SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-1363
ENVIROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 34-0617390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Five High Ridge Park, P.O. Box 10309, Stamford, CT 06904-2309
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(203) 322-8333
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period the Registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares outstanding of the Registrant's Common
Stock as of the close of business on November 10, 1994 was
40,055,759.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
EnviroSource, Inc.
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,622 $ 10,582
Accounts receivable, less allowance
for doubtful accounts of $968
and $944 40,671 36,196
Other current assets 7,480 8,093
-------- --------
Total current assets 50,773 54,871
Property, plant and equipment, at cost 276,276 248,785
Less allowance for depreciation 122,242 107,241
-------- --------
154,034 141,544
Goodwill, less amortization 168,407 172,166
Landfill permits, less amortization 23,431 24,661
Closure trust funds and deferred
charges, less amortization 17,846 14,909
Debt issuance costs, less amortization 8,843 9,061
Other assets 10,226 10,033
-------- --------
$ 433,560 $ 427,245
======== ========
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
EnviroSource, Inc.
CONSOLIDATED CONDENSED BALANCE SHEET -- Continued
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $ 9,567 $ 13,607
Salaries, wages and related benefits 10,302 9,075
Insurance 7,140 7,217
Interest 6,675 1,072
Estimated restructuring costs 6,655 10,900
Other current liabilities 20,809 21,904
Current portion of debt and in 1993
redeemable preferred stock 4,994 8,492
------- -------
Total current liabilities 66,142 72,267
Long-term debt 243,664 235,842
Other liabilities 66,557 66,208
Class G redeemable preferred stock 39,113 38,711
Commitments and contingencies (Note E)
Stockholders' equity:
Common stock, par value $.05 per
share, 60,000,000 shares author-
ized, 40,055,759 shares issued and
outstanding in 1994 and 40,052,259
shares in 1993 2,003 2,003
Capital in excess of par value 162,469 162,461
Accumulated deficit (144,675) (148,605)
Stock purchase loans receivable from
officers (840) (840)
Canadian translation adjustment (873) (802)
------- -------
Total stockholders' equity 18,084 14,217
------- -------
$ 433,560 $ 427,245
======= =======
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
EnviroSource, Inc.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues $66,001 $66,475 $187,882 $204,241
Cost of revenues 47,443 53,057 137,552 158,664
Selling, general and
administrative expenses 7,506 8,316 23,748 26,368
------ ------ ------- -------
Operating income 11,052 5,102 26,582 19,209
Interest income 214 308 755 745
Interest expense (6,278) (6,304) (18,776) (22,586)
------ ------ ------ ------
Income (loss) before income
taxes 4,988 (894) 8,561 (2,632)
Income tax expense 1,648 242 3,375 1,827
------ ------ ------ ------
Income (loss) before extraordi-
nary loss and cumulative
effect of accounting change 3,340 (1,136) 5,186 (4,459)
Extraordinary loss from extin-
guishment of debt (434) (21,930)
Cumulative effect of income
tax accounting change (2,302)
------ ------ ------ ------
Net income (loss) 3,340 (1,570) 5,186 (28,691)
Preferred stock dividend
requirements, reduced by
retirement gains of $13
and $536 in 1994 (562) (652) (1,256) (2,546)
------ ------ ------ ------
Income (loss) applicable
to common shares $ 2,778 $(2,222) $ 3,930 $(31,237)
====== ====== ====== ======
Income (loss) per share:
Before extraordinary loss
and cumulative effect of
accounting change $ 0.07 $ (.05) $ 0.10 $ (.22)
Extraordinary loss (.01) (.69)
Cumulative effect of income
tax accounting change (.07)
------ ------ ------ ------
Net income (loss) $ 0.07 $ (.06) $ 0.10 $ (.98)
====== ====== ====== ======
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
EnviroSource, Inc.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
1994 1993
<S> <C> <C>
OPERATING ACTIVITIES
Income (loss) before extraordinary loss and
cumulative effect of accounting change $ 5,186 $ (4,459)
Adjustments to reconcile income (loss) to
cash provided by operations:
Charge in lieu of income taxes 1,644 -
Depreciation 18,081 20,166
Amortization 6,232 8,576
Closure cost amortization and accruals 1,993 2,355
Restructuring costs (4,167)
Other changes in working capital (2,267) 787
Other 3,262 (2,461)
------- -------
Cash provided by operating activities 29,964 24,964
------- -------
INVESTING ACTIVITIES
Property, plant and equipment:
Additions (30,945) (22,254)
Proceeds from dispositions 550 94
Purchase of intangibles (2,948)
Landfill permit additions and closure
expenditures (303) (529)
Closure trust fund payments (4,306) (255)
Ongoing net cash flows related to
IU acquisition (580) (2,432)
Other (2,230) 68
------- -------
Cash used by investing activities (40,762) (25,308)
------- -------
FINANCING ACTIVITIES
Sale of common stock 8 42,711
Issuance of debt 17,500 238,500
Debt issuance costs (584) (9,617)
Debt repayments (9,826) (246,206)
Cash portion of extraordinary loss (11,348)
Retirement of preferred stock (4,260) (5,148)
------- -------
Cash provided by financing activities 2,838 8,892
------- -------
CASH AND CASH EQUIVALENTS
Increase (decrease) during the period (7,960) 8,548
Beginning of year 10,582 10,695
------- -------
End of period $ 2,622 $ 19,243
======= =======
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information. In the
opinion of management, all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation have been
included. Operating results for the three and nine month periods
ended September 30, 1994 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1994.
The consolidated condensed balance sheet at December 31, 1993 has
been derived from audited financial statements at that date. For
further information, refer to the consolidated financial statements
and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1993.
Per share amounts are based on the weighted average number of
common shares outstanding plus in 1994 the dilutive effect of
stock options and warrants: 40,370,000 and 39,996,000 for the three
months ended September 30, 1994 and 1993; 40,422,000 and
32,003,000 for the nine months then ended. Class G preferred stock had no
dilutive effects.
