Exhibit 10.3
CREDIT AGREEMENT
($60,000,000 ADVANCE TERM LOAN FACILITY)
DATED AS OF SEPTEMBER 28, 1995
AMONG
STERLING PULP CHEMICALS, LTD.,
AS BORROWER;
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
AS AGENT AND AS A LENDER;
AND
THE OTHER LENDERS NOW OR HEREAFTER
PARTIES HERETO
TABLE OF CONTENTS
Page
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1. Definitions........................................................... 1
1.1 Certain Defined Terms........................................... 1
1.2 Miscellaneous................................................... 16
2. Commitments and Loans................................................. 16
2.1 Loans........................................................... 16
2.2 Terminations or Reductions of Loan Commitments.................. 16
2.3 Fees............................................................ 17
2.4 Several Obligations............................................. 17
2.5 Notes........................................................... 17
2.6 Use of Proceeds................................................. 18
3. Borrowings, Payments and Prepayments.................................. 18
3.1 Borrowings...................................................... 18
3.2 Payments; Prepayments........................................... 18
4. Payments; Pro Rata Treatment; Computations, Etc. ..................... 20
4.1 Payments........................................................ 20
4.2 Pro Rata Treatment.............................................. 21
4.3 Certain Actions, Notices, Etc. ................................. 21
4.4 Non-Receipt of Funds by the Agent............................... 21
4.5 Sharing of Payments, Etc. ...................................... 22
5. Conditions Precedent.................................................. 22
5.1 Initial Loans................................................... 22
5.2 All Loans....................................................... 24
6. Representations and Warranties........................................ 25
6.1 Organization.................................................... 25
6.2 Financial Statements............................................ 25
6.3 Enforceable Obligations; Authorization.......................... 25
6.4 Other Borrowed Money Indebtedness............................... 25
6.5 Litigation...................................................... 26
6.6 Taxes........................................................... 26
6.7 Regulations G, U and X.......................................... 26
6.8 Subsidiaries.................................................... 26
6.9 No Untrue or Misleading Statements.............................. 26
6.10 ERISA........................................................... 26
6.11 Investment Company Act.......................................... 27
6.12 Public Utility Holding Company Act.............................. 27
6.13 Solvency........................................................ 27
6.14 Compliance...................................................... 27
6.15 Environmental Matters........................................... 27
6.16 Certain Representations Regarding the Plant Work................ 27
7. Affirmative Covenants................................................. 28
7.1 Taxes, Existence, Regulations, Property, Etc. .................. 28
7.2 Financial Statements and Information............................ 28
7.3 Financial Tests................................................. 29
7.4 Inspection...................................................... 29
7.5 Further Assurances.............................................. 30
7.6 Books and Records............................................... 30
7.7 Insurance....................................................... 30
7.8 Notice of Certain Matters....................................... 30
7.9 Interest Rate Risk.............................................. 31
7.10 Capital Adequacy................................................ 31
7.11 ERISA Information and Compliance................................ 31
7.12 Certain Affirmative Covenants Relating to the Plant Work........ 32
7.13 Satisfaction of Conditions Precedent............................ 32
7.14 Pledge of Bonds................................................. 33
7.15 Third Party Obligations......................................... 33
8. Negative Covenants.................................................... 33
8.1 Indebtedness.................................................... 33
8.2 Liens........................................................... 34
8.3 Contingent Liabilities.......................................... 35
8.4 Mergers, Consolidations and Dispositions and Acquisitions
of Assets...................................................... 35
8.5 Redemption, Dividends and Distributions......................... 36
8.6 Nature of Business.............................................. 36
8.7 Transactions with Affiliates.................................... 36
8.8 Loans and Investments........................................... 36
8.9 No Subsidiaries................................................. 36
8.10 BP Lease........................................................ 36
8.11 Fiscal Year..................................................... 36
8.12 Sterling Energy................................................. 37
8.13 Parent Credit Facility.......................................... 37
8.14 Key Plant Contracts............................................. 37
8.15 Revisions....................................................... 37
8.16 Third Party Obligations......................................... 37
9. Defaults.............................................................. 38
9.1 Events of Default............................................... 38
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9.2 Right of Setoff................................................. 41
9.3 Remedies Cumulative............................................. 42
10. The Agent............................................................. 42
10.1 Appointment, Powers and Immunities.............................. 42
10.2 Reliance........................................................ 43
10.3 Defaults........................................................ 43
10.4 Rights as a Lender.............................................. 44
10.5 Indemnification................................................. 44
10.6 Non-Reliance on Agent and Other Lenders......................... 44
10.7 Failure to Act.................................................. 45
10.8 Resignation or Removal of Agent................................. 45
10.9 No Partnership.................................................. 45
11. Miscellaneous......................................................... 46
11.1 Waiver.......................................................... 46
11.2 Notices......................................................... 46
11.3 Expenses, Etc. ................................................. 46
11.4 Indemnification................................................. 47
11.5 Amendments, Etc. ............................................... 47
11.6 Successors and Assigns.......................................... 48
11.7 Limitation of Interest.......................................... 51
11.8 Survival........................................................ 52
11.9 Captions........................................................ 52
11.10 Counterparts.................................................... 52
11.11 Governing Law................................................... 52
11.12 Severability.................................................... 52
11.13 Tax Forms....................................................... 52
11.14 Venue........................................................... 53
11.15 Confidentiality................................................. 53
11.16 Permitted Transfer to a US Subsidiary........................... 53
11.17 Canadian Taxes.................................................. 54
EXHIBITS
A -- Request for Extension of Credit
B -- Subsidiaries
C -- Note
D -- Assignment and Acceptance
E -- Compliance Certificate
F -- Plant Land
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SCHEDULES
1 -- Interest Rate Agreement
6.10 -- ERISA Matters
8.1 -- Borrowed Money Indebtedness
8.2 -- Liens
8.3 -- Contingent Liabilities
8.8 -- Existing Investments
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of September 28, 1995
(the "Effective Date"), by and among STERLING PULP CHEMICALS, LTD., a
corporation organized under the laws of the Province of Ontario, Canada (the
"Borrower"); each of the lenders which is or may from time to time become a
party hereto (individually, a "Lender" and, collectively, the "Lenders"), and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("TCB"), a national banking
association, as agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Agent").
The parties hereto agree as follows:
1. Definitions.
1.1 Certain Defined Terms.
Unless a particular term, word or phrase is otherwise defined or the
context otherwise requires, capitalized terms, words and phrases used herein or
in the Loan Documents (as hereinafter defined) have the following meanings (all
definitions that are defined in this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
Accounts, Equipment, General Intangibles and Inventory shall have the
respective meanings assigned to them in the Texas Business and Commerce Code in
force on the Effective Date.
Adjusted Fixed Charge Coverage Ratio shall mean, as of any day, the ratio
of (a) EBITDA for the Rolling Four Quarters as of such day less cash income
taxes paid during such Rolling Four Quarters plus cash income tax refunds
received during such Rolling Four Quarters to (b) the Adjusted Fixed Charges for
such Rolling Four Quarters.
Adjusted Fixed Charges shall mean (without duplication), for any period and
with respect to any Person, (a) Fixed Charges for such period plus (b) any
dividends on any equity interests in such Person of any class (except dividends
payable solely in shares of common stock) paid during such period.
Affiliate shall mean any Person controlling, controlled by or under common
control with any other Person. For purposes of this definition, "control"
(including "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise. Notwithstanding the foregoing, no
individual shall be deemed to be an Affiliate of a corporation solely by reason
of his or her being an officer or director of such corporation.
Agreement shall mean this Credit Agreement, as it may from time to time be
amended, modified, restated or supplemented.
Amortization Fraction shall mean a fraction, the numerator of which is
equal to the amount by which the aggregate principal amount of the Loans made
through the Termination Date exceeds $50,000,000 and the denominator of which is
equal to $10,000,000.
Annual Audited Financial Statements shall mean the annual consolidated
financial statements of a Person, including all notes thereto, which statements
shall include a balance sheet as of the end of such fiscal year and an income
statement and a statement of cash flows for such fiscal year, all setting forth
in comparative form the corresponding figures from the previous fiscal year, all
prepared in conformity with GAAP, and accompanied by a report and opinion of
Coopers & ▇▇▇▇▇▇▇ or other independent certified public accountants reasonably
satisfactory to the Agent, which shall state that such financial statements, in
the opinion of such accountants, present fairly the financial position of such
Person as of the date thereof and the results of its operations for the period
covered thereby in conformity with GAAP. Such statements shall be accompanied
by a certificate of such accountants that in making the appropriate examination
in connection with such report and opinion, such accountants did not become
aware of any Default relating to the financial tests set forth in Section 7.3
hereof or, if in the opinion of such accountants any such Default exists, a
description of the nature and status thereof.
Assignment and Acceptance shall have the meaning ascribed to such term in
Section 11.6 hereof.
Authority shall mean Valdosta-Lowndes County Industrial Authority.
Bankruptcy Code shall mean the United States Bankruptcy Code, as amended,
and any successor statute.
Bond Documents shall mean documentation, in Proper Form, relating to the
issuance of industrial development revenue bonds by the Authority in an
aggregate principal amount not exceeding $60,000,000, including without
limitation the Bonds and the Facilities Development Agreement, as the same may
from time to time be amended, restated or supplemented.
Bond Owner shall mean a limited liability company to be formed, of which
99% of the membership interests are to be owned by the Borrower and 1% of the
membership interests are to be owned by Sterling Canada.
Bonds shall mean the bonds issued pursuant to the Bond Documents.
Borrowed Money Indebtedness shall have the meaning ascribed to it in
Section 8.1 hereof.
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BP shall mean BP Chemicals Americas, Inc., a Delaware corporation, and its
successors.
BP Lease shall mean that certain Amended and Restated Lease and Production
Agreement dated August 8, 1994, executed by and between BP Chemicals, Inc. and
the Parent, as the same may from time to time be amended, modified, restated or
supplemented.
Budget shall mean the budget heretofore delivered to the Agent reflecting
all costs of all labor and materials required to complete the Plant Work,
together with all updates, if any, reflecting material changes thereto.
Business Day shall mean any day other than a day on which commercial banks
are authorized or required to close in Houston, Texas or in New York City, New
York.
Canadian Facility shall mean that certain Credit Agreement dated April 28,
1995 executed by and between the Borrower and The Bank of Nova Scotia, as the
same may be amended, restated or supplemented. The unpaid principal balance of
the Canadian Facility, together with the aggregate face amount of letters of
credit issued under the Canadian Facility, shall not exceed Canadian
$20,000,000.
Canadian Subsidiary shall mean any Subsidiary of the Parent which is
organized and exists under the laws of Canada or any province thereof.
Capital Expenditures shall mean expenditures in respect of fixed or capital
assets by a Person, to the extent capitalized in accordance with GAAP, but
excluding (a) expenditures for the restoration, repair or replacement of any
fixed or capital asset which was destroyed or damaged, in whole or in part, to
the extent financed by the proceeds of an insurance policy maintained by such
Person, (b) increases in the consolidated fixed or capital assets of such Person
resulting solely from Permitted Acquisitions (other than expenditures made after
the date of such Permitted Acquisition), (c) increases in the capital assets of
such Person resulting from expenditures in respect of fixed or capital assets
made by another so long as such Person has no obligation to reimburse the other
for such expenditures and (d) the Plant Work. Expenditures in respect of
replacements and maintenance consistent with the business practices of such
Person in respect of plant facilities, machinery, fixtures and other like
capital assets utilized in the ordinary course of business are not Capital
Expenditures to the extent such expenditures are not capitalized in preparing a
balance sheet of such Person in accordance with GAAP.
Capital Lease Obligations shall mean, as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board, as amended) and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No.
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13). Capital Lease Obligations shall not include the interest component of any
applicable rental payment.
Cash Flow shall mean, without duplication, for any period, (a) Net Income
of the Plant Owner plus (b) depreciation and depletion and other non-cash
charges deducted in determining Net Income of the Plant Owner plus (c) interest
accrued and paid on the Bonds minus (d) non-cash income, all determined in
accordance with GAAP.
Cash Flow Account shall mean an account established by the Borrower at a
financial institution reasonably acceptable to the Agent in which Excess Cash
Flow is to be deposited. The depository documentation relating to the Cash Flow
Account shall be in Proper Form.
Ceiling Rate shall have the meaning assigned to it in the Interest Rate
Agreement.
Change of Control shall mean a change resulting when any Unrelated Person
or any Unrelated Persons acting together which would constitute a Group together
with any Affiliates or Related Persons thereof (in each case also constituting
Unrelated Persons) shall at any time either (i) Beneficially Own more than 50%
of the aggregate voting power of all classes of Voting Stock of the Parent or
(ii) succeed in having sufficient of its or their nominees elected to the Board
of Directors of the Parent such that such nominees, when added to any existing
director remaining on the Board of Directors of the Parent after such election
who is an Affiliate or Related Person of such Person or Group, shall constitute
a majority of the Board of Directors of the Parent. As used herein (a)
"Beneficially Own" means "beneficially own" as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended, or any successor provision thereto;
provided, however, that, for purposes of this definition, a Person shall not be
deemed to Beneficially Own securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's Affiliates
until such tendered securities are accepted for purchase or exchange; (b)
"Group" means a "group" for purposes of Section 13(d) of the Securities Exchange
Act of 1934, as amended; (c) "Unrelated Person" means at any time any Person
other than the Parent or any of its Subsidiaries and other than any trust for
any employee benefit plan of the Parent or any of its Subsidiaries; (d) "Related
Person" of any Person shall mean any other Person owning (1) 5% or more of the
outstanding common stock of such Person or (2) 5% or more of the Voting Stock of
such Person; and (e) "Voting Stock" of any Person shall mean capital stock of
such Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
Code shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.
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Collateral shall mean all Property, tangible or intangible, real, personal
or mixed, now or hereafter subject to the Security Documents.
Compliance Certificate shall have the meaning given to it in Section 7.2
hereof.
Completion Date shall mean the date on which the Agent shall have received
the Evidence of Completion.
Contractor shall mean each Person (other than a design professional)
entering into any agreement directly with the Plant Owner relating to such
Person's performance of the Plant Work or any part thereof.
Contribution Agreement shall mean that certain Contribution Agreement dated
concurrently herewith executed by and among the Parent and the other Parties, as
the same may be amended, modified, supplemented and restated--and joined in
pursuant to a joinder agreement--from time to time.
Controlled Group shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Parent, are treated as a single employer
under Section 414 of the Code.
Corporation shall mean a corporation, limited liability company,
partnership, joint venture, joint stock association, business trust and other
business entity.
Current Assets shall mean all assets of a Person which under GAAP would be
classified as current assets.
Current Liabilities shall mean all liabilities of a Person which under GAAP
would be classified as current liabilities, other than current maturities of
long term debt.
Current Ratio means, as of any day, the ratio of Current Assets to Current
Liabilities.
Debt to EBITDA Ratio shall mean, as of the last day of any fiscal quarter,
the ratio of (a) the outstanding balance of Borrowed Money Indebtedness on such
date to (b) EBITDA for the Rolling Four Quarters ending on such date.
Default shall mean an Event of Default or an event which with notice or
lapse of time or both would, unless cured or waived, become an Event of Default.
Dollars and $ shall mean lawful money of the United States of America.
EBITDA shall mean, without duplication, for any period the sum of (a) Net
Income less non-cash income and (b) the sum of (i) Interest Expense for such
period, (ii) Federal, state and
5
local income taxes deducted in determining such Net Income, (iii) amortization
of goodwill and other non-cash expenses and intangibles (including, without
limitation, patents, deferred financing costs and debt discount) deducted in
determining such Net Income, (iv) depreciation, depletion and obsolescence of
Property, in each case, determined in accordance with GAAP and (v) prepaid
income to the extent actually paid in cash.
Electrical Agreement shall mean that certain Agreement for Electrical
Service dated as of July 31, 1995 executed by and among ▇▇▇▇▇▇▇▇ Electric
Membership Corporation, Oglethorpe Power Corporation (An Electric Generation &
Transmission Corporation) and Sterling Pulp (US) (and assigned or to be assigned
by Sterling Pulp (US) to the Plant Owner), as the same may be amended, restated
or supplemented.
Environmental Claim shall mean any third party (including Governmental
Authorities) action, lawsuit, claim or proceeding (including claims or
proceedings at common law) which seeks to impose liability for (i) noise; (ii)
pollution or contamination of the air, surface water, ground water or land or
the clean up of such pollution or contamination; (iii) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal or transportation; (iv)
exposure to Hazardous Substances; or (v) the manufacture, processing,
distribution in commerce or use of Hazardous Substances. An "Environmental
Claim" includes, but is not limited to, a common law action, as well as a
proceeding to issue, modify or terminate an Environmental Permit.
Environmental Liabilities includes all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental Law
under any theory of recovery, at law or in equity, and whether based on
negligence, strict liability or otherwise, including but not limited to:
remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage to property or injuries to persons, and any other related
costs, expenses, losses, damages, penalties, fines, liabilities and obligations,
and all costs and expenses necessary to cause the issuance, reissuance or
renewal of any Environmental Permit including reasonable attorneys' fees and
court costs.
Environmental Permit means any permit, license, approval or other
authorization under any applicable Requirements of Environmental Law.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
Event of Default shall have the meaning assigned to it in Section 9 hereof.
Evidence of Completion shall mean a certificate from the Plant Owner
certifying that the Plant Work has been completed and the Plant is operating.
Excess Cash Flow shall mean, for any period, the product of (I) Cash Flow
minus the sum of (a) current maturities of Capital Lease Obligations of the
Plant Owner, (b) principal
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payments and prepayments of the Obligations, (c) unreimbursed costs incurred by
the Plant Owner in connection with the Plant Work in accordance with this
Agreement, (d) other Capital Expenditures by the Plant Owner after the
Completion Date not to exceed $5,000,000 in the aggregate in any fiscal year and
(e) $5,000,000 for any period from the Effective Date through and including
September 30, 1997 (but from and after October 1, 1997, no deduction shall be
made under this clause (e) in calculating Excess Cash Flow) multiplied by (II)
eighty percent (80%).
Facilities Development Agreement shall mean a document, in Proper Form,
executed or to be executed by and between the Authority and the Plant Owner,
relating to the construction of the Plant.
Federal Funds Rate shall have the meaning assigned to it in the Interest
Rate Agreement.
Financing Statements shall mean all such Uniform Commercial Code financing
statements as the Agent shall require, in Proper Form, duly executed by the
Borrower, the Plant Owner, the Authority or others to give notice of and to
perfect or continue perfection of the Agent's Liens in all Collateral, as any of
the foregoing may from time to time be amended, modified, supplemented or
restated.
Fixed Charge Coverage Ratio shall mean, as of the last day of any fiscal
quarter, the ratio of (a) EBITDA for the Rolling Four Quarters ending on such
day less cash income taxes paid during such Rolling Four Quarters plus cash
income tax refunds received during such Rolling Four Quarters to (b) the Fixed
Charges for such Rolling Four Quarters.
Fixed Charges shall mean (without duplication), for any period, (a) the
amounts of scheduled principal payments made or to be made during such period
with respect to Borrowed Money Indebtedness (other than Capital Lease
Obligations) of the applicable Person (it is agreed that such scheduled
principal payments do not include any principal payments made to reduce any
revolving Indebtedness), plus (b) payments made or required to be made during
such period with respect to the principal component of the Capital Lease
Obligations of the applicable Person with unrelated third parties, plus (c) the
amount of Interest Expense for such period, plus (d) Capital Expenditures made
during such period.
GAAP shall mean generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for changes concurred in by
the Parent's independent public accountants) with the September 30, 1994 audited
financial statements of the Parent delivered to the Lenders together with the
notes thereto.
Governmental Authority shall mean any foreign governmental authority, the
United States of America, any State of the United States and any political
subdivision of any of the foregoing, and any central bank, agency, department,
commission, board, bureau, court or other tribunal
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having jurisdiction over the Agent, any Lender, the Borrower, the Bond Owner,
the Plant Owner, the Parent or any of the Parent's Subsidiaries or their
respective Property.
Guaranties shall mean that certain Guaranty dated concurrently herewith
executed by the Parent, together with any other guaranties hereafter executed
with respect to the Obligations, as any of the same may from time to time be
amended, modified, restated or supplemented.
Hazardous Substance shall mean petroleum products, and any hazardous or
toxic waste or substance defined or regulated as such from time to time by any
law, rule, regulation or order described in the definition of "Requirements of
Environmental Law".
Indebtedness shall mean and include (a) all items which in accordance with
GAAP would be included on the liability side of a balance sheet on the date as
of which Indebtedness is to be determined (excluding capital stock, surplus,
surplus reserves and deferred credits); (b) all guaranties, letter of credit
contingent reimbursement obligations, endorsements and other contingent
obligations in respect of, or any obligations to purchase or otherwise acquire,
Indebtedness of others, and (c) all Indebtedness secured by any Lien existing on
any interest of the Person with respect to which Indebtedness is being
determined in Property owned subject to such Lien whether or not the
Indebtedness secured thereby shall have been assumed; provided, that the term
"Indebtedness" shall not mean or include any Indebtedness of the type described
in clause (a) of this definition in respect of which monies sufficient to pay
and discharge the same in full (either on the expressed date of maturity thereof
or on such earlier date as such Indebtedness may be duly called for redemption
and payment) shall be deposited with a depository, agency or trustee acceptable
to the Agent in trust for the payment thereof.
Interest Expense shall mean, for any period, the sum of the interest
payments by an obligor made or accrued in accordance with GAAP during such
period in connection with all of its Borrowed Money Indebtedness, including the
interest component of any Capital Lease Obligations.
Interest Rate Agreement shall mean the Interest Rate Agreement attached
hereto as Schedule 1, as it may from time to time be amended, modified, restated
or supplemented.
