[CONFORMED COPY]
CONSENT, WAIVER AND AMENDMENT
CONSENT, WAIVER AND AMENDMENT dated as of July 31, 1995, among: TERRA
CAPITAL, INC., a Delaware corporation (the "Company"); TERRA NITROGEN, LIMITED
PARTNERSHIP, a Delaware limited partnership ("TNLP" and, together with the
Company, the "Borrowers); each of the entities listed on the signature pages
hereof under the caption "GUARANTORS" (each such entity, and each of the
Borrowers, an "Obligor" and, collectively, the "Obligors"); each of the lenders
(the "Lenders") and issuing banks (the "Issuing Banks") listed on the signature
pages hereof; and CITIBANK, N.A., as agent for the Lenders and Issuing Banks
under the Credit Agreement referred to below (in such capacity, the "Agent").
The Obligors, the Lenders, the Issuing Banks and the Agent are parties
to an Amended and Restated Credit Agreement dated as of May 12, 1995 (as from
time to time amended, the "Credit Agreement"). Terra Industries Inc. ("Terra")
has requested that the Lenders and Issuing Banks consent to the transactions
described in Section 2 hereof in connection with the repair of Terra
International, Inc.'s Port Xxxx, Iowa, facility, and has requested that the
Credit Agreement be amended as provided in Section 4 hereof. The Lenders and
Issuing Banks are willing to so consent and are willing to so amend the Credit
Agreement, all on the terms and conditions set forth herein. Accordingly, the
parties hereto hereby agree as follows:
Section 1. Definitions. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as therein defined. In addition,
as used herein "Port Xxxx Land" means the land underlying the Port Xxxx Facility
and "Port Xxxx Plant" means the Port Xxxx Facility (other than the Port Xxxx
Land).
Section 2. Description of Proposed Transaction. Terra has requested
that the Lenders and the Issuing Banks consent to the following transactions
(collectively, the "Proposed Transaction"):
A. Formation and Capitalization of Holdco. A new corporation
("Holdco") will be formed. The initial common stock of Holdco (the "Initial
Holdco Common") will be issued to a temporary holder ("Temporary Holder")
for nominal consideration; preferred stock of Holdco (the "Holdco
Preferred") will be issued to one or more investors (collectively, the
"Investor") for net proceeds to Holdco in an amount to be determined
(currently estimated to be approximately $25,000,000).
The Holdco Preferred will represent at all times at least 20% of voting
control of Holdco. The certificate of designation relating to the Holdco
Preferred will permit the Investor at all times to elect at least one
member of Holdco's Board of Directors.
Terra contemplates that, in addition to the Proposed Transaction, Holdco
may from time to time purchase Senior Preference Units as part of the SPU
Redemption or make loans to Terra or one or more Subsidiaries of Terra for
such purpose.
B. Acquisition of Holdco by TI. TI will acquire the Initial Holdco
Common from the Temporary Holder for nominal consideration. Concurrently
therewith, Holdco will issue additional common stock (such additional
common stock, together with the Initial Holdco Common, the "Holdco Common")
to TI for consideration consisting of the Port Xxxx Plant and cash in an
amount to be determined (currently estimated to be approximately
$9,000,000).
C. Formation and Capitalization of PNC. Holdco will form a new
corporation ("PNC") that will be a direct wholly owned subsidiary of
Holdco. Holdco will capitalize PNC by contributing the Port Xxxx Plant and
cash in an amount to be determined (currently estimated to be approximately
$35,000,000) to PNC.
D. Contribution Agreement, Etc. The Company and TI will agree, on a
joint and several basis, to contribute to Holdco from time to time such
additional amounts of capital as Holdco and PNC may need to complete the
repair of the Port Xxxx Plant in a manner reasonably satisfactory to the
Investor (such agreement, the "Contribution Agreement"). Terra, the Company
and TI may also indemnify the Investor, Holdco and PNC for environmental
liabilities that may arise relating to the Port Xxxx Facility and for
securities law liabilities that may arise relating to the SPU Redemption.
E. Leases. TI will lease the Port Xxxx Land to PNC (the "Ground
Lease") under a long-term lease. PNC will lease the Port Xxxx Plant to TI
under an operating lease having a term not in excess of 36 months. The
Company may Guarantee the obligations of TI under operating lease of the
Port Xxxx Plant.
F. Intercompany Loans, Etc. TI may from time to time loan funds to the
Company to enable the Company to fund its obligations under the
Contribution Agreement. Holdco and PNC may also make loans from time to
time to Subsidiaries of Terra.
G. Holdco Note; Set-Off Right. The Company will make loans to Holdco
in an aggregate principal amount to be determined (currently estimated to
be approximately $50,000,000). The obligations of Holdco in respect of such
loans will be evidenced by a note (the "Holdco Note") in favor of the
Company. Holdco will contribute the proceeds of borrowings under the Holdco
Note to PNC. TI, the Company and Holdco will agree that amounts owing by TI
and the Company to Holdco under the Contribution Agreement may be offset
against amounts owing to the Company by Holdco under the Holdco Note.
H. Repair. PNC will repair the Port Xxxx Facility.
I. Transfer of PNC to TI. Upon completion of the repair of the Port
Xxxx Facility, TI may exercise its option to purchase from Holdco all of
the issued and outstanding capital stock of PNC for a purchase price to be
equal to the fair market value of PNC. Such purchase price would be payable
by TI in a combination of cash and notes to be issued to Holdco. The
purchase price may be funded in part by insurance proceeds received by TI
from the December 13, 1994 Casualty Event at the Port Xxxx Facility.
J. Redemption of Holdco Preferred. Following TI's acquisition of the
capital stock of PNC from Holdco, Holdco may redeem the Holdco Preferred.
K. Certain Limitations. Holdco at all times prior to the transfer of
PNC contemplated in paragraph (I) above will own, beneficially and of
record, all of the issued and outstanding capital stock (other than
directors' qualifying shares) of PNC, and will own no other property (other
than (x) cash and other property incidental to its business as a holding
company, (y) the property described in the Proposed Transaction as being
held by Holdco and (z) any Senior Preference Units acquired by Holdco as
part of the SPU Redemption and any loans made to Terra and its
Subsidiaries). PNC will at all times own no property other than the Port
Xxxx Plant, the Ground Lease and the other property described in the
Proposed Transaction as being held by PNC and other property used in the
repair and operation of the Port Xxxx Plant.
Section 3. Consent and Waiver. Subject to the satisfaction of the
conditions precedent set forth in Section 5(2) hereof, but effective as of the
date hereof:
(a) each of the Lenders and Issuing Banks hereby consents to the
Proposed Transaction for all purposes of the Credit Agreement and the other
Loan Documents, and agrees that the same may be implemented (and in such
connection consents to the execution, delivery and performance of all
documents, instruments and other undertakings necessary to give effect to
the proposed transaction);
(b) each of the Lenders and Issuing Banks hereby waives all
prepayments under Sections 2.05(b)(ii), (iii) and (iv) of the Credit
Agreement that would otherwise be required as a result of the occurrence of
Dispositions and Equity Issuances, or the use of proceeds of insurance
received in connection with Casualty Events, as part of the Proposed
Transaction; and
(c) each of the Lenders and Issuing Banks hereby waives any Default or
Event of Default that would otherwise occur solely as a result of the
consummation of the Proposed Transaction.
Section 4. Amendments to Credit Agreement. Subject to the
satisfaction of the conditions precedent specified in Section 5(1) hereof, but
effective as of the date hereof, the Credit Agreement shall be amended as
follows:
A. General. References in the Credit Agreement and the other Loan
Documents (including references to the Credit Agreement as amended hereby) to
"this Agreement" (and indirect references such as "hereunder", "hereby",
"herein" and "hereof") shall be deemed to be references to the Credit Agreement
as amended hereby.
B. Definitions.
(1) Section 1.01 of the Credit Agreement shall be amended by deleting
clause (viii) of the definition of "Excess Cash Flow" therein and substituting
the following therefor:
"(viii) the aggregate amount of all optional prepayments of Term
Advances made pursuant to Section 2.05(a) during such fiscal year (other
than Early Excess Cash Flow Prepayments), provided, that, unless the
Required Lenders otherwise agree, each such optional prepayment is applied
to the Advances in the manner specified in Section 2.05(c), plus"
(2) Section 1.01 of the Credit Agreement shall be further amended by
adding the following new definition:
"Early Excess Cash Flow Prepayment" means an optional prepayment of
Term Advances made pursuant to Section 2.05(a) that is (unless the Required
Lenders otherwise agree) applied to the Advances in the manner specified in
Section 2.05(c), other than any such prepayment made with proceeds of a
Disposition, Equity Issuance, Casualty Event or incurrence of Debt.