NOTE B. DEBT
On June 14, 1994, the Company completed an $8.5 million Industrial
Revenue Bond financing, due in 2002. Interest is at 8.25% (9.2%
effective rate including amortization of issuance costs). The
proceeds are being used to expand the Company's Idaho landfill.
At September 30, 1994, $3 million of revolving credit borrowings
and $11.5 million of standby letters of credit were outstanding.
The Company paid interest of $12.2 million and $20.2 million
during the nine months ended September 30, 1994 and 1993, excluding $.6
million and $.4 million capitalized in these periods.
NOTE C. CLASS G PREFERRED STOCK
Subsequent to September 30, 1994, the Company retired 62,800 shares
of Class G redeemable preferred stock with $7 million of revolving
credit borrowings, thereby reducing to 237,780 the number of Class
G shares outstanding.
NOTE D. INCOME TAXES
Income tax expense consists primarily of state and foreign income
taxes plus charges in lieu of federal taxes. The 1994 effective
tax rate contemplates recognition of federal tax benefits
resulting from estimated costs included in the 1993 restructuring charge
that will become deductible and reduce taxable income in the 1994 tax
return. Such benefits reduced the nine month 1994 federal tax
expense by $1.9 million.
The Company paid income taxes, net of refunds, of $1.4 million for
both the nine months ended September 30, 1994 and 1993.
NOTE E. COMMITMENTS AND CONTINGENCIES
As of September 30, 1994 the Company is committed to spend $11
million through the first quarter of 1995 for equipment additions,
a dross processing plant that is nearing completion and landfill
development and treatment facilities. To secure its obligations
to close its Idaho landfill and perform post-closure monitoring and
maintenance procedures for 30 years, the Company must deposit
into a closure trust fund approximately $1.1 million annually through
1998. The Company is also obligated to make nonrefundable
payments into Ohio closure trust funds of approximately $3.7 million in
late 1994, $7.6 million in 1995 and $3.9 million in 1996 to fund the
latter stages of Ohio landfill closure and all post-closure
procedures in perpetuity. The Company believes these payments
together with those previously made will satisfy substantially
all of its closure and post-closure obligations, based on current
regulations and permitted capacity.
At September 30, 1994, the Company was contingently liable for
$11.5 million of letters of credit outstanding under its bank
credit agreement, approximately $5 million of which were issued
to secure liabilities already reflected in the consolidated
condensed balance sheet.
In connection with IU International Corporation's ("IU's") 1985
disposition of P-I-E Nationwide, Inc. ("PIE"), IU guaranteed
bonds or undertakings made to surety companies and/or states of the
United States in connection with PIE's self-insurance programs
for workers' compensation and other losses arising through 1987. PIE
commenced bankruptcy proceedings in 1990 and ceased making
payments in respect of its self-insured claims. The Company's obligations
for these claims aggregate an estimated $16.6 million at
September 30, 1994, and currently require the Company to make payments
averaging $.5 million per quarter. Although the Company has the
right to receive proceeds from the liquidation of various classes
of PIE assets, the timing and amount of receipt, if any, cannot
be predicted. However, because sufficient liabilities are reflected
in the consolidated condensed balance sheet and the Company's
estimates do not assume any such liquidation proceeds, the Company's
financial condition as reported at September 30, 1994
will not be adversely affected if IU receives no proceeds from
such liquidation.
PIE's bankruptcy has triggered withdrawal liabilities to certain
multi-employer pension plans estimated by PIE to aggregate $58 million.
Early in 1991 the trustee of the largest plan sought information from the
Company for the stated purpose of determining whether the
circumstances of IU's 1985 sale of PIE would justify a claim against
IU for any deficiencies in PIE's payment of such withdrawal liabilities.
However, no such claim has been asserted. The Company believes no such claim
would be warranted. Also in 1991, the same pension plan trustee demanded
payment of approximately $38 million from a more recent owner of
most of PIE's capital stock and such owner in turn demanded an
identical amount from IU. Such owner has made no attempt to
pursue its demand. The Company believes the ultimate outcome of these
matters will not have a material adverse effect on its financial
condition or results of operations.
The U.S. Environmental Protection Agency and applicable state
agencies have issued "Part B" permits under the Resource
Conservation and Recovery Act, as amended ("RCRA"), to the
Company's Ohio and Idaho landfills. These permits are subject to
regulatory review five years after issuance and may be modified
by the applicable government agencies at any time.
The Company and its competitors and customers are subject to a
complex, evolving array of federal, state and local environmental
laws and regulations. In particular, such regulations can affect
the demand for Treatment and Disposal Services, and could also
require this segment to incur significant costs for such matters
as facility upgrading, remediation or other corrective action and
landfill closure and post-closure maintenance and monitoring.
Any such cost increases would normally affect all hazardous waste
landfills, so the Company would expect to be able to offset
increased operating compliance costs by increasing prices charged
to customers.
In several instances the Company has been named as a potentially
responsible party regarding properties that could be subject to
remedial action under RCRA or the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended. As
to such matters, the Company is not subject to any administrative
or judicial order requiring material expenditures, and the
Company has determined that it is not likely to be subject to sanctions
or held responsible for material remediation expenditures. In the
opinion of management, the outcome of the matters described in
this paragraph will not have a material adverse effect on the
Company's financial condition or results of operations.
The Company is a party to litigation, proceedings and other
contested matters, arising in the normal course of its present or
former businesses, for which it is possible that the Company's
exposure could exceed by as much as $3 million the amounts
currently recorded. In the opinion of management, the amounts
recorded adequately reflect the expected outcomes of such matters
and the final outcome of all such matters will not have a
material adverse effect on the Company's financial condition or results of
operations.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30
Revenues are $.5 million (1%) lower in 1994, reflecting a reduction
of $4.2 million (24%) for Treatment and Disposal Services
partially offset by an increase of $3.7 million (8%) for Industrial
Environmental Services. The Treatment and Disposal Services
decrease is due to a $6.5 million decline in revenues from long-
term contracts to design, supply and construct scrubber sludge
stabilization systems for electric utilities, because the 1993
quarter included billings for major equipment installations.
This segment's hazardous waste landfilling revenues increased due to
higher volumes. The Industrial Environmental Services revenue
increase is attributable to increased production volumes at steel
mill customers and to significantly improved conditions in the
aluminum industry that resulted in increased prices and volume.
