<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 11, 2000
TERRA INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
Maryland 1-8520 52-1145429
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
Terra Centre
600 Fourth Street
P.O. Box 6000
Sioux City, Iowa 51102-6000
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (712) 277-1340
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<PAGE>
ITEM 5. Other Events.
------------
On January 11, 2000, Terra Industries Inc. issued the press release
contained in Exhibit 1 hereto, which is incorporated by reference herein.
ITEM 7. Exhibits.
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99.1 January 11, 2000 Press Release
99.2 Commitment Letter for U.S. $250,000,000 Term Loan and Revolving Credit
Facilities dated as of January 10, 2000 by and between Terra Capital,
Inc. and Citibank, N.A., as Collateral Agent and Administrative Agent,
and Salomon Smith Barney Inc., as Arranger.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TERRA INDUSTRIES INC.
By: /s/ George H. Valentine
---------------------------------------
George H. Valentine
Senior Vice President, General Counsel
and Corporate Secretary
Date: January 11, 2000
2
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EXHIBIT 99.1
[LETTERHEAD OF TERRA INDUSTRIES INC.]
Terra Industries Inc.
600 Fourth Street
P.O. Box 6000
Sioux City, IA 51102-6000
Telephone: (712) 277-1340
Telefax: (712) 277-7383
www.terraindustries.com
- --------------------------------------------------------------------------------
NEWS
- --------------------------------------------------------------------------------
For Immediate Release Contact: W Mark Rosenbury
(712) 279-8756
Terra Industries Obtains Financing Commitment
Sioux City, Iowa, January 11, 2000 - Terra Industries Inc. (NYSE: TRA) reported
today that it has obtained a commitment from Citibank, N.A., as Administrative
Agent, and Salomon Smith Barney Inc., as Arranger, to refinance Terra's existing
$63 million revolving credit line and long-term bank debt of $109 million with a
$250 million asset-based borrowing facility expiring in January 2003. The new
financing agreement is expected to close by February 29, 2000 following
syndication and is subject to completion of due diligence and other customary
conditions of closing. The agreement's financial covenants, including minimum
earnings required, are specified in the Citibank commitment letter that Terra
filed today with the Securities and Exchange Commission under Form 8-K.
Terra Industries Inc., with 1998 revenues of $850 million from continuing
operations, is a leading producer and marketer of nitrogen fertilizers. The
company also manufactures nitrogen products and methanol for industrial markets.
<PAGE>
Exhibit 99.2
January 10, 2000
Terra Industries Inc.
Terra Capital, Inc.
Terra Nitrogen (UK) Limited
Terra Nitrogen, Limited Partnership
Terra International (Canada) Inc.
c/o Terra Industries Inc.
Terra Centre
600 Fourth Street
P.O. Box 6000
Sioux City, Iowa 51102-6000
Attention: Francis G. Meyer
Senior Vice President & Chief Financial Officer
COMMITMENT LETTER
US $250,000,000 TERM LOAN AND REVOLVING CREDIT FACILITIES
Ladies and Gentlemen:
You have advised us that Terra Capital, Inc. ("Terra Capital") and certain of
its subsidiaries desire to establish and continue credit facilities in the
aggregate principal amount of US $250,000,000 (the "Facilities"), the proceeds
of which would be used (i) to refinance in full the loans, if any, outstanding
under the Amended and Restated Credit Agreement dated as of June 25, 1999 among
Terra Capital, certain guarantors, the lenders and issuing banks party thereto,
Salomon Smith Barney Inc. ("SSB") as Arranger, and Citibank, N.A., as Collateral
Agent and Administrative Agent (the "Terra Capital Credit Agreement"), (ii) to
continue in full the existing term loan (current principal balance: US
$109,375,000) (the "Canadian Term Loan") made to Terra International (Canada),
Inc. ("Terra Canada") pursuant to a further amendment and restatement of the
Credit Agreement dated as of December 31, 1997 and amended and restated as of
June 25, 1999 among Terra Canada, certain guarantors, the lenders and issuing
banks party thereto, SSB, as Arranger, and Citibank, N.A., as Collateral Agent
and Administrative Agent (the "Terra Canada Credit Agreement"), (iii) to pay
related transaction costs, fees and expenses, (iv) to provide working capital
from time to time for Terra Capital and its subsidiaries and (v) for other
general corporate purposes. The Facilities would consist of (i) a new senior
secured revolving credit facility in the maximum committed amount of US
$140,625,000 (the "Revolving Credit Facility") to be made available to Terra
Capital, Terra Nitrogen UK, Ltd. ("Terra UK")
<PAGE>
and Terra Nitrogen, Limited Partnership ("Terra LP"; together with Terra
Capital, Terra UK and Terra Canada, the "Borrowers"), and (ii) a continuation of
the senior secured term loan facility in the principal amount of the outstanding
Canadian Term Loan pursuant to an amendment and restatement of the existing
Terra Canada Credit Agreement. You have asked Citibank, N.A. or one of its
affiliates ("Citibank") to commit to provide you with financing commitments for
the entire amount of the Facilities.
Citibank is pleased to inform you of its commitment to provide the entire amount
of the Facilities, and of its agreement to act as Administrative Agent, subject
to the terms and conditions described in this letter and the attached Annex I
("Annex I"; collectively, and together with the Fee Letter referred to below,
the "Commitment Letter"); provided, however, that Citibank's commitment to
provide the entire amount of the Facilities will be irrevocably reduced by the
amount of the commitment of any prospective Lender (as defined below) to provide
a portion of the Facilities effective upon delivery of written evidence of such
Lender's commitment to the Borrowers.
Conditions Precedent
- --------------------
The commitment and other obligations of Citibank and SSB hereunder are subject
to: (i) the preparation, execution and delivery of mutually acceptable loan
documentation, including, without limitation, a new credit agreement evidencing
the Revolving Credit Facility and an amendment and restatement of the existing
Terra Canada Credit Agreement, in each case incorporating substantially the
terms and conditions outlined in this Commitment Letter; (ii) the absence of (A)
a material adverse change in the business, condition (financial or otherwise),
operations, performance, properties or prospects of any Borrower, or Terra
Industries Inc. (the "Company") and its subsidiaries taken as a whole, since
December 31, 1998 and (B) any change in loan syndication, financial or capital
market conditions generally that, in the reasonable judgment of SSB, would
materially impair syndication of the Facilities; (iii) the accuracy and
completeness in all material respects of all representations that you make to us
and all information that you furnish to us and your compliance with the terms of
this Commitment Letter; (iv) the payment in full of all fees, expenses and other
amounts due and payable under this Commitment Letter; (v) Citibank's and SSB's
completion and satisfaction with the results of its due diligence review of the
Borrowers and their subsidiaries; (vi) the other conditions precedent to the
initial funding of the Facilities contained in Annex I; and (vii) a closing of
the Facilities on or prior to February 29, 2000.