Interest Rate Risk Agreement shall mean an interest rate swap agreement,
interest rate cap agreement or similar arrangement entered into between the
Borrower and one or more financial institutions for the purpose of reducing
Borrower's exposure to interest rate risk and not for speculative purposes, as
it may from time to time be amended, modified, restated or supplemented from
time to time.
Interest Rate Risk Indebtedness shall mean all obligations and Indebtedness
of the Borrower with respect to the program for the hedging of interest rate
risk provided for in any Interest Rate Risk Agreement.
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Investment shall mean the purchase or other acquisition of any securities
or Indebtedness of, or the making of any loan, advance, or other extension of
credit or capital contribution to (by means of transfers of property or assets
or otherwise) any Person.
Key Plant Contracts shall mean the Electrical Agreement and the Bond
Documents.
Legal Requirement shall mean any law, statute, ordinance, decree,
requirement, order, judgment, rule, or regulation (or interpretation of any of
the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, whether presently existing or arising in the future.
Lending Percentage shall mean, as to any Lender, the percentage equivalent
of a fraction the numerator of which is the sum of the Loans made by such Lender
plus the amount of such Lender's remaining Loan Commitment and the denominator
of which is the sum of the aggregate Loans made by all Lenders plus the
aggregate amount of the remaining Loan Commitments of all Lenders.
Lien shall mean any mortgage, pledge, charge, encumbrance, security
interest, collateral assignment or other lien of any kind, whether based on
common law, constitutional provision, statute or contract to secure payment of
debt or performance of an obligation.
Loans shall mean the loans provided for by Section 2.1 hereof.
Loan Commitment shall mean, as to any Lender, the unused obligation, if
any, of such Lender to make Loans in an aggregate principal amount up to (but
not exceeding) the amount, if any, set forth opposite such Lender's name on the
signature pages hereof under the caption "Loan Commitment," or otherwise
provided for in an Assignment and Acceptance Agreement (as the same may be
reduced from time to time pursuant to Section 2.2 hereof).
Loan Documents shall mean, collectively, this Agreement, the Notes, the
Interest Rate Agreement, the Guaranties, the Contribution Agreement, the
Security Documents, the Notice of Entire Agreement, all instruments,
certificates and agreements now or hereafter executed by any Party and delivered
to, and for the benefit of, the Agent or any Lender in connection with the
Obligations or any commitment regarding the Obligations, and all amendments,
modifications, renewals, extensions, increases and rearrangements of, and
substitutions for, any of the foregoing.
Majority Lenders shall mean Lenders having greater than 60% of the
aggregate amount of Loans outstanding plus the remaining Loan Commitments
outstanding.
Material Adverse Effect shall mean a material adverse effect on the
business, financial condition, operations or Properties of the Parent and its
Subsidiaries, taken as a whole, or on
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the ability of any of them to perform their respective material obligations
under any Loan Document to which any of them is a party.
Maturity Date shall mean the maturity of the Notes, September 30, 2002, as
the same may hereafter be accelerated pursuant to the provisions of any of the
Loan Documents.
Maximum Payment Cap shall mean the aggregate of the Payment Cap of each
Loan. The "Payment Cap" of each Loan shall be equal to twenty-five percent
(25%) of the original principal amount of such Loan less all principal payments
and prepayments deemed to have theretofore been made on such Loan in accordance
with the provisions of clause (iv) below; provided, however,
(i) on October 1, 2001, the "Payment Cap" of each Loan made prior to
October 1, 1996 shall be increased by an amount equal to seventy-five
percent of the original principal amount thereof;
(ii) on the date which is five (5) calendar years plus one (1) Business
Day from the date of drawdown of any Loan made on or after October 1,
1996, the "Payment Cap" of each such Loan shall be increased by an
amount equal to seventy-five percent (75%) of the original principal
amount thereof;
(iii) on the date (if any) that a Subsidiary of Parent organized in the
United States is substituted as the "Borrower" hereunder as provided
for in Section 11.16 hereof, the "Maximum Payment Cap" shall
automatically, without the need for notice to any Person, be amended
to equal the entire aggregate unpaid principal balance of the Loans;
(iv) notwithstanding any other provision hereof and for all purposes under
this Agreement, principal payments and prepayments shall be applied
to Loans in the order in which such Loans were advanced, up to the
Payment Cap of each such Loan (i.e if application of any such
principal payment or prepayment to a particular Loan would exceed the
Payment Cap of any such Loan, the excess shall be applied to the
other Loans up to the Payment Cap of each such Loan in the order in
which such Loans were advanced); and
(v) payments received concurrently shall be aggregated for purposes of
clause (iv) and for purposes of the calculation of the Maximum
Payment Cap.
Mortgaged Property shall mean all Property of any Party, whether now
existing or hereafter acquired, which is subject to the Lien of the Mortgage.
Mortgage shall mean, collectively, a Deed to Secure Debt and Security
Agreement, in Proper Form, executed or to be executed by the Authority and the
Plant Owner in favor of the
10
Agent, covering and affecting the Property described on Exhibit F hereto, and
all improvements, appurtenances and personal property related thereto, and also
covering the interests of the Plant Owner under the Electrical Agreement and
Facilities Development Agreement, as the same may from time to time be amended,
modified, restated or supplemented.
Net Income shall mean, for any Person and any period, the consolidated net
income of such Person for such period after taxes but before extraordinary
items, determined in accordance with GAAP.
Net Worth shall mean net worth determined in accordance with GAAP.
Notes shall mean the promissory notes of the Borrower evidencing the Loans,
substantially in the form of Exhibit C hereto, together with all renewals,
extensions, modifications and replacements thereof and substitutions therefor.
Notice of Entire Agreement shall mean a notice of entire agreement, in
Proper Form, executed by the Borrower, the Plant Owner, the Parent, the Agent
and each other Party, as the same may from time to time be amended, modified,
supplemented or restated.
Obligations shall mean, as at any date of determination thereof, the sum
(without duplication) of the following: (i) the aggregate principal amount of
Loans outstanding hereunder plus (ii) all other liabilities, obligations and
indebtedness of any Party under any Loan Document.
Organizational Documents shall mean, with respect to a corporation, the
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture, and with respect to a trust,
the instrument establishing such trust; in each case including any and all
modifications thereof.
Parent shall mean Sterling Chemicals, Inc., a Delaware corporation.
Parent Credit Facility shall mean that certain Credit Agreement dated as of
April 13, 1995 executed by and among the Parent, TCB, as Agent, The Bank of Nova
Scotia, as Documentation Agent, and ABN AMRO Bank, N.V., Houston Agency, Bank of
Scotland, and Credit Lyonnais, New York Branch, as Co-Agents, and the lenders
party thereto, as the same may from time to time be amended, restated or
supplemented.
Parties shall mean the Borrower, the Plant Owner, the Bond Owner, the
Parent and each Subsidiary of the Parent executing a Loan Document.
11
Past Due Rate shall mean, on any day, a rate per annum equal to the lesser
of (i) the Ceiling Rate for that day or (ii) the Base Rate (as defined in the
Interest Rate Agreement) plus two percent (2%).
PBGC shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
Permitted Acquisitions shall mean non-hostile acquisitions of all or
substantially all of the assets, or 50% or more of the voting securities, of any
Person (or any division or product line of such Person), but only so long as no
Default or Event of Default shall have occurred and be continuing (or would
result from such acquisition).
Permitted Dividends shall mean an amount not to exceed 50% of Net Income of
the Parent for the immediately preceding Rolling Four Quarters which may, so
long as no Default or Event of Default shall have occurred and be continuing (or
would result from such distribution) and so long as the Adjusted Fixed Charge
Coverage Ratio for the Parent and its Subsidiaries is not (and would not be,
after giving effect to such distribution) less than 1.10 to 1.00, be distributed
by the Parent so long as the Parent has delivered to the Agent a Compliance
Certificate calculated after giving effect to the proposed distribution which
indicates that such distribution complies with the terms of this Agreement.
Permitted Investments shall mean: (a) certificates of deposit maturing
within 90 days of the acquisition thereof and issued by a bank or trust company
organized under the laws of the United States of America or a State thereof,
having combined capital and surplus of at least $250,000,000 and which has (or
which is a Subsidiary of a bank holding company which has) publicly traded debt
securities rated A or higher by Standard and Poor's Corporation and A-2 or
higher by ▇▇▇▇▇'▇ Investors Service, Inc.; (b) obligations issued or guaranteed
by the United States of America; (c) commercial paper with a published rating of
not less than A-2 and P-2 (or the equivalent rating); (d) repurchase obligations
for underlying securities of the type described in clauses (a), (b) or (c) above
entered into on a fully collateralized basis with any Lender; (e) dollar
denominated time deposits with, including certificates of deposit issued by, any
non-United States branch or office of any Lender; (f) Permitted Acquisitions;
(g) securities (other than those securities described in clauses (a) through (e)
of this definition) of money market mutual funds with net assets in excess of
$100,000,000, provided that the investment amounts in securities described in
this clause (g) may not exceed 5% of the issued and outstanding securities of
any Person (or such lesser percentage as would constitute a controlling
interest), irrespective of whether such securities having voting power or may be
convertible to securities with voting power of any Person; (h) loan
participations with a rating of not less than A-2 and P-2 (or, in the case of
investments maintained in the Cash Flow Account, A-1 and P-1) (or the equivalent
rating) by ▇▇▇▇▇'▇ Investors Service, Inc. and Standard and Poor's Corporation,
respectively; (i) money market preferred stock with a rating of not less than
AAA (or the equivalent rating); (j) the Bonds; (k) investments maintained in the
Cash Flow Account in publicly traded securities rated BB+ or better by Standard
& Poor's Corporation or Ba1 or
12
better by ▇▇▇▇▇'▇ Investors Service, Inc.; (l) other investments approved by
Agent in writing not exceeding, in the aggregate, $20,000,000, and (m) other
investments approved by the Majority Lenders in writing. Amounts in the Cash
Flow Account may not be invested in the items described in clauses (f) or (l)
above.
Person shall mean any individual, Corporation, trust, unincorporated
organization, Governmental Authority or any other form of entity.
Plan shall mean an employee pension benefit plan (as such term is defined
in Section 3(2) of ERISA) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Code or Section 302 of
ERISA and (a) which is maintained by the Parent or any member of the Controlled
Group for employees of the Parent or any member of the Controlled Group or (b)
as to which the Parent or any member of the Controlled Group may have any
liability.
Plans and Specifications shall mean written plans, proposals and drawings
for the Plant Work heretofore delivered to the Agent, together with all updates,
if any, reflecting material changes thereto.
Plant shall mean, collectively, the Plant Land and the Plant Improvements.
Plant Contract shall mean any contract or agreement now or hereafter
entered into between the Plant Owner and any Contractor relating to the Plant
Work.
Plant Improvements shall mean all improvements now or hereafter situated on
the Plant Land.
Plant Land shall mean the real property described on Exhibit F attached
hereto.
Plant Owner shall mean an entity to be formed or acquired, all of the
equity interests in which will be owned by Sterling Pulp (US), and which will
own a leasehold interest in and to the Plant under a lease to be entered into
with the Authority, in Proper Form.
Plant Work shall mean all work required to complete and equip the Plant in
accordance with the Plans and Specifications.
Principal Office shall mean the principal office of the Agent, presently
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
Proper Form shall mean in form and substance reasonably satisfactory to the
Agent.
Property shall mean any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
13
Quarterly Dates shall mean the first day of each April, July, October and
January, provided that if any such date is not a Business Day, then the relevant
Quarterly Date shall be the next succeeding Business Day.
Quarterly Financial Statements shall mean the quarterly financial
statements of a Person, including all notes thereto, which statements shall
include a balance sheet as of the end of a fiscal quarter and an income
statement and a statement of changes in financial position for such fiscal
quarter and for the fiscal year to date, subject to normal adjustments, all
setting forth in comparative form the corresponding figures for the
corresponding calendar quarter of the preceding year, prepared in accordance
with GAAP and certified as true and correct to the best of his knowledge by the
chief financial officer or other authorized officer of such Person.
Regulatory Change shall mean with respect to any Lender, any change after
the date of this Agreement in any Legal Requirement (including, without
limitation, Regulation D) or the adoption or making on or after such date of any
interpretation, directive or request applying to a class of financial
institutions including such Lender under any Legal Requirements (whether or not
having the force of law) by any Governmental Authority.
Request for Extension of Credit shall mean a request for extension of
credit duly executed by the chief executive officer, chief financial officer or
treasurer of the Borrower (or other Person designated in writing by any of the
foregoing to whom authority has been properly delegated), appropriately
completed and substantially in the form of Exhibit A attached hereto.
Requirements of Environmental Law shall mean all requirements imposed by
any law (including for example and without limitation The Comprehensive
Environmental Response, Compensation, and Liability Act), rule, regulation, or
order of any federal, state or local executive, legislative, judicial,
regulatory or administrative agency, board or authority at the applicable time
which relate to (i) noise; (ii) pollution, protection or clean up of the air,
surface water, ground water or land; (iii) solid, gaseous or liquid waste
generation, treatment, storage, disposal or transportation; (iv) exposure to
Hazardous Substances; or (v) regulation of the manufacture, processing,
distribution in commerce, use, discharge or storage of Hazardous Substances.
Rolling Four Quarters shall mean, as of any day, the then most recently
ended four (4) fiscal quarter period of the Parent.
Scheduled Completion Date shall mean June 30, 1997.
Secretary's Certificate shall mean a certificate, in Proper Form, of the
Secretary or an Assistant Secretary of a corporation as to (a) the resolutions
of the Board of Directors of such corporation authorizing the execution,
delivery and performance of the documents to be executed by such corporation;
(b) the incumbency and signatures of the officers of such corporation
14
executing such documents on behalf of such corporation, and (c) the
Organizational Documents of such corporation.
Security Agreements shall mean, collectively, the Security Agreements
executed or to be executed, in Proper Form, in favor of the Agent covering the
Bonds and the Cash Flow Account, as any of them may from time to time be
amended, modified, restated or supplemented.
Security Documents shall mean, collectively, the Mortgage, the Security
Agreements, and any and all other security documentation now or hereafter
executed and delivered by the Authority or any Party to the Agent, as any of
them may from time to time be amended, modified, restated or supplemented.
Sterling Canada shall mean Sterling Canada, Inc., a Delaware corporation
and a wholly-owned Subsidiary of the Parent.
Sterling Energy shall mean Sterling Chemicals Energy, Inc., a Delaware
corporation.
Sterling Pulp (US) shall mean Sterling Pulp Chemicals US, Inc., a Delaware
corporation.
Subcontractor shall mean any Person who furnishes labor or materials for
the Plant to fulfill an obligation to a Contractor or to another Subcontractor
to perform all or part of the work required by a Plant Contract.
Subordinated Debt shall mean, as of the date of determination thereof,
unsecured Indebtedness with any lender for which the Parent is directly and
primarily liable, in respect of which none of its Subsidiaries is contingently
or otherwise obligated, and which is subordinated to the obligations of the
Parent to pay principal of and interest (before and after bankruptcy) on the
Loans and the Notes and on any Interest Rate Risk Indebtedness owed to any of
the Lenders, on terms, and which contains other terms (including interest,
amortization and financial covenants), in form and substance satisfactory to the
Agent and the Majority Lenders.
Subsidiary shall mean, as to a particular parent Corporation, any
Corporation of which more than 50% of the indicia of equity rights (whether
outstanding capital stock or otherwise) is at the time directly or indirectly
owned by, such parent Corporation.
Survey shall mean a current survey of the applicable portion of the
Mortgaged Properties by a state-licensed surveyor who is reasonably acceptable
to the Agent and to the Title Company, which shall contain the surveyor's
certificate that the survey satisfies the standards and tolerances of a "Class A
Survey" currently prescribed by the ALTA and ACSM.
Termination Date shall mean the earlier of (a) September 30, 1997 or (b)
the date specified by the Agent in accordance with Section 9.1 hereof.
15
Texas Credit Code shall mean Title 79, Texas Revised Civil Statutes, 1925,
as amended.
Title Company shall mean a title insurance company reasonably acceptable to
the Agent and the Borrower.
Title Insurance Policies shall mean a policy of title insurance, in Proper
Form, in a face amount reasonably satisfactory to the Agent, issued in favor of
the Agent by the Title Company and insuring that title to the Mortgaged
Properties is vested in the Authority, free and clear of any Lien, objection,
exception or requirement other than those securing the Bonds or that could
otherwise be reasonably expected to materially affect the operation of the
Plant, and that the Mortgage creates a valid first and prior lien in favor of
the Agent on all the Mortgaged Properties affected by the Mortgage, subject only
to such exceptions as may be approved in writing by the Agent, together with any
endorsements thereto reasonably requested by the Agent. Said policy shall
contain a complete and accurate description of the Mortgage, shall specify the
recording and filing information applicable to it and shall describe the
Mortgaged Properties identically to the description thereof in the Mortgage.
Unfunded Vested Liabilities shall mean, with respect to any Plan, at any
time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds (b) the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of the Parent or any member of the Controlled
Group to the PBGC or such Plan under Title IV of ERISA.
Welfare Plan shall mean a "welfare plan," as such term is defined in
Section 3(1) of ERISA.
1.2 Miscellaneous. The words "hereof," "herein," and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement.
2. Commitments and Loans.
2.1 Loans. Each Lender severally agrees, subject to all of the terms and
conditions of this Agreement (including, without limitation, Sections 5.1 and
5.2 hereof), to make Loans to the Borrower from time to time prior to the
Termination Date in an aggregate principal amount up to but not exceeding such
Lender's Loan Commitment.
2.2 Terminations or Reductions of Loan Commitments.
(a) Mandatory. Each Loan Commitment shall be automatically reduced by the
amount of any Loan made by the applicable Lender. On September 30, 1996, the
aggregate of all remaining Loan Commitments shall be reduced by the amount, if
any, by which such
16
aggregate amount exceeds $10,000,000. On the Termination Date, all Loan
Commitments shall be terminated in their entirety.
(b) Optional. The Borrower shall have the right to terminate or reduce the
unused portion of the Loan Commitments at any time or from time to time,
provided that (i) the Borrower shall give notice of each such termination or
reduction to the Agent as provided in Section 4.3 hereof and (ii) each such
partial reduction shall be in an aggregate amount of at least $1,000,000.
(c) No Reinstatement. Any termination or reduction of the Loan Commitments
may not be reinstated without the written approval of the Agent and the Lenders.
2.3 Fees.
(a) The Borrower shall pay to the Agent for the account of each Lender
commitment fees with respect to such Lender's Loan Commitment for the period
from the Effective Date to and including the Termination Date at a rate per
annum equal to 0.25%. Such commitment fees shall be computed (on the basis of
the actual number of days elapsed in a year composed of 360 days) on each day
and shall be based on the amount of such Lender's Loan Commitment for such day.
Accrued commitment fees payable under this provision shall be payable in arrears
on the Quarterly Dates prior to the Termination Date and on the Termination
Date.
(b) All past due fees payable under this Section shall bear interest at the
Past Due Rate.
2.4 Several Obligations. The failure of any Lender to make any Loan to be
made by it on the date specified therefor shall not relieve any other Lender of
its obligation to make its Loan on such date, but neither the Agent nor any
Lender shall be responsible or liable for the failure of any other Lender to
make a Loan to be made by such other Lender. Notwithstanding anything contained
herein to the contrary, if a Lender fails to make a Loan as and when required
hereunder, then upon each subsequent event which would otherwise result in funds
being paid to the defaulting Lender, the amount which would have been paid to
the defaulting Lender shall be divided among the non-defaulting Lenders ratably
according to their respective Lending Percentages until the aggregate principal
amount of Loans outstanding hereunder made by each Lender (including the
defaulting Lender) are equal to such Lender's Lending Percentage of the
aggregate principal amount of Loans outstanding hereunder made by all Lenders
(nothing in this Section shall result in any additional liability on the
Borrower and each Lender agrees to make such adjustments on the terms and
provisions of its Note as may be required to address the results of this
Section).
2.5 Notes. The Loans made by each Lender shall be evidenced by a single
Note of the Borrower payable to the order of such Lender in a principal amount
equal to the initial Loan Commitment of such Lender, and otherwise duly
completed. Each Lender is hereby authorized
17
by the Borrower to endorse on the schedule (or a continuation thereof) that may
be attached to each Note of such Lender, to the extent applicable, the date,
amount, type of and the applicable period of interest for each Loan made by such
Lender to the Borrower hereunder, and the amount of each payment or prepayment
of principal of such Loan received by such Lender, provided, that any failure by
such Lender to make any such endorsement (or any error in such endorsement)
shall not affect the obligations of the Borrower under such Note or hereunder in
respect of such Loan.
2.6 Use of Proceeds. The proceeds of the Loans shall be used by the
Borrower to provide funds to the Bond Owner for the purchase of Bonds or to pay,
or cause to be paid, on behalf of the Authority, costs (or reimbursement of
costs) of the Plant Work and for no other purpose, and upon the Agent's request,
the Borrower shall furnish evidence of items which have been paid by the
proceeds of any applicable Loan.
3. Borrowings, Payments and Prepayments.
3.1 Borrowings. The Borrower shall give the Agent notice of each
borrowing to be made hereunder as provided in Section 4.3 hereof. Not later
than 12:00 noon Houston time on the date specified for each such borrowing
hereunder, each Lender shall make available the amount of the Loan, if any, to
be made by it on such date to the Agent, at its Principal Office, in immediately
available funds, for the account of the Borrower. Such amounts received by the
Agent will be held in an account maintained by the Borrower with the Agent. The
amounts so received by the Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Borrower by wiring or otherwise
transferring, in immediately available funds, such amount to an account
designated by the Borrower and maintained with Agent in Houston, Texas.
