000, and (3) as of the date three (3) Business Days prior to
any payment in respect of such purchase or redemption and after giving
effect to the amount to be paid in respect of such purchase or
redemption, 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, and (4) as of
the date one (1) Business Day prior to the day of any payment in
respect of such purchase or redemption, Lender shall have received
written notice of the intention of Timet to make any such purchase or
redemption, which notice shall specify the amount of BUCS to be
purchased or Subordinated Debentures to be redeemed, the price or
redemption amount thereof and such other information with respect
thereto as Lender may reasonably request,"
(c) Section 9.9 of the Loan Agreement is hereby amended by deleting
the word "and" in front of Section 9.9(n), changing the punctuation at the end
of Section 9.9(n) from a period to a semicolon followed by "and" and adding the
following new Section 9.9(o) at the end thereof:
"(o) the unsecured Indebtedness of Timet pursuant to the Freedom
Forge Bonds; provided, that, (i) aggregate face amount of the Federal
Bond and the ▇▇▇ ▇▇▇▇ together shall not exceed $3,000,000, and (ii)
such Indebtedness shall not at any time include any terms that include
any limitation on the right of Borrowers to request or receive Loans
or Letter of Credit Accommodations or the right of Borrowers to amend,
modify, supplement, replace, renew or extend any of the terms or
conditions of this Agreement or any of the other Financing
Agreements."
3.4 Dividends and Redemptions.
(a) Section 9.11(h) of the Loan Agreement is hereby amended to add the
parenthetical "(other than the New Preferred Stock)" after the term Stock in the
second line of such Section.
(b) Section 9.11 of the Loan Agreement is hereby amended by deleting
the word "and" in front of Section 9.11(h), changing the punctuation at the end
of Section 9.11(h) from a period to a semicolon followed by "and" and adding the
following new Sections 9.11(i), (j), (k) and (l) at the end thereof:
"(i) The Trust may redeem the BUCS or the Trust Common
Securities; provided, that, as to any such redemption of the BUCS each
of the following conditions is satisfied: (i) as of the date three (3)
Business Days prior to the date of any such redemption, the daily
average of the Excess Availability for the immediately preceding
thirty (30) consecutive days shall have been not less than
$25,000,000, (ii) as of the date three (3) Business Days prior to any
such redemption and after giving effect to the amount to be paid in
respect of such redemption, the Excess Availability shall be not less
than $25,000,000, (iii) as of the date three (3) Business Days prior
to any such redemption and after giving effect to the amount to be
paid in respect of such redemption, 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, and (iv) as of the date one (1) Business Day prior to the
date of any such redemption, Lender shall have received written notice
of the intention of the Trust to make any such redemption, which
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notice shall specify the amount of BUCS to be purchased or
Subordinated Debentures to be redeemed and such other information with
respect thereto as Lender may reasonably request;
(j) After consummation of the BUCS Exchange Offer, Timet may
purchase New Preferred Stock in the open market or pursuant to
privately negotiated purchases and, notwithstanding anything to the
contrary in this Agreement, may redeem the New Preferred Stock,
provided, that, as to any such purchase each of the following
conditions is satisfied: (i) as of the date three (3) Business Days
prior to the date of any such purchase, the daily average of the
Excess Availability for the immediately preceding thirty (30)
consecutive days shall have been not less than $25,000,000, (ii) as of
the date three (3) Business Days prior to any such purchase and after
giving effect to the amount to be paid in respect of such purchase,
the Excess Availability shall be not less than $25,000,000, (iii) as
of the date three (3) Business Days prior to any such purchase and
after giving effect to the amount to be paid in respect of such
purchase, no Event of Default, or act, condition or event which with
notice of passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, and (iv) as
of the date one (1) Business Day prior to any such purchase, Lender
shall have received written notice of the intention of Timet to make
any such purchase, which notice shall specify the amount of New
Preferred Stock to be purchased, the price per share thereof and such
other information with respect thereto as Lender may reasonably
request;
(k) Timet may pay dividends to the holders of the New Preferred
Stock, provided, that, as to any such dividend, (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 $25,000,000, (iii)
the aggregate amount of all such dividends from and after the issuance
of the New Preferred Stock, calculated on a cumulative basis, shall
not exceed an aggregate amount equal to $15,000,000 multiplied by the
number of calendar years from and including the year of issuance of
such New Preferred Stock, (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; and
(l) Timet may offer to exchange Capital Stock of Timet for New
Preferred Stock to the extent permitted in Section 9.7(b)(xi);
provided, that, Timet shall not be required to comply with the
requirements in Section 9.7(b)(xi)(A) hereof so long as Lender shall
have received one (1) Business Day prior written notice of Timet's
intention to make any such exchange, which notice shall specify the
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amount of the Capital Stock to be issued for the New Preferred Stock
and such other information with respect thereto as Lender may
reasonably request. Nothing in this Agreement is intended to limit or
require prior notice to or approval of Lender with respect to Timet's
issuance of Capital Stock of Timet in connection with the exercise of
conversion rights by the holders of BUCS or New Preferred Stock in
accordance with the terms of the BUCS or New Preferred Stock."
3.5 Change in Business. The reference to the clause "Capital Stock of Timet
or BUCS" in Section 9.16(b) of the Loan Agreement is hereby amended to read
"Capital Stock of Timet, or BUCS or New Preferred Stock." The second to last
sentence in Section 9.16(b) of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
"TFMC shall not engage in any business or commercial activity or own
or hold any assets or properties otherwise prohibited by the terms of
this Agreement."