Gross profit increased $5.1 million (38%) reflecting a $2.4
million (126%) increase for Treatment and Disposal Services and a $2.7
million (24%) improvement at Industrial Environmental Services.
The Treatment and Disposal Services improvement results primarily
from substantially increased profits on long-term contracts and
to a lesser extent the increased landfilling volumes mentioned
above. Profits from long-term contracts increased despite the
significant decline in revenues from such contracts, because a 1994 contract
is in its higher-margin design phase while two earlier contracts
were in their lower-margin equipment installation phases in 1993. The
Industrial Environmental Services gross profit increase is
principally due to the higher production volumes of steel mill
customers, the improved conditions in the aluminum industry
mentioned above and the absence of losses ($.6 million in 1993)
from the flue dust recycling units that were terminated as a part
of the 1993 restructuring.
Selling, general and administrative costs decreased $.8 million,
primarily due to savings resulting from headcount reductions and
other steps taken in the 1993 restructuring.
Due to the factors described above, operating income increased $6
million (117%). The increase includes $2.7 million for Industrial
Environmental Services, $3 million for Treatment and Disposal
Services and a $.3 million reduction in corporate headquarters
costs.
Due to the factors described above, 1994 net income is $3.3 million
compared with a 1993 net loss of $1.6 million, which included a
$.4 million charge to eliminate income tax benefit from the
extraordinary debt extinguishment loss recorded in the 1993
second quarter.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30
Revenues are $16.4 million (8%) lower in 1994, reflecting a
reduction of $22.4 million (39%) for Treatment and Disposal
Services partially offset by an increase of $6 million (4%) for
Industrial Environmental Services. The Treatment and Disposal
Services decrease is largely the result of a $19.5 million
decline in revenues from long-term contracts to design, supply and
construct scrubber sludge stabilization systems for electric
utilities, because the 1993 period included billings for major
equipment installations. This segment's hazardous waste
landfilling revenues also declined as a result of a substantial
reduction in disposal volumes in the first half of the year
caused by weak demand, which is attributed primarily to slowdowns in
cleanup projects, particularly as a result of the severe winter
weather of the first quarter. The Industrial Environmental
Services revenues increase is attributable to increased
production volumes at steel mill customers and the significant improvement
of conditions in the aluminum industry in the September quarter.
Gross profit increased $4.8 million (10%) reflecting a $5.6
million (16%) improvement at Industrial Environmental Services partially
offset by a $.8 million (8%) reduction for Treatment and Disposal
Services. The Industrial Environmental Services gross profit
increase is principally due to the higher production volumes of
steel mill customers, the improved conditions in the aluminum
industry and the absence of losses ($1.5 million in 1993) from
the flue dust recycling units that were terminated as a part of the
1993 restructuring. The Treatment and Disposal Services
shortfall resulted from the reduced landfilling volumes mentioned above,
partially offset by substantially increased profits from
long-term contracts and the absence of losses ($.8 million in 1993) from
operations that were terminated as a part of the 1993
restructuring. Profits from long-term contracts increased
despite the significant decline in revenues from such contracts for the
reason discussed in the three month comparison.
Selling, general and administrative costs decreased $2.6 million,
primarily due to savings resulting from headcount reductions and
other steps taken in the 1993 restructuring.
Due to the factors described above, operating income increased
$7.4 million (38%). The increase includes $5.4 million for Industrial
Environmental Services, $.9 million for Treatment and Disposal
Services and a $1.1 million reduction in corporate headquarters
costs.
Interest expense decreased $3.8 million, primarily due to the 1993
recapitalization. The recapitalization also increased by 25% the
average shares of common stock outstanding.
Due to the factors described above, 1994 net income is $5.2 million
compared with a 1993 net loss of $28.7 million, which included
both a $21.9 million extraordinary debt extinguishment loss and a $2.3
million charge for the cumulative effect of a change in
accounting for income taxes.
Preferred stock dividend requirements were lower in 1994 than in
1993 due to the 1993 exchange of the Class H preferred stock for
common stock and a $.5 million 1994 gain from retiring 38,000
shares of Class G preferred stock.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise primarily from the
funding of its capital expenditures, Treatment and Disposal
Services trust fund payments, working capital needs and debt
service obligations. The Company must also fund obligations
resulting from its 1993 restructuring. Historically, the Company
has met such requirements with cash flows generated by operations
and with additional debt financing.
The Company expects to spend approximately $40 million for capital
additions in 1994, primarily for Industrial Environmental Services
equipment additions and an aluminum dross processing plant in Utah
and for Treatment and Disposal Services landfill development and
treatment facilities at both the Ohio and Idaho landfills. $30.9
million was spent through September 30, 1994.
Treatment and Disposal Services' landfill permits require it to
fund closure and post-closure monitoring and maintenance
obligations by making essentially nonrefundable trust fund
payments. The Company estimates its future trust fund payments as
follows: for the Idaho landfill, approximately $1.1 million
annually through 1998, and for the Ohio landfill, approximately
$3.7 million in late 1994, $7.6 million in 1995 and $3.9 million
in 1996.
In the fourth quarter of 1993, the Company recorded a $22 million
restructuring charge, primarily to (i) terminate two unprofitable
flue dust recycling units and other unprofitable units, (ii)
discontinue efforts to obtain a Pennsylvania hazardous waste
landfill permit, and (iii) reorganize its Envirosafe and
Conversion Systems units into the Treatment and Disposal Services business
segment. Approximately $10 million of the total restructuring
charge consists of non-cash losses resulting primarily from the
write-off of property, plant and equipment. The other $12
million was provided for cash costs. Most of the changes contemplated in
the 1993 restructuring have been completed, and $4.2 million of
the cash costs were incurred through September 30, 1994, primarily
for employee severance and terminating operations. An additional $1
million of such cash costs are expected in the fourth quarter of
1994 with the remaining cash expenditures carrying over into
1995.
The consolidated balance sheet reflects negative working capital of
$15.4 million at September 30, 1994, including $6.7 million of
estimated restructuring costs and $13.2 million of estimated IU
acquisition obligations, which are unrelated to ongoing
operations.