C. Excess Cash Flow Prepayment. Section 2.05(b)(i) of the Credit
Agreement shall be amended to read in its entirety as follows:
"(i) Excess Cash Flow. Not later than the date 90 days after the end
of each fiscal year of the Company commencing with the fiscal year ending
December 31, 1995, the Company shall prepay the Advances in an aggregate
amount equal to (x) 75% of Excess Cash Flow for such fiscal year minus (y)
the aggregate amount of Early Excess Cash Flow Prepayments made during such
fiscal year and minus (z) in the case of the prepayment made with respect
to Excess Cash Flow for the fiscal year ending December 31, 1995, the
Excess SPU Amount (as defined below), if any; provided, that once an
aggregate amount of $20,000,000 or more has been prepaid pursuant to this
clause (i), the figure 75% set forth above shall automatically be deemed to
be reduced to 50%. For purposes of this clause (i), "Excess SPU Amount"
means the excess, if any, of the aggregate consideration paid by Terra and
its Subsidiaries to purchase, redeem or otherwise acquire Senior Preference
Units pursuant to the SPU Redemption over the aggregate amount of Debt
(other than Terra Working Capital Advances) incurred by Terra and its
Subsidiaries to finance such purchase, redemption or other acquisition."
D. 1995 Terra Debt Prepayment. Section 2.05(b)(v) of the Credit
Agreement shall be amended to read in its entirety as follows:
"(v) Non-Redemption of Senior Preference Units, Etc. On or prior to
December 31, 1995, the Company shall prepay the Advances in an aggregate
amount equal to the excess, if any, of (x) 100% of the net proceeds
received by Terra and its Subsidiaries from the issuance of the 0000 Xxxxx
Xxxx to the extent such proceeds (or proceeds of Terra Working Capital
Advances, if such use is permitted pursuant to Section 2.01(c)(iv)) have
not theretofore been applied to the redemption of Senior Preference Units
pursuant to the SPU Redemption over (y) the aggregate amount of Bridge
Indebtedness contractually required to be repaid by the Company in
connection with such issuance."
Section 5. Conditions Precedent.
(1) Amendment Conditions. As provided in Section 4 hereof, the
amendments to the Credit Agreement set forth in said Section 4 shall become
effective, as of the date hereof, upon the satisfaction of the condition
precedent that the Agent shall have received the following (each in form and
substance satisfactory to it):
A. Execution and Delivery, Etc. This Consent, Waiver and Amendment,
duly executed by each of the Obligors, each of the Lenders, each of the
Issuing Banks and the Agent.
B. Other Documents. Such other documents as the Agent or any Lender or
special New York counsel to the Agent may reasonably request.
(2) Additional Consent and Waiver Conditions. As provided in Section
3 hereof, the consent and waiver set forth in said Section 3 shall become
effective, as of the date hereof, upon the satisfaction of the condition
precedent that the Agent shall have received all of the documents referred to in
paragraph (1) above and also shall have received the following (each in form and
substance satisfactory to it):
A. Transaction Documents. Certified copies of the Holdco Note, the
Contribution Agreement, the charter documents of Holdco and PNC, the
preferred stock purchase and sale agreement and each other document,
instrument and undertaking executed and delivered in connection with the
Proposed Transaction.
B. Final Transaction Amounts. A certificate from the Company setting
forth the amount of net proceeds to be received by Holdco under Paragraph
2(A) above, the cash consideration to be received by Holdco under Paragraph
2(B) above, the cash to be contributed by Holdco to PNC under Paragraph
2(C) above and an updated management estimate of the amount of loans
anticipated to be made by the Company to Holdco under Paragraph 2(G) above.
Section 6. Miscellaneous. Except as herein provided, the Credit
Agreement and each of the other Loan Documents shall remain unchanged and in
full force and effect. This Consent, Waiver and Amendment may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Consent,
Waiver and Amendment by signing any such counterpart. This Consent, Waiver and
Amendment shall be governed by, and construed in accordance with, the law of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Consent, Waiver and
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
THE BORROWERS
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TERRA CAPITAL, INC.
By /s/ XX Xxxxx
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Title: Vice President
TERRA NITROGEN, LIMITED PARTNERSHIP
By Terra Nitrogen Corporation, its General Partner
By /s/ XX Xxxxxxxxxxxx
------------------------
Title: Vice President
GUARANTORS
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TERRA INDUSTRIES INC.
