THIRD AMENDMENT TO AND WAIVER OF RECEIVABLES SALE AGREEMENT
Exhibit 99.1
THIRD AMENDMENT TO AND WAIVER OF
RECEIVABLES SALE AGREEMENT
RECEIVABLES SALE AGREEMENT
THIS THIRD AMENDMENT AND WAIVER (herein, the “Amendment and Waiver”), dated as of October
28, 2008, is entered into among Tronox Funding LLC (the “Seller”), Tronox Worldwide LLC (the
“Collection Agent”), Amsterdam Funding Corporation (“Amsterdam”), The Royal Bank of Scotland plc
(successor to ABN AMRO N.V., as agent for the Purchasers (the “Agent”) and as a committed
purchaser (the “Committed Purchaser”).
WITNESSETH:
A. The Seller, the Collection Agent, Amsterdam, the Committed Purchasers and the Agent have
heretofore executed and delivered Receivables Sale Agreement dated as of September 26, 2007 (as
amended, supplemented or otherwise modified through the date hereof, the “Sale Agreement”); and
B. We have become aware that “Defaults” and “Events of Default” may have occurred under the
Parent Credit Agreement as of October 1, 2008 (the “Credit Agreement Defaults”) as a result of
non-compliance by the borrower thereunder with certain covenants contained in Section 7.1(a) and
Section 7.1(b) of the Parent Credit Agreement. To the extent of such Defaults and Events of
Default, a Termination Event has occurred under clause (h)(ii) of the definition of Termination
Event in the Sale Agreement (collectively, together with the Potential Termination Events and
Termination Events resulting directly therefrom, including, without limitation, the circumstances
described in the next sentence,. the “Existing Termination Events”). In addition, to the extent
of the occurrence of the Existing Termination Events, the Seller should not have and should not
have been since September 30, 2008 permitted to accept any additional Purchases under Section 7.2
of the Sale Agreement and the Collection Agent is required to set aside and hold in trust all
Collections for application pursuant to Section 2.3(b) of the Sale Agreement. Failure to comply
with such obligations would also result in Potential Termination Events or Termination Events
under the Sale Agreement.
C. The Seller has requested that the Agent and the Purchasers waive the Existing Termination
Events under the terms and conditions set forth herein.
D. The Agent and Purchasers constituting the Instructing Group (collectively, the “Waiving
Parties”) are willing to waive the Existing Termination Events subject to the terms hereof.
E. In order to accommodate the Seller’s request, during and only during the period (the
“Waiver Period”) beginning on the Effective Date (as defined below) of this Amendment and Waiver,
but with effect as of the date hereof, and ending on November 25, 2008 (the “Scheduled Waiver
Expiration Date”), the Waiving Parties are willing to waive the Existing Termination Events on
the terms, conditions, and provisions contained in this Amendment and Waiver.
F. The parties hereto also desire to amend the Sale Agreement pursuant to Section
9.6 of the Sale Agreement under the terms and conditions provided herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree that the Sale Agreement shall be and is
hereby amended as follows:
1. Incorporation of Recitals; Defined Terms. Each of the Seller and the Collection
Agent acknowledges that the Recitals A, B and C set forth above are true and correct in all
material respects. The defined terms in the Recitals set forth above are hereby incorporated into
this Amendment and Waiver by reference. All other capitalized terms used herein without definition
shall have the same meanings herein as such terms have in the Sale Agreement.
2. Acknowledgment of Default(s). The Existing Termination Events constituted a Termination
Event under the Sale Agreement. Each of the Seller and Collection Agent represents to the Agent
and Purchasers that there are no Potential Termination Events other than the Existing Termination
Events.
3. Incremental Purchases. During the Waiver Period, the Seller shall not have the right to
request Incremental Purchases under the Sale Agreement and the Purchasers shall not be obligated
to honor any such request for Incremental Purchases under the Sale Agreement.
4. Forbearance. Unless and until a Waiver Termination occurs, the Purchasers will
permit Reinvestment Purchases to continue and will not exercise any other rights or remedies it
may have as a result of the occurrence of the Existing Termination Events.
5. Waiver Termination. As used in this Amendment and Waiver, “Waiver Termination” shall mean
the occurrence of the Scheduled Waiver Expiration Date, or, if earlier, the occurrence of any one
or more of the following events: (a) the occurrence of any Termination Event under the Sale
Agreement, other than the Existing Termination Events; (b) following written notice from the Agent
of the occurrence of any failure by the Seller for any reason to comply with any term, condition,
or provision contained in this Amendment and Waiver;
(c) following written notice from the Agent that any representation made by the Seller in
this Amendment and Waiver proves to be incorrect or misleading in any material respect when made;
(d) following written notice from the Agent that any Material Adverse Effect shall have
occurred and be continuing as determined in good faith by the Waiving Parties; or (e) the Parent
Credit Agreement Waiver (as hereinafter defined) shall cease to be effective. The occurrence of
any Waiver Termination shall be deemed a Termination Event under the Sale Agreement. Upon the
occurrence of a Waiver Termination, the Waiver Period is automatically terminated all Purchases
shall cease and the Purchasers shall be entitled to exercise all rights and remedies available to
them upon the occurrence of a Termination Event under the Sale Agreement.
6. Reservation of Rights. The Seller acknowledges and agrees that immediately
upon expiration of the Waiver Period, the Agent and the Purchasers have all of their rights and
remedies with respect to the Existing Termination Events to the same extent, and with the same
force and effect, as if the waiver had not occurred. The Seller will not assert and hereby forever
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waives any right to assert that the Agent or the Purchasers are obligated in any way to continue
beyond the Waiver Period to extend any waiver period or otherwise to forbear from enforcing their
rights or remedies or that the Agent and the Purchasers are not entitled to act on the Existing
Termination Events after the occurrence of a Waiver Termination as if such default had just
occurred and the Waiver Period had never existed. The Seller acknowledges that the Agent and the
Purchasers have made no representations as to what actions, if any, the Agent and the Purchasers
will take after the Waiver Period or upon the occurrence of any Waiver Termination, a Potential
Termination Event or Termination Event (other than an Existing Termination Event during the Waiver
Period), and the Purchasers and the Agent must and do hereby specifically reserve any and all
rights, remedies, and claims they have (after giving effect hereto) with respect to the Existing
Termination Events and each other Potential Termination Event or Termination Event that may occur.
7. Waiving Parties Representation. The Waiving Parties hereby represent and warrant to the
Seller and the Collection Agent that The Royal Bank of Scotland plc has effectively assumed and/or
succeeded to the right and obligations of ABN AMRO N.V. under the Transaction Documents in
accordance with terms thereof.
8. Amendments to the Sale Agreement.
(a) Section 3.4 of the Sale Agreement is hereby amended in its entirety and as so
amended shall read as follows:
The Agent is hereby authorized to give notice at any time to any or
all Lock-Box Banks that the Agent is exercising its rights under the
Lock-Box Letters and to take all actions permitted under the Lock-
Box Letters. The Agent will give prompt notice to the Seller upon
exercising the foregoing rights. The Seller agrees to take any
action requested by the Agent to facilitate the foregoing. After the
Agent takes any such action under the Lock-Box Letters, the Seller
shall immediately deliver to the Agent any Collections received by
the Seller comprising part of the Sold Interest. If the Agent takes
control of any Lock-Box Account, the Agent shall distribute
Collections it receives in accordance herewith and shall deliver to
the Collection Agent, for distribution under Section 3.2, all other
amounts it receives from such Lock-Box Account.
(b) Clause (a) of Section 3.5 of the Sale Agreement is hereby amended in its entirety
and as so amended shall read as follows:
(a) The Agent may at any time direct the Obligors and
the Lock-Box Banks to make all payments on the Receivables (and
pursuant to the Lock-Box Letters, the Lock-Box Banks to remit all
Collections) directly to the Agent or its designee. The Agent will
give prompt notice to the Seller of any such direction to the
Obligors and Lock-Box Banks. The Agent may, and the Seller
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shall at the Agent’s request, withhold the identity of the Purchasers from
the Obligors and Lock-Box Banks unless required by law to do otherwise.
Upon the Agent’s request, the Collection Agent on behalf of the Seller (at
the Seller’s expense) shall (i) give notice to each Obligor of the Agent’s
ownership of the Sold Interest and direct that payments on Receivables be
made directly to the Agent or its designee, (ii) assemble for the Agent
all Records and collateral security for the Receivables and the Related
Security and transfer to the Agent (or its designee), or (to the extent
permitted by applicable law and contract) license to the Agent (or its
designee) the use of, all software useful to collect the Receivables and
(iii) segregate in a manner acceptable to the Agent all Collections the
Seller receives and, promptly upon receipt, remit such Collections in the
form received, duly endorsed or with duly executed instruments of
transfer, to the Agent or its designee.
(c) The defined term “Dilution Reserve” appearing in Schedule I to the Sale Agreement is
hereby amended in its entirety and as so amended shall read as follows:
“Dilution Reserve” means, for any Settlement Period, the product of
(i) the greater of (A) 5.0%, and (B) the amount obtained by multiplying
4.0 times the highest three-month average Dilution Ratio experienced
during the most recent twelve month period, and
(ii) the Net Receivables Balance as of the last day of such Settlement
Period.
(d) The defined term “Net Receivables Balance” appearing in Schedule I to the Sale Agreement
is hereby amended in its entirety and as so amended shall read as follows:
“Net Receivables Balance” means the Eligible Receivable Balance less
the sum of (without duplication) (i) the amount by which the Outstanding
Balance of all Eligible Receivables of each Obligor and its Affiliates
exceeds the Obligor Concentration Limit or Special Limit for such Obligor,
(ii) the amount by which the Outstanding Balance of Eligible Receivables
that are Canadian Receivables exceeds 5.0% of the Eligible Receivables
Balance,
(iii) the amount by which the Outstanding Balance of Eligible Receivables
that are Mexican Receivables exceeds the 2.0% of the Eligible Receivables
Balance, and (iv) the Accrued Rebates applicable to North American
Obligors.
(e) The defined term “Special Limit” appearing in Schedule I to the Sale Agreement is hereby
amended in its entirety and as so amended shall read as follows:
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“Special Limit” means, (i) with respect to The Xxxxxxx-
Xxxxxxxx Company, an amount not to exceed 20% of the Eligible
Receivables Balance so long as its long-term unsecured indebtedness
is rated no lower than (a) A- by S&P and no lower than Baal by
Moody’s or (b) no lower than A3 by Moody’s and BBB+ by S&P, and (ii)
with respect to any other Obligor, such amount as may be agreed from
time to time in writing by the Seller and Agent.
(f) The reference to “October 31, 2008” appearing in the defined term “Scheduled
Termination Date” appearing in Schedule I of the Sale Agreement is hereby deleted and
replaced with “November 25, 2008.”
9. Conditions Precedent. This Amendment and Waiver shall become effective on the date that
each of the following shall have been satisfied with the date on which such conditions shall have
been satisfied or waived shall be referred to as the “Effective Date”) (i) the Agent shall have
received counterparts hereof executed by the Seller, the Initial Collection Agent, each Purchaser
and the Agent, (ii) Tronox Incorporated shall have executed and delivered to the Agent the
acknowledgment and consent in the form set forth below, (iii) the Seller shall have paid to the
Agent the Waiver Fee, (iv) the Agent shall have received an executed copy of the Waiver and
Amendment to Credit Agreement dated as of October 28, 2008 relating to the Parent Credit Agreement
(the “Parent Credit Agreement Waiver”), and (v) the Seller shall have demonstrated, in a form and
substance satisfactory to the Agent in its reasonable discretion, compliance with all of the
provisions of the Sale Agreement on a pro forma basis after taking into effect this Amendment and
Waiver, including, without, limitation, evidence that the Net Receivables Balance will not exceed
the sum of the Aggregate Investment plus the Aggregate Reserve after the effectiveness of this
Amendment and Waiver.
10. Representations and Warranties. To induce the Agent and the Purchasers to enter into this
Amendment and Waiver, the Seller and Initial Collection Agent represent and warrant to the Agent
and the Purchasers that after taking into effect this Amendment and Waiver: (a) the
representations and warranties contained in the Transaction Documents, are true and correct in all
material respects as of the date hereof with the same effect as though made on the date hereof (it
being understood and agreed that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material respects only as of such
specified date); (b) no Potential Termination Event exists; (c) this Amendment and Waiver has been
duly authorized by all necessary corporate proceedings and duly executed and delivered by each of
the Seller and the Initial Collection Agent, and the Sale Agreement, as amended by this Amendment
and Waiver, and each of the other Transaction Documents are the legal, valid and binding
obligations of the Seller and the Initial Collection Agent, enforceable against the Seller and the
Initial Collection Agent in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency or other similar laws of general application affecting the
enforcement of creditors’ rights or by general principles of equity; and (d) no consent, approval,
authorization, order, registration or qualification with any governmental authority is required
for, and in the absence of which would adversely effect, the legal and valid execution and
delivery or performance by the Seller or the Initial Collection Agent of this
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Amendment and Waiver or the performance by the Seller or the Initial Collection Agent of the Sale
Agreement, as amended by this Amendment and Waiver, or any other Transaction Document to which
they are a party.
11. Counterparts. This Amendment and Waiver may be executed in any number of counterparts and
by the different parties on separate counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute but one and the same Amendment
and Waiver.
12. Fees and Expenses. The Seller hereby agrees to pay to the Agent a waiver fee (the “Waiver
Fee”) in an amount equal to $382,500. The Waiver Fee shall be due and payable on the Effective
Date. The Seller shall also pay all fees and expenses (including invoiced attorneys’ fees) as set
forth on the invoices attached hereto as Exhibit A, incurred by the Agent and its counsel in
connection with this Amendment and Waiver and the other instruments and documents being executed
and delivered in connection herewith, and all invoiced fees and expenses of counsel to the Agent
with respect to the facilities subject to the Sale Agreement.
13. Transaction Documents Remain Effective, Miscellaneous. Except as specifically provided
above, the Sale Agreement and the other Transaction Documents and all of the obligations of the
Seller thereunder, the rights and benefits of the Agent and Purchasers thereunder, and the
security interests and other property rights created thereby remain in full force and effect and
are hereby ratified and confirmed in all respects. Without limiting the foregoing, the Seller
agrees to comply with all of the terms, conditions, and provisions of the Transaction Documents as
amended and waived hereby. The execution, delivery, and effectiveness of this Amendment and Waiver
shall not operate as a waiver of any right, power, or remedy of any Agent or any Purchaser under
the Sale Agreement or any of the other Transaction Documents, nor constitute a waiver or
modification of any provision of any of the other Transaction Documents other than as expressly
set forth herein. Any provision of this Amendment and Waiver held invalid, illegal, or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality, or unenforceability without affecting the validity, legality, and
enforceability of the remaining provision hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties hereto hereby acknowledge and agree that this Amendment and Waiver shall constitute a
Transaction Document for all purposes of the Sale Agreement and the other Transaction Documents.
Unless otherwise expressly stated herein, the provisions of this Amendment and Waiver shall
survive the termination of the Waiver Period.
14. Governing Law. This Amendment and Waiver and the rights and obligations of the parties
hereunder shall be construed in accordance with and be governed by the law of the State of New
York.
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IN WITNESS WHEREOF, the parties have caused this Amendment and Waiver to be executed and
delivered by their duly authorized officers as of the date first above written.
| THE ROYAL BANK OF SCOTLAND PLC (as successor to ABN AMRO N.V.), as Agent and as a Committed Purchaser AMSTERDAM FUNDING CORPORATION |
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| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | President | |||
| TRONOX FUNDING LLC |
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| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | President | |||
| TRONOX WORLDWIDE LLC |
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| By: | /s/ Xxxx Xxxxxxxxx | |||
| Name: | Xxxx Xxxxxxxxx | |||
| Title: | Sr. Vice President & Chief Financial Officer | |||
GUARANTOR’S ACKNOWLEDGMENT AND CONSENT
The undersigned, Tronox Incorporated, has heretofore executed and delivered the Limited
Guaranty dated as of September 26, 2007 (the “Guaranty”) and hereby consents to the Third Amendment
to and Waiver of the Sale Agreement as set forth above and confirms that the Guaranty and all of
the undersigned’s obligations thereunder remain in full force and effect.
| TRONOX INCORPORATED |
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| By: | /s/ Xxxx Xxxxxxxxx | |||
| Name: | Xxxx Xxxxxxxxx | |||
| By: | /s/ Xxxxxx X. Xxxxx, III | |||
| Name: | Xxxxxx X. Xxxxx, III | |||
| Title: | Vice President Strategic Planning & Business Services | |||
| By: | 
|
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EXHIBIT A -