The Company has not paid dividends on its Class G preferred stock
since July 1990 and is prohibited from paying dividends by its bank
credit facility. The facility, as amended, permits the Company to
redeem (including accumulated dividends) or retire shares of its
Class G preferred stock with up to $11.5 million in cash at any
time. In the first nine months of 1994, the Company spent $4.3
million to retire 38,000 shares of Class G preferred stock, and
in November borrowed $7 million to retire another 62,800 shares.
Subject to a test that requires improved financial performance, the
amount of additional allowable Class G retirements progressively
increases to $23.5 million by July 1995. The facility also permits
the Company to redeem shares of its Class G preferred stock with
the net cash proceeds from future issuances of certain capital
stock and debt. Redemption of the remaining outstanding shares of
Class G preferred stock, assuming no dividends are paid earlier,
would require $34.1 million in 1996.
Cash on hand, funds from operations and borrowing capacity under
the bank credit facility are expected to satisfy the Company's
operating and debt service requirements through the term of the
bank facility, as well as provide funds to retire a portion of the
Company's Class G preferred stock. The Company may be required to
issue additional capital stock or debt to redeem the balance of the
Class G preferred stock.
The bank credit facility provides $60 million of revolving credit
borrowing and letter of credit capacity, declining by $5 million on
each of July 15, 1996 and 1997 and terminating on July 15, 1998.
At September 30, 1994, $3 million of revolving credit borrowings
and $11.5 million of standby letters of credit were outstanding.
The Company has substantial deferred tax assets arising from
federal income tax net operating loss carryforwards. The Company
also has substantial additional deferred tax assets that will
become available to reduce future federal income taxes as the
underlying book/tax differences become deductible for tax
purposes. Consequently, the Company does not expect to pay any significant
amounts of federal income tax through 1998, and expects to
utilize its deferred tax assets to reduce substantially its federal
income tax payments for several years thereafter.
<PAGE>
PART II - OTHER INFORMATION
Item 3. DEFAULTS UPON SENIOR SECURITIES.
The Company's bank credit facility prohibits the
Company from declaring and paying dividends on its Class G $7.25
Cumulative Convertible Preferred Stock (the "Class G Stock")
until July 15, 1998. The Company has omitted regular quarterly
dividends since October 1990 on the Class G Stock. The total
amount of unpaid dividends on the outstanding shares of the Class
G Stock is currently approximately $7.5 million, which reflects
the November 3, 1994 acquisition by the Company of 62,800 shares
of Class G Stock.
Item 4. MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS.
The Company's Annual Meeting of Stockholders was held
at 10:00 A.M. on July 20, 1994. Two matters were acted upon at
such meeting.
a. Four members of Class B of the Board of Directors were
elected. The tabulation of the votes cast with respect
to each such director is as follows:
<TABLE>
<CAPTION>
Wallace B. John M. Arthur R. J. Frederick
Askins Roth Seder, Jr. Simmons
<S> <C> <C> <C> <C>
For 33,747,574 33,747,786 33,745,084 33,748,041
Against 0 0 0 0
Withheld 174,084 174,101 176,785 173,985
Abstain 0 0 0 0
Broker
Non-Vote 0 0 0 0
</TABLE>
b. The Company's selection as Ernst & Young as its
independent public accountants for the fiscal year
ending December 31, 1994 was ratified and approved by
the Company's stockholders. The votes cast with
respect to this item were as follows: 36,824,891 for;
48,235 against; 0 abstain; 0 broker non-votes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
2.1 - Second Modified Plan of Reorganization of the Company
(incorporated herein by reference to Exhibits 1, 2
and 3 to the Company's Current Report on Form 8-K
dated November 30, 1983 (File No. 1-1363)).
2.2 - Order, dated January 13, 1984, of the United States
District Court for the Northern District of Ohio
(modifying the Second Modified Plan of Reorganization
of the Company) (incorporated herein by reference to
Exhibit 2.2 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1983
(File No. 1-1363)).
4.1 - Term Loan Agreement, dated as of December 28, 1990,
between West One Bank, N.A., Imsamet of Idaho, Inc.,
the Company and International Mill Service, Inc.
(The Company agrees to furnish a copy of such
agreement to the Commission upon request.)
4.2 - Letter Amendment, effective January 28, 1992, to the
Term Loan Agreement to which reference is made in
Exhibit 4.1 to this Quarterly Report on Form 10-Q.
(The Company agrees to furnish a copy of such
agreement to the Commission upon request.)
4.3 - Loan and Security Agreement, dated as of April 6,
1993, between IMS Funding Corporation and Greyhound
Financial Corporation. (The Company agrees to
furnish a copy of such agreement to the Commission
upon request.)
4.4 - Indenture, dated as of July 1, 1993, between the
Company and United States Trust Company of New York,
as Trustee, relating to the Company's 9-3/4% Senior
Notes due 2003, including the form of such Notes
attached as Exhibit A thereto (incorporated herein by
reference to Exhibit 4.10 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June
30, 1993 (File No. 1-1363)).
4.5 - Registration Rights Agreement, dated as of May 13,
1993, among the Company, FS Equity Partners II, L.P.,
The IBM Retirement Plan Trust Fund and Enso Partners,
L.P. (incorporated herein by reference to Exhibit
4.29 to Amendment No. 1 to the Company's Registration
Statement on Form S-1, filed June 14, 1993 (File No.
33-62050)).
4.6 - Warrants to purchase shares of Common Stock of the
Company issued to FS Equity Partners II, L.P.,
pursuant to the Stock Purchase Agreement, dated as of
April 16, 1993, among the Company, The Dyson-Kissner-
Moran Corporation, WM Financial Corporation and FS
Equity Partners II, L.P., as amended (incorporated
herein by reference to Exhibit 4.30 to Amendment No.
1 to the Company's Registration Statement on Form S-
1, filed June 14, 1993 (File No. 33-62050)).