Section 4. Representations and Warranties. In addition to the continuing
representations and warranties heretofore or hereafter made by Borrowers and
Guarantors to Lender pursuant to the other Financing Agreements, each Borrower
and Guarantor hereby represents and warrants to Lender as follows (the truth and
accuracy of such representations and warranties are a continuing condition of
the making of Loans and providing Letter of Credit Accommodations by Lender,
shall survive the execution and delivery of Amendment No. 4, and shall be
incorporated into and made a part of the Financing Agreements:
4.1 BUCS Exchange Offer; New Preferred Stock.
(a) Upon the issuance of the New Preferred Stock in accordance with
the BUCS Exchange Offer, the New Preferred Stock shall have been fully paid and
non-assessable, free and clear of all claims, liens, pledges and encumbrances of
any kind arising by or through Timet.
(b) Upon the issuance of the New Preferred Stock in accordance with
the BUCS Exchange Offer, no court of competent jurisdiction will have issued any
injunction, restraining order or other order which would prohibit consummation
of the BUCS Exchange Offer or the transactions described in the BUCS Exchange
Offer Registration Statement, and no governmental action or proceeding will have
been threatened or commenced and remain pending seeking any injunction,
restraining order or other order which would seek to void or otherwise modify
the BUCS Exchange Offer or the transactions described in the BUCS Exchange Offer
Registration Statement.
(c) Upon the issuance of the New Preferred Stock in accordance with
the BUCS Exchange Offer, neither the issuance and delivery of the New Preferred
Stock nor the consummation of the transactions therein contemplated, nor
compliance with the provisions thereof or the BUCS Exchange Offer Registration
Statement (i) will have violated or will violate any applicable laws or
regulations or any order or decree of any court or governmental instrumentality
in any respect, or (ii) after giving effect to the consents hereunder, will
conflict with or result in the breach of, or constitute a default in any respect
under, any indenture, mortgage, deed of trust, security agreement, agreement or
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instrument to which any Borrower or Guarantor is a party or by which it or any
of its assets may be bound, or (iii) will violate any provision of the
Certificate of Incorporation, By-Laws or other organization document of any
Borrower or Guarantor.
(d) Borrowers have delivered, or caused to be delivered, to Lender
true, correct and complete copies of the BUCS Exchange Offer Registration
Statement (as in effect on the date hereof).
4.2 Freedom Forge Bonds. Lender has received true, correct and complete
copies of the Freedom Forge Bonds.
4.3 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 exists or
has occurred and is continuing on the date of this Amendment No. 4.
4.4 Corporate Power and Authority. This Amendment No. 4 has been duly
executed and delivered by each Borrower and Guarantor and, if necessary,
approved by their respective shareholders, and is in full force and effect as of
the date of this Amendment No. 4. The agreements and obligations of each
Borrower and Guarantor contained in this Amendment No. 4 constitute legal, valid
and binding obligations of such Borrower and Guarantor enforceable against such
Borrower and Guarantor in accordance with their respective terms.
4.5 Consents. No action of, or filing with, or consent of any governmental
authority and no approval or consent of any other party, is required to
authorize, or is otherwise required in connection with, the execution, delivery
and performance of Amendment No. 4.
Section 5. Conditions Precedent. The effectiveness of this Amendment No. 4 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):
5.1 an original of this Amendment No. 4; and
5.2 true, correct and complete copy of the BUCS Exchange Offer Registration
Statement (as of the date hereof).
Section 6. Additional Agreements.
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 cause to be delivered to Lender, a Certificate, duly
authorized executed and delivered by the Chief Financial Officer of Timet
substantially in the form of the certificate attached hereto as Exhibit B, in
form and substance satisfactory to Lender, by no later than five (5) Business
Days following the consummation of the BUCS Exchange Offer.
Section 7. Provisions of General Application.
7.1 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
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the extent of conflict between the terms of this Amendment No. 4 and the other
Financing Agreements, the terms of this Amendment No. 4 shall control. The Loan
Agreement and this Amendment No. 4 shall be read and construed as one agreement.
7.2 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).
7.3 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. 4.
7.4 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.
7.5 Binding Effect. This Amendment No. 4 shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
7.6 Survival of Representations and Warranties. All representations and
warranties made in this Amendment No. 4 or any other document furnished in
connection with this Amendment No. 4 shall survive the execution and delivery of
this Amendment No. 4 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.
7.7 Counterparts. This Amendment No. 4 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. 4 to
be duly executed and delivered by their authorized officers as of the date and
year first above written.
TITANIUM METALS CORPORATION
By: /s/ ▇. ▇. ▇▇▇▇▇▇
------------------------------------------
Title: V. P. Finance and Corporate Controller
TITANIUM HEARTH TECHNOLOGIES, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇
-------------------------------------------
Title: V. P. Finance and Corporate Controller
TMCA INTERNATIONAL, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇
------------------------------------------
Title: V. P. Finance and Corporate Controller
TIMET MILLBURY CORPORATION
By: /s/ ▇. ▇. ▇▇▇▇▇▇
-----------------------------------------
Title: V. P. Finance and Corporate Controller
TIMET CASTINGS CORPORATION
By: /s/ ▇. ▇. ▇▇▇▇▇▇
-----------------------------------------
Title: V. P. Finance and Corporate Controller
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
TIMET FINANCE MANAGEMENT
COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Title: Vice President & Treasurer
AGREED TO:
---------
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Senior Vice President
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