3.2 Payments; Prepayments.
(a) Optional Prepayments. Subject to the terms of the Interest Rate
Agreement, the Borrower shall have the right to prepay, on any Business Day, in
whole or in part, without the payment of any penalty or fee, Loans at any time
or from time to time, provided that the Borrower shall give the Agent notice of
each such prepayment as provided in Section 4.3 hereof. Each optional prepayment
on a Loan shall be in an amount at least equal to the lesser of $1,000,000 or
the unpaid principal balance of the Note evidencing such Loan. Without limiting
the foregoing, the Borrower may, at any time, apply all or any part of the funds
held in the Cash Flow Account in prepayment on the Loans.
(b) Certain Mandatory Prepayments.
(1) Insurance Proceeds and Condemnation Awards. Promptly following
the receipt thereof by the Parent or any of its Subsidiaries, the Borrower
shall deposit or cause to be deposited in the Cash Flow Account all of the
net cash proceeds of any
18
payment or award in excess of $250,000 made to the Parent or any of its
Subsidiaries under any policy of property insurance covering any of the
Mortgaged Properties or pursuant to any condemnation award with respect to
any such properties. Upon delivery to the Agent of written certification by
the Borrower that the Borrower or any of its Subsidiaries has reasonably
expended amounts or committed in writing to expend amounts for the
restoration or replacement of the Mortgaged Properties, specifying the
amount expended or committed, so long as no Default or Event of Default
shall have occurred and be continuing any such amount deposited in the Cash
Flow Account shall be released to the Borrower; provided, however, that, in
the event that within 90 days of receipt of such payment or award, to the
extent the Borrower shall not have certified to the Agent its intention to
expend an equivalent amount for the restoration or replacement of the asset
in respect of which such payment or award was made, the Borrower shall make
a prepayment on the Loans (using any funds deposited in the Cash Flow
Account pursuant to this Section 3.2(b)(1) or other funds) in the amount of
the excess of the amount of such payment or award over the amount of such
expenditures and/or commitment on such 90th day; provided, however, that if
such excess is greater than the Maximum Payment Cap, only the Maximum
Payment Cap shall be so applied, with the balance to be deposited in the
Cash Flow Account.
(2) Excess Cash Flow. Not later than five (5) Business Days after the
delivery of the Annual Audited Financial Statements pursuant to Section 7.2
hereof with respect to each fiscal year of the Parent (commencing with the
fiscal year ending on September 30, 1997), an amount equal to Excess Cash
Flow for such fiscal year shall, at the option of the Borrower, be
deposited in the Cash Flow Account or be applied in prepayment of the
Loans.
(3) Cash Flow Account. On each Quarterly Date, all amounts held in
the Cash Flow Account shall be applied in prepayment on the Loans;
provided, however, that if such amount is greater than the Maximum Payment
Cap, only the Maximum Payment Cap shall be so applied, with the balance to
be retained in the Cash Flow Account (income accruing on amounts and
investments held in the Cash Flow Account may be distributed to the
Borrower so long as no Event of Default has occurred).
(c) Application of Prepayments on Loans. Any prepayments made on the Loans
will be applied (i) first, pro rata to the scheduled principal installments due
on October 1, 2001, January 1, 2002, April 1, 2002 and July 1, 2002, until one-
half (1/2) of the aggregate amount of such scheduled principal installments
shall have been paid and (ii) thereafter, to the scheduled principal
installments on the Loans in inverse order of their maturities.
(d) Loan Amortization. The principal of each Note shall be due and payable
in quarterly installments due on each Quarterly Date, beginning on October 1,
1997, equal to the applicable Lender's pro rata share of the Loans times (i) for
each Quarterly Date through and including July 1, 1998, the sum of $781,250 plus
the product of $625,000 times the
19
Amortization Fraction, (ii) for the Quarterly Date on October 1, 1998 and for
each Quarterly Date thereafter through and including July 1, 2001, $781,250, and
(iii) for the Quarterly Date on October 1, 2001 and for each Quarterly Date
thereafter through and including July 1, 2002, $9,375,000; provided, however,
that if the payment required under the foregoing provisions of this sentence
exceed the Maximum Payment Cap, only the Maximum Payment Cap shall be applied to
the Loans, with the balance to be either applied in prepayment of the Loans or
deposited in the Cash Flow Account, at the option of the Borrower. On the
Maturity Date, the entire unpaid principal balance of each Note and all accrued
and unpaid interest on the unpaid principal balance of each Note shall be
finally due and payable.
(e) Interest Payments. Accrued and unpaid interest on the unpaid principal
balance of the Notes shall be due and payable on the Interest Payment Dates (as
defined in the Interest Rate Agreement).
(f) Payments; Interest Rate Agreement. The Borrower shall pay all amounts
required to be paid under the Interest Rate Agreement, the Notes and the other
Loan Documents as and when due.
4. Payments; Pro Rata Treatment; Computations, Etc.
4.1 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be paid by the Borrower hereunder,
under the Notes and under the other Loan Documents shall be made in Dollars, in
immediately available funds, to the Agent at the Principal Office (or in the
case of a successor Agent, at the principal office of such successor Agent in
the United States), not later than 11:00 a.m. Houston time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
(b) The Borrower shall, at the time of making each payment hereunder, under
any Note or under any other Loan Document, specify to the Agent the Loans or
other amounts payable by the Borrower hereunder or thereunder to which such
payment is to be applied. Each payment received by the Agent hereunder, under
any Note or under any other Loan Document for the account of a Lender shall be
paid promptly to such Lender, in immediately available funds. If the Agent
fails to send to any Lender its portion of any payment, to the extent timely
received by the Agent, by the close of business on the day such payment was
received, the Agent shall pay to such Lender interest on its portion of such
payment from the day such payment was timely received by the Agent until the
date such Lender's portion of such payment is sent to such Lender, at the
Federal Funds Rate.
(c) If the due date of any payment hereunder or under any Note falls on a
day which is not a Business Day, the due date for such payments (except as
otherwise provided in the
20
Interest Rate Agreement) shall be extended to the next succeeding Business Day
and interest shall be payable for any principal so extended for the period of
such extension.
4.2 Pro Rata Treatment. Except to the extent otherwise provided herein:
(a) each borrowing from the Lenders under Section 2.1 hereof shall be made
ratably from the Lenders on the basis of their respective Loan Commitments; (b)
each payment of commitment fees shall be made for the account of the Lenders,
and each termination or reduction of the Loan Commitments of the Lenders under
Section 2.2 hereof shall be applied, pro rata, according to the Lenders'
respective Loan Commitments and (c) each payment by the Borrower of principal of
or interest on the Loans shall be made to the Agent for the account of the
Lenders pro rata in accordance with the respective unpaid principal amounts of
such Loans held by the Lenders.
4.3 Certain Actions, Notices, Etc. Notices to the Agent of termination or
reduction of Loan Commitments, borrowings and prepayments of Loans shall be
irrevocable and shall be effective only if received by the Agent not later than
11:00 a.m. Houston time on the number of Business Days prior to the date of the
relevant termination, reduction, borrowing, prepayment and/or issuance specified
below:
Number of
Notice Business Days Prior
------ -------------------
Termination or Reduction of
Loan Commitments 5
Loan Borrowing at the Base Rate Same day
Borrowing at the Eurodollar Rate 3 Eurodollar Business Days (as
(as defined in the Interest defined in the Interest Rate
Rate Agreement) Agreement)
Optional prepayment of Loan 1
Each such notice of termination or reduction shall specify the amount of the
applicable Loan Commitment to be terminated or reduced. Each such notice of
borrowing or prepayment shall specify the amount of the Loans to be borrowed or
prepaid and the date of borrowing or prepayment (which shall be a Business Day).
The Agent shall promptly notify the affected Lenders of the contents of each
such notice.
4.4 Non-Receipt of Funds by the Agent. Unless the Agent shall have been
notified by a Lender or the Borrower (the "Payor") prior to the date on which
such Lender is to make payment to the Agent of the proceeds of a Loan to be made
by it hereunder or the Borrower is to make a payment to the Agent for the
account of one or more of the Lenders, as the case may be (such payment being
herein called the "Required Payment"), which notice shall be effective
21
upon receipt, that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment shall, on demand, pay to the Agent the amount made available by the
Agent together with interest thereon in respect of the period commencing on the
date such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the Federal Funds Rate for
such period or (if the recipient is the Borrower) the Base Rate (as defined in
the Interest Rate Agreement).
4.5 Sharing of Payments, Etc. If a Lender shall obtain payment of any
principal of or interest on any Loan made by it under this Agreement or on any
other Obligation then due to such Lender hereunder through the exercise of any
right of set-off (including, without limitation, any right of setoff or lien
granted under Section 9.2 hereof), banker's or other lien, counterclaim or
similar right, or otherwise, it shall promptly purchase from the other Lenders
participations in the Loans made, or other Obligations held, by the other
Lenders in such amounts, and make such other adjustments from time to time as
shall be equitable to the end that all the Lenders shall share the benefit of
such payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such benefit) pro rata in accordance with the unpaid
principal and interest on the Obligations then due to each of them. To such end
all the Lenders shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any Lender so purchasing a
participation in the Loans made, or other Obligations held, by other Lenders may
exercise all rights of set-off, bankers' or other lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of Loans or other Obligations in the amount of such participation.
Nothing contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.
5. Conditions Precedent.
5.1 Initial Loans. The obligation of each Lender to make its initial
Loans hereunder is subject to the following conditions precedent, each of which
shall have been fulfilled or waived to the satisfaction of the Agent:
(1) Corporate Action and Status. The Agent shall have received a
Secretary's Certificate from the Parent and each of its Subsidiaries signing a
Loan Document, which shall be accompanied by copies of the Organizational
Documents of the Parent and each such Subsidiary, copies of the bylaws of the
Parent and each such Subsidiary and such certificates as may be appropriate to
demonstrate the qualification and good standing of and payment of taxes by the
Parent and each such Subsidiary in each state where the failure in which to
qualify would
22
have a Material Adverse Effect. The Agent and each Lender may conclusively rely
on such certificates until they receive notice in writing from the Borrower or
the appropriate Party to the contrary.
(2) Notes. The Agent shall have received the appropriate Notes of the
Borrower for each Lender, duly completed and executed.
(3) Loan Documents. The Authority and the Parent and each other Party
shall have duly executed and delivered the Loan Documents to which it is a party
(in such number of copies as the Agent shall have requested) and each such Loan
Document shall be in form satisfactory to Agent. Each such Loan Document shall
be in form and substance reasonably satisfactory to the Lenders.
(4) Security Matters. All such action as the Agent shall have requested to
perfect the Liens created pursuant to the Security Documents shall have been
taken, including, without limitation, receipt by the Agent of (a) documentation,
in Proper Form, relating to the perfection of a security interest in the Cash
Flow Account and providing any required consents for the collateral assignment
of (and foreclosure upon) the Electrical Agreement and the Facilities
Development Agreement and the Bonds, (b) the Bonds issued as of the date of such
initial Loans and (c) the Title Insurance Policy (accompanied by copies of all
title matters referred to therein) and the delivery to the Agent of
appropriately completed and duly executed Uniform Commercial Code financing
statements with appropriate Governmental Authorities. The Agent shall also have
received evidence satisfactory to it that the Liens created by the Security
Documents constitute first priority Liens, except for the exceptions expressly
provided for herein and therein, including, without limitation, Uniform
Commercial Code search reports, satisfactory title evidence in form and
substance acceptable to the Agent, and executed releases of any prior Liens.
(5) Fees and Expenses. The Borrower shall have paid to the Agent all unpaid
fees in the amounts previously agreed upon in writing between the Borrower and
the Agent; and shall have in addition paid to the Agent all amounts payable
under Section 11.3 hereof, on or before the date of this Agreement.
(6) Insurance. The Borrower shall have delivered to the Agent certificates
of insurance satisfactory to the Agent evidencing the existence of all insurance
required to be maintained by the Borrower by this Agreement and the Security
Documents.
(7) Opinion of Counsel. The Agent shall have received an opinion of
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., counsel to the Parent and its Subsidiaries, as
well as such separate local counsel as the Agent may reasonably require, each in
form and substance reasonably satisfactory to the Agent.
23
(8) Consents. The Agent shall have received evidence satisfactory to it
that all material consents of each Governmental Authority and of each other
Person, if any, reasonably required in connection with (a) the Loans and (b) the
execution, delivery and performance of this Agreement and the other Loan
Documents have been satisfactorily obtained.
(9) Real Estate Matters. The Agent shall have received each of the
following:
(a) a Survey covering the Mortgaged Properties prepared by a
qualified surveyor reasonably acceptable to the Agent, in Proper Form;
(b) evidence reasonably satisfactory to the Agent that
environmental due diligence has been performed with respect to the
Mortgaged Properties of a nature and to an extent consistent with
normal and customary business practices with respect to facilities
similar to the Plant and similarly situated; and
(c) true, correct and complete copies of all Key Plant Contracts.
(10) Amendments to Parent Credit Facility and Canadian Facility. The Agent
shall have received amendments to the Parent Credit Facility and the Canadian
Facility permitting the consummation of the transactions herein described.
(11) Other Documents. The Agent shall have received such other documents
consistent with the terms of this Agreement and relating to the transactions
contemplated hereby as the Agent may reasonably request.
5.2 All Loans. The obligation of each Lender to make any Loan to be made
by it hereunder is subject to (a) the accuracy, in all material respects, on the
date of such Loan of all representations and warranties of the Authority and the
Borrower and any other Party contained in this Agreement and the other Loan
Documents; (b) receipt by the Agent of the following, all of which shall be duly
executed or endorsed and in Proper Form: (1) a Request for Extension of Credit
as to the Loan no later than 11:00 a.m. Houston time on the Business Day on
which such Request for Extension of Credit must be given under Section 4.3
hereof, (2) all Bonds issued prior to the date of such Loan (and assurances
reasonably satisfactory to the Agent that the Authority will cause all
additional Bonds subsequently issued to be delivered directly to the Agent) and
(3) such other documents as the Agent or any Lender may reasonably require; (c)
prior to the making of such Loan, there shall have occurred no event which has
had or could reasonably be expected to have a Material Adverse Effect; (d) no
Default or Event of Default shall have occurred and be continuing and shall not
occur as a result of the making of such Loan, and (e) the making of such Loan
shall not be illegal or prohibited by any Legal Requirement.
24
6. Representations and Warranties.
The Borrower represents and warrants to the Lenders and the Agent as
follows:
6.1 Organization. The Parent and each of its Subsidiaries (a) is duly
organized, validly existing and in good standing under the laws of the State or
Province of its organization; (b) has all necessary corporate power and
authority to conduct its business as presently conducted, and (c) is duly
qualified to do business and in good standing in the State or Province of its
organization and in all jurisdictions in which the failure to so qualify would
have a Material Adverse Effect.
6.2 Financial Statements. The Parent has furnished to the Agent the
Annual Audited Financial Statements of the Parent and its Subsidiaries as at
September 30, 1994, which fairly present, the financial condition and the
results of operations of the Parent and its Subsidiaries as at such date. No
events, conditions or circumstances have occurred from the date that the
financial statements were delivered to the Agent through the date hereof which
would cause said financial statements to be misleading in any material respect.
There are no material instruments or liabilities which should be reflected in
such financial statements provided to the Agent which are not so reflected.
Since September 30, 1994, no event has occurred which has had (or could
reasonably be expected to have) a Material Adverse Effect.
6.3 Enforceable Obligations; Authorization. The Loan Documents are legal,
valid and binding obligations of the Parties and, where applicable, the
Authority, enforceable in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency and other similar laws and judicial
decisions affecting creditors' rights generally and by general equitable
principles. The execution, delivery and performance of the Loan Documents (a)
have all been duly authorized by all necessary corporate action; (b) are within
the corporate power and authority of the Parties and, where applicable, the
Authority; (c) do not and will not contravene or violate any Legal Requirement
applicable to the Parties or, where applicable, the Authority, or the
Organizational Documents of the Parties or, where applicable, the Authority, the
contravention or violation of which could reasonably be expected to cause a
Material Adverse Effect; (d) do not and will not result in the breach of, or
constitute a default under, any agreement or instrument by which the Parties or
any of their respective Property may be bound or affected which breach or
default could reasonably be expected to cause a Material Adverse Effect, and (e)
do not and will not result in the creation of any Lien upon any Property of any
of the Parties, except in favor of the Agent or as expressly contemplated
therein. All necessary permits, registrations and consents for such making and
performance have been obtained. Except as otherwise expressly stated in the
Security Documents, the Liens created under the Security Documents constitute
valid and perfected first and prior Liens on the Property described therein,
subject to no other Liens whatsoever.
6.4 Other Borrowed Money Indebtedness. Neither the Parent nor any of its
Subsidiaries is in default in the payment of any other Borrowed Money
Indebtedness or under
25
any agreement, mortgage, deed of trust, security agreement or lease to which it
is a party and which default could reasonably be expected to cause a Material
Adverse Effect.
6.5 Litigation. There is no litigation or administrative proceeding
pending or, to the knowledge of the Borrower, threatened against, nor any
outstanding judgment, order or decree affecting, the Parent or any of its
Subsidiaries before or by any Governmental Authority which could reasonably be
expected to cause a Material Adverse Effect. Neither the Parent nor any of its
Subsidiaries is in default with respect to any judgment, order or decree of any
Governmental Authority where such default would have a Material Adverse Effect.
6.6 Taxes. The Parent and its Subsidiaries each has filed all tax returns
required to have been filed and paid all taxes shown thereon to be due, except
those for which extensions have been obtained and those which are being
contested in good faith as provided in Section 7.1(a) hereof and those which
could not reasonably be expected to have a Material Adverse Effect.
6.7 Regulations G, U and X. None of the proceeds of any Obligation will
be used for the purpose of purchasing or carrying directly or indirectly any
margin stock or for any other purpose would constitute this transaction a
"purpose credit" within the meaning of Regulation G, U and X of the Board of
Governors of the Federal Reserve System, as either of them may be amended from
time to time.
6.8 Subsidiaries. The Parent has no Subsidiaries except as set forth on
Exhibit B attached hereto or those formed in compliance with Section 8.9 hereof.
6.9 No Untrue or Misleading Statements. No document, certificate,
instrument or other writing furnished to the Lenders by or on behalf of the
Authority or any Party in connection with the transactions contemplated in any
Loan Document, taken as a whole, contains any untrue material statement of fact
or omits to state any such fact (of which the Borrower or any other Party has
knowledge) necessary to make the representations, warranties and other
statements contained herein or in such other document, instrument or writing not
misleading.
6.10 ERISA. The Parent and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code and are in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and have not incurred any liability
to the PBGC or a Plan under Title IV of ERISA (other than to make contributions
in the ordinary course) and no contribution failure has occurred with respect to
any Plan sufficient to give rise to the Lien under Section 302(f) of ERISA, in
each case which could reasonably be expected to have a Material Adverse Effect.
Except as described in Schedule 6.10, neither the Parent nor any member of the
Controlled Group has any contingent liability with respect to any post-
retirement benefit under a Welfare Plan other than liability for continuation
coverage described in Section 602 of ERISA which could reasonably be expected to
have a Material Adverse Effect.
26
6.11 Investment Company Act. Neither the Parent nor any of its
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or, directly or indirectly, controlled by or
acting on behalf of any Person which is an investment company, within the
meaning of said Act.
6.12 Public Utility Holding Company Act. Neither the Parent nor any of its
Subsidiaries is an "affiliate" or a "subsidiary company" of a "public utility
company," or a "holding company," or an "affiliate" or a "subsidiary company" of
a "holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
6.13 Solvency. None of the Borrower, the Plant Owner, the Bond Owner, the
Parent, or the Parent and its Subsidiaries, on a consolidated basis, is
"insolvent," as such term is used and defined in (i) the Bankruptcy Code and
(ii) the Texas Uniform Fraudulent Transfer Act, Tex. Bus. & Com. Code ▇▇▇. (S)
24.001 et seq., as amended from time to time.
6.14 Compliance. The Parent and its Subsidiaries are each in compliance
with all Legal Requirements applicable to it, except to the extent that the
failure to comply therewith could not reasonably be expected to cause a Material
Adverse Effect.
6.15 Environmental Matters. The Parent and its Subsidiaries have obtained
and maintained in effect all Environmental Permits (or the applicable Person has
initiated the necessary steps to transfer the Environmental Permits into its
name or obtain such permits), the failure to obtain which could reasonably be
expected to have a Material Adverse Effect. The Parent and its Subsidiaries and
their Properties, business and operations have been and are in compliance with
all applicable Requirements of Environmental Law and Environmental Permits
failure to comply with which could reasonably be expected to have a Material
Adverse Effect. The Parent and its Subsidiaries and their Properties, business
and operations are not subject to any (A) Environmental Claims or (B)
Environmental Liabilities, in either case direct or contingent, arising from or
based upon any act, omission, event, condition or circumstance occurring or
existing on or prior to the date hereof which could reasonably be expected to
have a Material Adverse Effect. None of the Parent or any of its Subsidiaries
has received any notice of any violation or alleged violation of any
Requirements of Environmental Law or Environmental Permit or any Environmental
Claim in connection with its Properties, liabilities, condition (financial or
otherwise), business or operations which could reasonably be expected to have a
Material Adverse Effect. The Borrower does not know of any event or condition
with respect to currently (as of the date this representation is provided)
enacted Requirements of Environmental Laws presently scheduled to become
effective in the future with respect to any of the Properties of the Parent or
any of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect, for which the Parent or the applicable Subsidiary of the Parent
has not made good faith provisions in its business plan and projections of
financial performance.
6.16 Certain Representations Regarding the Plant Work. The Plans and
Specifications are complete and adequate for the Plant Work. The Plans and
Specifications comply, and the
27
Plant Work, when completed in accordance with the Plans and Specifications will
comply, with all applicable restrictive covenants, zoning ordinances and
building codes and, to the knowledge of the Borrower, all other applicable Legal
Requirements, in each case the non-compliance with which could reasonably be
expected to have a Material Adverse Effect. The Plant has, or where applicable
will have when necessary for the timely completion of the Plant Work, all
necessary building, utility and other permits and rights of access to and from
public streets and roads, except in each instance those which could not
reasonably be expected to have a Material Adverse Effect.