4.7 - Warrants to purchase shares of Common Stock of the
Company issued to The IBM Retirement Plan Trust Fund,
pursuant to the Purchase Agreement and Assignment and
Assumption Agreement, dated as of May 13, 1993, among
the Company, FS Equity Partners II, L.P. and The IBM
Retirement Plan Trust Fund (incorporated herein by
reference to Exhibit 4.31 to Amendment No. 1 to the
Company's Registration Statement on Form S-1, filed
June 14, 1993 (File No. 33-62050)).
4.8 - Warrants to purchase shares of Common Stock of the
Company issued to Enso Partners, L.P., pursuant to
the Stock Purchase Agreement, dated as of May 13,
1993, among the Company, The Dyson-Kissner-Moran
Corporation, WM Financial Corporation and Enso
Partners, L.P. (incorporated herein by reference to
Exhibit 4.32 to Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed June 14,
1993 (File No. 33-62050)).
4.9 - Credit Agreement, dated as of June 24, 1993, among
the Company, International Mill Service, Inc., the
banks parties thereto, Chemical Bank, Banque Paribas
and Credit Lyonnais New York Branch, as Co-Agents,
and Chemical Bank, as Administrative Agent
(incorporated herein by reference to Exhibit 28.3 to
the Company's Current Report on Form 8-K, dated July
1, 1993 (File No. 1-1363)).
4.10 - First Amendment to the Credit Agreement, dated as of
December 23, 1993, among the Company, International
Mill Service, Inc., the banks parties thereto,
Chemical Bank, Banque Paribas and Credit Lyonnais New
York Branch, as Co-Agents, and Chemical Bank, as
Administrative Agent (incorporated herein by
reference to Exhibit 4.10 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1993 (File No. 1-1363)).
4.11*- Second Amendment to the Credit Agreement dated as of
October 20, 1994, among the Company, International
Mill Service, Inc., the banks parties thereto,
Chemical Bank, Banque Paribas and Credit Lyonnais New
York Branch, as co-Agents, and Chemical Bank, as
Administrative Agent.
*filed herewith
4.12 - Warrants to purchase 244,445 shares of Common Stock
issued to Chemical Bank, NCNB Texas National Bank,
Banque Paribas, and National Bank of Canada
(incorporated herein by reference to Exhibit 10.24 to
Amendment No. 2 to the Company's Registration
Statement on Form S-1, filed October 31, 1991 (File
No. 33-42381)).
<PAGE>
4.13 - Loan Agreement between the Industrial Development
Corporation of Owyhee County, Idaho and Envirosafe
Services of Idaho, Inc. relating to $8,500,000
Industrial Revenue Bonds, Series 1994, dated as of
June 1, 1994, and related agreements. (The Company
agrees to furnish a copy of such agreements to the
Commission upon request).
10.1 - Restated Incentive Stock Option Plan of the Company,
as amended (incorporated herein by reference to
Exhibit A to the Company's Registration Statement on
Form S-8, filed January 17, 1989 (File No. 33-
26633)).
10.2 - Stock Purchase Agreement, dated as of April 16, 1993,
among the Company, The Dyson-Kissner-Moran
Corporation, WM Financial Corporation and FS Equity
Partners II, L.P. (incorporated herein by reference
to Exhibit 4.21 to the Company's Form 8 Amendment to
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992 (File No. 1-1363)).
10.3 - First Amendment to the Stock Purchase Agreement,
dated as of May 13, 1993, among the Company, The
Dyson-Kissner-Moran Corporation, WM Financial
Corporation and FS Equity Partners II, L.P.
(incorporated herein by reference to Exhibit 28.2 to
the Company's Current Report on Form 8-K, dated May
27, 1993 (File No. 1-1363)).
10.4 - Purchase Agreement and Assignment and Assumption
Agreement, dated as of May 13, 1993, among the
Company, FS Equity Partners II, L.P. and The IBM
Retirement Plan Trust Fund (incorporated herein by
reference to Exhibit 28.4 to the Company's Current
Report on Form 8-K, dated May 27, 1993 (File No. 1-
1363)).
10.5 - Stock Purchase Agreement, dated as of May 13, 1993,
among the Company, The Dyson-Kissner-Moran
Corporation, WM Financial Corporation and Enso
Partners, L.P. (incorporated herein by reference to
Exhibit 28.3 to the Company's Current Report on Form
8-K, dated May 27, 1993 (File No. 1-1363)).
10.6 - Promissory Note of Louis A. Guzzetti, Jr., dated
March 31, 1993, amending and replacing the Promissory
Notes dated October 15, 1987, March 31, 1991 and
March 31, 1992 and the Letter Amendments dated April
13, 1991 and May 12, 1992, payable to the Company in
the principal amount of $432,678.50 (incorporated
herein by reference to Exhibit 10.13 to Post-
Effective Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed September
16, 1993 (File No. 33-46930)).
10.7 - Promissory Notes of Aarne Anderson, Jerrold I.
Dolinger, George E. Fuehrer, George T. Milano and Mr.
Guzzetti, dated as of April 1, 1993, amending and
replacing the Promissory Notes dated January 13,
1989, April 1, 1991 and April 1, 1992, payable to the
Company in the aggregate principal amount of
$1,058,158 (incorporated herein by reference to
Exhibit 10.17 to Post-Effective Amendment No. 1 to
the Company's Registration Statement on Form S-1,
filed September 16, 1993 (File No. 33-46930)).
10.8 - Stock Option Agreement, dated March 18, 1992, between
the Company and Raymond P. Caldiero (incorporated
herein by reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992 (File No. 1-1363)).
10.9 - Stock Option Agreement, dated March 18, 1992, between
the Company and Jeffrey G. Miller (incorporated
herein by reference to Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992 (File No. 1-1363)).
10.10 - Amendment, dated August 5, 1993, to the Stock Option
Agreement, dated March 18, 1992, between the Company
and Jeffrey G. Miller, to which reference is made in
Exhibit 10.9 to this Quarterly Report on Form 10-Q
(incorporated herein by reference to Exhibit 10.22 to
Post-Effective Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed September
16, 1993 (File No. 33-46930)).
10.11 - Stock Option Agreement, dated August 5, 1993, between
the Company and Wallace B. Askins (incorporated
herein by reference to Exhibit 10.23 to Post-
Effective Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed September
16, 1993 (File No. 33-46930)).