Commitment Termination
- ----------------------
Citibank's commitment set forth in this Commitment Letter will terminate on
February 29, 2000, unless the Facilities close on or before such date. Prior to
such date, this Commitment Letter may be terminated (i) by you at any time at
your option upon payment of all fees, expenses and other amounts then payable
under this Commitment Letter or (ii) by Citibank if any event occurs or
information has become available that, in its judgment, results in, or is likely
to result in, the occurrence of any of the events referred to in subclauses (A)
and (B) of clause (ii) of the
2
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preceding paragraph or the failure of any other condition referred to in the
immediately preceding paragraph.
Syndication
- -----------
Citibank reserves the right, prior to or after the execution of definitive
documentation with respect to the Facilities, to syndicate all or a portion of
its commitment to one or more other financial institutions (subject to the
approval of the Borrowers, not to be unreasonably withheld) that will become
parties to such definitive documentation pursuant to a syndication to be managed
by SSB (the financial institutions becoming parties to such definitive
documentation being collectively referred to herein as the "Lenders"). You
understand that SSB intends to commence syndication efforts promptly and that it
may elect to appoint one or more syndication agents (which may include Citibank)
to direct the syndication efforts on its behalf. The nature of the information
to be disclosed in discussions with potential Lenders, and any written materials
to be provided to such Lenders in connection therewith, shall be mutually
acceptable to you and SSB.
SSB will manage all aspects of the syndication in consultation with you,
including, without limitation, the timing of all offers to potential Lenders,
the acceptance of commitments, and the determination of the amounts offered and
the compensation provided.
You agree to take all action as SSB may reasonably request to assist it in
forming a syndicate acceptable to it. Your assistance in forming such a
syndicate shall include but not be limited to: (i) making senior management and
representatives of the Company and the Borrowers available to participate in
information meetings with potential Lenders at such times and places as SSB may
reasonably request; (ii) using your reasonable best efforts to ensure that the
syndication efforts benefit from the Company's and the Borrowers' lending
relationships; and (iii) providing SSB with all information reasonably deemed
necessary by it to successfully complete the syndication.
To ensure an orderly and effective syndication of the Facilities, you agree that
until the termination of the syndication (as determined by SSB), you will not,
and you will not permit any of your affiliates to, syndicate or issue, attempt
to syndicate or issue, announce or authorize the announcement of the syndication
or issuance of, or engage in discussions concerning the syndication or issuance
of, any debt facility or debt security (including, without limitation, the
renewal of any thereof), without the prior written consent of SSB (except the
renewal of the existing letter of credit issued by Rabobank and other equipment,
vendor and similar financing transactions entered into in the ordinary course of
business of the Company and its subsidiaries).
You agree that Citibank will be the collateral agent and administrative agent
for the Facilities and that SSB will act as sole arranger and book manager for
the Facilities and that no additional agents, co-agents or arrangers will be
appointed, or other titles conferred, without the consent of SSB and Citibank.
You agree that no Lender will receive any compensation of any kind for its
participation in the Facilities, except as expressly provided for in the Fee
Letter (as defined below) or in Annex I.
3
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Given the duration of our underwriting exposure, you acknowledge that if, in our
reasonable opinion, it appears likely due to market conditions that we will be
unable to reach our target hold level through our normal syndication process on
the basis of the agreed pricing, terms and structure of the Facilities, we
reserve the right, after consultation with you, to adjust the pricing, terms and
structure of the Facilities, but without reducing the aggregate amount of the
Facilities below $250,000,000. In connection with any such adjustment, we will
use our best efforts not to cause adverse Canadian withholding tax consequences.
Our commitment to lend under this Commitment Letter and the terms of the loan
documentation are subject to your agreement to any adjustment made under this
paragraph.
Fees
- ----
In addition to the fees described in Annex I, you agree to pay the fees set
forth in that certain letter between you and us of today's date (the "Fee
Letter"). The terms of the Fee Letter are an integral part of Citibank's
commitment hereunder and constitute part of this Commitment Letter for all
purposes hereof. Each of the fees described in the Fee Letter shall be non
refundable when paid.
Indemnification
- ---------------
You agree to indemnify and hold harmless Citibank, SSB, each Lender and each of
their affiliates and each of their respective officers, directors, employees,
agents, advisors, attorneys and representatives (each, an "Indemnified Party")
from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable and documented fees and disbursements
of counsel), joint or several, that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or relating to any investigation, litigation or proceeding or the preparation of
any defense with respect thereto, arising out of or in connection with or
relating to this Commitment Letter or the loan documentation or the transactions
contemplated hereby, or any use made or proposed to be made with the proceeds of
the Facilities, whether or not such investigation, litigation or proceeding is
brought by the Company or any of its subsidiaries, any of their shareholders or
creditors, an Indemnified Party or any other person, or an Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent such claim, damage, loss, liability
or expense is found in a final non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct.
You further agree that no Indemnified Party shall have any liability (except for
breach by it of the provisions of this Commitment Letter) (whether direct or
indirect, in contract, tort or otherwise) to the Company or any of its
subsidiaries or any of their shareholders or creditors for or in connection with
the transactions contemplated hereby, except to the extent such liability is
found in a final non-appealable judgment by a court of competent jurisdiction to
have resulted from such Indemnified Party's gross negligence or willful
misconduct. In no event, however, shall any Indemnified Party be liable on any
theory of liability for any special, indirect, consequential or punitive
damages.
4
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Costs and Expenses
- ------------------
In further consideration of the commitment of Citibank hereunder, and
recognizing that in connection herewith Citibank and SSB are incurring
substantial costs and expenses (including, without limitation, reasonable and
documented fees and disbursements of counsel, fees and disbursements of their
syndication agent(s), filing and recording fees and due diligence, syndication
(including, without limitation, printing, distribution and bank meetings),
transportation, computer, duplication, messenger, appraisal, audit, insurance
and consultant costs and expenses), you hereby agree to pay, or reimburse
Citibank and SSB on demand for, all such reasonable and documented costs and
expenses (whether incurred before or after the date hereof), regardless of
whether any of the transactions contemplated hereby is consummated. You also
agree to pay all reasonable and documented costs and expenses of Citibank and
SSB (including, without limitation, reasonable fees and disbursements of
counsel) incurred in connection with the enforcement of any of their respective
rights and remedies hereunder.
Confidentiality
- ---------------
By accepting delivery of this Commitment Letter, you agree that this Commitment
Letter is for your confidential use only and that neither its existence nor the
terms hereof will be disclosed by you to any person other than your officers,
directors, employees, accountants, attorneys and other advisors, and then only
on a "need to know" basis in connection with the transactions contemplated
hereby and on a confidential basis. Notwithstanding the foregoing, following
your acceptance of the provisions hereto as provided below and your return of an
executed counterpart of this Commitment Letter to us, you (i) may make public
disclosure of the existence, terms and amount of Citibank's commitment hereunder
and of Citibank's identity as collateral agent and administrative agent and of
SSB's identity as sole arranger and book manager, (ii) may file a copy of this
Commitment Letter (other than the Fee Letter) in any public record in which it
is required by law to be filed and (iii) may make such other public disclosures
of the terms and conditions hereto as you are required by law, in the opinion of
your counsel, to make.
