Source: https://www.scribd.com/document/15591121/Tronox-DIP-Default
Timestamp: 2017-05-24 10:36:57
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Matched Legal Cases: ['§ 157', '§ 157', '§ 1408', '§ 101', '§ 1', '§ 6', '§ 3', '§ 7', '§ 7', '§ 2', '§ 2', '§ 1', '§ 5', '§ 5', '§ 363', '§ 157', '§ 157', '§ 1408']

Tronox DIP Default | Bankruptcy | Bankruptcy In The United States
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Richard M. Cieri Jonathan S. Henes Colin M. Adams KIRKLAND & ELLIS LLP 153 East 53rd Street New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re TRONOX INCORPORATED, et al.,1 Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 09-10156 (ALG) Jointly Administered
NOTICE OF TRONOX’S MOTION FOR AN ORDER AUTHORIZING TRONOX INCORPORATED AND TRONOX WORLDWIDE LLC TO ENTER INTO THE FIRST WAIVER AND AMENDMENT TO ITS DEBTOR-IN-POSSESSION CREDIT AGREEMENT AND PAY CERTAIN FEES TO THE DIP AGENT AND DIP LENDERS IN CONNECTION THEREWITH PLEASE TAKE NOTICE that a hearing (the “Hearing”) on Tronox’s Motion for an Order Authorizing Tronox Incorporated and Tronox Worldwide LLC to Enter into the First Waiver and Amendment to the Debtor-In-Possession Credit Agreement and Pay Certain Fees to the DIP Agent and DIP Lenders in Connection Therewith (the “Motion”) will be held before the Honorable Allan L. Gropper, United States Bankruptcy Judge, in Courtroom 617, United States
The debtors in these chapter 11 cases include: Tronox Luxembourg S.ar.L.; Tronox Incorporated; Cimarron Corporation; Southwestern Refining Company, Inc.; Transworld Drilling Company; Triangle Refineries, Inc.; Triple S, Inc.; Triple S Environmental Management Corporation; Triple S Minerals Resources Corporation; Triple S Refining Corporation; Tronox LLC; Tronox Finance Corp.; Tronox Holdings, Inc.; Tronox Pigments (Savannah) Inc.; and Tronox Worldwide LLC.
Bankruptcy Court for the Southern District of New York, One Bowling Green, New York, New York 10004, on May 18, 2009 at 11:00 a.m. (ET). PLEASE TAKE FURTHER NOTICE that any responses or objections to the Motion must be in writing, shall conform to the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and the Local Bankruptcy Rules for the Southern District of New York (the “Local Bankruptcy Rules”), and shall be filed with the Bankruptcy Court electronically by registered users of the Bankruptcy Court’s case filing system (the User’s Manual for the Electronic Case Filing System can be found at www.nysb.uscourts.gov, the official website for the Bankruptcy Court) and, by all other parties in interest, on a 3.5 inch disk, in text-searchable Portable Document Format (PDF), Wordperfect or any other Windows-based word processing format (in either case, with a hard-copy delivered directly to Chambers), and shall be served upon (a) counsel to the Debtors, Kirkland & Ellis LLP, Citigroup Center, 153 East 53rd Street, New York, New York 10022-4611, Attn: Jonathan S. Henes, Esq. and Colin M. Adams, Esq.; (b) the Office of the United States Trustee for the Southern District of New York, 33 Whitehall Street, 21st Floor, New York, New York 10004, Attn: Susan D. Golden, Esq.; (c) counsel to the agent for the Debtors’ prepetition secured lenders and postpetition secured lenders, Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, NY 10019-7475, Attn: Robert H. Trust, Esq.; (d) counsel to the official committee of unsecured creditors of Tronox Incorporated, Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New York 10019-6064, Attn: Alan W. Kornberg, Esq. and Elizabeth McColm, Esq.; (e) counsel to the official committee of equity security holders of Tronox Incorporated, Pillsbury Winthrop Shaw Pittman LLP, 1540 Broadway, New York, New York 10036-4039, Attn: Craig A. Barbarosh, Esq. and David A. Crichlow, Esq.; (f) the Office of the United States Attorney for the Southern