10.12 - Stock Option Agreement, dated November 1, 1993,
between the Company and Arthur R. Seder, Jr.
(incorporated herein by reference to Exhibit 10.12 to
the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 (File No. 1-
1363)).
10.13 - 1993 Stock Option Plan of the Company (incorporated
herein by reference to Exhibit 10.21 to Amendment No.
1 to the Company's Registration Statement on Form S-
1, filed June 14, 1993 (File No. 33-62050)).
(b) Reports on Form 8-K.
During the quarter ended September 30, 1994, the
Company filed no Current Reports on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
EnviroSource, Inc.
Dated: November 10, 1994 By: /s/ James C. Hull
James C. Hull
Vice President and Chief
Financial Officer
(Duly Authorized Officer
and Principal Financial
and Accounting Officer)
<PAGE>
EXHIBIT INDEX
NUMBER EXHIBIT PAGE
2.1 - Second Modified Plan of Reorganization of
the Company (incorporated herein by
reference to Exhibits 1, 2 and 3 to the
Company's Current Report on Form 8-K
dated November 30, 1983 (File No. 1-
1363)).
2.2 - Order, dated January 13, 1984, of the
United States District Court for the
Northern District of Ohio (modifying the
Second Modified Plan of Reorganization of
the Company) (incorporated herein by
reference to Exhibit 2.2 to the Company's
Annual Report on Form 10-K for the fiscal
year ended December 31, 1983 (File No. 1-
1363)).
4.1 - Term Loan Agreement, dated as of December
28, 1990, between West One Bank, N.A.,
Imsamet of Idaho, Inc., the Company and
International Mill Service, Inc. (The
Company agrees to furnish a copy of such
agreement to the Commission upon
request).
4.2 - Letter Amendment, effective January 28,
1992, to the Term Loan Agreement to which
reference is made in Exhibit 4.1 to this
Quarterly Report on Form 10-Q. (The
Company agrees to furnish a copy of such
agreement to the Commission upon
request.)
4.3 - Loan and Security Agreement, dated as of
April 6, 1993, between IMS Funding
Corporation and Greyhound Financial
Corporation. (The Company agrees to
furnish a copy of such agreement to the
Commission upon request.)
4.4 - Indenture, dated as of July 1, 1993,
between the Company and United States
Trust Company of New York, as Trustee,
relating to the Company's 9-3/4% Senior
Notes due 2003, including the form of
such Notes attached as Exhibit A thereto
(incorporated herein by reference to
Exhibit 4.10 to the Company's Quarterly
Report on Form 10-Q for the fiscal
quarter ended June 30, 1993 (File No. 1-
1363)).
4.5 - Registration Rights Agreement, dated as
of May 13, 1993, among the Company, FS
Equity Partners II, L.P., The IBM
Retirement Plan Trust Fund and Enso
Partners, L.P. (incorporated herein by
reference to Exhibit 4.29 to Amendment
No. 1 to the Company's Registration
Statement on Form S-1, filed June 14,
1993 (File No. 33-62050)).
4.6 - Warrants to purchase shares of Common
Stock of the Company issued to FS Equity
Partners II, L.P., pursuant to the Stock
Purchase Agreement, dated as of April 16,
1993, among the Company, The Dyson-
Kissner-Moran Corporation, WM Financial
Corporation and FS Equity Partners II,
L.P., as amended (incorporated herein by
reference to Exhibit 4.30 to Amendment
No. 1 to the Company's Registration
Statement on Form S-1, filed June 14,
1993 (File No. 33-62050)).
4.7 - Warrants to purchase shares of Common
Stock of the Company issued to The IBM
Retirement Plan Trust Fund, pursuant to
the Purchase Agreement and Assignment and
Assumption Agreement, dated as of May 13,
1993, among the Company, FS Equity
Partners II, L.P. and The IBM Retirement
Plan Trust Fund (incorporated herein by
reference to Exhibit 4.31 to Amendment
No. 1 to the Company's Registration
Statement on Form S-1, filed June 14,
1993 (File No. 33-62050)).
4.8 - Warrants to purchase shares of Common
Stock of the Company issued to Enso
Partners, L.P., pursuant to the Stock
Purchase Agreement, dated as of May 13,
1993, among the Company, The Dyson-
Kissner-Moran Corporation, WM Financial
Corporation and Enso Partners, L.P.
(incorporated herein by reference to
Exhibit 4.32 to Amendment No. 1 to the
Company's Registration Statement on Form
S-1, filed June 14, 1993 (File No. 33-
62050)).
4.9 - Credit Agreement, dated as of June 24,
1993, among the Company, International
Mill Service, Inc., the banks parties
thereto, Chemical Bank, Banque Paribas
and Credit Lyonnais New York Branch, as
Co-Agents, and Chemical Bank, as
Administrative Agent (incorporated herein
by reference to Exhibit 28.3 to the
Company's Current Report on Form 8-K,
dated July 1, 1993 (File No. 1-1363)).
4.10 - First Amendment to the Credit Agreement,
dated as of December 23, 1993, among the
Company, International Mill Service,
Inc., the banks parties thereto, Chemical
Bank, Banque Paribas and Credit Lyonnais
New York Branch, as Co-Agents, and
Chemical Bank, as Administrative Agent
(incorporated herein by reference to
Exhibit 4.10 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1993 (File No. 1-
1363)).
4.11 - Second Amendment to the Credit Agreement EX 4.11
dated as of October 20, 1994, among the
Company, International Mill Service,
Inc., the banks parties thereto, Chemical
Bank, Banque Paribas and Credit Lyonnais
New York Branch, as co-Agents, and
Chemical Bank, as Administrative Agent.
4.12 - Warrants to purchase 244,445 shares of
Common Stock issued to Chemical Bank,
NCNB Texas National Bank, Banque Paribas,
and National Bank of Canada (incorporated
herein by reference to Exhibit 10.24 to
Amendment No. 2 to the Company's
Registration Statement on Form S-1, filed
October 31, 1991 (File No. 33-42381)).