7. Affirmative Covenants.
The Borrower covenants and agrees with the Agent and the Lenders that prior
to the termination of this Agreement it will do, and cause the Parent and each
of its Subsidiaries to do, and if necessary cause to be done, each and all of
the following:
7.1 Taxes, Existence, Regulations, Property, Etc. At all times (a) pay,
or work with the Authority to cause to be paid, prior to the date when Liens
attach with respect thereto, all bills of Contractors, Subcontractors and other
Persons incurred on labor, materials and services in connection with the Plant
Work unless and only to the extent that the same shall be diligently contested
in good faith and reserves have been established therefor, and will pay, prior
to the date when penalties attach with respect thereto, all taxes and
governmental charges of every kind upon it or against its income, profits or
Property and which could reasonably be expected to have a Material Adverse
Effect, unless and only to the extent that the same shall be contested
diligently in good faith and reserves deemed adequate by the independent
certified public accounting firm used by the Parent to prepare the Parent's
Annual Audited Financial Statements have been established therefor; (b) do all
things necessary to preserve its corporate existence, qualifications, rights and
franchises in all States where such failure to qualify would have a Material
Adverse Effect; (c) comply with all applicable Legal Requirements (including
without limitation Requirements of Environmental Law) in respect of the conduct
of its business and the ownership of its Property, the noncompliance with which
could reasonably be expected to cause a Material Adverse Effect; and (d) cause
its Property to be protected, maintained and kept in good repair and make all
replacements and additions to its Property as may be reasonably necessary to
conduct its business properly and efficiently.
7.2 Financial Statements and Information. Furnish to the Agent and, in
each case other than the monthly management report described in clause (e)
below, the Lenders one copy of each of the following: (a) as soon as available
and in any event within 90 days after the end of each fiscal year of the Parent,
beginning with the fiscal year 1995, Annual Audited Financial Statements of the
Parent and its Subsidiaries; (b) as soon as available and in any event within 45
days after the end of each calendar quarter of each fiscal year of the Parent,
Quarterly Financial Statements of the Parent and its Subsidiaries and of the
Borrower; (c) concurrently with the financial statements provided for in
Subsections 7.2(a) and (b) hereof, such schedules, computations and other
information, in reasonable detail, as may be required by the Agent to
28
demonstrate compliance with the covenants set forth herein or reflecting any
non-compliance therewith as of the applicable date, all certified and signed by
the president or chief financial officer of the Borrower (or other authorized
officer approved by the Agent) as true, correct and complete and, commencing
with the quarterly financial statement prepared as of September 30, 1995, a
compliance certificate ("Compliance Certificate") in the form of Exhibit E
hereto, duly executed by such authorized officer (provided, however, that if a
"Compliance Certificate" has been delivered by the Parent for any applicable
period as provided for in the Parent Credit Facility, the Borrower shall not be
required to deliver a Compliance Certificate with respect to such period
pursuant to this provision); (d) within 30 days after the end of each calendar
month of each fiscal year of the Parent, a management report with respect to
sales and operating revenues and costs of manufacturing and related information
in such detail as such management report is prepared for the use of the
management of the Parent (promptly upon receipt of each such report, Agent shall
forward copies thereof to each Lender); (e) by October 31 of each year, the
financial projections of income and cash flow of the Parent for each month of
the fiscal year of the Parent which begins on the October 1 immediately
preceding such October 31, and (f) such other information relating to the
condition (financial or otherwise), operations, prospects or business of any of
the Parent and its Subsidiaries as from time to time may be reasonably requested
by the Agent.
7.3 Financial Tests. The Parent, on a consolidated basis, will have:
(a) Debt to EBITDA Ratio - as of the last day of each fiscal quarter, a
Debt to EBITDA Ratio of not greater than 4.00 to 1.00.
(b) Fixed Charge Coverage Ratio - as of the last day of each fiscal
quarter, a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00.
(c) Adjusted Fixed Charge Coverage Ratio - as of the date of any proposed
dividend which is subject to the Adjusted Fixed Charge Coverage Ratio (and after
giving effect to such dividend), an Adjusted Fixed Charge Coverage Ratio of not
less than 1.10 to 1.00.
(d) Net Worth - Net Worth of not less than (1) at all times during the
period commencing on the Effective Date through and including September 30,
1995, $134,039,000 plus and (2) at all times during each fiscal quarter after
September 30, 1995, the minimum Net Worth required during the immediately
preceding fiscal quarter plus 50% of the Net Income of the Parent (if positive)
for the immediately preceding fiscal quarter plus all of the net proceeds of any
issuance of equity in the Parent during such fiscal quarter.
(e) Current Ratio - a Current Ratio of not less than 1.10 to 1.00 at all
times.
7.4 Inspection. Permit the Agent and any Lender upon 3 days' prior notice
to inspect its Property, to examine its files, books and records except
privileged communication with legal counsel and classified governmental
material, and make and take away copies thereof, and to
29
discuss its affairs with its officers and accountants, all during normal
business hours and at such intervals and to such extent as the Agent or the
applicable Lender may reasonably desire.
7.5 Further Assurances. Promptly execute and deliver, at the Borrower's
expense, any and all other and further instruments which may be reasonably
requested by the Agent to cure any defect in the execution and delivery of any
Loan Document in order to effectuate the transactions contemplated by the Loan
Documents, and in order to grant, preserve protect and perfect the validity and
priority of the security interests created by the Security Agreements.
7.6 Books and Records. Maintain books of record and account in accordance
with GAAP.
7.7 Insurance. Maintain insurance with such insurers, on such of its
Property, with responsible companies in such amounts, with such deductibles and
against such risks as are usually carried by owners of similar businesses and
properties in the same general areas in which the Parent and its Subsidiaries
operate (including without limitation business interruption insurance), and
furnish the Agent satisfactory evidence thereof promptly upon request. The
Borrower shall provide the Agent with copies of the policies of insurance and a
certificate of the insurer that the insurance required by this Section may not
be canceled, reduced or affected in any material manner without thirty (30)
days' prior written notice to the Agent.
7.8 Notice of Certain Matters. Give the Agent prompt written notice of
the following:
(a) the issuance by any Governmental Authority of any injunction, order or
other restraint prohibiting, or having the effect of prohibiting, the
performance of this Agreement, any other Loan Document, or the making of the
Loans or the initiation of any litigation, or any claim or controversy which
might result in the initiation of any litigation, seeking any such injunction,
order or other restraint that could reasonably be expected to cause a Material
Adverse Effect;
(b) the filing or commencement of any action, suit or proceeding, whether
at law or in equity or by or before any court or any Federal, state, municipal
or other Governmental Authority which could reasonably be expected to cause a
Material Adverse Effect;
(c) any Event of Default or Default known to Borrower, specifying the
nature and extent thereof and the action (if any) which is proposed to be taken
with the respect thereto; and
(d) any development in the business or affairs of the Parent or any of its
Subsidiaries which has had or which could reasonably be expected to have, in the
reasonable judgment of the Borrower, a Material Adverse Effect.
The Borrower will also notify the Agent in writing at least 30 days prior to the
date that any Party changes its name or the location of its chief executive
office or principal place of business or the place where it keeps its books and
records.
30
7.9 Interest Rate Risk. Promptly upon execution thereof, the Borrower
shall deliver to the Agent true and correct and complete copies of any Interest
Rate Risk Agreement.
7.10 Capital Adequacy. Agrees that if any Lender shall have determined
that the adoption after the Effective Date or effectiveness after the Effective
Date (whether or not previously announced) of any applicable law, rule,
regulation or treaty regarding capital adequacy, or any change therein after the
Effective Date, or any change in the interpretation or administration thereof
after the Effective Date by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive after the Effective Date
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency has or would have the
effect of reducing the rate of return on such Lender's capital as a consequence
of its obligations hereunder, under the Notes or other Obligations held by it to
a level below that which such Lender could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, upon satisfaction of the conditions precedent set forth
in this Section 7.10, upon demand by such Lender (with a copy to the Agent), the
Borrower (subject to Section 11.7 hereof) shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
The certificate of any Lender setting forth such amount or amounts as shall be
necessary to compensate it and the basis thereof shall be delivered as soon as
practicable to the Borrower and shall be conclusive and binding, absent manifest
error. The Borrower shall pay the amount shown as due on any such certificate
within fifteen (15) days after the delivery of such certificate; provided that
the Borrower shall not be obligated to compensate any Lender for any such
amounts which relate to a period more than seventy-five (75) days prior to such
request for payment. In preparing such certificate, a Lender may employ such
assumptions and allocations of costs and expenses as it shall in good ▇▇▇▇▇ ▇▇▇▇
reasonable and may use any reasonable averaging and attribution method.
7.11 ERISA Information and Compliance. If and when Parent or any member of
the Controlled Group (i) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in subsections (b)(1), (c)(1), (c)(5), or (c)(6)
of Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows that
the plan administrator of any Plan has given or is required to give notice of
any such reportable event, or (ii) knows that a failure to make a required
contribution with respect to any Plan has occurred if such failure is sufficient
to give rise to a Lien under section 203(f) of ERISA, or (iii) that any other
event has occurred that could result in (A) the incurrence by Parent or a member
of the Controlled Group of a liability, fine or penalty with respect to a Plan
or (B) any increase in the contingent liability of Parent or a member of the
Controlled Group with respect to any post-retirement benefit under a Welfare
Plan, in each case which could reasonably be expected to have a Material Adverse
Effect, Parent shall deliver to the Agent a copy of the notice of such
reportable event given or required to be given to the PBGC or a notice of such
contribution failure or other event, as the case may be.
31
7.12 Certain Affirmative Covenants Relating to the Plant Work.
(a) The Borrower shall, upon request by the Agent from time to time,
deliver to the Agent evidence that the anticipated use of the Plant complies
with all applicable Legal Requirements and the Plant Work is being constructed
in a good and workmanlike manner, with reasonable diligence and generally in
accordance with the Plans and Specifications.
(b) If and when the Borrower or the Plant Owner acquires an updated Survey,
Borrower shall deliver to the Agent a copy of such Survey.
(c) The Borrower will (and will cause the Plant Owner to) prosecute the
construction of the Plant Improvements in accordance with all applicable Legal
Requirements the non-compliance with which could reasonably be expected to have
a Material Adverse Effect, this Agreement and the other Loan Documents, and with
diligence and dispatch, and will complete the Plant Work on or before the
Scheduled Completion Date.
(d) The Borrower agrees to permit (and to cause the Plant Owner to permit)
the Agent and each of the Lenders and their agents, representatives and
employees at all reasonable times and upon reasonable notice to go upon,
examine, inspect and remain on the Plant, to assist and cooperate, and require
the Parent's, the Borrower's and the Plant Owner's employees, agents and the
Contractors to cooperate, with the Agent or the applicable Lender and to furnish
to the Agent or the applicable Lender on request all pertinent information
concerning the physical and economic condition, development and operation of the
Plant. The Agent may discuss the Plant directly with any of the Borrower's or
the Plant Owner's or the Parent's employees holding a supervisory position,
partners, officers, directors and managers so long as such discussions do not
unreasonably interfere with the business operations of the Borrower or the Plant
Owner or the Parent.
(e) Upon request of the Agent, the Borrower shall inform the Agent of
locations (other than the Plant Land) where equipment, supplies and materials
acquired or furnished in connection with the Plant Work but not affixed to or
incorporated into the Plant (but only to the extent that the aggregate
acquisition costs with respect to items stored at any single offsite location at
the time in question exceed $500,000) are located. Upon request of the Agent,
the Borrower will furnish an inventory of all equipment, supplies and materials
stored off-site, specifying the location thereof.
(f) As soon as reasonably possible after the Borrower is of the opinion
that Plant Work has been completed, the Borrower shall deliver the Evidence of
Completion to the Agent.
7.13 Satisfaction of Conditions Precedent. The Borrower shall cause the
conditions precedent to the initial Loans to be satisfied on or before November
15, 1995.
32
7.14 Pledge of Bonds. All of the issued and outstanding Bonds shall at all
times be pledged to (and shall have been delivered, or be in transit, to) the
Agent.
7.15 Third Party Obligations. The Borrower guarantees that the Authority
shall duly perform each affirmative covenant made by the Authority to the Agent
or the Lenders under any Loan Document.
8. Negative Covenants.
The Borrower covenants and agrees with the Agent and the Lenders that prior
to the termination of this Agreement it will not, and will not suffer or permit
the Parent or any of its Subsidiaries to, do any of the following:
8.1 Indebtedness. Create, incur, suffer or permit to exist, or assume or
guarantee, directly or indirectly, or become or remain liable with respect to
any Borrowed Money Indebtedness (as defined below), whether direct, indirect,
absolute, contingent or otherwise, except the following: (a) the Obligations;
(b) the liabilities existing on the date of this Agreement and disclosed on
Schedule 8.1 hereto and, except for the Parent Credit Facility, all renewals,
extensions and replacements (but not increases) of any of the foregoing; (c)
Indebtedness under the Canadian Facility and all renewals, extensions and
replacements (but not increases) thereof; (d) purchase money Indebtedness to
acquire Equipment not exceeding, in the aggregate, $10,000,000 outstanding at
any one time; (e) in addition to Indebtedness permitted under the preceding
clause (d), non-recourse Indebtedness in an aggregate amount not to exceed
$60,000,000 at any one time outstanding incurred by Subsidiaries of the Parent
which is payable solely by recourse to Properties which are not included in the
Collateral, which are not included in the "Borrowing Base" under the Parent
Credit Facility and which are acquired or constructed by such Subsidiary after
the date hereof; (f) Subordinated Debt so long as the net proceeds of such
Subordinated Debt are applied in payment of the Loans or "Term Loans" under the
Parent Credit Facility or, if no Loans or "Term Loans" under the Parent Credit
Facility remain outstanding, so long as the Loan Commitments or the "Revolving
Loan Commitments" under the Parent Credit Facility are reduced by an amount
equal to the net proceeds of such Subordinated Debt; (g) Interest Rate Risk
Indebtedness, together with "Interest Rate Risk Indebtedness" as defined in the
Parent Credit Facility; (h) insurance premiums financed with the applicable
insurance carrier; (i) Indebtedness under the Bond Documents and Indebtedness
under (or permitted under) the Parent Credit Facility, but only so long as the
Agent is the "Agent" under the Parent Credit Facility and the Lenders hold "Term
Loans," "Revolving Loans" and/or "Revolving Loan Commitments" under the Parent
Credit Facility in amounts sufficient to constitute "Majority Lenders" under the
Parent Credit Facility, and (j) other Borrowed Money Indebtedness not in excess
of $30,000,000 in the aggregate outstanding at any time on terms no more
restrictive than the terms provided herein. For purposes of this Agreement,
"Borrowed Money Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person under
33
conditional sale or other title retention agreements relating to Property
purchased by such Person, (d) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (excluding trade accounts
payable incurred in the ordinary course of such Person's business), (e) all
Capital Lease Obligations, (f) all obligations of others of the types specified
in clauses (a) through (e) above secured by any lien on property or assets owned
or acquired by such Person, whether or not the obligations secured thereby have
been assumed, (g) Interest Rate Risk Indebtedness, together with "Interest Rate
Risk Indebtedness" as defined in the Parent Credit Facility, (h) all outstanding
letters of credit issued for the account of such Person and (i) all guarantees
of such Person of obligations of the type referred to in the foregoing clauses
(a) through (j).
8.2 Liens. Create or suffer to exist any Lien upon any of its Property
now owned or hereafter acquired, or acquire any Property upon any conditional
sale or other title retention device or arrangement or any purchase money
security agreement; or in any manner directly or indirectly sell, assign, pledge
or otherwise transfer any of its Accounts; provided, however, that the Parent or
any of its Subsidiaries may create or suffer to exist: (a) Liens in favor of the
Agent or any Lender under the Loan Documents, including, without limitation,
Liens securing Interest Rate Risk Indebtedness owed to one or more of the
Lenders (but not to any Person which is not, at such time, a Lender); (b) Liens
in effect on the Effective Date and disclosed on Schedule 8.2 hereto, provided
that neither the Indebtedness secured thereby nor the Property covered thereby
shall increase after the Effective Date; (c) Liens securing the Canadian
Facility but only on assets of the Canadian Subsidiaries; (d) Liens securing
purchase money Indebtedness permitted under Section 8.1(d) hereof and covering
only the Property so purchased and the proceeds therefrom and Liens permitted
under Section 8.1(e) hereof covering Properties acquired or constructed after
the date hereof and the proceeds therefrom; (e) normal encumbrances and
restrictions on title which do not secure Borrowed Money Indebtedness and which
do not have a material adverse effect on the value or utility of the applicable
Property; (f) Liens incurred or deposits made in the ordinary course of business
(i) in connection with workmen's compensation, unemployment insurance, social
security and other like laws, (ii) to secure insurance in the ordinary course of
business, the performance of bids, tenders, contracts, leases, licenses,
statutory obligations, surety, appeal and performance bonds and other similar
obligations incurred in the ordinary course of business, not, in any of the
cases specified in this clause (ii), incurred in connection with the borrowing
of money, the obtaining of advances or the payment of the deferred purchase
price of Property, or (iii) on deposits made in financial institutions in the
ordinary course of business as a result of common law and statutory rights of
setoff and depositary agreements and other contractual arrangements (other than
Borrowed Money Indebtedness) arising in the ordinary course of business; (g)
attachments, judgments and other similar Liens arising in connection with the
court proceedings, provided that the execution and enforcement of such Liens are
effectively stayed and the claims secured thereby are being actively contested
in good faith with adequate reserves made therefor in accordance with GAAP; (h)
Liens imposed by law, such as carriers', warehousemen's, mechanics',
materialmen's and vendors' liens, incurred in good faith in the ordinary course
of business and securing obligations which are not yet due or which are being
contested in good faith by appropriate proceedings if
34
adequate reserves with respect thereto are maintained in accordance with GAAP;
(i) Liens for taxes which are not yet due or are being contested in good faith
by appropriate proceedings if adequate reserves with respect thereto are
maintained in accordance with GAAP; (j) Liens or rights under insurance policies
securing Indebtedness permitted under Section 8.1(h); (k) Liens securing or
otherwise permitted under the Parent Credit Facility to the extent required
under the present terms and provisions of the Parent Credit Facility, without
amendment except as approved (or consented to pursuant to the proviso to Section
8.13 hereof) by the Majority Lenders (wherever consent by the "Majority Lenders"
under the Parent Credit Facility is required) or by all of the Lenders (wherever
consent by all of the "Lenders" under the Parent Credit Facility is required),
but only so long as the Agent is the "Agent" under the Parent Credit Facility
and the Lenders hold "Term Loans," "Revolving Loans" and/or "Revolving Loan
Commitments" under the Parent Credit Facility in amounts sufficient to
constitute "Majority Lenders" under the Parent Credit Facility, and (l)
extensions, renewals and replacements of Liens referred to in clauses (a)
through (j) of this Section; provided that any such extension, renewal or
replacement Lien shall be limited to the Property or assets covered by the Lien
extended, renewed or replaced and that the Indebtedness secured by any such
extension, renewal or replacement Lien shall be in an amount not greater than
the amount of the Indebtedness secured by the Lien extended, renewed or
replaced.
8.3 Contingent Liabilities. Directly or indirectly guarantee the
performance or payment of, or purchase or agree to purchase, or assume or
contingently agree to become or be secondarily liable in respect of, any
obligation or liability of any other Person except for (a) the endorsement of
checks or other negotiable instruments in the ordinary course of business; (b)
obligations disclosed on Schedule 8.3 hereto (but not increases of such
obligations after the Effective Date), (c) those liabilities permitted under
Section 8.1 hereof and (d) guaranties by the Parent of any of its Subsidiaries
obligations (except where recourse is expressly required to be limited by this
Agreement).
8.4 Mergers, Consolidations and Dispositions and Acquisitions of Assets.
In any single transaction or series of transactions, directly or indirectly: (a)
liquidate or dissolve; (b) be a party to any merger or consolidation unless and
so long as (i) no Default or Event of Default has occurred that is then
continuing, (ii) immediately thereafter and giving effect thereto, no event will
occur and be continuing which constitutes a Default, (iii) the Parent or a
Subsidiary of the Parent is the surviving Person, and (iv) the surviving Person
ratifies and assumes each Loan Document and each "Loan Document" under the
Parent Credit Facility to which any party to such merger was a party; (c) sell,
convey or lease all or any substantial part of its assets, except for sale of
Inventory in the ordinary course of business and except for sales of Property
(other than Inventory) in the ordinary course of the Parent's or the applicable
Subsidiary's business; (d) pledge, transfer or otherwise dispose of any shares
of capital stock of any Subsidiary of the Parent or any Borrowed Money
Indebtedness of any Subsidiary of the Parent, or permit any such Subsidiary to
issue any additional shares of capital stock other than to the Parent or to
acquire any shares of capital stock of any Subsidiary of the Parent, or (e)
acquire all or substantially all of the assets of any Person or (except as
expressly permitted by Section
35
8.8 hereof) any shares of stock of or similar interest in any other Person
except for Permitted Acquisitions.
8.5 Redemption, Dividends and Distributions. At any time: (a) redeem,
retire or otherwise acquire, directly or indirectly, any shares of its capital
stock except to the extent that no Default or Event of Default has occurred
which is continuing (or would result from the same); (b) pay any dividend other
than payments of the Permitted Dividends by the Parent or dividends by a
Subsidiary of the Parent to the Parent or any Subsidiary of the Parent or (c)
make any other distribution of any Property or cash to stockholders as such.