District of New York, Attn: Matthew L. Schwartz, Assistant United States Attorney, Southern District of New York, 86 Chambers Street, 3rd Floor, New York, New York 10007; and (g) all those persons and entities that have formally requested notice by filing a written request for notice pursuant to Bankruptcy Rule 2002 and the Local Bankruptcy Rules (with service on such parties by email only), so as to be actually received no later than May 15, 2009 at 12:00 p.m. (ET). Only those responses that are timely filed, served and received will be considered at the Hearing. Failure to file a timely objection may result in entry of a final order granting the Motion as requested by the Debtors. New York, New York Dated: May 11, 2009 Respectfully submitted, /s/ Colin M. Adams_____________________________ Richard M. Cieri Jonathan S. Henes Colin M. Adams KIRKLAND & ELLIS LLP 153 East 53rd Street New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Counsel to the Debtors and Debtors in Possession
Hearing Date: May 18, 2009 at 11:00 a.m. (ET) Objection Deadline: May 15, 2009 at 12:00 p.m. (ET)
Richard M. Cieri Jonathan S. Henes Colin M. Adams KIRKLAND & ELLIS LLP 153 East 53rd Street New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Counsel to the Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: TRONOX INCORPORATED, et al.,1 Debtors. ) ) ) ) ) ) ) Chapter 11 Case No. 09-10156 (ALG) Jointly Administered
TRONOX’S MOTION FOR AN ORDER AUTHORIZING TRONOX INCORPORATED AND TRONOX WORLDWIDE LLC TO ENTER INTO THE FIRST WAIVER AND AMENDMENT TO THE DEBTOR-IN-POSSESSION CREDIT AGREEMENT AND PAY CERTAIN FEES TO THE DIP AGENT AND DIP LENDERS IN CONNECTION THEREWITH Tronox Incorporated and Tronox Worldwide LLC, together with certain of their affiliates, as debtors and debtors in possession (collectively, “Tronox”), hereby submit this motion (the “Motion”) for entry of an order, substantially in the form attached hereto as Exhibit A, authorizing Tronox Incorporated and Tronox Worldwide LLC to enter into a waiver and amendment of the postpetition debtor-in-possession financing facility and to pay certain fees to
the agent and lenders under that facility in connection therewith. In support of this Motion, Tronox respectfully states as follows: Preliminary Statement 1. Tronox is not presently in compliance with certain covenants and representations
in its postpetition debtor-in-possession financing facility credit agreement (as amended, the “DIP Agreement”) because of, among other things, the March 13, 2009 insolvency filing of Tronox’s German subsidiaries under German law and Tronox’s failure to timely provide the DIP Lenders (as defined below) with audited financial statements for the fiscal year ended December 31, 2008 as a result of an ongoing analysis and investigation of the company’s environmental and other contingent reserves. Tronox and its advisors have engaged in extensive, arms’-length
negotiations with the DIP Agent and DIP Lenders to waive these defaults and amend the DIP Agreement. These negotiations have been successful. 2. The resulting waiver and amendment (the “First Amendment”) is essential to
maximizing the value of the estates. First, the First Amendment will enable Tronox to borrow under the DIP Agreement, which it cannot presently do. Without the ability to borrow, Tronox would face a liquidity crisis before the end of this month which would significantly impair its ability to operate in the ordinary course. Second, the First Amendment will eliminate the serious risks posed to Tronox’s estates by the DIP Lenders’ rights under the DIP Agreement to exercise remedies against Tronox on account of the defaults. These remedies include, among other things, the ability to declare the amounts presently outstanding under the DIP Financing due and payable in full, an act which would likely force Tronox to liquidate. 3. In connection with the First Amendment, Tronox is required to pay a waiver fee
to the DIP Lenders and an arrangement fee to the DIP Agent. Tronox believes that the waiver and arrangement fees are justified in light of the substantial benefits that Tronox will obtain 2
through the First Amendment. Because the First Amendment will enable Tronox to continue operating as a going concern on improved financial terms and eliminate the risks inherent in a default, Tronox submits that entry into the First Amendment and the payment of fees in connection therewith should be authorized as a sound exercise of Tronox’s business judgment. Jurisdiction 4. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and
1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2).
Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. The statutory bases for the relief requested herein are sections 363(b) and 364 of
title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”). Background 7. On January 12, 2009 (the “Petition Date”), Tronox filed petitions with the Court
under chapter 11 of the Bankruptcy Code. Tronox is operating its businesses and managing its properties as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. The chapter 11 cases are consolidated for procedural purposes only and are being jointly administered pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). On January 21, 2009, the United States Trustee for the Southern District of New York (the “U.S. Trustee”) appointed an official committee of unsecured creditors (the “Creditors’ Committee”). On March 13, 2009, the U.S. Trustee appointed an official committee of equity security holders (the “Equity Committee”). No request for the appointment of a trustee or examiner has been made in the chapter 11 cases. 8. Tronox, together with its non-debtor affiliates, is among the world’s leading
producers of titanium dioxide pigment and electrolytic and other specialty chemicals. Tronox’s products are used in the manufacture of a number of everyday goods and consumer products 3
such as paints, coatings, plastics, paper, batteries, toothpaste, sunscreen and shampoo. Tronox has approximately 1,100 customers located in more than 100 countries. The DIP Agreement 9. In connection with the chapter 11 cases, Tronox obtained superpriority senior
priming secured revolving debtor-in-possession financing in an aggregate amount of $125 million (the “DIP Financing”) pursuant to that certain Credit Agreement (the “DIP Agreement”) among Tronox Incorporated, Tronox Worldwide LLC, as Borrower, Credit Suisse Securities (USA) LLC as Sole Lead Arranger and Sole Bookrunner, Credit Suisse as Administrative Agent (the “DIP Agent”), JPMorgan Chase Bank, N.A. as Collateral Agent, and the banks, financial institutions and other lenders parties thereto (collectively, together with the DIP Agent and the Collateral Agent, the “DIP Lenders”) and certain ancillary documents, including a Guarantee and Collateral Agreement. 10. On February 9, 2009, this Court entered a final order (the “Final DIP Order”)
[Dkt. No. 151] finding that Tronox had satisfied the requirements of section 364 of the Bankruptcy Code necessary to obtain the DIP Financing, including, among other requirements, that Tronox was unable to obtain financing on more favorable terms and that, without the relief granted by the Final DIP Order, Tronox’s estates would be immediately and irreparably harmed. See Final DIP Order ¶ 5 (c) and (g). As of April 30, 2009, the aggregate amount of borrowings outstanding under the DIP Financing was approximately $50 million. 11. All obligations under the DIP Agreement are unconditionally guaranteed by
Tronox Incorporated and each of Tronox Worldwide LLC’s domestic subsidiaries and are secured by a first priority priming lien on substantially all of the domestic assets of Tronox Worldwide LLC and the guarantors. The DIP Financing is also secured by pledges of up to 65% of the equity interest in Tronox Worldwide LLC’s direct foreign subsidiaries and the direct 4
foreign subsidiaries of the guarantors to the DIP Agreement. See DIP Agreement at § 1.01; see also Guarantee and Collateral Agreement among Tronox Incorporated, Tronox Worldwide LLC, certain subsidiaries of Tronox Incorporated and the Collateral Agent. 12. The DIP Agreement imposes certain covenants with which Tronox must comply.
These include, among others, that Tronox must: (a) meet minimum Consolidated EBITDAR amounts at the end of each month; (b) cause each of its subsidiaries to do “all things necessary to preserve, renew and keep in full force and effect its legal existence”; (c) provide the DIP Lenders with audited financial statements for the fiscal year ended December 31, 2008 by no later than 100 days after the fiscal year end2; (d) commence a process to sell all or substantially all of its operating assets by July 13, 2009; and (e) not make loans and advances to its non-debtor foreign subsidiaries in an aggregate amount of more than $5 million. See DIP Agreement §§ 6.12; 5.01(a), 5.04(a); 5.17; and 6.04(b). In addition, Tronox was required to make certain
representations and warranties at the closing of the DIP Agreement and is required to bring down those representations and warranties each time it makes a borrowing request. See id. at §§ 3.05(a), 3.06, 3.15, 3.17(a), (g) and (h), and 5.11. 13. Failure to comply with any of the covenants or agreements in the DIP Agreement
results in a default under the DIP Agreement. See id. at § 7(e) and (f). Similarly, it constitutes an event of default if any of the representations made in connection with the DIP Agreement proves to have been false or misleading in any material respect when made. Id. at § 7(a). In the event of a default, Tronox cannot borrow additional amounts under the DIP Financing. Moreover, in the event of a default, the DIP Lenders have the right to exercise a range of remedies, each of which could have serious repercussions on Tronox’s liquidity. Specifically,
One hundred days after December 31, 2008 is April 10, 2009.