4.13 - Loan Agreement between the Industrial
Development Corporation of Owyhee County,
Idaho and Envirosafe Services of Idaho,
Inc. relating to $8,500,000 Industrial
Revenue Bonds, Series 1994, dated as of
June 1, 1994, and related agreements.
(The Company agrees to furnish a copy of
such agreements to the Commission upon
request).
10.1 - Restated Incentive Stock Option Plan of
the Company, as amended (incorporated
herein by reference to Exhibit A to the
Company's Registration Statement on Form
S-8, filed January 17, 1989 (File No. 33-
26633)).
10.2 - Stock Purchase Agreement, dated as of
April 16, 1993, among the Company, The
Dyson-Kissner-Moran Corporation, WM
Financial Corporation and FS Equity
Partners II, L.P. (incorporated herein by
reference to Exhibit 4.21 to the
Company's Form 8 Amendment to Annual
Report on Form 10-K for the fiscal year
ended December 31, 1992 (File No. 1-
1363)).
10.3 - First Amendment to the Stock Purchase
Agreement, dated as of May 13, 1993,
among the Company, The Dyson-Kissner-
Moran Corporation, WM Financial
Corporation and FS Equity Partners II,
L.P. (incorporated herein by reference to
Exhibit 28.2 to the Company's Current
Report on Form 8-K, dated May 27, 1993
(File No. 1-1363)).
10.4 - Purchase Agreement and Assignment and
Assumption Agreement, dated as of May 13,
1993, among the Company, FS Equity
Partners II, L.P. and The IBM Retirement
Plan Trust Fund (incorporated herein by
reference to Exhibit 28.4 to the
Company's Current Report on Form 8-K,
dated May 27, 1993 (File No. 1-1363)).
10.5 - Stock Purchase Agreement, dated as of May
13, 1993, among the Company, The Dyson-
Kissner-Moran Corporation, WM Financial
Corporation and Enso Partners, L.P.
(incorporated herein by reference to
Exhibit 28.3 to the Company's Current
Report on Form 8-K, dated May 27, 1993
(File No. 1-1363)).
10.6 - Promissory Note of Louis A. Guzzetti,
Jr., dated March 31, 1993, amending and
replacing the Promissory Notes dated
October 15, 1987, March 31, 1991 and
March 31, 1992 and the Letter Amendments
dated April 13, 1991 and May 12, 1992,
payable to the Company in the principal
amount of $432,678.50 (incorporated
herein by reference to Exhibit 10.13 to
Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form
S-1, filed September 16, 1993 (File No.
33-46930)).
10.7 - Promissory Notes of Aarne Anderson,
Jerrold I. Dolinger, George E. Fuehrer,
George T. Milano and Mr. Guzzetti dated
as of April 1, 1993, amending and
replacing the Promissory Notes dated
January 13, 1989, April 1, 1991 and April
1, 1992, payable to the Company in the
aggregate principal amount of $1,058,158
(incorporated herein by reference to
Exhibit 10.17 to Post-Effective Amendment
No. 1 to the Company's Registration
Statement on Form S-1, filed September
16, 1993 (File No. 33-46930)).
10.8 - Stock Option Agreement, dated March 18,
1992, between the Company and Raymond P.
Caldiero (incorporated herein by
reference to Exhibit 10.20 to the
Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992
(File No. 1-1363)).
10.9 - Stock Option Agreement, dated March 18,
1992, between the Company and Jeffrey G.
Miller (incorporated herein by reference
to Exhibit 10.21 to the Company's Annual
Report on Form 10-K for the fiscal year
ended December 31, 1992 (File No. 1-
1363)).
10.10 - Amendment, dated August 5, 1993, to the
Stock Option Agreement, dated March 18,
1992, between the Company and Jeffrey G.
Miller, to which reference is made in
Exhibit 10.9 to this Quarterly Report on
Form 10-Q (incorporated herein by
reference to Exhibit 10.22 to Post-
Effective Amendment No. 1 to the
Company's Registration Statement on Form
S-1, filed September 16, 1993 (File No.
33-46930)).
10.11 - Stock Option Agreement, dated August 5,
1993, between the Company and Wallace B.
Askins (incorporated herein by reference
to Exhibit 10.23 to Post-Effective
Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed
September 16, 1993 (File No. 33-46930)).
10.12 - Stock Option Agreement, dated November 1,
1993, between the Company and Arthur R.
Seder, Jr. (incorporated herein by
reference to Exhibit 10.12 to the
Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993
(File No. 1-1363)).
10.13 - 1993 Stock Option Plan of the Company
(incorporated herein by reference to
Exhibit 10.21 to Amendment No. 1 to the
Company's Registration Statement on Form
S-1, filed June 14, 1993 (File No. 33-
62050)).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ENVIROSOURCE, INC.'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1994 AND
FORM 10-K FOR THE PERIOD ENDED DECEMBER 31, 1993 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993
<PERIOD-END> SEP-30-1994 DEC-31-1993
<CASH> 2,622 10,582
<SECURITIES> 0 0
<RECEIVABLES> 41,639 37,140
<ALLOWANCES> 968 944
<INVENTORY> 0 0
<CURRENT-ASSETS> 50,773 54,871
<PP&E> 276,276 248,785
<DEPRECIATION> 122,242 107,241
<TOTAL-ASSETS> 433,560 427,245
<CURRENT-LIABILITIES> 66,142 72,267
<BONDS> 243,664 235,842
<COMMON> 2,003 2,003
39,113 38,711
0 0
<OTHER-SE> 16,081 12,214
<TOTAL-LIABILITY-AND-EQUITY> 433,560 427,245
<SALES> 0 0
<TOTAL-REVENUES> 187,882 271,026
<CGS> 0 0
<TOTAL-COSTS> 137,552 208,511
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 18,776 28,863
<INCOME-PRETAX> 8,561 (19,025)
<INCOME-TAX> 3,375 2,549
<INCOME-CONTINUING> 5,186 (21,574)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (21,930)
<CHANGES> 0 (2,302)
<NET-INCOME> 5,186 (45,806)
<EPS-PRIMARY> .10 (1.44)
<EPS-DILUTED> .10 (1.44)
</TABLE>
SECOND AMENDMENT TO CREDIT AGREEMENT
SECOND AMENDMENT, dated as of October 20, 1994 (this
"Second Amendment"), among the signatories hereto to the Credit
Agreement, dated as of June 24, 1993 (as previously amended by
that certain First Amendment thereto, dated as of December 23,
1993, the "Credit Agreement"), among International Mill Service,
Inc., a Pennsylvania corporation (the "Borrower"), EnviroSource,
Inc., a Delaware corporation (the "Parent"), the lenders parties
thereto (the "Lenders"), Banque Paribas, a banking organization
organized under the laws of the Republic of France, Credit
Lyonnais New York Branch, the New York branch of a banking
organization organized under the laws of the Republic of France,
and Chemical Bank, a New York banking corporation, as co-agents
for the Lenders (in such capacity, the "Co-Agents"), and Chemical
Bank, as administrative agent for the Lenders (in such capacity,
the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Borrower has requested and the
Administrative Agent, the Co-Agents and the Lenders have agreed
to amend certain provisions of subsection 7.8 of the Credit
Agreement upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the Administrative Agent, the Co-Agents and the
Lenders have agreed to such amendments only upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein, the parties hereto hereby
agree as follows:
i. Defined Terms. Terms defined in the Credit
Agreement are used herein with the meanings set forth
in the Credit Agreement unless otherwise defined
herein.