Representations and Warranties of the Borrowers
- -----------------------------------------------
You represent and warrant that (i) all written information that has been or will
hereafter be made available by you which is prepared by you or any of your
advisors (including, but not limited to, legal, environmental and financial
advisors and consultants) to Citibank, SSB, any Lender or any potential Lender
by each of you or any of your respective representatives in connection with the
transactions contemplated hereby is and will be complete and correct in all
material respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances under
which such statements were or are made and (ii) all financial projections, if
any, that have been or will be prepared by you and made available to Citibank,
SSB, any Lender or any potential Lender have been or will be prepared in good
faith based upon assumptions that were reasonable as of the date of the
preparation of such financial projections. You agree to supplement the
information and projections from time to time so that the representations and
warranties contained in this paragraph remain correct in all material respects.
5
<PAGE>
In issuing this commitment, Citibank is relying on the accuracy of the
information furnished to it by or on behalf any of the Borrowers and their
affiliates without independent verification thereof.
No Third Party Reliance, Etc.
- -----------------------------
The agreements of Citibank hereunder and of any Lender that issues a commitment
to provide financing under the Facilities are made solely for the benefit of the
Borrowers and may not be relied upon or enforced by any other person. Please
note that those matters that are not covered or made clear herein or in Annex I
or in the Fee Letter are subject to mutual agreement of the parties. The terms
and conditions of this Commitment Letter may be modified only in writing.
You should be aware that Citibank or one or more of its affiliates may be
providing financing or other services to parties whose interests may conflict
with yours. Be assured, however, that consistent with Citibank's longstanding
policy to hold in confidence the affairs of its customers, neither Citibank nor
any of its affiliates will furnish confidential information obtained from you to
any of its other customers. By the same token, neither Citibank nor any of its
affiliates will make available to you confidential information that it obtained
or may obtain from any other customer.
Governing Law, Etc.
- -------------------
This Commitment Letter shall be governed by, and construed in accordance with,
the law of the State of New York. This Commitment Letter sets forth the entire
agreement between the parties with respect to the matters addressed herein and
supersedes all prior communications, written or oral, with respect hereto,
including, without limitation, the Proposal Letter dated November 1, 1999
between you and us. This Commitment Letter may be executed in any number of
counterparts, each of which, when so executed, shall be deemed to be an original
and all of which, taken together, shall constitute one and the same Commitment
Letter. Delivery of an executed counterpart of a signature page to this
Commitment Letter by telecopier shall be as effective as delivery of a manually
executed counterpart of this Commitment Letter. Your obligations under the
paragraphs captioned "Fees", "Indemnification", "Costs and Expenses" and
---- --------------- ------------------
"Confidentiality" shall survive the expiration or termination of this Commitment
- ----------------
Letter, unless formal loan documentation is entered into, in which case such
paragraphs shall be superseded by the provisions of such formal loan
documentation addressing such topics.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
6
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Waiver of Jury Trial
- --------------------
Each party hereto irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to the Commitment Letter or the transactions
contemplated by the Commitment Letter or the actions of Citibank, SSB or any of
their affiliates in the negotiation, performance or enforcement of the
Commitment Letter.
Please indicate your acceptance of the provisions hereof by signing the enclosed
copy of this letter and the Fee Letter and returning them to Suzanne Crymes,
Vice President, c/o Citibank USA, Inc., 399 Park Avenue, New York, New York
10043 (telecopier: (212) 793-1290) at or before 5:30 p.m. (New York City time)
on January 12, 2000, the time at which the commitment of Citibank set forth
above (if not so accepted prior thereto) will expire. If you elect to deliver
the Commitment Letter by telecopier, please arrange for the executed original to
follow by next-day courier.
Very truly yours,
CITIBANK, N.A.
By: /s/ Suzanne A. Crymes
----------------------
Title: Vice President
SALOMON SMITH BARNEY INC.
By: /s/ Thomas W. NG
-----------------
Title: Director
ACCEPTED this 10th day
of January, 2000
TERRA INDUSTRIES INC.
By: /s/ Francis G. Meyer
--------------------
Title: Senior Vice President and Chief Financial Officer
TERRA CAPITAL, INC.
By: /s/ Francis G. Meyer
--------------------
Title: Vice President
7
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TERRA NITROGEN (UK) LIMITED
By: /s/ Francis G. Meyer
--------------------
Title: Director
TERRA NITROGEN, LIMITED PARTNERSHIP
By: /s/ Francis G. Meyer
--------------------
Title: Vice President
TERRA INTERNATIONAL (CANADA) INC.
By: /s/ Francis G. Meyer
--------------------
Title: Vice President
8
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ANNEX I
US $250,000,000 TERM LOAN AND REVOLVING CREDIT FACILITIES
SUMMARY OF TERMS AND CONDITIONS
This Summary of Terms and Conditions outlines certain terms of the Facilities
referred to in the Commitment Letter dated January 10, 2000 addressed to Terra
Industries Inc., Terra Capital, Inc., Terra Nitrogen UK, Ltd., Terra Nitrogen,
Limited Partnership, and Terra International (Canada), Inc., from Citibank, N.A.
and Salomon Smith Barney Inc. (the "Commitment Letter"). This Summary of Terms
and Conditions is part of and subject to the Commitment Letter. Certain
capitalized terms used herein are defined in the Commitment Letter.
Borrowers: Terra Capital, Inc. ("Terra Capital"),
Terra Nitrogen UK, Ltd. ("Terra UK"), Terra
Nitrogen, Limited Partnership ("TNLP"), and
Terra International (Canada), Inc. ("Terra
Canada") (collectively the "Borrowers").
Guarantors: Terra Industries, Inc. (the "Company") and
Terra Capital Holdings Inc. ("Terra
Holdings") and, with respect to the
following obligations of any Borrower under
the Facilities, the subsidiaries of the
Company indicated below (excluding in each
case (whether or not mentioned below) Terra
Real Estate Corporation and certain other
non-material subsidiaries to be agreed)
(collectively, the "Guarantors"):
For Obligations of Terra Capital: all US
subsidiaries of Terra Capital (other than
Terra Nitrogen Company, L.P. ("TNCLP") and
its subsidiaries).
For Obligations of TNLP: Terra Capital,
TNCLP and all other US subsidiaries of
Terra Capital.
For Obligations of Terra UK: Terra
Capital, all US subsidiaries of Terra
Capital (other than TNCLP and its
subsidiaries) and Terra Canada.
For Obligations of Terra Canada: Terra
Capital, all US subsidiaries of Terra
Capital (other than TNCLP and its
subsidiaries) and Terra UK.