the DIP Lenders have the right to declare the full amount outstanding under the DIP Financing due and payable. Id. In addition, the Collateral Agent has the right to direct the banks at which Tronox maintains deposit accounts to transfer any funds on deposit in Tronox’s accounts to the DIP Agent and apply such funds to the amounts outstanding under the DIP Financing, which would effectively cut off Tronox’s access to incoming funds generated by business operations. Id. at § 2.13(c). Finally, upon the event of a default, the DIP Lenders are entitled to receive an additional 2% per annum in default interest on the amounts outstanding under the DIP Agreement for the duration of the default until it is cured or waived. Id. at § 2.07; see also Final DIP Order at ¶ 10(b) (waiver of Tronox’s right to raise any issue at a hearing regarding the exercise of the DIP Lenders’ rights under the DIP Agreement except whether an Event of Default has occurred and is continuing). 14. Pursuant to the terms of the DIP Agreement, certain amendments and/or waivers
of the DIP Agreement (and all of the ones contemplated by the First Amendment) must be approved by DIP Lenders holding more than 50% of the DIP Financing. See DIP Agreement at §§ 1.01 and 9.08(b). Pursuant to the terms of the Final DIP Order, Tronox is authorized to amend and/or modify the DIP Agreement and pay all fees reasonably required or necessary in connection therewith without order of the Court if that amendment or modification is not materially adverse to Tronox. See Final DIP Order at ¶ 6(b)(ii). Tronox believes that the First Amendment provides substantial benefits to Tronox. However, as set forth below, the First Amendment also imposes certain new affirmative covenants on Tronox. Thus, out of an
abundance of caution, and to provide all of its stakeholders with appropriate notice of the terms of the First Amendment, Tronox has filed this Motion and is seeking the Court’s authorization to
enter into the First Amendment. In addition, the effectiveness of the First Amendment is expressly conditioned on obtaining Court approval of the First Amendment. Non-Compliance with Certain Terms of the DIP Agreement 15. As discussed above, Tronox is not presently in compliance with certain covenants
and representations and warranties in the DIP Agreement primarily as a result of two recent developments: (a) the March 13, 2009 insolvency filings of Tronox’s German subsidiaries under German law; and (b) Tronox’s failure to timely provide the DIP Lenders with audited financial statements for the fiscal year ended December 31, 2008 on account of Tronox’s ongoing analysis and investigation of its environmental and other contingent reserves. a. 16. German Insolvency Filings
On March 13, 2009, Tronox’s German subsidiaries, Tronox GmbH and Tronox
Pigments GmbH -- which are not debtors in the chapter 11 cases -- commenced insolvency proceedings in Germany under German law. The German entities’ operations had not been cash flow positive, which posed significant financial risks to Tronox, including, among other things, impairing Tronox’s ability to comply with the minimum Consolidated EBITDAR covenant in section 6.12 of the DIP Agreement. Because the German entities were unable to obtain local financing to support their cash needs, they filed insolvency petitions with the Insolvency Court in Krefeld, Germany. As a consequence, Tronox is not in compliance with section 5.01(a) of the DIP Agreement, which requires Tronox to cause each of its subsidiaries to do “all things necessary to preserve, renew and keep in full force and effect its legal existence.” Agreement § 5.01(a).3 DIP
On March 31, 2009, the DIP Agent delivered a notice confirming the breach of this covenant.
Environmental and Other Contingent Reserves Review
Tronox is presently engaged in a review of its environmental and other contingent
reserves. On April 13, 2009, Tronox disclosed in a Form 8-K that there were indications that certain reserves may have been understated. See Form 8-K, dated April 13, 2009, at 2. And on May 5, 2009, Tronox disclosed in a Form 8-K that “the financial statements included in the company’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K filed with the Securities and Exchange Commission should no longer be relied upon because the company failed to establish adequate reserves as required by applicable accounting pronouncements” and that adjustments to its environmental reserves will be material. See Form 8-K, dated May 5, 2009, at 2. Tronox is working with its professionals to resolve these issues. Because this review has not yet concluded, Tronox has not delivered audited financial statements and the related auditors’ opinion for the fiscal year ended December 31, 2008 to the DIP Lenders. As a consequence, Tronox is not in compliance with section 5.04(a) of the DIP Agreement, which requires Tronox to deliver its audited financial statements to the DIP Lenders within 100 days of the end of the fiscal year. DIP Agreement § 5.04(a); see also Form 8-K, dated April 13, 2009, at 2 and Form 8-K, dated May 5, 2009, at 2. 18. Tronox’s determination regarding its previously issued financial statements may
implicate numerous representations, warranties and covenants contained in the DIP Agreement regarding financial and environmental matters, including, among others, those set forth in the following sections of the DIP Agreement: section 3.05 (the financial statements previously provided to the DIP Lenders “present fairly the financial condition … of [Tronox]”, “disclose all material liabilities, direct or contingent, of [Tronox]” and “were prepared in accordance with GAAP”); section 3.06 (no event or change has occurred that could have a material adverse effect on Tronox’s business, assets, liabilities, or condition, including a change of Tronox’s 8
environmental reserves of more than 130% of Tronox’s reserves as of September 30, 2008); section 3.15 (no information provided to the DIP Agent or DIP Lenders contained “any material misstatement” when provided); and section 3.17(a) (no environmental reports have been prepared revealing Hazardous Materials that “could reasonably be expected to result in any Environmental Liability” that have not been provided to the DIP Agent). c. 19. Negotiations with the DIP Lenders
