Exhibit 10.1
FIRST AMENDMENT
to
CREDIT AGREEMENT
AMENDMENT, dated as of April 15, 1997 by and among SPECIAL METALS
CORPORATION, a Delaware corporation (the "Borrower"), the financial institutions
listed on the signature pages hereto (collectively, the "Lenders") and CREDIT
LYONNAIS NEW YORK BRANCH, as Issuing Bank and as Agent for the Lenders (in such
capacity, the "Agent").
RECITALS
A. The Borrower, the Lenders, the Issuing Bank and the Agent are party to
the Credit Agreement dated as of October 18, 1996 (the "Credit Agreement"),
pursuant to which the Lenders severally agreed to make Term Loans and Revolving
Loans to the Borrower, and the Issuing Bank agreed to issue Letters of Credit
for account of the Borrower, all upon the terms and subject to the conditions
set forth in the Credit Agreement.
B. The Borrower has filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission (the "SEC") on December 20, 1996 (said
Registration Statement, as subsequently amended, herein called the "Registration
Statement"), registering a portion of its shares of common stock for offering to
the public (the "Offering").
C. The Borrower paid the Term Loans in full upon the consummation of the
Offering and the receipt of the proceeds therefrom and has requested that the
Credit Agreement be modified in certain respects, including (i) to increase the
Aggregate Revolving Commitments by $20,000,000 to $60,000,000 (subject to the
scheduled reductions specified below), (ii) to reduce the Commitment Fee to
0.20% per annum, (iii) to eliminate the prohibition against the termination of
the Cash Flow Support Agreement, (iv) to permit the use of Loan proceeds for
capital improvements and acquisitions, and (v) to permit the Borrower to
repurchase or redeem its capital stock.
D. The Lenders, the Issuing Bank and the Agent are willing to effect such
modifications, subject to the terms and conditions specified below.
ACCORDINGLY, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment, unless
otherwise defined, shall have the meanings given to them in the Credit
Agreement. In addition, the following terms shall have the following meanings:
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"AGENT" shall have the meaning specified in the preamble hereto.
"BORROWER" shall have the meaning specified in the preamble hereto.
"CREDIT AGREEMENT" shall have the meaning specified in Recital A hereto.
"FIRST AMENDMENT DATE" shall have the meaning specified in Section 5
hereto.
"LENDERS" shall have the meaning specified in the preamble hereto.
"OFFERING" shall have the meaning specified in Recital B hereto.
"REGISTRATION STATEMENT" shall have the meaning specified in Recital B
hereto.
"SEC" shall have the meaning specified in Recital B hereto.
2. AMENDMENTS TO CREDIT AGREEMENT.
(a) The parties have agreed that the Aggregate Revolving Commitments will
be increased to $60,000,000 on the First Amendment Date and will be apportioned
among the Lenders as specified in Exhibit A hereto. In order to reflect that
understanding, the parties hereby agree that, effective on the First Amendment
Date, Schedule I to the Credit Agreement shall be deleted and the schedule
attached to this Amendment as Exhibit A shall be substituted therefor.
(b) The parties have agreed that the Aggregate Revolving Commitments will
be reduced by $4,000,000 a year, such reductions to be made on October 17 of
each year, commencing with October 17, 1997. To reflect that understanding, the
parties hereby agree that, effective on the First Amendment Date, Section 2.6(b)
of the Credit Agreement will be redesignated as Section 2.6(c) and the following
new Section 2.6(b) will be added to the Credit Agreement:
"The Aggregate Revolving Commitments shall be reduced on
each date set forth below to the amount set forth below
opposite such date:
DATE OF REDUCTION AGGREGATE REVOLVING COMMITMENTS
October 17, 1997 $56,000,000
October 17, 1998 52,000,000
October 17, 1999 48,000,000
October 17, 2000 44,000,000
October 17, 2001 40,000,000
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Each such reduction shall be permanent and shall occur
irrespective of any prior optional reduction of the
Aggregate Revolving Commitments pursuant to Section
2.6(a,) unless the prior optional reduction has reduced
the Aggregate Revolving Commitments below the amounts
set forth above, in which event no further reductions in
the Aggregate Revolving Commitments shall occur on the
date specified. If the aggregate principal amount of the
Revolving Loans outstanding on the effective date of any
such reduction exceeds the amount of the Aggregate
Revolving Commitments after giving effect to such
reduction, the Borrower shall prepay the Revolving Loans
on the date on which such reduction becomes effective by
an amount equal to the amount of such excess."
(c) The parties have agreed that from and after the First Amendment Date
the Commitment Fee shall be reduced from 0.25% to 0.20%. To reflect that
understanding, the parties hereby agree that, effective on the First Amendment
Date, Section 2.12(a) of the Credit Agreement (Fees) will be amended by deleting
the figure "one-quarter of one percent (0.25%)" from the first sentence thereof
and substituting the figure "one-fifth of one percent (0.20%)" in its place.