8.6 Nature of Business. Change the nature of its business or enter into
any business which is substantially different from the business in which it is
presently engaged.
8.7 Transactions with Affiliates. Enter into any transaction or agreement
with any Affiliate of the Parent or any of its Subsidiaries (or any Affiliate of
any such Person) unless the same is upon terms substantially comparable to those
obtainable from wholly unrelated sources or in an arms length transaction. The
Key Plant Contracts shall not result in a violation of this provision.
8.8 Loans and Investments. Make any loan, advance, extension of credit or
capital contribution to, or make or have any Investment in, any Person, or make
any commitment to make any such extension of credit or Investment, except (a)
Permitted Investments, (b) normal and reasonable advances in the ordinary course
of business, (c) trade and customer accounts receivable in accordance with the
ordinary course of business, (d) Investments in Subsidiaries of the Parent, (e)
Investments in 50% or less owned joint ventures and other Corporations not to
exceed $20,000,000 in unreturned capital Investment at any one time outstanding
provided that such joint ventures and other Corporations are in substantially
the same lines of business as the Parent and its Subsidiaries, and (f) other
Investments existing as of the date hereof which are described on the attached
Schedule 8.8.
8.9 No Subsidiaries. Form, create or acquire a Subsidiary unless the same
8.10 BP Lease. Terminate or agree to the termination of the BP Lease
without the prior written consent of all of the Lenders or amend, modify or
obtain or grant a waiver of any provision of the BP Lease if such amendment,
modification or waiver could reasonably be expected to have a material adverse
effect on the ability of the Lenders to collect, as and when due and payable,
amounts due and payable hereunder and under the other Loan Documents without the
prior written consent of the Majority Lenders.
8.11 Fiscal Year. The Parent will not (and will not permit any of its
Subsidiaries to) change its fiscal year, unless the Agent shall have consented
thereto in writing or unless required to make such change because of a change in
or amendment to the Code. In the event that the
36
Parent or any of its Subsidiaries is required to make any such change in its
fiscal year, the parties hereto agree to negotiate in good faith any changes in
this Agreement made necessary by the required change in fiscal year. Sterling
NRO, Ltd. may change its fiscal year in connection with any merger of Sterling
NRO, Ltd. into Sterling Pulp Chemicals, Ltd. which is hereby permitted under the
terms of this Agreement.
8.12 Sterling Energy. Sterling Energy shall not own any Property of any
material nature other than its undivided 50% interest under the Joint Venture
Agreement dated as of February 8, 1991 between Praxair Energy Resources, Inc.,
formerly known as UCIG Energy Resources, Inc., and Sterling Energy. Any
distributions paid to Sterling Energy under said Joint Venture Agreement shall
be promptly paid over to the Parent as dividends.
8.13 Parent Credit Facility. Amend, modify or obtain or grant a waiver of
any material provision of the Parent Credit Facility unless the same shall be
consented to in writing by the Majority Lenders (wherever consent by the
"Majority Lenders" under the Parent Credit Facility is required) or by all of
the Lenders (wherever consent by all of the "Lenders" under the Parent Credit
Facility is required) (such consent not to be unreasonably withheld); provided,
however, that execution of, or written consent to, any such amendment,
modification or waiver of any material provision of the Parent Credit Facility
by a particular Lender shall evidence the consent by such Lender required under
this Section.
8.14 Key Plant Contracts. Except as provided in Section 8.15 below,
materially amend, modify or obtain or grant a waiver of any material provision
of any of the Key Plant Contracts unless the same shall be consented to in
writing by the Majority Lenders (such consent not to be unreasonably withheld).
8.15 Revisions. Without first obtaining the written consent of the
Majority Lenders (which consent shall not be unreasonably withheld), agree or
consent to any revision to the Budget or the Plans and Specifications which (a)
results in any material reduction either in the anticipated production capacity
of the Plant or in the projected economics of the Plant), (b) extends or is
likely to extend (in the reasonable judgment of Agent) the scheduled date for
completion of the Plant Work beyond the Scheduled Completion Date or (c) would
result in an increase in the aggregate cost of the Plant Work to an amount
exceeding $60,000,000. All amendments to the Budget or Plans and Specifications
shall control advances required to be made under this Agreement after the
effective date of each such amendment, provided that such amendments have been
approved to the extent and in the manner provided for in this Section.
8.16 Third Party Obligations. The Borrower shall not permit the Authority
to fail to duly perform any negative covenant made by the Authority to the Agent
or the Lenders under any Loan Document. The Borrower shall not permit any of
the events described in Sections 9.1 (f), (g) or (h) hereof to occur with
respect to the Authority unless, within thirty (30) days following the
occurrence of such event, the Borrower shall have either (i) demonstrated to the
reasonable satisfaction of the Majority Lenders that such event cannot
reasonably be expected
37
to materially and adversely affect the validity, enforceability or priority of
any of the Security Documents or (ii) provided to the Agent supplemental
collateral of a nature and character, and pursuant to documentation, acceptable
to the Majority Lenders.
9. Defaults.
9.1 Events of Default. If any one or more of the following events (herein
called "Events of Default") shall occur, then the Agent may (and at the
direction of the Majority Lenders, shall) do any or all of the following: (1)
upon notice to the Borrower, declare the Loan Commitments terminated (whereupon
the Loan Commitments shall be terminated) and/or accelerate the Termination Date
to a date as early as the date of termination of the Loan Commitments; (2)
declare the principal amount then outstanding of and the unpaid accrued interest
on the Loans and all fees and all other amounts payable hereunder, under the
Notes and under the other Loan Documents to be forthwith due and payable,
whereupon such amounts shall be and become immediately due and payable, without
notice (including, without limitation any notice of intent to accelerate),
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower; provided that in the case of the
occurrence of an Event of Default with respect to the Parent or any of its
Subsidiaries referred to in clause (f), (g) or (h) of this Section 9.1, the Loan
Commitments shall be automatically terminated and the principal amount then
outstanding of and unpaid accrued interest on the Loans and all fees and all
other amounts payable hereunder, under the Notes and under the other Loan
Documents shall be and become automatically and immediately due and payable,
without notice (including, without limitation, notice of acceleration and notice
of intent to accelerate), presentment, demand, protest or other formalities of
any kind, all of which are hereby expressly waived by the Borrower, and (3)
exercise any or other rights and remedies available to the Agent or any of the
Lenders under the Loan Documents, at law or in equity:
(a) Payments - (i) the Borrower or any other Party shall fail to make
any payment or required prepayment of any installment of principal on the
Loans payable under the Notes, this Agreement or the other Loan Documents
when due or (ii) the Borrower or any other Party fails to make any payment
or required prepayment of interest with respect to the Loans or any other
fee or amount under the Notes, this Agreement or the other Loan Documents
when due and (except in the case of acceleration of maturity) such failure
to pay continues unremedied for a period of five days; or
(b) Other Obligations - the Parent or any of its Subsidiaries (other
than Subsidiaries that own no material assets) shall default in the payment
when due (including amounts due on acceleration) of any principal of or
interest on the Parent Credit Facility or any other Borrowed Money
Indebtedness having an outstanding principal amount of at least $5,000,000
(other than the Loans) and such default shall continue beyond any
applicable period of grace; or any event or condition shall occur which
enables (or, with the giving of notice or lapse of time or both, would
enable) the holder of the Parent
38
Credit Facility or any such other Borrowed Money Indebtedness or any Person
acting on such holder's behalf to accelerate the maturity thereof and such
event or condition shall not be cured within any applicable period of grace
and there is no reasonable ability of the Person in default to pay the
amount of principal or interest that would be due on acceleration; or
(c) Representations and Warranties - any representation or warranty
made or deemed made by or on behalf of the Borrower in this Agreement or
any other Loan Document or in any certificate furnished or made by the
Borrower to the Agent or the Lenders in connection herewith or therewith
shall, taken as a whole, prove to have contained any untrue, incorrect,
false or misleading material fact or omits to state any such fact necessary
to make the representations, warranties or other statements contained
herein or in such other document, instrument or writing not untrue, false
or misleading in any material respect as of the date thereof or as of the
date as of which the facts therein set forth were stated or certified; or
(d) Affirmative Covenants - (i) default shall be made in the due
observance or performance of any of the covenants or agreements contained
in Sections 7.3 or 7.13 hereof, (ii) any of the insurance provided for in
Section 7.7 hereof that relates to any material risk shall lapse, (iii)
default shall be made in the due observance or performance of any of the
covenants or agreements contained in Section 7.7 hereof (other than lapse
of required insurance, which is provided for above) and such default
continues unremedied for a period of 10 days after (x) notice thereof is
given by the Agent to the Borrower or (y) such default otherwise becomes
known to the Borrower, whichever is earlier or (iv) default is made in the
due observance or performance of any of the other covenants and agreements
contained in Section 7 hereof or any other affirmative covenant of the
Borrower or any other Party in this Agreement or any other Loan Document
and such default continues unremedied for a period of 30 days after (x)
notice thereof is given by the Agent to the Borrower or (y) such default
otherwise becomes known to the Borrower, whichever is earlier; or
(e) Negative Covenants - default is made in the due observance or
performance by the Borrower or any other Party of any of the other
covenants or agreements contained in Section 8 of this Agreement or of any
other negative covenant of the Borrower or any other Party contained in
this Agreement or any other Loan Document; or
(f) Involuntary Bankruptcy or Receivership Proceedings - a receiver,
conservator, liquidator or trustee of the Parent or any of its Subsidiaries
(other than Subsidiaries that own no material assets) or of any of its
property is appointed by the order or decree of any court or agency or
supervisory authority having jurisdiction, and such decree or order remains
in effect for more than 30 days; or the Parent or any of its Subsidiaries
(other than Subsidiaries that own no material assets) is adjudicated
bankrupt
39
or insolvent; or any of such Person's property is sequestered by court
order and such order remains in effect for more than 30 days; or a petition
is filed against the Parent or any of its Subsidiaries (other than
Subsidiaries that own no material assets) under any state or federal
bankruptcy, reorganization, arrangement, insolvency, readjustment or debt,
dissolution, liquidation or receivership law or any jurisdiction, whether
now or hereafter in effect, and is not dismissed within 30 days after such
filing; or
(g) Voluntary Petitions or Consents - the Parent or any of its
Subsidiaries (other than Subsidiaries that own no material assets)
commences a voluntary case or other proceeding or order seeking
liquidation, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or other relief with respect to itself or its debt
or other liabilities under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or consents to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or fails generally to, or
cannot, pay its debts generally as they become due or takes any corporate
action to authorize or effect any of the foregoing; or
(h) Assignments for Benefit of Creditors or Admissions of Insolvency -
the Parent or any of its Subsidiaries (other than Subsidiaries that own no
material assets) makes an assignment for the benefit of its creditors, or
admits in writing its inability to pay its debts generally as they become
due, or consents to the appointment of a receiver, trustee, or liquidator
of the Parent or such Subsidiary or of all or any substantial part of its
Property; or
(i) Undischarged Judgments - a final judgment or judgments for the
payment of money exceeding, in the aggregate, $5,000,000 is rendered by any
court or other governmental body against the Parent or any of its
Subsidiaries (other than Subsidiaries that own no material assets) and the
Parent or such Subsidiary does not discharge the same or provide for its
discharge in accordance with its terms, or procure a stay of execution
thereof within 30 days from the date of entry thereof; or
(j) Security Documents; Guaranties - any Security Document for any
reason ceases to create a valid and perfected first-priority Lien on any
material portion of the Collateral purported to be covered thereby, or any
Guaranty shall cease to be in full force and effect and a valid, binding
and enforceable obligation of the applicable Party (except as otherwise
herein expressly permitted), or the Parent or any of its Subsidiaries
(other than Subsidiaries that own no material assets) or any Party to a
Guaranty (or any other Person who may have granted or purported to grant
such Lien or executed any such Guaranty) will so state in writing; or
40
(k) Attachment - the Parent or any of its Subsidiaries (other than
Subsidiaries that own no material assets) shall suffer any writ of
attachment or execution or any similar process to be issued or levied
against it or any substantial part of its Property which is not released,
stayed, bonded or vacated within 30 days after its issue or levy; or
(l) ERISA Matters - (i) Parent or any member of the Controlled Group
shall fail to pay when due an amount or amounts which it shall have become
liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice
of intent to terminate a Plan or Plans shall be filed under Title IV of
ERISA; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such Plan
or Plans or a proceeding shall be instituted by a fiduciary of any such
Plan or Plans against Parent or any member of the Controlled Group to
enforce Section 5415 of ERISA; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that any
such Plan or Plans must be terminated or a contribution failure occurs with
respect to any Plan sufficient to give rise to a lien under Section 302(f)
of ERISA on the property of Parent or any member of the Controlled Group,
and (ii) in each case, such event could reasonably be expected to cause a
Material Adverse Effect; or
(m) Change of Control - there shall occur any Change of Control, or
the Parent shall cease to own (directly or indirectly) all of the issued
and outstanding equity interests in the Borrower, without the written
consent of the Majority Lenders.
9.2 Right of Setoff. Upon the occurrence and during the continuance of
any Event of Default, the Lenders each are hereby authorized at any time and
from time to time, without notice to the Parent or any of its Subsidiaries (any
such notice being expressly waived by the Parent and its Subsidiaries), to
setoff and apply any and all funds and liquid investments held in the Cash Flow
Account and any and all deposits (general or special, time or demand,
provisional or final (but excluding the funds held in accounts clearly
designated as escrow or trust accounts held by the Parent or such Subsidiary for
the benefit of Persons which are not Affiliates of the Parent or any of its
Subsidiaries), whether or not such setoff results in any loss of interest or
other penalty, and including without limitation all certificates of deposit at
any time held, and any other funds or property at any time held, and other
Indebtedness at any time owing by such Lender to or for the credit or the
account of the Parent or any such Subsidiary against any and all of the
Obligations irrespective of whether or not such Lender or the Agent will have
made any demand under this Agreement, the Notes or any other Loan Document. The
Borrower also hereby grants to each of the Lenders a security interest in and
hereby transfers, assigns, sets over, and conveys to each of the Lenders, as
security for payment of all Loans, all such deposits, funds or property of the
Parent or any such Subsidiary, or Indebtedness of any Lender to the Parent or
any such Subsidiary. Should the right of any Lender to realize funds in any
manner set forth hereinabove be challenged and any application of such funds be
reversed, whether by court order or otherwise, the Lenders shall make
restitution or refund to
41
the Borrower pro rata in accordance with their Loan Commitments. Each Lender
agrees to promptly notify the Borrower and the Agent after any such setoff and
application, provided that the failure to give such notice will not affect the
validity of such setoff and application. The rights of the Agent and the Lenders
under this Section are in addition to other rights and remedies (including
without limitation other rights of setoff) which the Agent or the Lenders may
have. This Section is subject to the terms and provisions of Sections 4.5 and
11.7 hereof.
9.3 Remedies Cumulative. No remedy, right or power conferred upon the
Agent or any Lender is intended to be exclusive of any other remedy, right or
power given hereunder or now or hereafter existing at law, in equity, or
otherwise, and all such remedies, rights and powers shall be cumulative.
10. The Agent.
10.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
appoints and authorizes the Agent to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically delegated to the Agent
by the terms hereof and thereof, together with such other powers as are
reasonably incidental thereto. The Agent (the "Agent" as used in this Section
10 shall include reference to its Affiliates and its own and its Affiliates'
respective officers, shareholders, directors, employees and agents) (a) shall
not have any duties or responsibilities except those expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee or fiduciary for any Lender;
(b) shall not be responsible to any Lender for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or in any certificate or other document referred to or provided for
in, or received by any of them under, this Agreement or any other Loan Document,
or for the value, validity, effectiveness, genuineness, enforceability,
execution, filing, registration, collectibility, recording, perfection,
existence or sufficiency of this Agreement or any other Loan Document or any
other document referred to or provided for herein or therein or any property
covered thereby or for any failure by any Party or any other Person to perform
any of its obligations hereunder or thereunder, and shall not have any duty to
inquire into or pass upon any of the foregoing matters; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Loan Document except to the extent requested by the
Majority Lenders; (d) shall not be responsible for any mistake of law or fact or
any action taken or omitted to be taken by it hereunder or under any other Loan
Document or any other document or instrument referred to or provided for herein
or therein or in connection herewith or therewith, including, without
limitation, pursuant to its own negligence, except for its own gross negligence
or willful misconduct; (e) shall not be bound by or obliged to recognize any
agreement among or between the Borrower and any Lender, regardless of whether
the Agent has knowledge of the existence of any such agreement or the terms and
provisions thereof; (f) shall not be charged with notice or knowledge of any
fact or information not herein set out or provided to the Agent in accordance
with the terms of this Agreement or any other Loan Document; (g) shall not be
responsible for any delay, error, omission or default of any mail,
42
telegraph, cable or wireless agency or operator, and (h) shall not be
responsible for the acts or edicts of any Governmental Authority. The Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. In any foreclosure proceeding concerning any Collateral,
each holder of an Obligation if bidding for its own account or for its own
account and the accounts of other Lenders is prohibited from including in the
amount of its bid an amount to be applied as a credit against the Obligations
held by it or the Obligations held by the other Lenders; instead, such holder
must bid in cash only. However, in any such foreclosure proceeding, the Agent
may (but shall not be obligated to) submit a bid for all Lenders (including
itself) in the form of a credit against the Obligations, and the Agent or its
designee may (but shall not be obligated to) accept title to such collateral for
and on behalf of all Lenders.
10.2 Reliance. The Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel (which may be counsel for the Borrower),
independent accountants and other experts selected by the Agent. The Agent
shall not be required in any way to determine the identity or authority of any
Person delivering or executing the same. As to any matters not expressly
provided for by this Agreement or any other Loan Document, the Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and thereunder in accordance with instructions of the Majority Lenders, and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders. Subject to the provisions of Section 11.5 hereof, the Agent shall have
the authority to execute releases of the Security Documents on behalf of the
Lenders without the joinder of any Lender. If any order, writ, judgment or
decree shall be made or entered by any court affecting the rights, duties and
obligations of the Agent under this Agreement or any other Loan Document, then
and in any of such events the Agent is authorized, in its sole discretion, to
rely upon and comply with such order, writ, judgment or decree which it is
advised by legal counsel of its own choosing is binding upon it under the terms
of this Agreement, the relevant Loan Document or otherwise; and if the Agent
complies with any such order, writ, judgment or decree, then it shall not be
liable to any Lender or to any other Person by reason of such compliance even
though such order, writ, judgment or decree may be subsequently reversed,
modified, annulled, set aside or vacated.
10.3 Defaults. The Agent shall not be deemed to have knowledge of the
occurrence of a Default (other than the non-payment of principal of or interest
on Loans) unless it has received notice from a Lender or the Borrower specifying
such Default and stating that such notice is a "Notice of Default." In the
event that the Agent receives such a Notice of Default, the Agent shall give
prompt notice thereof to the Lenders (and shall give each Lender prompt notice
of each such non-payment). The Agent shall (subject to Section 10.7 hereof)
take such action with respect to such Notice of Default as shall be directed by
the Majority Lenders and within its rights under the Loan Documents and at law
or in equity, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated
43
to) take such action, or refrain from taking such action, permitted hereby with
respect to such Notice of Default as it shall deem advisable in the best
interests of the Lenders and within its rights under the Loan Documents, at law
or in equity.
10.4 Rights as a Lender. With respect to its Loan Commitments and the
Loans made, TCB in its capacity as a Lender hereunder shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not acting in its agency capacity, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may (without having to account therefor to any
Lender) accept deposits from, lend money to and generally engage in any kind of
banking, trust, letter of credit, agency or other business with the Borrower
(and any of its Affiliates) as if it were not acting as the Agent, and the Agent
may accept fees and other consideration from the Borrower (in addition to the
fees heretofore agreed to between the Borrower and the Agent) for services in
connection with this Agreement or otherwise without having to account for the
same to the Lenders.
10.5 Indemnification. The Lenders agree to indemnify the Agent each (to
the extent not reimbursed under Section 11.3 or Section 11.4 hereof, but without
limiting the obligations of the Borrower under said Sections 11.3 and 11.4),
ratably in accordance with the sum of the Lenders' respective Loan Commitments
and Loans, for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever, REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE
NEGLIGENCE OF ANY INDEMNIFIED PARTIES, which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which the Borrower is
obligated to pay under Sections 11.3 and 11.4 hereof, interest, penalties,
reasonable attorneys' fees and amounts paid in settlement, but excluding, unless
a Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other
documents; provided that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified. The obligations of the Lenders under this Section 10.5
shall survive the termination of this Agreement and the repayment of the
Obligations.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
has received current financial information with respect to the Borrower and that
it has, independently and without reliance on the Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower and decision to enter into this Agreement
and that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Loan Documents. The
Agent shall not be
44
required to keep itself informed as to the performance or observance by any
Party or the Authority of this Agreement or any of the other Loan Documents or
any other document referred to or provided for herein or therein or to inspect
the properties or books of the Borrower or any Party or the Authority. Except
for notices, reports and other documents and information expressly required to
be furnished to the Lenders by the Agent hereunder or the other Loan Documents,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the affairs, financial condition or
business of the Borrower or any other Party or the Authority (or any of their
affiliates) which may come into the possession of the Agent.
10.7 Failure to Act. Except for action expressly required of the Agent
hereunder or under the Loan Documents, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder and thereunder unless it shall
receive further assurances to its satisfaction by the Lenders of their
indemnification obligations under Section 10.5 hereof against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
10.8 Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower, and the Agent may
be removed at any time with or without cause by the Majority Lenders. Upon any
such resignation or removal, (i) the Majority Lenders without the consent of the
Borrower shall have the right to appoint a successor Agent so long as such
successor Agent is also a Lender at the time of such appointment and (ii) the
Majority Lenders shall have the right to appoint a successor Agent that is not a
Lender at the time of such appointment so long as the Borrower consents to such
appointment (which consent shall not be unreasonably withheld). If no successor
Agent shall have been so appointed by the Majority Lenders and accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation or the Majority Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Any
successor Agent shall be a bank which has an office in the United States and a
combined capital and surplus of at least $250,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder and under any other Loan
Documents. Such successor Agent shall promptly specify by notice to the
Borrower its Principal Office referred to in Section 3.1 and Section 4 hereof.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Section 10 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
10.9 No Partnership. Neither the execution and delivery of this Agreement
nor any of the other Loan Documents nor any interest the Lenders, the Agent or
any of them may now or hereafter have in all or any part of the Obligations
shall create or be construed as creating a partnership, joint venture or other
joint enterprise between the Lenders or among the Lenders
45
and the Agent. The relationship between the Lenders, on the one hand, and the
Agent, on the other, is and shall be that of principals and agent only, and
nothing in this Agreement or any of the other Loan Documents shall be construed
to constitute the Agent as trustee or other fiduciary for any Lender or to
impose on the Agent any duty, responsibility or obligation other than those
expressly provided for herein and therein.
11. Miscellaneous.
11.1 Waiver. No waiver of any Default or Event of Default shall be a
waiver of any other Default or Event of Default. No failure on the part of the
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law or in equity.
11.2 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made by telex, telecopy or other
writing and telexed, telecopied, mailed or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof (or provided for in an Assignment and Acceptance); or, as to any party,
at such other address as shall be designated by such party in a notice to the
Borrower and the Agent given in accordance with this Section 11.2. Except as
otherwise provided in this Agreement, all such notices or communications shall
be deemed to have been duly given when (i) transmitted by telex or telecopier,
(ii) personally delivered (iii) one Business Day after deposit with an overnight
mail or delivery service, postage prepaid or (iv) three Business Days' after
deposit in a receptacle maintained by the United States Postal Service, postage
prepaid, registered or certified mail, return receipt requested, in each case
given or addressed as aforesaid.
11.3 Expenses, Etc. Whether or not any Loan is ever made, the Borrower
shall pay or reimburse on demand (a) the Agent for paying the reasonable fees
and expenses of one primary legal counsel to the Agent, together with the
reasonable fees and expenses of each local counsel to the Agent, in connection
with the preparation, negotiation, execution and delivery of this Agreement
(including the exhibits and schedules hereto), the Security Documents and the
other Loan Documents and the making of the Loans hereunder, and any
modification, supplement or waiver of any of the terms of this Agreement or any
other Loan Document; (b) the Agent for any lien search fees; (c) the Agent for
reasonable out-of-pocket expenses incurred in connection with the preparation,
documentation, administration and syndication of the Loans or any of the Loan
Documents (including, without limitation, the advertising, marketing, printing,
publicity, duplicating, mailing and similar expenses) of the Loans; (d) the
Agent or any Lender for paying all transfer, stamp, documentary or other similar
taxes, assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any
46
other Loan Document or any other document referred to herein or therein; (e) the
Agent or any Lender for paying all costs, expenses, taxes, assessments and other
charges incurred in connection with any filing, registration, recording or
perfection of any security interest contemplated by this Agreement, any Security
Document or any document referred to herein or therein, and (f) any Lender or
the Agent for paying all amounts reasonably expended, advanced or incurred by
such Lender or Agent to satisfy any obligation of the Borrower under this
Agreement or any other Loan Document, to protect the Collateral, to collect the
Obligations or to enforce, protect, preserve or defend the rights of such Lender
or Agent under this Agreement or any other Loan Document, including, without
limitation, fees and expenses incurred in connection with such Lender's or
Agent's participation as a member of a creditor's committee in a case commenced
under the Bankruptcy Code or other similar law, fees and expenses incurred in
connection with lifting the automatic stay prescribed in (S) 362 of the
Bankruptcy Code and fees and expenses incurred in connection with any action
pursuant to (S) 1129 of the Bankruptcy Code and all other customary out-of-
pocket expenses incurred by such Lender or Agent in connection with such
matters, together with interest thereon at the Past Due Rate on each such amount
from the date which is fifteen days after demand is made on the Borrower until
the date of reimbursement to such Lender or Agent.
11.4 Indemnification. The Borrower shall indemnify each of the Agent, the
Lenders, and each affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject,
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY
INDEMNIFIED PARTIES, insofar as such losses, liabilities, claims or damages
arise out of or result from any (i) actual or proposed use by the Borrower of
the proceeds of any extension of credit by any Lender hereunder; (ii) breach by
the Borrower of this Agreement or any other Loan Document or the breach by any
Party or the Authority of any Loan Document; (iii) violation by the Borrower or
any other Party of any Legal Requirement; (iv) investigation, litigation or
other proceeding relating to any of the foregoing, and the Borrower shall
reimburse the Agent, each Lender, and each Affiliate thereof and their
respective directors, officers, employees and agents, upon demand for any
reasonable expenses (including reasonable legal fees) incurred in connection
with any such investigation or proceeding, or (v) taxes (excluding income taxes
and franchise taxes) payable or ruled payable by any Governmental Authority in
respect of the Obligations or any Loan Document other than taxes incurred due to
a Lender's failure to comply with Section 11.13 hereof; provided, however, that
the Borrower shall not have any obligations pursuant to this Section with
respect to any losses, liabilities, claims, damages or expenses incurred by the
Person seeking indemnification by reason of the gross negligence or willful
misconduct of that Person. Nothing in this Section is intended to limit the
obligations of the Borrower under any other provision of this Agreement.
11.5 Amendments, Etc. No amendment or modification of this Agreement, the
Notes or any other Loan Document shall in any event be effective against the
Borrower unless the same shall be agreed or consented to in writing by the
Borrower. No amendment, modification
47
or waiver of any provision of this Agreement, the Notes or any other Loan
Document, nor any consent to any departure by the Borrower therefrom, shall in
any event be effective against the Lenders unless the same shall be agreed or
consented to in writing by the Majority Lenders, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, that no amendment, modification, waiver or consent
shall, unless in writing and signed by each Lender, do any of the following: (a)
increase any Loan Commitment of any of the Lenders or subject the Lenders to any
additional obligations; (b) reduce the principal of, or interest on, any Loan or
fee hereunder; (c) postpone or extend the Maturity Date, the Termination Date or
any scheduled date fixed for any payment of principal of, or interest on, any
Loan, fee or other sum to be paid hereunder or waive any Event of Default
described in Section 9.1(a) hereof; (d) change the percentage of any of the Loan
Commitments or of the aggregate unpaid principal amount of any of the Loans, or
the number of Lenders, which shall be required for the Lenders or any of them to
take any action under this Agreement; (e) change any provision contained in
Sections 7.10, 11.3 or 11.4 hereof or this Section 11.5; (f) change the
definition of "Majority Lenders" set forth in Article 1 hereof, or (g) release
the liability of any Guarantor under the Guaranties or release, in any one (1)
calendar year, Collateral having an aggregate value exceeding $1,000,000;
provided, however, that execution of, or written consent to, any amendment,
modification or waiver of a particular provision of the Parent Credit Facility
by a particular Lender shall evidence the consent by such Lender required under
this Section with respect to an amendment, modification or waiver of the
identical provision contained in this Agreement and/or the Loan Documents,
without the necessity for any further action hereunder or under the Loan
Documents. Notwithstanding anything in this Section 11.5 to the contrary, no
amendment, modification, waiver or consent shall be made with respect to Section
10 without the consent of the Agent to the extent it affects the Agent.
11.6 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Agent and the Lenders and their respective successors and assigns;
provided, however, that, except as provided in Section 11.16, the Borrower may
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of all of the Lenders, and any such assignment or transfer
without such consent shall be null and void. Each Lender may sell
participations in all or part of any Loan, or all or part of its Notes or Loan
Commitments, to another bank or other entity, in which event, without limiting
the foregoing, the provisions of the Loan Documents (including, without
limitation, the Interest Rate Agreement) shall inure to the benefit of each
purchaser of a participation; provided, however, the pro rata treatment of
payments, as described in Section 4.2 hereof, shall be determined as if such
Lender had not sold such participation. Any Lender that sells one or more
participations to any Person shall not be relieved by virtue of such
participation from any of its obligations to Borrower under this Agreement
relating to the Loans. In the event any Lender shall sell any participation,
such Lender shall retain the sole right and responsibility to enforce the
obligations of the Borrower relating to the Loans, including, without
limitation, the right to approve any amendment,
48
modification or waiver of any provision of this Agreement other than amendments,
modifications or waivers with respect to (i) any fees payable hereunder to the
Lenders, (ii) the amount of principal or the rate of interest payable on, or the
dates fixed for the scheduled repayment of principal of, the Loans and (iii) the
release of the Liens on any of the Collateral.
(b) Each Lender may assign to one or more Lenders or any other Person all
or a portion of its interests, rights and obligations under this Agreement;
provided, however, that (i) the aggregate amount of the Loan Commitments and the
Loans of the assigning Lender subject to each such assignment shall in no event
be less than $2,000,000, each such assignment shall be in a constant and not
varying percentage of all such assigning Lender's rights and obligations under
the Loan Documents and each Lender hereunder shall also be a "Lender" under the
Parent Credit Facility; (ii) other than in the case of an assignment to another
Lender (that is, at the time of the assignment, a party hereto) or to an
Affiliate of such Lender or to a Federal Reserve Bank, the Agent and, so long as
no Event of Default shall have occurred and be continuing, the Borrower must
each give its prior written consent, which consents shall not be unreasonably
withheld, and (iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance an Assignment and Acceptance in the
form of Exhibit D hereto (each an "Assignment and Acceptance") with blanks
appropriately completed, together with any Note or Notes subject to such
assignment and a processing and recording fee of $3,000.00 paid by the assignee
(for which the Borrower will have no liability). Upon such execution, delivery
and acceptance, from and after the effective date specified in each Assignment
and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (B) the Lender thereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall still have indemnification rights surviving as provided in
Section 11.8 hereof). Notwithstanding anything contained in this Agreement to
the contrary, any Lender may at any time assign all or any portion of its rights
under this Agreement and the Notes issued to it as collateral to a Federal
Reserve Bank; provided that no such assignment shall release such Lender from
any of its obligations hereunder.
(c) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant thereto; (ii) such Lender assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition
49
of the Borrower or any other Party or the performance or observance by the
Borrower or any other Party of any of its obligations under this Agreement or
any of the other Loan Documents or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 6.2 hereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such Lender assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all obligations that by the terms of this Agreement
and the other Loan Documents are required to be performed by it as a Lender.
(d) The entries in the records of the Agent as to each Assignment and
Acceptance delivered to it and the names and addresses of the Lenders and the
Loan Commitments of, and principal amount of the Loans owing to, each Lender
from time to time shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may treat each Person the name of which is
recorded in the books and records of the Agent as a Lender hereunder for all
purposes of this Agreement and the other Loan Documents.
(e) Upon the Agent's receipt of an Assignment and Acceptance executed by
an assigning Lender and the assignee thereunder, together with any Note or Notes
subject to such assignment and the written consent to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed with blanks
appropriately filled, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in its records and (iii) give prompt notice
thereof to the Borrower. Within five Business Days after receipt of notice, the
Borrower, at its own expense, shall execute and deliver to the Agent in exchange
for the surrendered Notes new Notes to the order of such assignee in an amount
equal to the Loan Commitments and the Loans (or either of them) assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Loan Commitment and Loans (or either of them) hereunder, new Notes to
the order of the assigning Lender in an amount equal to the Loan Commitment and
the Loans (or either of them) retained by it hereunder. Such new Notes shall be
in an aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the respective
Note. Thereafter, such surrendered Notes shall be marked renewed and
substituted and the originals thereof delivered to the Borrower (with copies,
certified by the Borrower as true, correct and complete, to be retained by the
Agent).
(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.6, disclose to
the assignee or participant
50
or proposed assignee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower provided that such
Person agrees in writing to the confidentiality obligations set forth in Section
11.15 hereof.
11.7 Limitation of Interest. The Borrower and the Lenders intend to
strictly comply with all applicable federal and Texas laws, including applicable
usury laws (or the usury laws of any jurisdiction whose usury laws are deemed to
apply to the Notes or any other Loan Documents despite the intention and desire
of the parties to apply the usury laws of the State of Texas). Accordingly, the
provisions of this Section 11.7 shall govern and control over every other
provision of this Agreement or any other Loan Document which conflicts or is
inconsistent with this Section, even if such provision declares that it
controls. As used in this Section, the term "interest" includes the aggregate
of all charges, fees, benefits or other compensation which constitute interest
under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be characterized as an
expense or as compensation for something other than the use, forbearance or
detention of money and not as interest, and (b) all interest at any time
contracted for, reserved, charged or received shall be amortized, prorated,
allocated and spread, in equal parts during the full term of the Obligations. In
no event shall the Borrower or any other Person be obligated to pay, or any
Lender have any right or privilege to reserve, receive or retain, (a) any
interest in excess of the maximum amount of nonusurious interest permitted under
the laws of the State of Texas or the applicable laws (if any) of the United
States or of any other state, or (b) total interest in excess of the amount
which such Lender could lawfully have contracted for, reserved, received,
retained or charged had the interest been calculated for the full term of the
Obligations at the Ceiling Rate. On each day, if any, that the interest rate
(the "Stated Rate") called for under this Agreement or any other Loan Document
exceeds the Ceiling Rate, the rate at which interest shall accrue shall
automatically be fixed by operation of this sentence at the Ceiling Rate for
that day, and shall remain fixed at the Ceiling Rate for each day thereafter
until the total amount of interest accrued equals the total amount of interest
which would have accrued if there were no such ceiling rate imposed by this
sentence. Thereafter, interest shall accrue at the Stated Rate unless and until
the Stated Rate again exceeds the Ceiling Rate, in which case, the provisions of
the immediately preceding sentence shall again automatically operate to limit
the interest accrual rate to the Ceiling Rate. The daily interest rates to be
used in calculating interest at the Ceiling Rate shall be determined by dividing
the applicable Ceiling Rate per annum by the number of days in the calendar year
for which such calculation is being made. None of the terms and provisions
contained in this Agreement or in any other Loan Document (including, without
limitation, Section 9.1 hereof) which directly or indirectly relate to interest
shall ever be construed without reference to this Section 11.7, or be construed
to create a contract to pay for the use, forbearance or detention of money at an
interest rate in excess of the Ceiling Rate. If the term of any Obligation is
shortened by reason of acceleration of maturity as a result of any Default or by
any other cause, or by reason of any required or permitted prepayment, and if
for that (or any other) reason any Lender at any time, including but not limited
to, the stated maturity, is owed or receives (and/or has received) interest in
excess of interest calculated at the Ceiling Rate, then and in any such event
all of any such excess interest shall be canceled automatically
51
as of the date of such acceleration, prepayment or other event which produces
the excess, and, if such excess interest has been paid to such Lender, it shall
be credited pro tanto against the then-outstanding principal balance of the
Borrower's obligations to such Lender, effective as of the date or dates when
the event occurs which causes it to be excess interest, until such excess is
exhausted or all of such principal has been fully paid and satisfied, whichever
occurs first, and any remaining balance of such excess shall be promptly
refunded to its payor.
11.8 Survival. The obligations of the Borrower under Sections 7.10, 11.3
and 11.4 hereof and all other obligations of the Borrower in any other Loan
Document (to the extent stated therein), and the obligations of the Lenders
under Section 10.5 and 11.7 hereof, shall survive the repayment of the Loans and
the termination of the Loan Commitments.
11.9 Captions. Captions and section headings appearing herein are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
11.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement and any of the parties hereto may execute this Agreement by signing
any such counterpart.
11.11 Governing Law. THIS AGREEMENT AND (EXCEPT AS THEREIN PROVIDED) THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
APPLICABLE LAWS (OTHER THAN THE CONFLICT OF LAWS RULES) OF THE STATE OF TEXAS
AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.
11.12 Severability. Whenever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision of any Loan Document shall be invalid, illegal
or unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions of such Loan Document shall not
be affected or impaired thereby.
11.13 Tax Forms. With respect to each Lender which is organized under the
laws of a jurisdiction outside the United States, on the day of the initial
borrowing from each such Lender hereunder and from time to time thereafter if
requested by the Borrower or the Agent, such Lender shall provide the Agent and
the Borrower with the forms prescribed by the Internal Revenue Service of the
United States certifying as to such Lender's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to such Lender hereunder or other documents satisfactory to the Lender
and the Agent indicating that all payments to be made to such Lender hereunder
are subject to such tax at a rate reduced by an applicable tax treaty. Unless
the Borrower and the Agent shall have received such forms or such documents
indicating that payments hereunder are not subject to United States withholding
tax or are subject to such tax at a rate reduced by an applicable tax treaty,
52
the Borrower or the Agent shall withhold taxes from such payments at the
applicable statutory rate in the case of payments to or for any Lender organized
under the laws of a jurisdiction outside the United States.
11.14 Venue. The Borrower hereby irrevocably (a) agrees that any legal
proceeding against the Agent or any Lender arising out of or in connection with
the Loan Documents shall be brought in the district courts of ▇▇▇▇▇▇ County,
Texas, or in the United States District Court for the Southern District of
Texas, Houston Division (collectively, the "Houston Courts"); (b) submits to the
non-exclusive jurisdiction of the Houston Courts; (c) agrees and consents that
service of process may be made upon it in any proceeding arising out of the Loan
Documents or any transaction contemplated thereby by service of process as
provided by Texas law; (d) WAIVES, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of any Loan Document or the transactions
contemplated thereby in the Houston Courts; and (e) WAIVES any claim that any
such suit, action or proceeding in any Houston Court has been brought in an
inconvenient forum. All of the obligations of the Borrower under the Loan
Documents are performable in ▇▇▇▇▇▇ County, Texas. Nothing herein shall affect
the right of the Agent or any Lender to commence legal proceedings or otherwise
proceed against the Borrower in any jurisdiction or to serve process in any
manner permitted by applicable law. The Borrower agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions in any manner provided by law.
11.15 Confidentiality. Each Lender agrees to comply with its customary
procedures to keep any information delivered or made available by the Borrower
to it confidential from anyone other than Persons employed or retained by such
Lender who are or are expected to become engaged in evaluating, approving,
structuring or administering commitments, the Loans or the Loan Documents,
provided that nothing herein shall prevent any Lender from disclosing such
information (a) to any other Lender, (b) to any Person if reasonably incidental
to the administration of the Loans, (c) upon the order of any court or
administrative agency, (d) upon the request or demand of any regulatory agency
or authority having jurisdiction over such Lender, (e) which has been publicly
disclosed, (f) in connection with any litigation to which any Lender, the Agent,
or their respective Affiliates may be a party, (f) to the extent reasonably
required or desirable in connection with the exercise of any remedy hereunder or
under any Loan Document, (h) to such Lender's legal counsel and independent
auditors, and (i) to any actual or proposed participant or assignee of all or
part of its Loans, Loan Commitment or participations hereunder.
11.16 Permitted Transfer to a US Subsidiary. Upon thirty (30) days' prior
written notice to the Agent, the Borrower may assign and transfer all of its
duties, liabilities and obligations under this Agreement and under the other
Loan Documents to any Subsidiary of the Parent which is organized in the United
States and substitute such Subsidiary for the "Borrower" for all purposes under
this Agreement and the other Loan Documents. In the event of any such
53
transfer, the present Borrower, Sterling Pulp Chemicals, Ltd., shall be released
from all of its duties, liabilities and obligations hereunder subject to and
contingent upon the following:
(i) assumption by the applicable Subsidiary of all of the duties,
liabilities and obligations of Sterling Pulp Chemicals, Ltd. under
this Agreement and the other Loan Documents;
(ii) Section 3.2(d) hereof shall have been amended to require amortization
of the unpaid principal balance of the Loans in equal installments
due and payable (x) on the later of October 1, 1997 or the Quarterly
Date first occurring after an assignment pursuant to this Section,
(y) on each Quarterly Date thereafter prior to the Maturity Date and
(z) on the Maturity Date;
(iii) transfer and conveyance by Sterling Pulp Chemicals, Ltd. to the
applicable Subsidiary of all rights, titles and interests, then
currently owned or thereafter acquired, in and to the Cash Flow
Account, the Bond Documents and the Bonds;
(iv) ratification by the Parent of its Guaranty; and
(v) review and approval by the Agent (such approval not to be
unreasonably withheld) of the documentation evidencing such transfer
and evidencing the satisfaction of the above-described conditions
precedent.
Upon satisfaction of the above-described conditions precedent, the Agent shall
execute and deliver to Sterling Pulp Chemicals, Ltd. a written release from any
further duties, liabilities or obligations under this Agreement or any of the
Loan Documents. The release of Sterling Pulp Chemicals, Ltd. from its duties,
liabilities and obligations under this Agreement and the other Loan Documents
shall not become effective until the execution and delivery of such written
release by the Agent.
11.17 Canadian Taxes. All payments made by the Borrower under this
Agreement, under the Notes or under any of the other Loan Documents are to be
made without any deduction or withholding for or on account of any present or
future tax, levy, impost, duty, charge, assessment or fee of any nature
(including, without limitation, interest, penalties and additions thereto) that
is imposed by any Canadian Governmental Authority in respect of a payment under
this Agreement, under the Notes or under any of the other Loan Documents (a
"Canadian Tax"). If the Borrower is required by any applicable law, rule or
regulation to make any deduction or withholding for or on account of any
Canadian Tax from any payment to be made by it under this Agreement, under the
Notes or under any other Loan Documents, then the Borrower shall (i) promptly
notify the Lender that is entitled to such payment of such requirement, in
writing (with a copy to the Agent) to so deduct or withhold such Canadian Tax,
(ii) pay to the relevant authorities the full amount required to be so deducted
or withheld promptly upon the earlier of determining that such deduction or
withholding is required or
54
receiving notice that such amount has been assessed against such Lender, (iii)
promptly forward to such Lender an official receipt (or certified copies
thereof), or other documentation reasonably acceptable to such Lender,
evidencing such payment to such authorities (with copies to the Agent) and (iv)
pay, to the extent permitted by law, to the Agent for the account of such
Lender, such additional amount as is necessary to ensure that the total amount
actually received by such Lender will equal the full amount of the payment such
Lender would have received had no such deduction or withholding been required.
The provisions of this Section shall not apply with respect to Canadian Taxes
paid or incurred by any Lender organized under the laws of Canada (or a Province
of Canada) and accruing after a transfer to a Subsidiary of the Parent organized
in the United States pursuant to Section 11.16 hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
STERLING PULP CHEMICALS, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
Title: Treasurer
----------
Address for Notices:
▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
55
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Agent and as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Vice President
Address for Notices:
Loan Commitment: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
$6,500,000 Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
56
[STERLING PULP CHEMICALS, LTD. LETTERHEAD]
REQUEST FOR EXTENSION OF CREDIT
-------------------------------
________________, 199____
Texas Commerce Bank National Association, as Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Refining and Petrochemicals Group
Gentlemen:
The undersigned hereby certifies that the undersigned is the
_________________________________ of STERLING PULP CHEMICALS, LTD., a
corporation organized under the laws of the Province of Ontario, Canada (the
"Borrower"), and that as such the undersigned is authorized to execute this
Request for Extension of Credit (the "Request") on behalf of the Borrower
pursuant to the Credit Agreement (as it may be amended, supplemented or restated
from time to time, the "Credit Agreement") dated as of September 28, 1995, by
and among the Borrower, Texas Commerce Bank National Association, as Agent, and
the Lenders a party thereto. The Loan being requested hereby is to be in the
amount set forth in (b) below and is requested to be made on __________________,
199____, which is a Business Day. The undersigned further certifies, represents
and warrants that to the undersigned's knowledge, after due inquiry (each
capitalized term used herein having the same meaning given to it in the Credit
Agreement unless otherwise specified herein):
(a) As of the date hereof, the unused aggregate
amount of the Loan Commitments is: $__________
(b) The Borrower hereby requests under this Request a Loan in the amount
of $__________.
(c) Except to the extent that such representations and warranties
expressly relate to an earlier specified date, the representations and
warranties made in each Loan Document are true and correct in all
material respects on and as of the time of delivery hereof, with the
same force and effect as if made on and as of the time of delivery
hereof.
EXHIBIT A
to Credit Agreement
Page 1
(d) No event which has had (or could reasonably be expected to have) a
Material Adverse Effect has occurred and is continuing.
(e) No Default or Event of Default has occurred and is continuing or will
occur as a result of the making of the Loan requested hereby.
Thank you for your attention to this matter.
Very truly yours,
STERLING PULP CHEMICALS, LTD.
By: _______________________________
Name:______________________________
Title:_____________________________
EXHIBIT A
to Credit Agreement
Page 2
SUBSIDIARIES
------------
1. Sterling Chemicals International, Inc., a Delaware corporation (100% owned
by Borrower)
2. Sterling Chemicals Energy, Inc., a Delaware corporation (100% owned by
Borrower)
3. Sterling Canada, Inc., a Delaware corporation (100% owned by Borrower)
4. Sterling Chemicals Marketing, Inc., a U.S. Virgin Islands corporation (100%
owned by Borrower)
5. Sterling NRO, Ltd., an Ontario corporation (100% owned by Sterling Canada,
Inc.)
6. Sterling Pulp Chemicals US, Inc., a Delaware corporation (100% owned by
Sterling Canada, Inc.)
7. Sterling Pulp Chemicals, Ltd., an Ontario corporation (100% owned by
Sterling Canada, Inc.)
EXHIBIT B
NOTE
Houston, Texas
$__________________ _____________, 199___
FOR VALUE RECEIVED, STERLING PULP CHEMICALS, LTD. ("Maker"), a
-----
corporation organized under the laws of the Province of Ontario, Canada,
promises to pay to the order of _______________________________________________
("Payee"), a _________________, at the principal office of Texas Commerce
Bank National Association, a national banking association, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, in immediately available funds and in
lawful money of the United States of America, the principal sum of
________________________________________________________ Dollars
($__________________) (or the unpaid balance of all principal advanced against
this note, if that amount is less), together with interest on the unpaid
principal balance of this note from time to time outstanding at the rate or
rates provided in that certain Interest Rate Agreement (as amended,
supplemented, restated or replaced from time to time, the "Interest Rate
Agreement") attached as Schedule 1 to the Credit Agreement (hereinafter
defined); provided, that for the full term of this note the interest rate
produced by the aggregate of all sums paid or agreed to be paid to the holder of
this note for the use, forbearance or detention of the debt evidenced hereby
(including, but not limited to, all interest on this note at the Stated Rate
plus the Additional Interest) shall not exceed the Ceiling Rate. Any term
defined in the Interest Rate Agreement or in that certain Credit Agreement (as
amended, supplemented, restated or replaced from time to time, the "Credit
Agreement") dated as of September 28, 1995 among Maker, certain signatory
financial institutions named therein, and Texas Commerce Bank National
Association, as Agent, which is used in this note and which is not otherwise
defined in this note shall have the meaning ascribed to it in the Credit
Agreement or the Interest Rate Agreement, as the case may be.
1. Credit Agreement; Advances; Security. This note has been issued
pursuant to the terms of the Credit Agreement, and is one of the Notes referred
to in the Credit Agreement. Advances against this note by Payee or other holder
hereof shall be governed by the terms and provisions of the Credit Agreement.
Reference is hereby made to the Credit Agreement for all purposes. Payee is
entitled to the benefits of and security provided for in the Credit Agreement.
The unpaid principal balance of this note at any time shall be the total of all
amounts lent or advanced against this note less the amount of all payments or
permitted prepayments made on this note and by or for the account of Maker. All
loans and advances and all payments and permitted prepayments made hereon may be
endorsed by the holder of this note on a schedule which may be attached hereto
(and thereby made a part hereof for all purposes) or otherwise recorded in the
holder's records; provided, that any failure to make notation (or any error in
such notation) of (a) any advance shall not cancel, limit or otherwise affect
Maker's obligations or any holder's rights with respect to that advance, or (b)
any payment or permitted prepayment
EXHIBIT C
to Credit Agreement
Page 1
of principal shall not cancel, limit or otherwise affect Maker's entitlement to
credit for that payment as of the date received by the holder.
2. Mandatory Payments of Principal and Interest.
(a) Accrued and unpaid interest on the unpaid principal balance of this
note shall be due and payable on the Interest Payment Dates in accordance with
the terms of the Credit Agreement and the Interest Rate Agreement.
(b) The principal of this note shall be due and payable in quarterly
installments due on each Quarterly Date, beginning on October 1, 1997, equal to
___________% times the amount provided under Section 3.2(d) of the Credit
Agreement (subject to adjustment as provided in the Credit Agreement). On the
Maturity Date, the entire unpaid principal balance of this note and all accrued
and unpaid interest on the unpaid principal balance of this note shall be
finally due and payable.
(c) The Credit Agreement provides for required prepayments of the
indebtedness evidenced hereby upon terms and conditions specified therein.
3. No Usury Intended; Spreading. Notwithstanding any provision to the
contrary contained in this note or any of the other Loan Documents, it is
expressly provided that in no case or event shall the aggregate of (i) all
interest on the unpaid balance of this note, accrued or paid from the date
hereof and (ii) the aggregate of any other amounts accrued or paid pursuant to
this note or any of the other Loan Documents, which under applicable laws are or
may be deemed to constitute interest upon the indebtedness evidenced by this
note from the date hereof, ever exceed the Ceiling Rate. In this connection,
Maker and Payee stipulate and agree that it is their common and overriding
intent to contract in strict compliance with applicable federal and Texas usury
laws (and the usury laws of any other jurisdiction whose usury laws are deemed
to apply to this note or any of the other Loan Documents despite the intention
and desire of the parties to apply the usury laws of the State of Texas). In
furtherance thereof, none of the terms of this note or any of the other Loan
Documents shall ever be construed to create a contract to pay, as consideration
for the use, forbearance or detention of money, interest at a rate in excess of
the Ceiling Rate. Maker or other parties now or hereafter becoming liable for
payment of the indebtedness evidenced by this note shall never be liable for
interest in excess of the Ceiling Rate. If, for any reason whatever, the
interest paid or received on this note during its full term produces a rate
which exceeds the Ceiling Rate, the holder of this note shall credit against the
principal of this note (or, if such indebtedness shall have been paid in full,
shall refund to the payor of such interest) such portion of said interest as
shall be necessary to cause the interest paid on this note to produce a rate
equal to the Ceiling Rate. All sums paid or agreed to be paid to the holder of
this note for the use, forbearance or detention of the indebtedness evidenced
hereby shall, to the extent permitted by applicable law, be amortized,
EXHIBIT C
to Credit Agreement
Page 2
prorated, allocated and spread in equal parts throughout the full term of this
note, so that the interest rate is uniform throughout the full term of this
note. The provisions of this Paragraph shall control all agreements, whether now
or hereafter existing and whether written or oral, between Maker and Payee.
4. Default. The Credit Agreement provides for the acceleration of the
maturity of this note and other rights and remedies upon the occurrence of
certain events specified therein.
5. Waivers by Maker and Others. Except to the extent, if any, that
notice of default is expressly required herein or in any of the other Loan
Documents, Maker and any and all co-makers, endorsers, guarantors and sureties
severally waive notice (including, but not limited to, notice of intent to
accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in collecting and
the filing of suit for the purpose of fixing liability and consent that the time
of payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its liability
on or with respect to this note shall not be affected by any release of or
change in any guaranty or security at any time existing or by any failure to
perfect or to maintain perfection of any lien against or security interest in
any such security or the partial or complete unenforceability of any guaranty or
other surety obligation, in each case in whole or in part, with or without
notice and before or after maturity.
6. Paragraph Headings. Paragraph headings appearing in this note are
for convenient reference only and shall not be used to interpret or limit the
meaning of any provision of this note.
7. Choice of Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES
OF AMERICA FROM TIME TO TIME IN EFFECT.
8. Successors and Assigns. This note and all the covenants and
agreements contained herein shall be binding upon, and shall inure to the
benefit of, the respective legal representatives, heirs, successors and assigns
of Maker and Payee.
9. Records of Payments. The records of Payee shall be prima facie
evidence of the amounts owing on this note.
10. Severability. If any provision of this note is held to be
illegal, invalid or unenforceable under present or future laws, the legality,
validity and enforceability of the remaining provisions of this note shall not
be affected thereby, and this note shall be liberally construed so as to carry
out the intent of the parties to it.
EXHIBIT C
to Credit Agreement
Page 3
11. Business Loans. Maker warrants and represents to Payee and all
other holders of this note that all loans evidenced by this note are and will be
for business, commercial, investment or other similar purpose and not primarily
for personal, family, household or agricultural use, as such terms are used in
Chapter One.
STERLING PULP CHEMICALS, LTD.
By: __________________________
Name:_________________________
Title:________________________
EXHIBIT C
to Credit Agreement
Page 4
ASSIGNMENT AND ACCEPTANCE
-------------------------
Dated: ___________________, 199___
Reference is made to the Credit Agreement dated as of September 28, 1995
(as restated, amended, modified, supplemented and in effect from time to time,
the "Credit Agreement"), among Sterling Pulp Chemicals, Ltd., a corporation
organized under the laws of the Province of Ontario, Canada (the "Borrower"),
the Lenders a party thereto, and Texas Commerce Bank National Association, as
Agent (the "Agent"). Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit Agreement. This
Assignment and Acceptance, between the Assignor (as defined and set forth on
Schedule I hereto and made a part hereof) and the Assignee (as defined and set
forth on Schedule I hereto and made a part hereof) is dated as of the Effective
Date (as set forth on Schedule I hereto and made a part hereof).
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date, an undivided ________% interest (the "Assigned Interest") in and
to all the Assignor's rights and obligations under the Credit Agreement as set
forth on Schedule I (the "Assigned Facility").
2. The Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement, any other Loan Document or any other instrument
or document furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower, the Parent or the Parent's Subsidiaries or the performance or
observance by the Borrower, the Parent or the Parent's Subsidiaries of any of
its respective obligations under the Credit Agreement, any other Loan Document
or any other instrument or document furnished pursuant thereto; and (iii)
attaches the Note held by it evidencing the Assigned Facility, as the case may
be, and requests that the Agent exchange such Note for a new Note payable to the
Assignor (if the Assignor has retained any interest in the Assigned Facility)
and a new Note payable to the Assignee in the respective amounts which reflect
the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance and, upon the effectiveness of this
Assignment and Acceptance,
EXHIBIT D
to Credit Agreement
Page 1
that it will be in compliance with Section 11.6 of the Credit Agreement; (ii)
confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements referred to in Section 6.2 thereof, or if
later, the most recent financial statements delivered pursuant to Section 7.2
thereof, and such other documents and information as it has deemed appropriate
to make its own credit analysis; (iii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iv) appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under the Credit Agreement as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (v) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender; (vi) if the Assignee is organized under the laws
of a jurisdiction outside the United States, attaches the forms prescribed by
the Internal Revenue Service of the United States certifying as to the
Assignee's exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement or such other
documents as are necessary to indicate that all such payments are subject to
such tax at a rate reduced by an applicable tax treaty, and (vii) has supplied
the information requested on the administrative questionnaire submitted by the
Agent.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance by it and the Borrower and recording by
the Agent pursuant to Section 11.6 of the Credit Agreement, effective as of the
Effective Date (which Effective Date shall, unless otherwise agreed to by the
Agent, be at least five Business Days after the execution of this Assignment and
Acceptance).
5. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignee,
whether such amounts have accrued prior to the Effective Date or accrue
subsequent to the Effective Date. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to the Effective Date by
the Agent or with respect to the making of this assignment directly between
themselves.
6. From and after the Effective Date, (i) the Assignee shall be a party
to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder, and (ii) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
EXHIBIT D
to Credit Agreement
Page 2
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective duly authorized officers on
Schedule I hereto.
EXHIBIT D
to Credit Agreement
Page 3
SCHEDULE I TO ASSIGNMENT AND ACCEPTANCE
Legal Name of Assignor: ______________________________________________
Legal Name of Assignee: ______________________________________________
Effective Date of Assignment: __________________, 199___
Assigned Principal
Facility Amount Assigned
-------- ---------------
Loans: $______________
Accepted:
TEXAS COMMERCE BANK NATIONAL __________________________________
ASSOCIATION, as Agent as Assignor
By: _____________________________ By: _____________________________
Name: ___________________________ Name: ___________________________
Title: __________________________ Title: __________________________
_________________________________
as Assignee
By: _____________________________
Name: ___________________________
Title: __________________________
EXHIBIT D
to Credit Agreement
Page 1
Acknowledged and Agreed:
STERLING PULP CHEMICALS, LTD.
By: _____________________________
Name: ___________________________
Title: __________________________
EXHIBIT D
to Credit Agreement
Page 2
COMPLIANCE CERTIFICATE
----------------------
The undersigned hereby certifies that the undersigned is the
______________________________ of STERLING PULP CHEMICALS, LTD., a corporation
organized under the laws of the Province of Ontario, Canada (the "Borrower"),
and that as such the undersigned is authorized to execute this certificate on
behalf of the Borrower pursuant to the Credit Agreement (as it may be amended,
supplemented or restated from time to time, the "Credit Agreement") dated as of
September 28, 1995, by and among the Borrower, TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association, as Agent, and the financial
institutions a party thereto; and that a review of the Borrower, the Parent and
the Parent's Subsidiaries has been made under the supervision of the undersigned
with a view to determining whether the Borrower, the Parent and the Parent's
Subsidiaries have fulfilled all of their respective obligations under the Credit
Agreement, the Notes and the other Loan Documents; and on behalf of the Borrower
further certifies, represents and warrants that to the undersigned's knowledge,
after due inquiry (each capitalized term used herein having the same meaning
given to it in the Credit Agreement unless otherwise specified):
(a) The financial statements delivered to the Agent concurrently with this
Compliance Certificate have been prepared in accordance with GAAP
consistently followed throughout the period indicated and fairly present the
financial condition and results of operations of the applicable Persons as
at the end of, and for, the period indicated (subject, in the case of
Quarterly Financial Statements and monthly statements of income and cash
flow, to normal changes resulting from year-end adjustments).
(b) No Default or Event of Default has occurred and is continuing. In this
regard, the compliance with the provisions of Sections 7.3 of the Credit
Agreement is as follows:
(i) SECTION 7.3(A) -- DEBT TO EBITDA RATIO
Actual Required
------ --------
______ to 1.00 4.00 to 1.00
(ii) SECTION 7.3(B) -- FIXED CHARGE COVERAGE RATIO
Actual Required
------ --------
______ to 1.00 1.25 to 1.00
EXHIBIT E
to Credit Agreement
Page 1
(iii) SECTION 7.3(C) -- ADJUSTED FIXED CHARGE RATIO (only required in the case
of dividends)
Actual Required
------ --------
______ to 1.00 1.10 to 1.00
(iv) SECTION 7.3(D) -- NET WORTH
Actual Required
------ --------
$_____________ $_______________
(v) SECTION 7.3(E) -- CURRENT RATIO
Actual Required
------ --------
______ to 1.00 1.10 to 1.00
DATED as of ____________________, 199___.
___________________________________
[SIGNATURE OF AUTHORIZED OFFICER]
EXHIBIT E
to Credit Agreement
Page 2
EXHIBIT F
PLANT LAND
Tract I (Easement Tract: All that tract or parcel of land situate, lying and
being in Land Lots 153 and 170 of the 11th Land District of Lowndes County,
Georgia and being all of that certain 6.80 acres of land depicted as Tract IV
upon that certain plat or map of survey made by ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Georgia
Registered Land Surveyor No. 2101 dated 8/14/95 entitled "Survey for
Valdosta-Lowndes County Industrial Authority", a copy of which is of record in
Plat Record Book 38, page 200, Lowndes County Deed Records and which is more
particularly described, by metes and bounds, as follows: Commence at a point on
the easterly margin of the right of way of Perimeter Road (200 foot right of
way) which is located north 00 degrees 53 minutes 06 seconds east a distance of
1968.90 feet from the northeast corner of the intersection of the right of way
of Perimeter Road and the right of way of Georgia Southern and Florida Railroad
(100 foot right of way); thence north 89 degrees 15 minutes 00 seconds east
930.87 feet; thence south 01 degrees 05 minutes 36 seconds west 191.85 feet;
thence south 83 degrees 47 minutes 00 seconds east 517.81 feet; thence south 00
degrees 56 minutes 08 seconds west 118.78 feet; thence north 87 degrees 26
minutes 55 seconds west 185.43 feet; thence north 56 degrees 35 minutes 51
seconds west 65.94 feet; thence south 82 degrees 59 minutes 57 seconds west 380
feet; thence north 72 degrees 43 minutes 37 seconds west 862.95 feet to the
easterly margin of the right of way of Perimeter Road; and thence run north 00
degrees 53 minutes 06 seconds east 100 feet to the point of beginning.
Tract 2: All that tract or parcel of land situate, lying and being in Land ▇▇▇
▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and being all of that
certain 28.00 acres of land depicted as Tract I upon that certain plat or map of
survey made by ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Georgia Registered Land Surveyor No. 2101
dated 8-14-95 entitled "Survey for Valdosta-Lowndes County Industrial
Authority", a copy of which is of record in Plat Record Book 38, page 200,
Lowndes County Deed Records and which is more particularly described by metes
and bounds as follows: Commence at a point located on the northerly margin of
the right of way of Georgia Southern and Florida Railroad (100 foot right of
way) which is located south 87 degrees 07 minutes 21 seconds east of the
northeast corner of the intersection of Georgia Southern and Florida Railroad
right of way with Perimeter Road right of way a distance of 1487.32 feet; thence
north 07 degrees 00 minutes 03 seconds west 1657.59 feet; thence south 87
degrees 26 minutes 55 seconds east 185.43 feet; thence south 87 degrees 26
minutes 55 seconds east 451.86 feet; thence south 87 degrees 26 minutes 55
seconds east 113.89 feet; thence south 07 degrees 00 minutes 03 seconds east
1635.44 feet to a point on the northerly margin of Georgia Southern and Florida
Railroad right of way; and thence run north 89 degrees 07 minutes 21 seconds
west 747.82 feet to the point of beginning.
Page 1 of 2
EXHIBIT F
Survey map for Valdosta - Lowndes County
Tract 1 (Easement Tract)
and Tract 2
[MAP APPEARS HERE]
SCHEDULE 1
INTEREST RATE AGREEMENT
THIS INTEREST RATE AGREEMENT (this "Agreement") is attached as
SCHEDULE 1 to the Credit Agreement (as amended, supplemented, restated or
replaced from time to time, the "Credit Agreement"), of even date herewith, by
and among STERLING PULP CHEMICALS, LTD. ("Borrower"), a corporation organized
under the laws of the Province of Ontario, Canada, certain financial
institutions from time to time a party thereto, and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION (in such capacity "Agent"), a national banking association acting as
agent for such financial institutions.
RECITALS
1. Any capitalized term defined in the Credit Agreement which is used
in this Agreement shall, unless otherwise defined herein, have the meaning
ascribed to it in the Credit Agreement.
2. For convenience, Borrower and Agent desire to gather the
provisions of the Loan Documents relating solely to interest, including the
selection of interest rate options, into a separate agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the execution and delivery of the
Notes, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
Capitalized words and phrases used in this Agreement have the meanings
provided below. Unless otherwise stated, references to sections are to sections
in this Agreement.
Additional Interest means the aggregate of all amounts accrued or paid
pursuant to the Notes or any of the other Loan Documents (other than interest on
the Notes at the Stated Rate) which, under applicable laws, are or may be deemed
to constitute interest on the indebtedness evidenced by the Notes.
Base Rate means for any day a rate per annum equal to the lesser of
(a) the greater of (1) the Prime Rate for that day and (2) the Federal Funds
Rate for that day plus 1/2 of 1% or (b) the Ceiling Rate. If for any reason
Agent shall have determined (which determination shall be conclusive and
binding, absent manifest error) that it is unable to ascertain the Federal Funds
Rate for any reason, including, without limitation, the inability or failure of
Agent to obtain
SCHEDULE 1
to Credit Agreement
sufficient quotations in accordance with the terms hereof, the
Base Rate shall, until the circumstances giving rise to such inability no longer
exist, be the lesser of (a) the Prime Rate or (b) the Ceiling Rate.
Base Rate Borrowing means that portion of the principal balance of the
Loans at any time bearing interest at the Base Rate.
Ceiling Rate means, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of applicable federal or Texas laws
permits the higher interest rate, stated as a rate per annum. On each day, if
any, that Chapter One establishes the Ceiling Rate, the Ceiling Rate shall be
the "indicated rate ceiling" (as defined in Chapter One) for that day. Agent may
from time to time, as to current and future balances, implement any other
ceiling under Chapter One by notice to Borrower, if and to the extent permitted
by Chapter One. Without notice to Borrower or any other person or entity, the
Ceiling Rate shall automatically fluctuate upward and downward as and in the
amount by which such maximum nonusurious rate of interest permitted by
applicable law fluctuates.
Chapter One means Chapter One of Title 79, Texas Revised Civil
Statutes, 1925, as amended.
Eurodollar Business Day means a Business Day on which transactions in
United States dollar deposits between banks may be carried on in whatever
Eurodollar interbank market may be selected by Agent in accordance herewith.
Eurodollar Interbank Rate means, for each Interest Period, the rate of
interest per annum, rounded, if necessary, to the next highest whole multiple of
one-sixteenth percent (1/16%), quoted by Agent at or before 10:00 a.m., Houston,
Texas time (or as soon thereafter as practicable), on the date two Eurodollar
Business Days before the first day of such Interest Period, to be the arithmetic
average of the prevailing rates per annum at the time of determination and in
accordance with the then existing practice in the applicable market, for the
offering to Agent by one or more prime banks selected by Agent in its sole
discretion, in whatever Eurodollar interbank market may be selected by Agent in
its sole discretion, of deposits in Dollars for delivery on the first day of
such Interest Period and having a maturity equal to the length of such Interest
Period and in an amount equal (or as nearly equal as may be) to the Eurodollar
Rate Borrowing to which such Interest Period relates. Each determination by
Agent of the Eurodollar Interbank Rate shall be conclusive and binding, absent
manifest error, and may be computed using any reasonable averaging and
attribution method.
Eurodollar Rate means for any day a rate per annum equal to the lesser
of (a) the sum of (1) the Eurodollar Interbank Rate in effect on the first day
of the Interest Period for the applicable Eurodollar Rate Borrowing plus (2) the
applicable Margin Percentage in effect on the first day of the Interest Period
for the applicable Eurodollar Rate Borrowing and (b) the Ceiling
2
Rate. Each Eurodollar Rate is subject to adjustments for reserves and other
matters as provided for in Section 2.3 hereof.
Eurodollar Rate Borrowing means each portion of the principal balance
of the Loans at any time bearing interest at a Eurodollar Rate.
Eurodollar Reserve Requirement means, on any day, for any Loans of any
Lender bearing interest at the Eurodollar Rate and any Interest Period, the
average maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained by such Lender during such
Interest Period under Regulation D against "Eurocurrency liabilities" (as such
term is used in Regulation D). Each determination of the Eurodollar Reserve
Requirement by a Lender shall be conclusive and binding, absent manifest error,
and may be computed using any reasonable averaging and attribution method.
Federal Funds Rate means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by Agent in its sole and absolute discretion.
Funding Loss means, with respect to (a) Borrower's payment of
principal of a Eurodollar Rate Borrowing on a day before the last day of the
applicable Interest Period; (b) Borrower's failure to borrow a Eurodollar Rate
Borrowing on the date specified by Borrower; (c) Borrower's failure to make any
prepayment of the Loans (other than Base Rate Borrowings) on the date specified
by Borrower, or (d) any cessation of a Eurodollar Rate to apply to the Loans or
any part thereof pursuant to Section 2.3, in each case whether voluntary or
involuntary, any loss, expense, penalty, premium or liability incurred by any
Lender (including but not limited to any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain a Loan).
Interest Options means the Base Rate and each Eurodollar Rate, and
"Interest Option" means either of them.
Interest Payment Dates means (a) for Base Rate Borrowings, January
1, 1996 and the first day of each October, January, April and July thereafter
prior to the Maturity Date and the Maturity Date; and (b) for Eurodollar Rate
Borrowings, the end of the applicable Interest Period (and if such Interest
Period exceeds three months' duration, quarterly, commencing on the first
quarterly anniversary of the first day of such Interest Period) and the Maturity
Date.
3
Interest Period means, for each Eurodollar Rate Borrowing, a period
commencing on the date such Eurodollar Rate Borrowing began and ending on the
numerically corresponding day which is, subject to availability, not less than 1
nor more than 12 months thereafter, as Borrower shall elect in accordance
herewith; provided, (v) any Interest Period with respect to a Eurodollar Rate
Borrowing which would otherwise end on a day which is not a Eurodollar Business
Day shall be extended to the next succeeding Eurodollar Business Day, unless
such Eurodollar Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Eurodollar Business Day; (w) any
Interest Period with respect to a Eurodollar Rate Borrowing which begins on the
last Eurodollar Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Eurodollar Business Day of the
appropriate calendar month; (x) no Interest Period shall ever extend beyond the
Maturity Date; and (y) Interest Periods shall be selected by Borrower in such a
manner that the Interest Period with respect to any portion of the Loans which
shall become due shall not extend beyond such due date.
Margin Percentage means:
(a) On any day prior to the first adjustment after the date hereof
pursuant to clause (b) of this definition, 0.65;
(b) the Margin Percentage for any day shall be the applicable per annum
percentage set forth at the appropriate intersection in the table
shown below, based on the Debt to EBITDA Ratio for the Parent (on a
consolidated basis) as of the last day of each March, June, September
and December (beginning with the fiscal quarter ending on September
30, 1995) (such increase or decrease to be effective on the date that
Borrower delivers the Quarterly Financial Statements for the fiscal
quarter ending on such date to the Agent pursuant to the terms of the
Credit Agreement):
Eurodollar Rate
Debt to Borrowings Margin
EBITDA Ratio Percentage
------------------------------- -----------------
Greater than or equal to 3.50 1.25
Greater than or equal to
2.50 but less than 3.50 1.00
Greater than or equal to
1.50 but less than 2.50 0.75
Less than 1.50 0.65
4
Prime Rate means, on any day, the prime rate for that day as announced
from time to time by TCB and thereafter entered in the minutes of its Loan and
Discount Committee. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate or a favored rate, and TCB, Agent and each
Lender disclaims any statement, representation or warranty to the contrary.
TCB, Agent or any Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
Rate Designation Date means that Business Day which is (a) in the case
of Base Rate Borrowings, 11:00 a.m., Houston, Texas time, on the date of such
borrowing and (b) in the case of Eurodollar Rate Borrowings, 11:00 a.m.,
Houston, Texas time, on the date three Eurodollar Business Days preceding the
first day of any proposed Interest Period.
Rate Designation Notice means a written notice substantially in the
form of Exhibit A.
Regulation D means Regulation D of the Board of Governors of the
Federal Reserve System from time to time in effect and includes any successor or
other regulation relating to reserve requirements applicable to member banks of
the Federal Reserve System.
Stated Rate means the effective weighted per annum rate of interest
applicable to the Loans. Without notice to Borrower or any other person or
entity, the Stated Rate shall automatically fluctuate upward and downward in
accordance with the provisions of this definition.
Taxes means any tax, levy, impost, duty, charge or fee.
2. INTEREST OPTIONS FOR LOANS
2.1 Options Available. The outstanding principal balance of the Notes
shall bear interest at the Base Rate; provided, that (1) all amounts, both
principal and accrued interest, remaining past due beyond the grace period (if
any) provided in the Credit Agreement shall bear interest at the Past Due Rate,
and (2) subject to the provisions hereof, Borrower shall have the option of
having all or any portion of the principal balances of the Notes from time to
time outstanding bear interest at a Eurodollar Rate. The records of Agent with
respect to Interest Options, Interest Periods and the amounts of Loans to which
they are applicable shall be binding and conclusive, absent manifest error.
Interest on the Loans shall be calculated at the Base Rate except where it is
expressly provided pursuant to this Agreement that a Eurodollar Rate or the Past
Due Rate is to apply. Interest on the amount of each advance against the Notes
shall be computed on the amount of that advance and from the date it is made.
Notwithstanding anything in this Agreement to the contrary, for the full term of
the Notes the interest rate produced by the aggregate of all sums paid or agreed
to be paid to the holders of the Notes for the use, forbearance or detention of
the debt evidenced thereby (including all interest on the Notes at the Stated
Rate plus the Additional Interest) shall not exceed the Ceiling Rate.
5
2.2 Designation and Conversion. Borrower shall have the right to
designate or convert its Interest Options in accordance with the provisions
hereof. Subject to the last sentence of Section 2.1 and the provisions of
Section 2.3, Borrower may elect to have a Eurodollar Rate apply or continue to
apply to all or any portion of the principal balance of the Notes. Each change
in Interest Options shall be a conversion of the rate of interest applicable to
the specified portion of the Loans, but such conversion shall not change the
respective outstanding principal balances of the Notes. The Interest Options
shall be designated or converted in the manner provided below:
(a) Borrower shall give Agent telephonic notice, promptly confirmed by a
Rate Designation Notice. Each such telephonic and written notice
shall specify the amount of the Loan which is the subject of the
designation, if any; the amount of borrowings into which such
borrowings are to be converted or for which an Interest Option is
designated; the proposed date for the designation or conversion and
the Interest Period or Periods, if any, selected by Borrower. Such
telephonic notice shall be irrevocable and shall be given to Agent no
later than the applicable Rate Designation Date.
(b) No more than three (3) Eurodollar Rate Borrowings shall be in effect at
any time.
(c) Each designation or conversion of a Eurodollar Rate Borrowing shall
occur on a Eurodollar Business Day.
(d) Unless the Borrower makes the payment required by Section 2.3(d) hereof,
no Eurodollar Rate Borrowing shall be converted to a Base Rate
Borrowing on any day other than the last day of the applicable
Interest Period.
(e) Each Eurodollar Rate Borrowing shall be in the amount of at least
$1,000,000.
(f) Each designation of an Interest Option with respect to the Notes shall
apply to all of the Notes, respectively, ratably in accordance with
their respective outstanding principal balances. If any Lender
assigns an interest in any of its Notes when any Eurodollar Rate
Borrowing is outstanding with respect thereto, then such assignee
shall have its ratable interest in such Eurodollar Rate Borrowing.
2.3 Special Provisions Applicable to Eurodollar Rate Borrowings.
(a) Options Unlawful. If the adoption of any applicable Legal
Requirement or any change in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental Authority or
compliance by Agent or any Lender with any request or directive (whether or not
having the force of law) of any central bank or other Governmental Authority
shall at any time make it unlawful or impossible for Agent or any Lender to
permit the establishment of or to maintain any Eurodollar Rate Borrowing, the
commitment to establish
6
or maintain such Eurodollar Rate Borrowing shall forthwith be suspended and
Borrower shall forthwith, upon demand by Agent to Borrower, (1) if required to
avoid a violation of any Legal Requirement, convert the Eurodollar Rate
Borrowing with respect to which such demand was made to a Base Rate Borrowing;
(2) pay all accrued and unpaid interest to date on the amount so converted; and
(3) pay any amounts required to compensate each Lender for any additional cost
or expense which each Lender may incur as a result of such adoption of or change
in such Legal Requirement or in the interpretation or administration thereof and
any Funding Loss which each Lender may incur as a result of such conversion. If,
when Agent so notifies Borrower, Borrower has given a Rate Designation Notice
specifying a Eurodollar Rate Borrowing but the selected Interest Period has not
yet begun, such Rate Designation Notice shall be deemed to be of no force and
effect, as if never made, and the balance of the Loans specified in such Rate
Designation Notice shall bear interest at the Base Rate until a different
available Interest Option shall be designated in accordance herewith.
(b) Increased Cost of Borrowings. If the adoption of any applicable
Legal Requirement or any change in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental Authority or
compliance by any Lender with any request or directive (whether or not having
the force of law) of any central bank or Governmental Authority shall at any
time, as a result of any portion of the principal balances of the Notes being
maintained on the basis of a Eurodollar Rate:
(1) subject any Lender (or make it apparent that any
Lender is subject) to any Taxes, or any deduction or withholding
for any Taxes, on or from any payment due under any Eurodollar
Rate Borrowing or other amount due hereunder, other than income
and franchise taxes of the United States and its political
subdivisions; or
(2) change the basis of taxation of payments due from
Borrower to any Lender under any Eurodollar Rate Borrowing
(otherwise than by a change in the rate of taxation of the
overall net income of such Lender); or
(3) impose, modify, increase or deem applicable any
reserve requirement, special deposit requirement or similar
requirement (including, but not limited to, state law
requirements and Regulation D) imposed, modified, increased or
deemed applicable by any Governmental Authority against assets
held by any Lender, or against deposits or accounts in or for the
account of any Lender, or against loans made by any Lender, or
against any other funds, obligations or other property owned or
held by any Lender; or
(4) impose on any Lender any other condition regarding
any Eurodollar Rate Borrowing;
7
and the result of any of the foregoing is to increase the cost to any Lender of
agreeing to make or of making, renewing or maintaining such Eurodollar Rate
Borrowing, or reduce the amount of principal or interest received by any Lender,
then, upon demand by Agent, Borrower shall pay to Agent, from time to time as
specified by Agent, additional amounts which shall compensate each Lender for
such increased cost or reduced amount. The determination by any Lender of the
amount of any such increased cost, increased reserve requirement or reduced
amount shall be conclusive and binding, absent manifest error. Each Lender will
notify the Borrower through the Agent of any event occurring after the date of
this Agreement which will entitle such Lender to compensation pursuant to this
Section as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation, and (if so requested by the Borrower
through the Agent) will designate a different lending office of such Lender for
the applicable Eurodollar Rate Borrowing or will take such other action as the
Borrower may reasonable request if such designation or action is consistent with
the internal policy of such Lender and legal and regulatory restrictions, will
avoid the need for, or reduce the amount of, such compensation and will not, in
the sole opinion of such Lender, be disadvantageous to such Lender (provided
that such Lender shall have no obligation so to designate a different lending
office which is located in the United States of America).
(c) Inadequacy of Pricing and Rate Determination. If for any reason
with respect to any Interest Period, the Agent (or, in the case of clause 3
below, the applicable Lender) shall have determined (which determination shall
be conclusive and binding upon Borrower) that:
(1) Agent is unable through its customary general
practices to determine any applicable Eurodollar Rate, or
(2) by reason of circumstances affecting the applicable
market, generally, Agent is not being offered deposits in United
States dollars in such market, for the applicable Interest Period
and in an amount equal to the amount of any applicable Eurodollar
Rate Borrowing requested by Borrower, or
(3) any applicable Eurodollar Rate will not adequately
and fairly reflect the cost to any Lender of making and
maintaining such Eurodollar Rate Borrowing hereunder for any
proposed Interest Period,
then Agent shall give Borrower notice thereof and thereupon, (A) any Rate
Designation Notice previously given by Borrower designating the applicable
Eurodollar Rate Borrowing which has not commenced as of the date of such notice
from Agent shall be deemed for all purposes hereof to be of no force and effect,
as if never given, and (B) until Agent shall notify Borrower that the
circumstances giving rise to such notice from Agent no longer exist, each Rate
Designation Notice requesting the applicable Eurodollar Rate shall be deemed a
request for a Base Rate Borrowing, and any applicable Eurodollar Rate Borrowing
then outstanding shall be converted,
8
without any notice to or from Borrower, upon the termination of the Interest
Period then in effect with respect to it, to a Base Rate Borrowing.
(d) Funding Losses. Borrower shall indemnify each Lender against and
hold each Lender harmless from any Funding Loss. This agreement shall survive
the payment of the Notes. A certificate as to any additional amounts payable
pursuant to this paragraph submitted to Borrower shall be conclusive and binding
upon Borrower, absent manifest error.
3. MISCELLANEOUS
3.1 Funding Offices; Adjustments Automatic; Calculation Year. Any
Lender may, if it so elects, fulfill its obligation as to any Eurodollar Rate
Borrowing by causing a branch or affiliate of such Lender to make such Loan and
may transfer and carry such Loan at, to or for the account of any branch office
or affiliate of such Lender; provided, that in such event for the purposes of
this Agreement such Loan shall be deemed to have been made by such Lender and
the obligation of Borrower to repay such Loan shall nevertheless be to such
Lender and shall be deemed held by it for the account of such branch or
affiliate. Without notice to Borrower or any other person or entity, each rate
required to be calculated or determined under this Agreement shall automatically
fluctuate upward and downward in accordance with the provisions of this
Agreement. Interest at the Prime Rate shall be computed on the basis of the
actual number of days elapsed in a year consisting of 365 or 366 days, as the
case may be. All other interest required to be calculated or determined under
this Agreement shall be computed on the basis of the actual number of days
elapsed in a year consisting of 360 days, unless the Ceiling Rate would thereby
be exceeded, in which event, to the extent necessary to avoid exceeding the
Ceiling Rate, the applicable interest shall be computed on the basis of the
actual number of days elapsed in the applicable calendar year in which accrued.
3.2 Funding Sources. Notwithstanding any provision of this Agreement
to the contrary and each Lender shall be entitled to fund and maintain its
funding of all or any part of the Loans in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder shall be made as if each Lender had actually funded and maintained
each Eurodollar Rate Borrowing during each Interest Period through the purchase
of deposits having a maturity corresponding to such Interest Period and bearing
an interest rate equal to the Eurodollar Rate for such Interest Period.
3.3 Affected Lenders. In the event a Lender ("Affected Lender") shall
have
(i) delivered a notice pursuant to this Agreement
claiming that such Affected Lender is unable to extend Eurodollar
Rate Loans to Borrower for reasons not generally applicable to
the other Lenders, or
9
(ii) shall have requested compensation from Borrower
under any of the provisions hereof to recover increased costs
incurred by such Affected Lender which are not being incurred
generally by the other Lenders,
then, in any such case, Borrower or Agent may make written demand on such
Affected Lender (with a copy to Borrower in the case of a demand by Agent and
with a copy to Agent in the case of a demand by Borrower) for the Affected
Lender to assign, and such Affected Lender shall assign pursuant to one or more
duly executed Assignment and Acceptances within five (5) Business Days after the
date of such demand, to one or more assignees permitted under Section 11.6 of
the Credit Agreement (each, an "Eligible Assignee") which Borrower or Agent, as
the case may be, shall have engaged for such purpose, all of such Affected
Lender's rights and obligations under the Credit Agreement (including, without
limitation, its Loan Commitment, its Note and all Loans owing to it) in
accordance with Section 11.6 of the Credit Agreement.
EXECUTED as of the 28th day of September, 1995.
STERLING PULP CHEMICALS, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------
Title: Treasurer
----------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Vice President
10
RATE DESIGNATION NOTICE
Sterling Pulp Chemicals, Ltd., Texas Commerce Bank National Association, as
Agent, and certain financial institutions executed and delivered that certain
Credit Agreement (as amended, supplemented or restated from time to time, the
"Credit Agreement") dated as of September 28, 1995. Schedule 1 to the Credit
Agreement is entitled the "Interest Rate Agreement". Any term used herein and
not otherwise defined herein shall have the meaning herein ascribed to it in the
Interest Rate Agreement. In accordance with the Interest Rate Agreement,
Borrower hereby notifies Agent of the exercise of an Interest Option.
A. Current borrowings
1. Interest Options now in effect: _______________________
2. Amounts: $_____________________
3. Expiration of current Interest Periods, if applicable:
B. Proposed election
1. Total Amount: $______________________
2. Date Interest Option is to be effective: __________________________
3. Interest Option to be applicable (check one): [ ] Base Rate [ ]
Eurodollar Rate
4. Interest Period: ______ months (if available and if applicable)
Borrower represents and warrants that the Interest Option and Interest
Period selected above comply with all provisions of the Interest Rate Agreement.
Date:_________________ STERLING PULP CHEMICALS, LTD.
By: _______________________________
Name: _____________________________
Title: ____________________________
EXHIBIT A
SCHEDULE 6.10
ERISA MATTERS
NONE
SCHEDULE 8.1
BORROWED MONEY INDEBTEDNESS
NONE
SCHEDULE 8.2
LIENS
Liens existing under the Security Agreement dated as of August 1, 1988 between
BP Chemicals Inc., formerly known as BP Chemicals America Inc., as secured
party, and Sterling Chemicals, Inc. as debtor, securing obligations under the
Production Agreement dated as of April 15, 1988 between those parties covering
production related to the Production Agreement, proceeds of such production and
equipment and fixtures related to the production, all as described in such
Security Agreement.
SCHEDULE 8.3
CONTINGENT LIABILITIES
NONE
SCHEDULE 8.8
INVESTMENTS
DESCRIPTION
-----------
PRIMEX, LTD.-COMMON STOCK (2,500 SHARES)
PRIMEX, LTD. -SERIES "A " PREFERRED (7,957 SHARES)
50% OF S & L CO-GENERATION (A PARTNERSHIP)