Lenders: Citibank, N.A. or one of its affiliates
("Citibank") and other financial
institutions or entities acceptable to the
Arranger and reasonably acceptable to the
Borrowers (the "Lenders"). Citibank may
assign or reallocate (before and after the
Closing Date (as defined below)) all or any
part of the Facilities to one or more other
financial institutions or other entities
acceptable to the Arranger and reasonably
acceptable to the Borrower and, upon such
assignment or reallocation, such financial
institutions or other entities shall become
Lenders for all purposes under the
Facilities. Upon such assignment or
reallocation of commitments, Citibank shall
be relieved of all further liability with
respect to the portions of the
<PAGE>
Facilities so assigned or reallocated.
Administrative agent: Citibank (the "Administrative Agent").
Arranger and Book Manager: Salomon Smith Barney Inc. (the "Arranger").
Letter of Credit Issuers: Citibank and other Lenders that are letter
of credit issuers under the Terra Capital
Credit Agreement (or affiliates of such
Lenders) acceptable to the Administrative
Agent (the "Issuers").
The Facilities: US $250,000,000 in the aggregate of loans
(the "Loans") and other financial
accommodations allocated as follows:
Term Loan Facility: An amendment and
restatement of the existing term loan made
to Terra Canada pursuant to the Terra
Canada Credit Agreement in the original
principal amount of US $125,000,000, the
outstanding principal balance of which is
US $109,375,000 ("Canadian Term Loan"),
payable in annual installments aggregating
1% of the outstanding principal amount of
the Canadian Term Loan on the Closing Date.
The final maturity date of the Canadian
Term Loan will be January 2, 2003.
Revolving Credit Facility: A three-year
non-amortizing revolving credit facility
made available to Terra Capital, Terra UK
and TNLP in a principal amount of up to US
$140,625,000 (the "Revolving Credit
Facility"), subject to Availability (as
defined below), during the period from the
Closing Date through January 2, 2003 (the
"Revolving Credit Termination Date"). All
Loans outstanding under the Revolving
Credit Facility ("Revolving Loans") shall
become due and payable on the Revolving
Credit Termination Date.
Letters of Credit Sub-Facility: Up to the
lesser of the undrawn portion of the
Revolving Credit Facility and US
$35,000,000, subject to Availability, will
be available for the issuance of letters of
credit, by the Issuers for the account of
the Borrowers and their loan party
subsidiaries ("Letters of Credit"). No
Letter of Credit shall have a term of more
than one year.
Swing Loans Sub-facility: Up to
US $15,000,000 of the Revolving Credit
Facility, subject to Availability, will be
available to the Borrowers for
discretionary swing loans from the
Administrative Agent.
Closing Date: On or before February 29, 2000.
Availability: Availability under the Revolving Credit
Facility with respect to any Borrower will
be subject to (i) such availability
reserves applicable to such Borrower as the
Administrative Agent, in its sole
discretion, deems appropriate (without
double counting in the calculation of
Borrower Base (as defined below) and (ii)
the following Borrowing Base limitations
applicable to such Borrower:
2
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For Terra Capital: the aggregate Borrowing
Base of Terra Capital's domestic operating
subsidiaries (Terra International
(Oklahoma) Inc., Port Neal Corporation,
Beaumont Methanol, Limited Partnership and
Beaumont Ammonia Inc.) minus that portion
of such aggregate Borrowing Base required
to support the Canadian Term Loan.
FOR TNLP: the Borrowing Base of TNLP .
For Terra UK: the Borrowing Base of Terra
UK minus that portion of Terra UK's
Borrowing Base required to support the
Canadian Term Loan.
Availability under the Revolving Credit
Facility for Terra Capital and Terra UK
will be reduced by that portion of the
Canadian Term Loan not supported by the
Borrowing Base of Terra Canada.
"Borrowing Base" means, with respect to any
Borrower: (i) the sum of (A) up to 85% of
eligible trade accounts receivable of such
Borrower, (B) a range of advance rates
varying on a seasonal basis of up to 55 -
85% of eligible inventory of such Borrower
(at the lower of cost on a FIFO basis and
market), (C) up to 10% of eligible spare
parts inventory of such Borrower, (D) up to
the lesser of US $50 million and 25% of the
Liquidation in Place Value (as defined in
the loan documentation) of eligible
equipment and real estate (the "Fixed
Assets") of such Borrower and (E) 100% of
cash maintained by such Borrower in a cash
collateral account at Citibank in the name
of the Administrative Agent, in each case
less such eligibility reserves as the
Administrative Agent, in its sole
discretion, deems appropriate (including,
without limitation, in respect of (a)
preferential debts which under applicable
law would be prior to claims of the Lenders
and (b) assets which are subject to title
retention claims of suppliers).
Availability against Fixed Assets will be
reduced on a quarterly basis by US
$1,250,000 per quarter. The Administrative
Agent shall be entitled to request updated
Fixed Asset appraisals at any time. Fixed
Asset Availability will be recalculated
periodically based upon such updated
appraisals and will be reduced upon a sale
or other disposition of Fixed Assets
(including, without limitation, a Permitted
Sale Leaseback Transaction (as defined
below)).
Eligibility: Eligibility of trade accounts receivable
and inventory for purposes of computing
Availability will be determined by the
Administrative Agent in accordance with its
customary criteria.
Purpose: No additional proceeds of the Canadian Term
Loan will be made available on the Closing
Date.
Proceeds of the Revolving Credit Facility
shall be used solely by Terra Capital,
Terra UK and TNLP (i) to refinance existing
debt of Terra Capital and its subsidiaries
under the Terra Capital Credit
3
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Agreement, (ii) to pay related transaction
costs, fees and expenses, (iii) to provide
working capital from time to time for Terra
Capital, the other Borrowers and their
subsidiaries and (iv) for other general
corporate purposes.
Interest: Loans will bear interest, at the option of
the Borrowers, at one of the following
rates:
(i) the Applicable Margin (as defined
below) plus Citibank's fluctuating
Alternate Base Rate III (the "Base Rate"),
payable monthly in arrears; or
(ii) the Applicable Margin plus the current
LIBO rate as quoted by Citibank, adjusted
for reserve requirements, if any, and
subject to customary change of circumstance
provisions, for interest periods of one,
two, three or six months (the "LIBO Rate"),
payable at the end of the relevant interest
period, but in any event at least
quarterly.
"Applicable Margin" means (i) for an
initial period from the Closing Date
through the delivery of the December 2000
financial statements of the Company and its
subsidiaries:
(A) in the case of Revolving Loans, 1.75%
per annum, in the case of Base Rate Loans,
and 2.75% per annum, in the case of LIBO
Rate Loans;
(B) in the case of the Term Loan, 2.25% per
annum, in the case of Base Rate Loans, and
3.25% per annum, in the case of LIBO Rate
Loans; and
(ii) thereafter, such higher or lower rates
per annum to be determined and subject to
adjustment from time to time based on the
pricing grid attached hereto as Exhibit A.
Interest shall be calculated on the basis
of the actual number of days elapsed in a
360-day year. No more than seven (7)
separate LIBO Rate interest periods may be
in effect at any one time under the
Revolving Credit Facility, and no more than
three (3) separate LIBO Rate interest
periods may be in effect at any one time
under the Canadian Term Loan.