(d) The parties have agreed that from and after the First Amendment Date
the Borrower may use the proceeds of the Loans not only to repay certain
existing indebtedness and to finance working capital needs, but also to fund
capital improvements and finance acquisitions which are otherwise permitted
under the Credit Agreement. To reflect that understanding, the parties hereby
agree that, effective on the First Amendment Date, clause (a) of Section 4.16 of
the Credit Agreement (Use of Proceeds) shall be amended in its entirety to read
as follows:
"(a) The Borrower shall use the proceeds of the Loans solely (i) to
refinance the principal of, and to pay all interest, fees and other
amounts payable in respect of, all loans outstanding under the Existing
Agreement, (ii) to pay the transaction costs relating to this Agreement,
(iii) to finance the working capital needs of the Borrower and its
Subsidiaries, (iv) to repay outstanding Indebtedness of the Borrower to
its Affiliates, (v) to finance capital expenditures, and (vi) to finance
acquisitions and Investments that are permitted under this Agreement. The
Borrower shall use the Letters of Credit solely to support payment
obligations incurred by it in the ordinary course of its business."
(e) The parties have agreed that the Borrower shall furnish to the Agent
and the Lenders, prior to the closing of any acquisition or Investment in a
joint venture that is otherwise permitted under the Credit Agreement certain
information regarding the impact of the proposed acquisition or Investment on
the Borrower's financial statements and calculations showing that after giving
effect to such acquisition or Investment the Borrower will be in compliance with
the financial covenants contained in the Credit Agreement. To reflect that
understanding, the parties hereby agree that, effective on the First Amendment
Date, Section 6.3 of the Credit Agreement
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(Financial Statements, Reports, Etc.) will be amended by deleting the word "and"
from the end of clause (f) thereof, redesignating clause (g) thereof as clause
(h) and adding the following new clause (g) thereto:
"(g) as soon as available and in any event no later than 10 Business Days
prior to the closing of any merger or consolidation of the Borrower or
any of its Subsidiaries with any other Person (other than a merger of a
Subsidiary into the Borrower or a merger among two or more Subsidiaries),
any acquisition by the Borrower or any of its Subsidiaries of all or
substantially all of the assets of any other Person or any division or
business unit of any other Person, or any Investment (other than an
Investment described in Section 6.14 (a), (b), (c), (d), or (e)) by the
Borrower or any of its Subsidiaries in any other Person (each of the
foregoing herein called a "Corporate Event" and any such other Person
herein called a "Target"), (x) a copy of the most recent available
balance sheets and statements of income and cash flows of such Target,
(y) if such Target will become a consolidated Subsidiary of the Borrower
after the consummation of the Corporate Event, a pro forma consolidated
balance sheet and pro forma consolidated statements of income and cash
flows of the Borrower and its consolidated Subsidiaries (including the
Target) after giving effect to such Corporate Event and (z) a certificate
of a Responsible Officer of the Borrower to the effect that, to the best
of his knowledge, after due inquiry, the Borrower shall be in compliance
with the financial covenants contained in Sections 6.18, 6.19 and 6.20 of
the Credit Agreement after giving effect to such Corporate Event, which
certificate shall set forth in detail reasonably satisfactory to the
Agent the calculations made to determine such compliance and the
information required to make such calculations."
(f) The parties have agreed that the Borrower shall not permit its
Consolidated Net Worth to be less than $40,000,000 at any time after the First
Amendment Date. To reflect that understanding, the parties hereby agree that,
effective on the First Amendment Date, Section 6.18 of the Credit Agreement
(Consolidated Net Worth) will be amended by deleting the figure "$24,000,000"
therefrom and substituting the figure "$40,000,000" in its place.
(g) The parties have agreed that from and after the First Amendment Date
the Borrower shall be permitted to redeem or repurchase shares of its Capital
Stock, subject to the same restrictions as those currently applicable to
payments of dividends or other distributions on shares of its Capital Stock. To
reflect that understanding, the parties hereby agree that, effective on the
First Amendment Date, clause (a) of the proviso in Section 6.17 of the Credit
Agreement (Restricted Payments) shall be amended in its entirety to read as
follows:
"(a) so long as no Default or Event of Default has occurred and is
continuing or would occur after giving effect thereto, the Borrower may
declare and pay dividends or other distributions on shares of its Capital
Stock, and may purchase or redeem shares of its Capital Stock, provided
that the aggregate amount of all such dividends, distributions, purchases
or redemptions does not exceed in any fiscal year of the Borrower an
amount equal to fifty percent (50%) of the Consolidated Net Income of the
Borrower for the
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immediately preceding fiscal year"
(h) The parties have agreed that the Borrower may terminate, or permit
SIMA to terminate, the Cash Flow Support Agreement at any time after the First
Amendment Date. To reflect that understanding, the parties hereby agree that,
effective on the First Amendment Date,
(A) The Cash Flow Support Agreement, and the promissory note
issued by the Borrower to the order of SIMA thereunder, shall
be terminated and shall be of no further force and effect;
(B) Section 6.23 of the Credit Agreement (Cash Flow Support
Agreement) shall be amended in its entirety to read as
follows:
"6.23. INTENTIONALLY DELETED."
(C) clause (j) of Section 7.1 of the Credit Agreement (Events of
Default) (which makes the termination of the Cash Flow
Support Agreement an Event of Default) shall be deleted and
the following new clause (j) shall be substituted therefor:
"(j) Intentionally deleted; or"
(i) The following new paragraph is hereby added at the end of Section 9.3
of the Credit Agreement (Amendments and Waivers):
"In the event that any Lender fails to consent to a waiver, amendment,
supplement or modification which requires the unanimous written consent
of all the Lenders and which has been approved in writing by the Majority
Lenders, the Borrower shall have the right, at its own expense, upon
notice to such Lender and the Agent, so long as no Default or Event of
Default shall have occurred and be continuing, to require such Lender to
transfer and assign without recourse (in accordance with and subject to
the restrictions contained in Section 9.6) all, but not less than all, of
its interests, rights and obligations under this Agreement and the other
Loan Documents to one or more existing Lenders that are willing, in their
sole discretion, to acquire and assume such interests, rights and
obligations (it being understood and agreed that no Lender shall have any
obligation to do so) or to one or more other banks or financial
institutions that are chosen by the Borrower and are acceptable to the
Agent and the Issuing Bank; provided that (x) no such assignment shall
conflict with any law, rule, regulation or order of any Governmental
Authority and (y) the Borrower or the acquiring Lender, bank or financial
institution, as the case may be, shall pay to the assigning Lender in
immediately available funds on the date of such assignment the principal
of and interest accrued to the date of payment on the Loans made by it
hereunder and all fees and other amounts accrued for its account or owed
to it hereunder or under any other Loan Document (including any amounts
owed to it pursuant to Section 3.5)."
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(j) Clause (A) of Section 9.9 of the Credit Agreement (Judicial
Proceedings) is hereby amended by deleting the reference to "Schedule I"
therefrom and substituting a reference to "Schedule II" in its place.
(k) All references in the Credit Agreement or any other Loan Document to
one or more Notes shall be deemed to include any promissory note or notes issued
in replacement or substitution therefor, including any Note or Notes issued
pursuant to this Amendment.
3. REAFFIRMATION OF OBLIGATIONS. The Borrower hereby acknowledges and
confirms to Agent, the Issuing Bank and each Lender (a) that the amendments and
modifications to the Credit Agreement made pursuant hereto shall not affect or
impair in any way the validity, binding effect or enforceability of any Loan
Document to which it is a party or of any liens or security interests granted to
the Agent, the Issuing Bank or any Lender thereunder, or its obligations or the
respective rights and remedies of the Agent, the Issuing Bank and the Lenders
thereunder and (b) that the Loan Documents to which the Borrower is a party, any
liens and security interests granted to the Bank thereunder, and the Borrower's
obligations and the respective rights and remedies of the Agent, the Issuing
Bank and the Lenders thereunder shall continue in full force and effect,
notwithstanding such amendments and modifications.
4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Agent, the Issuing Bank and the Lenders that (a) it has full
power and authority to execute and deliver this Amendment and the replacement
Notes being issued pursuant hereto, (b) this Amendment, the Credit Agreement as
amended hereby, and such replacement Notes constitute the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, (c) the Borrower's execution, delivery
and performance of this Amendment, the Credit Agreement as amended hereby and
such replacement Notes have been duly authorized by all requisite action of the
Borrower and do not require the approval of its shareholders, (d) the execution
and delivery by the Borrower of this Amendment and such replacement Notes and
the performance by the Borrower of the Credit Agreement as amended hereby do not
and will not (i) violate the Borrower's Certificate of Incorporation or By-Laws
or any law or regulation applicable to the Borrower, (ii) violate or constitute
(with due notice or lapse of time or both) a default under any indenture,
agreement, license or other instrument to which the Borrower is a party or by
which the Borrower or any of its properties may be bound or affected, (iii)
violate any order of any court, tribunal or governmental agency binding upon the
Borrower or its properties, (iv) result in the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of the Borrower, or
(v) require any license, consent or approval of any governmental agency or
regulatory authority or any other third party, and (e) (i) the Borrower has
complied and is currently in compliance with all the terms, covenants and
conditions of the Credit Agreement and the other Loan Documents, (ii) there
exists no Default under the Credit Agreement, and (iii) the representations and
warranties of the Borrower contained in Article 4 of the Credit Agreement are
true with the same effect as though such representations and warranties had been
made on the date hereof, except for such representations and warranties which
specifically relate to an earlier date.
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5. CONDITIONS PRECEDENT. This Amendment shall become effective on the
date (the "First Amendment Date") on which each of the following conditions
precedent shall have been satisfied or waived:
(a) The Borrower, SIMA and each Lender shall have executed and delivered
to the Agent counterpart originals or facsimiles hereof;
(b) The Borrower shall have executed and delivered to the Agent such
replacement Notes as may be necessary to reflect the Lenders' respective
Revolving Commitments after giving effect to this Amendment;
(c) The Agent shall have received payment in full of (i) all fees
separately agreed upon between the Borrower and the Agent and (ii) all costs and
expenses (including, without limitation, all fees and disbursements of outside
counsel to the Agent) incurred by the Agent in connection with the preparation
of this Amendment and all related instruments and agreements; and
(d) All legal, documentary and other matters in connection with this
Amendment and the transactions contemplated hereby shall be satisfactory to the
Agent and its counsel.
The amendments to the Credit Agreement set forth in Section 2 of this
Amendment shall become effective automatically on the First Amendment Date,
without the need for any further action by any party hereto.
6. MISCELLANEOUS.
(a) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) Except as expressly amended hereby, all terms and conditions of the
Credit Agreement and the other Loan Documents, and all rights of the Agent and
each Bank and obligations of the Borrower thereunder and under all related
documents, shall remain in full force and effect.
(c) The Borrower hereby agrees to pay on demand all costs and expenses
(including without limitation the reasonable fees and expenses of outside
counsel to the Agent) incurred by the Agent in connection with the negotiation,
preparation, execution and delivery of this Amendment and all related documents,
whether or not the transactions contemplated hereby are consummated.
(d) This Amendment may be executed by one or more of the parties hereto
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. Delivery of
an executed signature page to this Amendment by facsimile transmission shall be
as effective as delivery of a manually signed
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counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their duly authorized officers as of the day and year first
above written.
SPECIAL METALS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------
Xxxxxx X. Xxxxxxx
Vice President - Administration
CREDIT LYONNAIS NEW YORK BRANCH, as
Agent, Issuing Bank and Lender
By: /s/ Xxxxxx Xxxx
-------------------------
Xxxxxx Xxxx
First Vice President
MELLON BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
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XXXXXX XXXXXXXXX XX XXXXX
XXX XXXX BRANCH
By: /s/ Xxxxxxx Pages /s/ Xxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxxxx Pages Xxxx Xxxxxxxxx
Title: Vice President Vice President
BANQUE NATIONALE DE PARIS
GEORGETOWN BRANCH
By: /s/ Xxxxxxx Pages /s/ Xxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxxxx Pages Xxxx Xxxxxxxxx
Title: Vice President Vice President
SOCIETE GENERALE NEW YORK BRANCH
By: /s/ Xxxxx Xxxx
--------------------------
Name: Xxxxx Xxxx
Title: Vice President
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The undersigned, Societe Industrielle de Materiaux Avances ("SIMA"),
consents to the termination of the Cash Flow Support Agreement and the
Promissory Note delivered thereunder, and acknowledges and confirms to, and
agrees with, the Agent, the Issuing Bank and the Lenders party to the foregoing
Amendment (i) that the amendments and modifications to the Credit Agreement made
pursuant to the foregoing Amendment shall not affect or impair in any way the
validity, binding effect or enforceability of the Subordination Agreement dated
as of October 18, 1996 among Special Metals Corporation, SIMA, and the Agent
(the "Subordination Agreement") or SIMA's obligations or the respective rights
and remedies of the Agent, the Issuing Bank and the Lenders under the
Subordination Agreement and (ii) that the Subordination Agreement, and the
undersigned's obligations and the respective rights and remedies of the Agent,
the Issuing Bank and the Lenders thereunder, shall continue in full force and
effect, notwithstanding such amendments and modifications.
SOCIETE INDUSTRIELLE DE MATERIAUX AVANCES
By /s/ Xxxxxxx Xxxxx
----------------------------
Name: Xxxxxxx Xxxxx
Title: Directuer General
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EXHIBIT A to Amendment
SCHEDULE I to Credit Agreement
SCHEDULE OF COMMITMENTS AND PERCENTAGES
NAME OF LENDER REVOLVING COMMITMENT PERCENTAGE
-------------------- --------------------- ------------
Credit Lyonnais $18,000,000 30.00%
New York
Branch
Mellon Bank, N.A 17,000,000 28.33%
Banque Nationale 15,000,000 25.00%
de Paris,
New York Branch
and Georgetown
Branch
Societe Generale
New York Branch 10,000,000 16.67%
-------------------- --------------------- ------------
TOTAL $60,000,000 100.00%