By /s/ XX Xxxxx
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Title: Vice President
TERRA NITROGEN CORPORATION
By /s/ XX Xxxxxxxxxxxx
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Title: Vice President
BEAUMONT METHANOL, LIMITED PARTNERSHIP
By Terra Methanol Corporation, its General Partner
By /s/ Xxxxxx X. Xxxxxxxxx
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Title: Vice President
TERRA METHANOL CORPORATION
By /s/ Xxxxxx X. Xxxxxxxxx
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Title: Vice President
BMC HOLDINGS, INC.
By /s/ Xxxxxx X. Xxxxxxxxx
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Title: Vice President
TERRA CAPITAL HOLDINGS, INC.
By /s/ Xxxxxx X. Xxxxxxxxx
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Title: Vice President
THE AGENT
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CITIBANK, N.A.
By /s/ Xxxxx X. Xxxxxxx
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Title: Attorney-in-Fact
CO-ARRANGER
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CHEMICAL BANK
By /s/ Xxxxx X. Xxxxxx
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Title: Vice President
THE ISSUING BANKS
-----------------
CITIBANK, N.A.
By /s/ Xxxxx X. Xxxxxxx
------------------------
Title: Attorney-in-Fact
THE LENDERS
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CITIBANK, N.A.
By /s/ Xxxxx X. Xxxxxxx
------------------------
Title: Attorney-in-Fact
CHEMICAL BANK
By /s/ Xxxxx X. Xxxxxx
------------------------
Title: Vice President
ARAB BANKING CORPORATION
By /s/ Xxxxx X. XxXxxxxx
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Title: Vice President
BANK OF AMERICA ILLINOIS
By /s/ X. X. Xxxxxxxx
---------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Xxxxx
------------------------
Title: Senior Manager Loan
Operations
CAISSE NATIONAL DE CREDIT AGRICOLE
By /s/ Xxxx Xxxxxx
------------------------
Title: Senior Vice President
Branch Manager
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH
By /s/ Xxxxxxxx X. Xxxxxxx
------------------------
Title: Vice President
By /s/ W. Xxxxxxx Xxxxxxx
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Title: Vice President, Manager
CREDIT LYONNAIS CHICAGO BRANCH
By /s/ Xxxxxx X. Xxxxxxx
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Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Xxxxxx X. Xxxxxxx
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Title: Vice President
DRESDNER BANK AG, CHICAGO AND GRAND CAYMAN BRANCHES
By /s/ Xxxx Xxxxxx
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Title: FVP
By /s/ Xxxxxx Xxxxx
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Title: AVP
FIRST BANK NATIONAL ASSOCIATION
By /s/ Xxxxxxx X. Xxxxxxxx
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Title: Vice President
THE FUJI BANK, LIMITED
By /s/ Xxxxx X. Xxxxxxxx
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Title: Joint General Manager
MELLON BANK, N.A.
By /s/ Xxxxxx X. Xxxxx
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Title: Vice President
XXXXXXX XXXXX PRIME RATE PORTFOLIO
By: Xxxxxxx Xxxxx Asset Management, L.P., as
investment advisor
By /s/ Xxxx X. Xxxxxx
------------------------
Title: Authorized Signatory
XXXXXXX XXXXX SENIOR FLOATING RATE FUND, INC.
By /s/ Xxxx X. Xxxxxx
------------------------
Title: Authorized Signatory
NATIONSBANK OF TEXAS, N.A.
By /s/ Xxxxx X. Xxxxxxxxxx
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Title: Senior Vice President
PROTECTIVE LIFE INSURANCE COMPANY
By /s/ Xxxx X. Xxxxx
------------------------
Title: Principal
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS B.V.
By Chancellor Senior Secured Management, Inc.,
its Portfolio Advisor
By /s/ Xxxxxxx X. Xxxxx
------------------------
Title: Vice President
STICHTING RESTRUCTURED OBLIGATIONS
BACKED BY SENIOR ASSETS 2 (ROSA2)
By Chancellor Senior Secured Management, Inc.,
its Portfolio Advisor
By /s/ Xxxxxxx X. Xxxxx
------------------------
Title: Vice President
UNION BANK OF SWITZERLAND, CHICAGO BRANCH
By /s/ Xxxxxx X. Xxxxx
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Title: Managing Director
By /s/ Xxxxx X. Xxxxxxxx XX
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Title: Vice President