ii. Subsection 7.8 (Limitation on Dividends).
Subsection 7.8 of the Credit Agreement is hereby amended
by:
(a) deleting clause (b) of such subsection in its
entirety and inserting in lieu thereof the following new
clause:
"(b) subject to clause (e) below, the Parent may
redeem or repurchase its Class G Preferred Stock if and
only if the Parent has achieved a ratio of (A) EBITDA
for the four fiscal quarter period most recently ended
for which financial statements are available and have
been delivered to the Lenders as required by the terms
hereof, less $15,000,000 to (B) Cash Interest for such
period, equal to or greater than the ratio for such
period set forth on Schedule VII (1) prior to the first
anniversary of the Closing Date, by spending for such
redemptions or repurchases up to an aggregate amount of
$5,000,000, (2) during the period commencing on the
first anniversary of the Closing Date and ending on the
second anniversary of the Closing Date, by spending for
such redemptions or repurchases up to an aggregate
amount of $12,500,000 plus the amount, if any, permitted
under clause (1) above and not used, and (3) at any time
after the second anniversary of the Closing Date, by
spending for such redemptions or repurchases up to an
aggregate amount of $12,500,000 plus the amount, if any,
permitted under clauses (1) and (2) above and not used;"
and
(b) deleting clause (e) in its entirety from such
subsection and inserting, in lieu thereof, the following new
clause:
"(e) the Parent in addition to any redemptions
permitted pursuant to clause (b) above may redeem or
repurchase its Class G Preferred Stock by spending for
such redemptions or repurchases an aggregate amount up
to $11,500,000; provided, that any amount permitted to
be redeemed or repurchased pursuant to this clause (e)
which exceeds $5,000,000 shall reduce by an equal amount
the amount permitted to be redeemed or repurchased
pursuant to clause (b)(2) above and for purposes of
clause (b)(3) above shall be deemed to have been used
during the period commencing on the First Anniversary of
the Closing Date and ending on the Second Anniversary of
the Closing Date;".
iii. Amendment Fee. The Borrower hereby agrees to pay
to the Administrative Agent on the date of effectiveness
of this Second Amendment, an amendment fee for the
ratable account of each Lender in an aggregate amount
equal to $60,000.
iv. Representations and Warranties. Other than with
respect to certain recorded unusual losses during the
fiscal quarter ended December 31, 1993, which losses
have been disclosed to the Administrative Agent, the Co-
Agents and the Lenders and may be deemed to constitute a
"development or event which has had or could reasonably
be expected to have a Material Adverse Effect" since
March 31, 1993 under subsection 4.2 of the Credit
Agreement (as to which the Parent and the Borrower make
no representation or warranty), the representations and
warranties of the Parent or the Borrower set forth in
the Credit Agreement or which are contained in any
certificate, document or financial or other statement
furnished pursuant to or in connection with the Credit
Agreement are true and correct in all material respects
on and as of the date hereof with the same effect as if
made on the date hereof and no Default or Event of
Default has occurred and is continuing under the Credit
Agreement both before and after giving effect to this
Second Amendment.
v. Conditions to Effectiveness. This Second Amendment
shall become effective as of the date first above
written when (a) counterparts hereof shall have been
duly executed and delivered by each of the parties
hereto and (b) the Administrative Agent shall have
received the fees referred to in Section 3 hereof.
vi. Continuing Effects. Except as expressly amended or
waived hereby, each of the Credit Agreement and the
other Loan Documents shall continue to be and shall
remain in full force and effect in accordance with its
terms.
vii. Expenses. The Borrower hereby agrees to pay and
reimburse the Administrative Agent for all of its out-
of-pocket costs and expenses incurred in connection with
the negotiation, preparation, execution, and delivery of
this Second Amendment, including the fees and expenses
of counsel to the Administrative Agent.
viii. Counterparts. This Second Amendment may be
executed on any number of separate counterparts and all
of said counterparts taken together shall be deemed to
constitute one and the same instrument.
ix. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Second Amendment to be duly executed and delivered by their
proper and duly authorized officers as of the day and year first
above written.
INTERNATIONAL MILL SERVICE, INC.
By: George Milano /s/
Title: Vice President
ENVIROSOURCE, INC.
By: George Milano /s/
Title: Vice President
CHEMICAL BANK,
as Administrative Agent, as a
Co-Agent and as a Lender
By: William Ewing, III /s/
Title: Managing Director
BANQUE PARIBAS,
as a Co-Agent and as a Lender
By: Pierre-Jean de Filippis /s/
Title: General Manager
By: J. N. MacDowell /s/
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH, as
a Co-Agent and as a Lender
By: Fred Haddad /s/
Title: Sr. Vice President
NATIONSBANK OF TEXAS, N.A.
By: Scott Jackson /s/
Title:
