EXHIBIT 4.11
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (hereinafter
referred to as the "Amendment") is made and entered into as of the 31st day of
December, 2003, between and among, on the one hand, the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), XXXXX FARGO FOOTHILL, INC., a
California corporation (f/k/a Foothill Capital Corporation), as the arranger and
administrative agent for the Lenders ("Agent"), and, on the other hand, PCI
CHEMICALS CANADA COMPANY, a Nova Scotia unlimited liability company, and PIONEER
AMERICAS LLC, a Delaware limited liability company (hereinafter each
individually is referred to as a "Borrower" and collectively as the
"Borrowers").
RECITALS
A. Agent, the Lenders and the Borrowers have entered into that certain
Loan and Security Agreement, dated as of December 31, 2001 (as amended by that
certain (i) First Amendment to Loan and Security Agreement dated as of Xxxxx 00,
0000, (xx) Second Amendment to Loan and Security Agreement dated as of June 3,
2002, but effective as of May 31, 2002, (iii) Third Amendment to Loan and
Security Agreement dated as of July 29, 2002, (iv) Fourth Amendment to Loan and
Security Agreement dated as of December 10, 2002, and (v) Fifth Amendment to
Loan and Security Agreement dated as of July 1, 2003, herein the "Agreement").
B. Agent, the Lenders and the Borrowers desire to amend the Agreement
as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meaning as in the
Agreement, as amended hereby.
ARTICLE II
AMENDMENTS
Section 2.01. Amendment to Definition of Applicable Margin. The
definition of "Applicable Margin" in Section 1.1 of the Agreement is hereby
amended and restated in its entirety as follows:
"Applicable Margin" means, on any date, and with respect to any
Advance, a margin of .50% per annum for a Base Rate Loan and a margin
of 2.50% per annum for a LIBOR Rate Loan, provided, however, during
such periods when the Borrowing Base includes an amount determined on
the basis of Borrowers' Inventory in accordance with Section 2.1(a),
the Applicable Margin means the applicable per annum percentage set
forth at the appropriate intersection in the table shown below, based
on the average Excess Availability for the immediately preceding month:
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT - PAGE 1
AVERAGE EXCESS MARGIN OVER MARGIN OVER
AVAILABILITY U.S. PRIME LIBOR
------------------ ----------- -----------
$20MM + .50% 2.50%
$10MM <= $20MM .75% 2.75%
$5MM <= $10MM 1.00% 3.00%
$0MM <= $5MM 1.25% 3.25%
It is understood and agreed that for the period from and after the date
of the first Advance until the date of the initial calculation of
average Excess Availability, the Applicable Margin shall be calculated
as if the Average Excess Availability were $10MM < $20MM.
Section 2.02. Amendment to Definition of Applicable Prepayment Premium.
The definition of "Applicable Prepayment Premium" in Section 1.1 of the
Agreement is hereby amended and restated in its entirety as follows:
"'Applicable Prepayment Premium' means, as of any date of
determination, an amount equal to (a) during the period of time from
December 31, 2003 through December 30, 2004, two percent (2%) of the
Maximum Revolver Amount on the date immediately prior to the date of
determination, (b) during the period of time from December 31, 2004
through December 30, 2005, one percent (1%) of the Maximum Revolver
Amount on the date immediately prior to the date of determination, and
(c) during the period of time from December 31, 2005 through December
30, 2006, one percent (1%) of the Maximum Revolver Amount on the date
immediately prior to the date of determination. Notwithstanding the
foregoing, if, at any time prior to the Maturity Date, the Maximum
Revolver Amount is refinanced by Xxxxx Fargo, there will be no
Applicable Prepayment Premium charged to Borrower."
Section 2.03. Amendment to Definition of EBITDA. The definition of
"EBITDA" in Section 1.1 of the Agreement is hereby amended and restated in its
entirety as follows:
"'EBITDA' means, with respect to any fiscal period, Parent and its
Subsidiaries consolidated net earnings (or loss), minus extraordinary
gains and gains on valuation of derivatives, plus interest expense,
income taxes, depreciation and amortization, and losses on valuation of
derivatives for such period, as determined in accordance with GAAP,
provided, however, that with respect to the 12 month period ending
December 31, 2003, EBITDA shall be determined without regard to the
impairment charge of $40.8 million and the environmental charge of $9.5
million incurred by Pioneer Americas during the quarter ended March 31,
2003."
Section 2.04. Amendment to Definition of Maximum Revolver Amount. The
definition of "Maximum Revolver Amount" in Section 1.1 of the Agreement is
hereby amended by deleting "$50,000,000" and inserting in lieu thereof,
"$30,000,000."
Section 2.05. Amendment to Section 2.1(a). Clauses (y) and (z) of
Section 2.1(a) are hereby amended and restated in their entirety to read as
follows:
"(y) during such periods, as selected by Borrowers with at
least 75 days advance written notice to Agent, that Borrowers
determine to include valuations with respect to Inventory in
the Borrowing Base, the lowest of
(i) $15,000,000,
(ii) the sum of (aa) 55% of the lower of cost or
market value of Eligible Finished Goods Inventory, plus (bb)
25% of the lower of cost or
SIXTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT - PAGE 2
market value of Eligible Raw Materials Inventory, but in no
event to exceed (1) $5,000,000.00 in the aggregate with
respect to Canadian Eligible Inventory and (2) $10,000,000.00
in the aggregate with respect to U.S. Eligible Inventory,
(iii) 80% times the then extant Net Liquidation
Percentage times the book value of Borrowers' Inventory,
(z) minus the sum of (i) the Bank Products Reserve, and
(ii) the aggregate amount of reserves, if any,
established by Agent under Section 2.1(c)."
Section 2.06. Amendment to Section 2.1(b). Clause (i) of Section 2.1(b)
is hereby amended and restated in its entirety to read as follows:
"(i) intentionally deleted,"
Section 2.07. Further Amendment to Section 2.1(b). Subclauses (2) and
(3) of Clause (iv) are hereby amended and restated in their entirety to read as
follows:
"(2) during such periods, as selected by Borrowers with at
least 75 days advance written notice to Agent, that Borrowers
determine to include valuations with respect to Inventory in
the Borrowing Base, the lower of
(aaa) the sum of 55% of the lower of cost or market
value of Canadian Eligible Finished Goods Inventory, plus 25%
of the lower of cost or market value of Canadian Eligible Raw
Materials Inventory, but in no event to exceed $5,000,000.00,
and
(bbb) 80% times the then extant Net Liquidation
Percentage (calculated with respect to PCI Chemical's
Inventory) times the book value of PCI Chemical's Inventory,
(3) minus the sum of (aaa) the Bank Products Reserve, and
(bbb) the aggregate amount of reserves, if any, established by
Agent under Section 2.1(c), or"
Section 2.08. Amendment to Section 2.6(a). The second paragraph of
Section 2.6(a) is hereby amended and restated in its entirety to read as
follows:
"The foregoing notwithstanding, at no time shall any portion
of the Obligations (other than Bank Product Obligations) bear interest
on the Daily Balance thereof at a per annum rate less than four percent
(4%) per annum. To the extent that interest accrued hereunder at the
rate set forth herein would be less than the foregoing minimum daily
rate, the interest rate chargeable hereunder for such day automatically
shall be deemed increased to the minimum rate."
Section 2.09. Amendment to Section 2.6(b). Section 2.6(b) is hereby
amended and restated in its entirety to read as follows:
"(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the ratable
benefit of the Lenders, subject to any letter agreement between Agent
and individual Lenders), a Letter of Credit fee (in addition to the
charges, commissions, fees, and costs set forth in Section 2.12(e))
which shall
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT - PAGE 3
accrue at a rate equal to 1.75% per annum times the Daily Balance of
the undrawn amount of all outstanding Letters of Credit. "
Section 2.10. Amendment to Section 2.11(b). Section 2.11(b) is hereby
amended and restated in its entirety to read as follows:
"(b) FEE LETTER FEES. As and when due and payable under the
terms of the Fee Letter, Borrowers shall pay to Agent the fees set
forth in the Fee Letter, with the exception of the servicing fee (as
described in such Fee Letter) which shall be U.S. $3,500 payable to
Agent on the first day of each month through the Maturity Date, which
servicing fee shall be payable monthly in arrears, and"
Section 2.11. Amendment to Section 3.4. Section 3.4 is hereby amended
and restated in its entirety to read as follows:
"3.4 Intentionally Deleted."
Section 2.12. Amendment to Section 3.5. Section 3.5 is hereby amended
and restated in its entirety to read as follows:
"3.5 Term. This Agreement shall become effective upon the
execution and delivery hereof by Borrowers, Agent, and the Lenders and
shall continue in full force and effect for a term ending on December
31, 2006 (the "Maturity Date"). The foregoing notwithstanding, the
Lender Group, upon the election of the Required Lenders, shall have the
right to terminate its obligations under this Agreement immediately and
without notice upon the occurrence and during the continuation of an
Event of Default."
Section 2.13. Amendment to Section 6.3(b). Section 6.3(b) is hereby
amended and restated in its entirety to read as follows:
"(b) as soon as available, but in any event within 120 days
after the end of each of Parent's fiscal years,"
Clauses (i) and (ii) under Section 6.3(b) remain the same.
Section 2.14. Reinstatement of LIBOR Rate Loans. Effective on the date
hereof, the Agent and the Lenders agree to reinstate Advances in the form of
LIBOR Rate Loans as may be requested by Borrowers, all in accordance with the
terms of the Agreement.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent, unless
specifically waived by Agent:
(a) Borrowers shall pay to Agent a closing fee of U.S. $150,000, which
fee shall be due and payable in full upon the execution of this
Amendment;
(b Agent shall have received the following documents, each in form and
substance satisfactory to Agent:
(i) This Amendment, duly executed by Borrowers, together with
the Consent and Ratification (the "Ratification") hereto, duly executed
by the Guarantors;
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT - PAGE 4
(ii) Officers' Certificates dated as of the date of this
Amendment, in form and substance satisfactory to Agent, certified by
the Secretary of the Borrowers and the Guarantors certifying among
other things, that the Borrowers' and Guarantors' Board of Directors
have met and have adopted, approved, consented to and ratified
resolutions which authorize the execution, delivery and performance by
Borrowers of this Amendment, and the Guarantors of the Ratification,
and each other document, instrument and agreement executed in
connection with or relating to the Agreement, this Amendment or the
Ratification (hereinafter individually referred to as a "Loan Document"
and collectively referred to as the "Loan Documents");
(c) The representations and warranties contained herein, in the
Agreement, as amended hereby, and/or in each other Loan Document shall
be true and correct as of the date hereof, as if made on the date
hereof;
(d) No Event of Default shall have occurred and be continuing and no
Default shall exist, unless such Event of Default or Default has been
specifically waived in writing by Agent; and
(e) All corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other
legal matters incident thereto, shall be satisfactory to Agent.
ARTICLE IV
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
Section 4.01. Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. Borrowers and the Agent agree that the Agreement, as amended hereby, and
the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
Section 4.02. Representations and Warranties. Borrowers hereby
represent and warrant to Agent as follows:
(a) the execution, delivery and performance of this Amendment
and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate
action on the part of Borrowers and do not and will not conflict with
or violate any provision of any Applicable Law, the Articles of
Incorporation/Organization or Bylaws/Operating Agreement of Borrower or
any agreement, document, judgment, license, order or permit applicable
to or binding upon any of the Borrowers or their respective Property;
no consent, approval, authorization or order of and no notice to or
filing with, any court or governmental authority or third person is
required in connection with the execution, delivery or performance of
this Amendment or to consummate the transactions contemplated hereby;
(b) the representations and warranties contained in the
Agreement, as amended hereby, and any other Loan Document are true and
correct on and as of the date hereof as though made on and as of the
date hereof, except to the extent such representations and warranties
relate to an earlier date;
(c) Borrowers are in full compliance with all covenants and
agreements contained in the Agreement, as amended hereby, and the other
Loan Documents; and
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT - PAGE 5
(d) Borrowers have not amended their respective Articles of
Incorporation/Organization or Bylaws/Operating Agreement or other
organizational documents since the date of the execution of the
Agreement.
ARTICLE V
MISCELLANEOUS
Section 5.01. Survival of Representations and Warranties. All
representations and warranties made in the Agreement or any other document or
documents relating thereto, including, without limitation, any Loan Document
furnished in connection with this Amendment, shall survive the execution and
delivery of this Amendment and the other Loan Documents, and no investigation by
Agent or any closing shall affect the representations and warranties or the
right of Agent to rely upon them.
Section 5.02. Reference to Agreement. Each of the Loan Documents,
including the Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Agreement, as amended hereby, are hereby amended
so that any reference in such Loan Documents to the Agreement shall mean a
reference to the Agreement, as amended hereby.
Section 5.03. Expenses of Agent. As provided in the Agreement, each
Borrower agrees to pay on demand all reasonable costs and expenses incurred by
Agent in connection with the preparation, negotiation and execution of this
Amendment and the other Loan Documents executed pursuant hereto and any and all
amendments, modifications, and supplements hereto, including, without
limitation, the reasonable costs and fees of Agent's legal counsel, and all
reasonable costs and expenses incurred by Agent in connection with the
enforcement or preservation of any rights under the Agreement, as amended
hereby, or any other Loan Document, including, without limitation, the
reasonable costs and fees of Agent's legal counsel.
Section 5.04. RELEASE. EACH BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF
ITS LIABILITY TO REPAY THE OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES
OF ANY KIND OR NATURE FROM THE AGENT OR THE LENDERS. EACH BORROWER HEREBY
VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES THE AGENT AND THE
LENDERS, THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL
POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES,
AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS
EXECUTED, WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE AGAINST THE AGENT AND THE
LENDERS, THEIR PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY,
AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT,
VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY OF THE
OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING,
TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST
LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE
AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
AMENDMENT.
Section 5.05. Severability. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT - PAGE 6
Section 5.06. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN
DOCUMENTS EXECUTED PURSUANT HERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
Section 5.07. Successors and Assigns. This Amendment is binding upon
and shall inure to the benefit of Agent, the Lenders and the Borrowers and their
respective successors and assigns, except the Borrowers may not assign or
transfer any of their rights or obligations hereunder without the prior written
consent of Agent.
Section 5.08. Counterparts. This Amendment may be executed in one or
more counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the same
instrument.
Section 5.09. Effect of Waiver. No consent or waiver, express or
implied, by Agent to or for any breach of or deviation from any covenant or
condition of the Agreement shall be deemed a consent or waiver to or of any
other breach of the same or any other covenant, condition or duty.
Section 5.10. Headings. The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 5.11. FINAL AGREEMENT. THE AGREEMENT, AS AMENDED HEREBY AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATED
TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[The Remainder of this Page Intentionally Left Blank]
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT - PAGE 7
IN WITNESS WHEREOF, the Borrowers, Agent and the Lenders have caused
this Amendment to be executed on the date first written above by their duly
authorized officers.
PCI CHEMICALS CANADA COMPANY
a Nova Scotia unlimited liability company
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
PIONEER AMERICAS LLC
a Delaware limited liability company
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
XXXXX FARGO FOOTHILL, INC.,
a California corporation (f/k/a Foothill
Capital Corporation), as Agent and
as a Lender
By:
--------------------------------------
Name:
------------------------------------
Title:
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SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT - PAGE 8
CONSENT AND RATIFICATION
The undersigned, Pioneer Companies, Inc., Pioneer (East), Inc., Pioneer
Licensing, Inc., Imperial West Chemical Co., KNA California, Inc., Pioneer Water
Technologies, Inc., and KWT, Inc. (each a "Guarantor" and collectively the
"Guarantors") have executed that certain continuing general guaranty dated as of
December 31, 2001 (the "Guaranty"), in favor of XXXXX FARGO FOOTHILL, INC., a
California corporation (f/k/a Foothill Capital Corporation), as the arranger and
administrative agent for the Lenders (as defined in the Guaranty). The
Guarantors hereby consent and agree to the terms of the Sixth Amendment to Loan
and Security Agreement dated as of December __, 2003 (the "Amendment"), executed
by PCI CHEMICALS CANADA COMPANY, a Nova Scotia unlimited liability company, and
PIONEER AMERICAS LLC, a Delaware limited liability company (hereinafter each
individually is referred to as a "Borrower" and collectively as the
"Borrowers"), the Lenders and Agent, a copy of which is attached hereto, and the
undersigned agree that the Guaranty shall remain in full force and effect and
shall continue to be the legal, valid and binding obligation of the Guarantors
in enforceable against the Guarantors in accordance with its terms. Furthermore,
each Guarantor hereby agrees and acknowledges that (a) the Guaranty is a "Loan
Document" as such term is defined in the Amendment and as such term is defined
in the Agreement, (b) the Guaranty is not subject to any claims, defenses or
offsets, (c) nothing contained in this Amendment or any other Loan Document
shall adversely affect any right or remedy of Agent under the Guaranty, (d) the
execution and delivery of the Amendment shall in no way reduce, impair or
discharge any obligations of the undersigned as guarantors pursuant to the
Guaranty and shall not constitute a waiver by Agent of any of Agent's rights
against the undersigned, (e) by virtue hereof and by virtue of the Guaranty,
each Guarantor hereby guarantees to Agent the prompt and full payment and full
and faithful performance by the Borrowers of the entirety of the Obligations (as
defined in the Agreement) on the terms and conditions set forth in the Agreement
as amended by the Amendment and any time further modified or amended, (f) the
Guarantors' consent is not required to the effectiveness of the Amendment, and
(g) no consent by the Guarantors is required for the effectiveness of any future
amendment, modification, forbearance or other action with respect to the
Agreement or any present or future Loan Document.
Pioneer Companies, Inc.
By:
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Name:
------------------------------------
Title:
-----------------------------------
Pioneer (East), Inc.
By:
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Name:
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Title:
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CONSENT AND RATIFICATION OF SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT -
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Pioneer Licensing, Inc.
By:
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Name:
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Title:
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Imperial West Chemical Co.
By:
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Name:
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Title:
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KNA California, Inc.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Pioneer Water Technologies, Inc.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
KWT, Inc.
By:
--------------------------------------
Name:
------------------------------------
Title:
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CONSENT AND RATIFICATION OF SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT -
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