Default interest: During the continuance of an event of
default (as defined in the loan
documentation), Loans will bear interest at
an additional 2.0% per annum.
Unused commitment fee: From and after the Closing Date, a non-
refundable unused commitment fee of 0.50%
per annum will accrue as a percentage of
the daily average unused portion of the
Revolving Credit Facility (whether or not
then available), payable monthly in arrears
and on the Revolving Credit Termination
Date.
4
<PAGE>
Letter of Credit Fees: A percentage per annum equal to the
Applicable Margin for LIBO Rate Loans to
the Lenders and an additional 0.50% per
annum to the applicable Issuer will accrue
on the outstanding undrawn amount of any
Letter of Credit, payable monthly in
arrears and computed on a 360-day basis. In
addition, the Borrowers will pay to the
applicable Issuer standard opening,
amendment, presentation, wire and other
administration charges applicable to each
Letter of Credit.
During the continuance of an event of
default (as defined in the loan
documentation), the Letter of Credit Fees
will increase by an additional 2.0% per
annum.
Optional Prepayments and Terra Canada may prepay in full or in part,
Commitment Reductions: without premium or penalty, the Term Loan;
provided that each such partial prepayment
shall be in such minimum amounts and with
advance notification in a manner to be set
forth in the loan documents. Such
prepayments shall be applied to the
remaining installments of the Term Loan in
the inverse order of their maturity.
The Borrowers under the Revolving Credit
Facility may repay the Revolving Loans at
any time without premium or penalty (other
than breakage costs, if applicable) and may
reduce the commitments under the Revolving
Credit Facility in such minimum amounts and
with advance notification in a manner to be
set forth in the loan documents and any
mandatory prepayment resulting from such
reduction shall have been made.
Mandatory Prepayments and Mandatory prepayments of the Facilities
Commitment Reductions: shall be required in an amount equal to (i)
100% of the net cash proceeds from any
issuance or incurrence of balance sheet
debt, subject to customary exceptions to be
agreed upon (including a Permitted Sale
Leaseback Transaction), (ii) a percentage
to be determined of the net cash proceeds
from equity issuances and capital
contributions, subject to customary
exceptions to be agreed upon, (iii) 100% of
the net sale proceeds from asset sales,
subject to customary exceptions to be
agreed upon and (iv) 100% of insurance and
condemnation proceeds, with certain
reinvestment rights to be agreed upon, in
each case received by any of the Borrowers
or any Guarantor.
Mandatory prepayments pursuant to the
preceding paragraph will be applied first
to repay Loans outstanding of the
applicable Borrower under the Canadian Term
Loan or the Revolving Credit Facility and
then to repay reimbursement obligations
under outstanding Letters of Credit, if
any, until paid in full, and thereafter, to
collateralize undrawn Letter of Credit
obligations and obligations in respect of
any guaranty of the Facilities. Any
mandatory repayment required to be applied
to the Revolving Facility pursuant to the
preceding paragraph will result in a
corresponding permanent reduction of the
commitments thereunder (other than any such
prepayment of net cash proceeds from a
Permitted Sale Leaseback Transaction). For
purposes of this
5
<PAGE>
Commitment Letter, "Permitted Sale
Leaseback Transaction" shall mean a sale
leaseback of the Company's US wholly-owned
nitrogen facilities on terms and conditions
satisfactory to the Administrative Agent.
Any amount collected in the concentration
account of Terra Capital and TNLP under the
control of the Administrative Agent will be
applied to the repayment of Revolving Loans
of such Borrower (or held as cash
collateral). After the occurrence of an
event of default under the loan
documentation, any amount collected in a
concentration account of Terra UK or Terra
Canada will be converted to US dollars (at
such Borrower's expense) and applied to the
repayment of Loans of such Borrower (or
held as cash collateral).
Terra Capital, Terra UK and TNLP shall
repay the outstanding Revolving Loans (and
cash collateralize outstanding Letters of
Credit) to the extent that such Loans and
Letters of Credit of such Borrower exceed
the lesser of the maximum amount of the
Revolving Credit Facility and the
Availability for such Borrower. In
addition, Terra Canada shall repay the
Canadian Term Loan to the extent that the
Borrowing Base of Terra Canada and the
unutilized Borrowing Base (under the
Revolving Credit Facility) of Terra Capital
and Terra UK is less than the principal
amount of the Canadian Term Loan.
Security: All obligations of each Borrower and
Guarantor under the Facilities (including,
without limitation, any exposure of a
Lender in respect of cash management or
hedging transactions incurred on behalf of
such Borrower or Guarantor) will be secured
by (i) a first priority perfected pledge of
(x) all notes owned by such Borrower or
Guarantor and (y) all capital stock owned
by such Borrower or Guarantor (but not more
than 65% of the capital stock of foreign
subsidiaries to the extent the pledge of
such stock would secure US borrowings) and
(ii) a first priority perfected security
interest in substantially all other assets
owned by such Borrower or Guarantor,
including, without limitation, accounts,
inventory, equipment, investment property,
instruments, chattel paper, real estate,
leasehold interests, contracts, patents,
copyrights, trademarks and other general
intangibles, subject to customary
exceptions for transactions of this type.
We will use reasonable efforts to minimize
the impact of "deemed dividend" issues
under the Internal Revenue Code.
Conditions Precedent to the The loan documentation will contain
Closing: conditions to the closing of the Facilities
customarily found in the Administrative
Agent's loan agreements for similar
financings and other conditions deemed by
the Administrative Agent to be appropriate
to the specific transaction and in any
event including without limitation:
. All documentation relating to the
Facilities shall be in form and
substance satisfactory to each of the
Borrowers and its counsel
6
<PAGE>
and each Lender and its counsel.
. All fees and expenses (including
reasonable fees and expenses of counsel)
required to be paid to the
Administrative Agent and to the
Arranger, for itself and for the benefit
of the Lenders, on or before the Closing
Date shall have been paid.
. The Lenders shall have received and be
satisfied with (i) audited financial
statements of the Company and its
subsidiaries for the fiscal period
ending December 31, 1998 by Deloitte &
Touche LLP which statements shall be
unqualified, (ii) interim unaudited
monthly and quarterly financial
statements of the Company and its
subsidiaries through the fiscal month
ending September 30, 1999 and (iii)
business plan for the Company and its
subsidiaries which shall include a
financial forecast on a monthly basis
for the year 2000, on an annual basis
thereafter through 2002, prepared by the
Company's management.
. The Lenders shall be satisfied in their
reasonable judgment that (i) the Company
and its subsidiaries' existing debts and
liens do not exceed an amount agreed
upon prior to the Closing Date, and
there shall not occur as a result of the
funding of the Facilities a default (or
any event which with the giving of
notice or lapse of time or both would be
a default) under any of the Company's or
its subsidiaries' debt instruments and
other material agreements, including,
without limitation, the Senior Note
Indenture dated as of October 15, 1993
and the Senior Note Indenture dated as
of June 22, 1995 (the "Indentures").
. The Lenders shall be satisfied in their
reasonable judgment that the Company and
its subsidiaries will be able to meet
their obligations under all employee and
retiree welfare plans of the Company and
its subsidiaries, that such employee
benefit plans are, in all material
respects, funded in accordance with the
minimum statutory requirements, that no
material "reportable event" (as defined
in ERISA, but excluding events for which
reporting has been waived) has occurred
as to any such employee benefit plan and
that no termination of, or withdrawal
from, any such employee benefit plan has
occurred or is contemplated that could
result in a material liability. The
Administrative Agent shall have reviewed
and be satisfied with all employee
benefit plans of the Company and its
subsidiaries.
. The Borrowers shall have delivered
letters, in form and substance
satisfactory to the Lenders, attesting
to the solvency of each of the Borrowers
and each of the Guarantors after giving
effect to the transactions contemplated
hereby, from the Company's chief
financial officer.
7
<PAGE>
. The Lenders shall have received
satisfactory opinions of independent
counsel to the Borrowers (including New
York, Canadian and English counsel and
other U.S. local counsel to be
determined), addressing such matters as
the Lenders shall reasonably request,
including, without limitation, the
enforceability of all loan
documentation, no adverse Canadian
withholding tax consequences, compliance
with all laws and regulations (including
Regulations T, U and X of the Board of
Governors of the Federal Reserve
System), the perfection of all security
interests purported to be granted and no
conflicts with material agreements,
including, without limitation, the
Indentures.
. There shall have occurred no material
adverse change in (i) the business,
condition (financial or otherwise),
operations, performance, properties or
prospects of any Borrower, or the
Company and its subsidiaries taken as a
whole, since December 31, 1998, (ii) the
ability of any Borrower or Guarantor to
perform its obligations under the loan
documentation or (iii) the ability of
the Administrative Agent and the Lenders
to enforce the loan documentation (any
of the foregoing being a "Pre-Closing
Material Adverse Change").
. Except as disclosed to the
Administrative Agent prior to the date
of the Commitment Letter, there shall
exist no action, suit, investigation,
litigation or proceeding pending or
threatened in any court or before any
arbitrator or governmental
instrumentality that (i) could
reasonably be expected to result in a
Pre-Closing Material Adverse Change or,
except as disclosed, if adversely
determined, could reasonably be expected
to result in a Pre-Closing Material
Adverse Change or (ii) restrains,
prevents or imposes or can reasonably be
expected to impose materially adverse
conditions upon the Facilities or the
transactions contemplated thereby.
. All necessary governmental and third
party consents and approvals necessary
in connection with the Facilities and
the transactions contemplated thereby
shall have been obtained (without the
imposition of any conditions that are
not reasonably acceptable to the
Lenders) and shall remain in effect; and
no law or regulation shall be applicable
in the reasonable judgment of the
Lenders that restrains, prevents or
imposes materially adverse conditions
upon the Facilities or the transactions
contemplated thereby.
. The Lenders shall have completed a due
diligence investigation of the Company
and its subsidiaries in scope, and with
results, reasonably satisfactory to the
Lenders and the Administrative Agent
shall have been given such access to the
management, records, books of account,
contracts, and properties of the
8
<PAGE>
Company and its subsidiaries and shall
have received such financial, business,
legal and other information regarding
the Company and its subsidiaries as they
shall have requested.
. The Lenders shall have a valid and
perfected first priority lien on and
security interest in the collateral
referred to above under "Security"; all
filings, recordations and searches
necessary or desirable in connection
with such liens and security interests
shall have been duly made; and all
filing and recording fees and taxes
shall have been duly paid.
. The Administrative Agent and Lenders
shall be satisfied with the amount,
types and terms and conditions of all
insurance and bonding maintained by the
Company and its subsidiaries, and the
Lenders shall have received endorsements
naming the Administrative Agent, on
behalf of the Lenders, as an additional
insured and loss payee under all
insurance policies to be maintained with
respect to the properties of the Company
and its subsidiaries forming part of the
Lenders' collateral.
. There shall not have occurred any change
in loan syndication, financial or
capital market conditions generally
that, in the Arranger's reasonable
judgment, would materially impair
syndication of the Facilities.
. The Lenders shall have received such
environmental review reports as the
Lenders may request, in form and
substance satisfactory to them, as to
any environmental hazards or liabilities
to which the Company and its
subsidiaries may be subject, and the
Lenders shall be satisfied with the
amount and nature of any such hazards or
liabilities and with the Company's plans
with respect thereto.
. The Terra Capital Credit Agreement and
all liens granted thereunder shall have
been terminated in form and substance
satisfactory to the Administrative
Agent.
Conditions Precedent to each On the funding date of each Revolving Loan
Revolving Loan: and each Swing Loan (and on the date of
issuance of any Letter of Credit) there
shall exist no default under the loan
documentation, the representations and
warranties of each of the Borrowers and
each of the Guarantors therein shall be
true and correct immediately prior to and
after giving effect to the requested
funding, a notice of borrowing shall be
received by the Administrative Agent, no
Borrowing Base deficiency shall have
occurred, and the making of such Revolving
Loan (or the issuance of such Letter of
Credit) shall not violate any requirement
of law and shall not be enjoined,
temporarily, preliminarily or permanently.
Representations and Warranties: The loan documentation will contain
representations and warranties customarily
found in the Administrative Agent's loan
agreements
9
<PAGE>
for similar financings and other
representations and warranties reasonably
deemed by the Administrative Agent
appropriate to the specific transaction
(which will be applicable to the Company
and its subsidiaries), including, without
limitation with respect to: valid
existence, requisite power, due
authorization, no conflict with agreements
or applicable law, enforceability of loan
documentation, accuracy in all material
respects of financial statements and all
other information provided, compliance with
law in all material respects, absence of
(i) (up to and including the Closing Date)
a Pre-Closing Material Adverse Change and
(ii) (following the Closing Date) a Post-
Closing Material Adverse Change (as defined
below), no default under the loan
documentation, absence of material
litigation, ownership of properties and
necessary rights to intellectual property,
no burdensome restrictions, inapplicability
of Investment Company Act or Public Utility
Holding Company Act and Y2K compliance.
"Post-Closing Material Adverse Change"
means the occurrence of an event which has
resulted in or could reasonably be expected
to result in a material adverse change in
any of (i) the business, condition
(financial or otherwise), operations,
performance or properties of any Borrower,
or the Company and its subsidiaries taken
as a whole, since December 31, 1998, (ii)
the ability of any Borrower or Guarantor to
perform its obligations under the loan
documentation or (iii) the ability of the
Administrative Agent and the Lenders to
enforce the loan documentation.
Affirmative, Negative and The loan documentation will contain
Financial Covenants: affirmative, negative and financial
covenants customarily found in the
Administrative Agent's loan agreements for
similar financings and other covenants
reasonably deemed by the Administrative
Agent appropriate to the specific
transaction (which will be applicable to
the Company and its subsidiaries),
including, without limitation, the
following (but in each case fashioned so as
not to conflict with the provisions of the
Indentures):
. Comply in all material respects with
laws (including, without limitation,
ERISA and environmental laws); pay
taxes; maintain all necessary licenses
and permits and trade names trademarks,
patents and other intellectual property;
preserve corporate existence; maintain
appropriate and adequate insurance;
permit inspection of properties, books
and records; allow the Administrative
Agent at any time to communicate
directly with the independent certified
public accountants of the Company and
its subsidiaries; and provide all
information concerning the business of
the Company and its subsidiaries and all
financial information as the
Administrative Agent may reasonably
require (including, but not limited to,
periodic Fixed Asset appraisals).
. Perform obligations under material
leases, related documents,
10
<PAGE>
material contracts and other material
agreements.
. Conduct all transactions with affiliates
on terms reasonable equivalent to those
obtainable in arm's length transactions,
including, without limitation,
restrictions on management fees to
affiliates.
. Maintain with the Administrative Agent
main cash concentration accounts for the
Borrowers, and with the Administrative
Agent or other banks acceptable to the
Administrative Agent blocked accounts
for the Borrowers into which all
proceeds of collateral are paid and
which are swept daily, in the case of a
single account of Terra Capital, TNLP
(and in respect of its US dollar
denominated receivables) Terra Canada
and which are subject to blockage upon
the occurrence of an event of default or
a reduction in total Availability (to an
amount to be determined), in the case of
Terra UK and Terra Canada (and with
respect to accounts at other banks
blocked account agreements in form and
substance acceptable to the
Administrative Agent have been
executed).
. Maintain existing interest rate hedging
arrangements in respect of interest rate
obligations arising under the existing
Canadian Term Loan.
. Maintain natural gas hedging
arrangements in respect of the Company's
and its subsidiaries' natural gas
requirements consistent with past
practices.
. Financial covenants as set forth on
Exhibit B attached hereto, and
including, but not limited to (A)
minimum cash flow (minimum EBITDA minus,
to the extent not reflected in the
calculation of EBITDA, the sum of (i)
minority interest payments and (ii) net
cash used for obligations of
discontinued operations) and (B) maximum
capital expenditures (including net cash
used to purchase the ownership units of
TNCLP to the extent permitted under the
loan documentation), subject to
customary exceptions to be agreed.
. Except in connection with a Permitted
Sale Leaseback Transaction, not incur or
assume any additional debt, give any
guaranties, create any liens, charges or
encumbrances or incur additional lease
obligations, in each case beyond agreed
upon limits; not merge or consolidate
with any other person, or change the
nature of business or corporate
structure or create new subsidiaries
beyond agreed upon limits or amend its
charter or by-laws except within agreed
parameters; not sell, lease or otherwise
dispose of assets (other than a
Permitted Sale Leaseback Transaction)
beyond agreed upon limits; not give a
negative pledge on any assets in favor
of any person other than
11
<PAGE>
the Administrative Agent and the Lenders
(subject to customary exceptions to be
agreed); and not permit to exist any
consensual encumbrance on the ability of
any subsidiary to pay dividends or other
distributions to the Borrowers (subject
to customary exceptions to be agreed).
. Not prepay, redeem, purchase, defease,
exchange or repurchase any debt or amend
or modify any of the terms of any such
debt or other similar agreements entered
into by the Company or its subsidiaries,
subject to certain exceptions to be
agreed.
. Not make any loans, advances, capital
contributions or acquisitions, form any
joint ventures or partnerships or make
any other investments in subsidiaries or
any other person (including the
Company), subject to agreed upon
exceptions and loan repurchase
requirements. Intercompany loans from
Terra Capital and its US subsidiaries to
foreign subsidiaries will be limited to
loans for normal operating purposes
only. Cash held at the Company and Terra
Holdings will be limited to amounts to
be determined.
. Not have cash outside of the US in
excess of US $20,000,000 for more than
five business days unless intercompany
loans made after the Closing Date by
Terra Capital and its US subsidiaries to
foreign subsidiaries have been repaid in
full.
. Not make or commit to make any payments
in respect of warrants, options,
repurchase of stock, dividends or any
other distributions to shareholders,
subject to agreed upon exceptions and
loan repurchase requirements; provided,
however, so long as no default or event
of default has occurred and is
continuing, (i) dividends not exceeding
US $5,000,000 per annum will be allowed
to fund discontinued operations, (ii)
expenditures not exceeding US $5,000,000
will be allowed to repurchase up to
500,000 ownership units of TNCLP and
(iii) dividends to fund certain
operating expenses, debt service
(including under the Indentures) and
taxes within the limitations to be
agreed.
. Not permit any change in ownership or
control of Terra Holdings or any of its
subsidiaries or any change in accounting
treatment or reporting practices, except
as required by GAAP and as permitted by
the loan documentation.
. Not amend the Indentures and other
material agreements, subject to certain
exceptions to be agreed.
Financial Reporting The Borrowers shall provide: (i) monthly
Requirements: consolidated and consolidating financial
statements of the Company and its
subsidiaries, including balance sheet,
income statement and cash flow statement
within 30 days of month-end, certified by
the
12
<PAGE>
Company's chief financial officer (setting
forth in comparative form the figures for
the corresponding period in the prior year
and the figures contained in the
projections for the current period); (ii)
quarterly consolidated and consolidating
financial statements of the Company and its
subsidiaries within 45 days of quarter-end,
certified by the Company's chief financial
officer (setting forth in comparative form
the figures for the corresponding period in
the prior year and the figures contained in
the projections for the current period);
(iii) annual audited consolidated and
consolidating financial statements of the
Company and its subsidiaries within 90 days
of year-end, certified with respect to such
consolidated statements by independent
certified public accountants acceptable to
the Administrative Agent; (iv) copies of
all reports on Form 10-K, 10-Q or 8-K filed
with the Securities and Exchange
Commission; (v) projections for the balance
of the term of the Facilities provided
annually and annual business and financial
plans provided in each case within 30 days
after fiscal year-end, with the business
and financial plans being updated
quarterly; and (vi) schedules of all Loans
and all intercompany loans and advances
provided quarterly, or more frequently as
requested by the Administrative Agent.
Other Reporting Requirements: The loan documentation will contain other
reporting requirements customarily found in
the Administrative Agent's loan documents
for similar financings and other reporting
requirements deemed by the Administrative
Agent appropriate to the specific
transaction, including, without limitation,
with respect to litigation, contingent
liabilities, ERISA or environmental events
and borrowing base certificates and
appropriate supporting data for such
borrowing base certificates at such times
and in form and substance as is
satisfactory to the Administrative Agent.
Events of Default: The loan documentation will contain events
of default customarily found in the
Administrative Agent's loan agreements for
similar financings and other events of
default reasonably deemed by the
Administrative Agent appropriate to the
specific transaction (which will be
applicable to the Company and its
subsidiaries), including, without
limitation (and subject in certain cases to
cure periods and threshold amounts to be
agreed), failure to make payments when due,
defaults under other indebtedness,
noncompliance with covenants, breaches of
representations and warranties, bankruptcy
events, failure to satisfy or stay
execution of judgments in excess of
specified amounts, the existence (which
constitutes a Post-Closing Material Adverse
Change) of certain employee benefit or
environmental liabilities or non-monetary
judgments, impairment of loan documentation
or security and change of ownership or
control (to be defined). Each of the
Revolving Credit Facility and the Canadian
Term Loan will be cross-defaulted.
Indemnification: The Borrowers shall jointly and severally
indemnify and hold harmless the
Administrative Agent, the Arranger, each
Lender and each of their affiliates and
each of the respective officers, directors,
13
<PAGE>
employees, agents, advisors, attorneys and
representatives of each (each, an
"Indemnified Party") from and against any
and all claims, damages, losses,
liabilities and expenses (including,
without limitation, reasonable and
documented fees and disbursements of
counsel), joint or several, that may be
incurred by or asserted or awarded against
any Indemnified Party, in each case arising
out of or in connection with or relating to
any investigation, litigation or proceeding
or the preparation of any defense with
respect thereto, arising out of or in
connection with or relating to the
Facilities, the loan documentation or the
transactions contemplated thereby, or any
use made or proposed to be made with the
proceeds of the Facilities, whether or not
such investigation, litigation or
proceeding is brought by the Company or any
of its subsidiaries, any of their
shareholders or creditors, an Indemnified
Party or any other person, or an
Indemnified Party is otherwise a party
thereto and whether or not the transactions
contemplated hereby are consummated, except
to the extent such claim, damage, loss,
liability or expense is found in a final
non-appealable judgment by a court of
competent jurisdiction to have resulted
from such Indemnified Party's gross
negligence or willful misconduct. No
Indemnified Party shall have any liability
(except for breach by it of the loan
documentation) (whether direct or indirect,
in contract, tort or otherwise) to the
Company or any of its subsidiaries or any
of their shareholders or creditors for or
in connection with the transactions
contemplated hereby, except to the extent
such liability is found in a final non-
appealable judgment by a court of competent
jurisdiction to have resulted from such
Indemnified Party's gross negligence or
willful misconduct. In no event, however,
shall any Indemnified Party be liable on
any theory of liability for any special,
indirect, consequential or punitive
damages.
Expenses: Each of the Borrowers and each of the
Guarantors shall jointly and severally pay
all (i) reasonable and documented costs and
expenses of the Administrative Agent and
Arranger (including all reasonable fees,
expenses and disbursements of outside
counsel) in connection with the
preparation, execution and delivery of the
loan documentation and the funding of all
loans under the Facilities, including,
without limitation, all due diligence,
syndication (including printing,
distribution and bank meeting),
transportation, computer, duplication,
messenger, audit, insurance, appraisal and
consultant costs and expenses, and all
search, filing and recording fees, incurred
or sustained by the Administrative Agent or
the Arranger in connection with the
Facilities, the loan documentation or the
transactions contemplated thereby, the
administration of the Facilities (including
the cost of any non-income tax, duty or
other similar assessment or reserve,
special deposit or charge) and any
amendment or waiver of any provision of the
loan documentation and (ii) costs and
expenses of the Lenders (including fees,
expenses and disbursements of counsel) in
connection with the enforcement of any of
their rights and remedies under the loan
documentation.
Assignments and Participations: Assignments must be in a minimum amount of
US $5 million, other
14
<PAGE>
than in the case of an assignment to a
Lender (or an affiliate of a Lender) or an
assignment of a Lender's entire interest in
the Facilities, and are subject to the
approval of the Administrative Agent and,
except for assignments to Lenders or their
affiliates (absent the occurrence and
continuance of an Event of Default) the
reasonable approval of the Borrowers. No
participation shall include voting rights,
other than for matters requiring consent of
100% of the Lenders. Lenders may pledge
their interests in the loans made under the
Revolving Credit Facility to Federal
Reserve Banks under Regulation A.
Requisite Lenders: Lenders holding at least 51% of the
outstanding commitments and/or exposure
under the Facilities (the "Requisite
Lenders").
Amendments: Requisite Lenders except for provisions
customarily requiring unanimous approval.
Miscellaneous: The loan documentation will include
standard yield protection provisions
(including, without limitation, provisions
relating to compliance with risk-based
capital guidelines, increased costs
(including, but not limited to, interest
period breakage costs and maximum statutory
Eurodollar reserve costs, whether or not
incurred) and payments free and clear of
withholding taxes).
Governing Law State of New York.
Counsel to Administration Weil, Gotshal & Manges LLP.
Agent:
15
<PAGE>
EXHIBIT A
Interest Pricing Grid
I. Revolving Credit Facility
Pricing after the date of delivery of the December 2000 financial
statements for the Company and its subsidiaries will be based on the Debt
to Cash Flow Ratio:
<TABLE>
<CAPTION>
Applicable Margin (% per annum)
-------------------------------
- -------------------------------------------------------------------------------------------------
Range of Debt Base Rate Eurodollar Rate
to Cash Flow Ratio Advances Advances
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than 5.00 to 1 1.75% 2.75
Less than or equal to 5.00 to 1 1.50% 2.50%
and greater than 4.00 to 1
Less than 4.00 to 1 1.25% 2.25%
- -------------------------------------------------------------------------------------------------
</TABLE>
II. Term Loan
Pricing after the date of delivery of the December 2000 financial
statements for the Company and its subsidiaries will be based on the Debt
to Cash Flow Ratio:
<TABLE>
<CAPTION>
Applicable Margin (% per annum)
-------------------------------
- -------------------------------------------------------------------------------------------------
Range of Debt Base Rate Eurodollar Rate
to Cash Flow Ratio Advances Advances
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than 5.00 to 1 2.25% 3.25%
Less than or equal to 5.00 to 1 2.00% 3.00%
and greater than 4.00 to 1
Less than 4.00 to 1 1.75% 2.75%
- -------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
EXHIBIT B
Financial Covenants (in US dollars)
I. Cash Flow Covenant
Period Covenant Level
------ --------------
1 quarter ended 3/00 $0 million
2 quarters ended 6/00 $25.0 million
3 quarters ended 9/00 $35.0 million
4 quarters ended 12/00 $45.0 million
4 quarters ended 3/01 $57.0 million
4 quarters ended 6/01 $77.0 million
4 quarters ended 9/01 $83.0 million
4 quarters ended 12/01 $90.0 million
4 quarters ended 3/02 $90.0 million
4 quarters ended 6/02 $90.0 million
4 quarters ended 9/02 $90.0 million
4 quarters ended 12/02 $90.0 million
II. Capital Expenditure Covenant (including purchases of units of TNCLP)
Period Covenant Level
------ --------------
year ended 12/00 $25.0 million
year ended 12/01 $35.0 million
year ended 12/02 $35.0 million
17