Based on the foregoing, Tronox and its advisors entered into good faith, arms’-
length negotiations with the DIP Lenders to waive or amend certain terms of the DIP Agreement to resolve the issues raised by the German insolvency filings, the failure to timely provide audited financial statements to the DIP Lenders and the concerns regarding certain representations and warranties raised by Tronox’s contingent reserves analysis. 20. In addition, at the outset of these negotiations, Tronox identified other areas of
concern for which Tronox has sought relief from the DIP Lenders. For example, Tronox determined that if the financial results of its German subsidiaries were included in calculations of Tronox’s Consolidated EBITDAR, Tronox would not be able to comply with the EBITDAR covenant in section 6.12 of the DIP Agreement. As such, Tronox sought to exclude the financial results of its German subsidiaries for purposes of determining its EBITDAR compliance. Similarly, Tronox sought relief that would: (a) enable Tronox to provide, in its discretion, additional financial assistance to its non-debtor foreign subsidiaries above the $5 million cap set forth in section 6.04(b) of the DIP Agreement, particularly in the near term as its foreign
subsidiaries increase production levels in response to the Savannah “warm idle”4; and (b) relieve Tronox of the obligation to enter into a deposit account control agreement with the Royal Bank of Canada, as required by section 5.07(a) of the Guarantee and Collateral Agreement, in light of the bank’s refusal to enter into such an agreement. The First Amendment to the DIP Agreement 21. Tronox, the DIP Agent, the DIP Lenders, and their respective advisors engaged in
extensive negotiations regarding the terms of a waiver and amendment to the DIP Agreement. On May 4, 2009, the proposed terms of the First Amendment were provided to the DIP Lenders for their consideration. On May 11, 2009, the First Amendment was approved by the requisite number of DIP Lenders. A copy of the First Amendment is attached hereto as Exhibit B.5 22. The First Amendment provides Tronox with the following key benefits6: • Waiver of Defaults: To allow Tronox to continue to borrow under the DIP Agreement and to obtain necessary liquidity for the operation of its businesses, the First Amendment permanently waives any Default that may have occurred as a result of any non-compliance with the provisions of the DIP Agreement or related documents related to or arising from, among other things, (a) the investigation of Tronox’s environmental and other contingent reserves, and any related understatement of said reserves in accordance with applicable accounting standards, (b) the failure to timely deliver audited financials and related auditors’ opinions, reports and certifications and (c) the insolvency filings of Tronox’s German subsidiaries. Borrowing Requests: To enable Tronox to make valid borrowing requests prior to the conclusion of its analysis of its environmental and other contingent reserves, the First Amendment modifies certain representations,
Additional facts regarding the Savannah “warm idle” are set forth in Tronox’s Motion for Entry of an Order Extending its Exclusive Periods to File and Solicit Votes for a Chapter 11 Plan Pursuant to Section 1121(d) of the Bankruptcy Code [Dkt. No. 372] (the “Exclusivity Motion”), filed April 22, 2009. A fully executed version of the First Amendment will be submitted to the Court promptly. The summary of the terms of the First Amendment contained in this Motion is qualified in its entirety by reference to the First Amendment, and any conflict between this Motion and the First Amendment shall be resolved in favor of the First Amendment.
warranties and covenants in the DIP Agreement, including those set forth in sections 3.05(a), 3.06, 3.15, 3.17(a), (g) and (h) and 5.11 of the DIP Agreement, which may be impacted by the outcome of that analysis. • Consolidated Financial Results: To conform to applicable accounting principles relating to the accounting of gains and losses for Tronox’s German subsidiaries, the First Amendment modifies the definition of Consolidated Net Income in section 1.01 of the DIP Agreement, which included the net income or loss of Tronox Incorporated’s “consolidated Subsidiaries,” to exclude the income or loss of Tronox’s German subsidiaries. Audited Financial Statements: To allow Tronox additional time to complete its investigation of its environmental and other contingent reserves, the First Amendment extends the time set forth in section 5.04(a) of the DIP Agreement within which Tronox must provide the DIP Lenders with audited financing statements for fiscal year ended December 31, 2008 for an additional 120 days until August 8, 2009. Financial Assistance to Foreign Subsidiaries: To enable Tronox to provide additional financial assistance to its foreign subsidiaries, the First Amendment modifies section 6.04 of the DIP Agreement, which restricted the aggregate principal amount of loans and advances made by Tronox to its non-debtor foreign subsidiaries to $5 million, to allow Tronox to make up to $7.5 million in such loans and advances to its foreign subsidiaries plus up to $5 million to its Dutch subsidiary. DACAs: To provide Tronox with relief occasioned by the Royal Bank of Canada’s refusal to enter into a deposit account control agreement (which agreement is required by the DIP Agreement), the First Amendment modifies section 5.07(a) of the Guarantee and Collateral Agreement, which required Tronox to establish and maintain Deposit Accounts (as defined in that agreement) subject to control agreements for the benefit of the Collateral Agent, to permit Tronox not to enter into a control agreement with the Royal Bank of Canada; provided that the balance in the account at that bank not exceed $250,000 at any time.
In addition, the DIP Lenders have agreed not to object to certain of Tronox’s
important operational decisions -- including the payment of a certain secured claim held by one of Tronox’s key vendors as part of a settlement agreement (which settlement was approved by the Court on May 6, 2009 [Dkt. No. 417]) and the payment of severance benefits to certain of Tronox’s employees in the event of their termination pursuant to a non-insider severance program (which severance plan will be submitted to the Court for approval shortly). Tronox 11
believes that both of these matters are important to the continued operation of the businesses. Accordingly, the DIP Lenders’ agreement not to object to these motions is valuable to the estates and benefits all parties in interest. 24. In exchange for the foregoing, Tronox and the DIP Lenders have agreed to the
following requirements. First, the affirmative covenant set forth in section 5.17 of the DIP Agreement regarding Tronox’s sale efforts is modified to require Tronox to execute an asset purchase agreement with respect to the sale of all or substantially all of its operating assets with a “stalking horse” bidder by May 31, 2009 (which deadline may be extended for an additional 10 business days at the discretion of the DIP Agent). In addition, Tronox will be required to file a motion with the Court seeking approval of the terms of the “stalking horse” bid and establishing procedures for a public auction within seven days following the execution of the asset purchase agreement. 25. Second, a new affirmative requirement is added to the DIP Agreement. Pursuant
to new section 5.20 of the DIP Agreement, Tronox will be required to hold weekly calls with the DIP Agent and the DIP Lenders regarding the status of the chapter 11 cases and to provide the DIP Agent’s legal and financial advisors with certain information regarding the asset purchase agreements received by Tronox from potential bidders. 26. Third, Tronox has agreed to pay a waiver fee to the DIP Lenders, an arrangement
fee to the DIP Agent and the expenses of the DIP Agent (collectively, the “Amendment Fees”) as consideration for the First Amendment and the above concessions. The effectiveness of the First Amendment is conditioned specifically on Tronox: (a) paying a waiver fee equal to 0.5% of the outstanding commitment of each DIP Lender who consent to the First Amendment by a certain deadline; (b) paying the DIP Agent an arrangement fee of $400,000 for the arrangement,
negotiation and preparation of the First Amendment; and (c) reimbursing the DIP Agent for all expenses, including the reasonable fees of the DIP Agent’s counsel, incurred in connection therewith. Tronox believes that the Amendment Fees reasonably reflect the current conditions of the credit markets and are justified under the circumstances. 27. The First Amendment and the Amendment Fees have been negotiated at arms’-
length and in good faith. Tronox has determined in the exercise of its business judgment that accepting the sale milestones and paying the Amendment Fees are necessary to receive the benefits of the First Amendment. Without the relief provided by the First Amendment, Tronox would remain in default and the estates would be at risk of irreparable financial harm. Relief Requested 28. By this Motion, Tronox seeks authority, pursuant to sections 363(b) and 364 of
the Bankruptcy Code, to enter into the First Amendment and to pay certain Amendment Fees to the DIP Agent and the DIP Lenders in connection therewith. Basis for Relief 29. Tronox has previously established the need for the DIP Financing pursuant to
section 364 of the Bankruptcy Code. The First Amendment is in furtherance of Tronox’s continued performance under the DIP Agreement, without which Tronox would not have sufficient liquidity to continue operating as a going concern and could face liquidation. 30. Section 363(b)(1) of the Bankruptcy Code provides that a debtor, “after notice
and a hearing, may use, sell or lease, other than in the ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1). In the Second Circuit, approval of a debtor’s actions under section 363(b)(1) of the Bankruptcy Code requires the debtor to show that its decision was based on its business judgment. See In re Lionel Corp., 722 F.2d 1063, 1070 (2d Cir. 1983) (requiring “some articulated business justification” to approve the use, sale or lease of property outside the 13
ordinary course of business); In re Ionosphere Clubs, Inc., 100 B.R. 670, 675 (Bankr. S.D.N.Y. 1989) (noting that the standard for determining a section 363(b) motion is “good business reason”). To determine whether the business judgment test is met, “the court ‘is required to examine whether a reasonable business person would make a similar decision under similar circumstances.’” In re Dura Auto. Sys. Inc., No. 06-11202 (KJC), 2007 Bankr. LEXIS 2764, at *272 (Bankr. D. Del. Aug. 15, 2007) (quoting In re Exide Techs., Inc., 340 B.R. 222, 239 (Bankr. D. Del. 2006)). 31. Once a debtor articulates a valid business justification, it is presumed that “in
making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action was in the best interests of the company.” In re Integrated Resources, Inc., 147 B.R. 650, 656 (S.D.N.Y. 1992) (quoting Smith v. Van Gorkom, 488 A.2d 858, 872 (Del. 1985)). The business judgment rule therefore shields a debtor’s management from judicial second-guessing, and mandates that a court approve a debtor’s business decision unless that decision is a product of bad faith or gross abuse of discretion. See id.; see also Lubrizol Enters., Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043, 1047 (4th Cir. 1985), cert. denied, 475 U.S. 1057 (1986). Entry into the First Amendment is a Sound Exercise of Tronox’s Business Judgment 32. Here, substantial business reasons exist for the Court to authorize Tronox to enter
into the First Amendment and pay the Amendment Fees. First, as described above, Tronox is not presently in compliance with certain representations, warranties and covenants contained in the DIP Agreement. As such, Tronox is unable to borrow. Additional borrowing under the DIP Agreement is essential to Tronox’s ability to continue to operate as a going concern. In addition, until the default is waived or cured, the DIP Lenders have the right to exercise a wide range of 14
remedies against Tronox, including simply declaring the amounts outstanding under the DIP Financing due and payable in full. Without the liquidity provided by the DIP Agreement, the estates would suffer immediate and irreparable harm and Tronox could be forced to liquidate. Accordingly, the relief provided by the First Amendment is essential to the ongoing operation of Tronox’s businesses during the chapter 11 cases and the preservation of the value of the estates. 33. Second, Tronox will garner significant benefits from the First Amendment. In
particular, the First Amendment provides Tronox with substantial reassurance about its ability to comply with the EBITDAR covenant set forth in section 6.12 of the DIP Agreement by authorizing Tronox to exclude the financial results of its German subsidiaries when computing its Consolidated EBITDAR since December 31, 2008. The First Amendment also increases Tronox’s ability to provide financial assistance to its non-debtor foreign subsidiaries, which Tronox believes will be important to maintaining the value of the non-debtor foreign subsidiaries going forward. And, by waiving the defaults, upon the effectiveness of the First Amendment, interest will cease accruing at the default rate. 34. Furthermore, as described above, the First Amendment resolves all issues
concerning the DIP Financing arising from Tronox’s evaluation and analysis of its environmental and other contingent reserves. It extends the deadline by which Tronox must provide audited financial statements to the DIP Lenders for the fiscal year ended December 31, 2008. It also modifies the representations, warranties and covenants in the DIP Agreement that may be impacted by the outcome of this analysis to exclude that analysis and the results thereof from consideration. Finally, it waives any defaults arising from or related to the environmental and other contingent reserves. Taken together, these concessions and modifications enable Tronox to continue to investigate these matters without running afoul of the covenants and representations
and warranties that could be impacted by the matters under investigation.
modifications preserve Tronox’s ability to borrow during the pendency of the review of its reserves, they provide substantial benefit. 35. Third, the new deadline regarding the sale required by the DIP Lenders is
achievable. Since the Petition Date, Tronox has devoted substantial time and attention to the process of marketing its operating assets for sale. As described in detail in Tronox’s Exclusivity Motion, Tronox has made substantial progress in this effort. On May 4, 2009, Tronox circulated a draft asset purchase agreement to interested parties. Tronox anticipates receiving second-round bids from interested parties, along with a mark-up of this asset purchase agreement, in the near term. Given this progress, Tronox believes that it will be able to meet the new sale deadline imposed by the First Amendment, without imposing undue pressure on the sale process. 36. Fourth, the Amendment Fees to be paid to the DIP Lenders reasonably reflect
current conditions in the credit markets and are appropriate in light of the concessions granted by the DIP Lenders. In particular, the covenant in the DIP Agreement regarding financial
statements was specifically negotiated by the DIP Lenders, and is an important source of disclosure for the DIP Lenders. Similarly, the EBITDAR covenant in the DIP Agreement, the limit on loans and advances to non-debtor foreign subsidiaries and the requirement that Tronox establish deposit accounts were specifically negotiated by the DIP Lenders to protect their collateral position. Each is an important source of protection for the DIP Lenders. Accordingly, the DIP Lenders’ agreements to waive the requirement that Tronox provide audited financial statements and enter into deposit account control agreements at all depository banks, as well as to revise the Consolidated Net Income definition to relax Tronox’s EBITDAR covenant requirements and increase the amount of funds that Tronox can lend to its foreign subsidiaries
each represent significant concessions by the DIP Lenders. Tronox believes that the Amendment Fees constitute appropriate consideration in exchange for these concessions. 37. Courts in this jurisdiction have authorized a debtor’s entry into an amendment of
its debtor-in-possession financing agreement and the payment of fees in connection therewith as a sound exercise of a debtor’s business judgment. See, e.g., In re Tower Automotive, Inc., Case No. 05-10578 (ALG) [Dkt. Nos. 2317 and 1815], entered on Jan. 31, 2007 and Oct. 25, 2006, respectively (authorizing amendments to DIP agreement and the payment of fees in connection therewith); In re Calpine Corp., Case No. 05-60200 (BRL) [Dkt. No. 7161], entered on Dec. 17, 2007 (authorizing amendments to Exit Financing and the payment of fees in connection therewith); In re Delphi Corporation, Case No. 05-44481 (RDD) [Dkt No. 16575], entered on April 23, 2009 (authorizing amendment to post-DIP facility accommodation agreement and payment of fees in connection therewith); In re Solutia, Inc., Case No. 03-17949 (PCB), [Dkt. No. 1120], entered on July 20, 2004 (authorizing amendment to DIP agreement and payment of fees in connection therewith). 38. Because the relief requested herein will enable Tronox to continue operating as a
going concern and will eliminate the risk of an acceleration of the DIP Facility or other similarly devastating exercise of remedies against Tronox, it constitutes an appropriate exercise of Tronox’s business judgment. As such, this Court should approve the First Amendment and authorize Tronox to pay the Amendment Fees in connection therewith. Motion Practice 39. This Motion includes citations to the applicable rules and statutory authorities
upon which the relief requested herein is predicated, and a discussion of their application to this Motion. Accordingly, Tronox submits that this Motion satisfies Rule 9013-1(a) of the Local Bankruptcy Rules for the Southern District of New York. 17
Notice 40. Tronox has provided notice of this Motion to: (a) the U.S. Trustee; (b) counsel to
the DIP Agent; (c) counsel to the Creditors’ Committee; (d) counsel to the Equity Committee; (e) the Office of the United States Attorney for the Southern District of New York; and (f) all those persons and entities that have formally appeared and requested service in these cases pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested, Tronox respectfully submits that no further notice is necessary. No Prior Request 41. other court. WHEREFORE, Tronox respectfully requests that the Court enter an order (i) authorizing Tronox Incorporated and Tronox Worldwide LLC to enter into the First Amendment to the DIP Agreement and pay the Amendment Fees in connection therewith, and (ii) granting such other relief as is just and proper. No previous motion for the relief requested herein has been made to this or any
New York, New York Dated: May 11, 2009
/s/ Colin M. Adams Richard M. Cieri Jonathan S. Henes Colin M. Adams KIRKLAND & ELLIS LLP Citigroup Center 153 East 53rd Street New York, New York 10022-4611 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Counsel to the Debtors and Debtors in Possession
Chapter 11 Case No. 09-10156 (ALG) Jointly Administered
ORDER AUTHORIZING TRONOX INCORPORATED AND TRONOX WORLDWIDE LLC TO ENTER INTO THE FIRST WAIVER AND AMENDMENT TO THE DEBTOR-IN-POSSESSION CREDIT AGREEMENT AND PAY CERTAIN FEES TO THE DIP LENDERS IN CONNECTION THEREWITH Upon the motion (the “Motion”) of Tronox Incorporated, Tronox Worldwide LLC and certain of their affiliates, as debtors in possession (collectively, the “Debtors”),1 for entry of an order (the “Order”) authorizing Tronox Incorporated and Tronox Worldwide LLC to enter into the First Waiver and Amendment to the DIP Credit Agreement and to pay certain Amendment Fees to the DIP Agent and the DIP Lenders in connection therewith; and it appearing that the relief requested in the Motion is in the best interests of the Debtors’ estates and stakeholders; and it appearing that the First Waiver and Amendment has been negotiated in good faith and at arm’s length between the Debtors and the DIP Agent; and it appearing that all of the Debtors’ obligations under and in connection with the First Waiver and Amendment, including the obligation to pay the Amendment Fees, have been incurred in good faith as that term is used in section 364(e) of the Bankruptcy Code; this Court having jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334; this proceeding being a core proceeding pursuant to 28 U.S.C. § 157; venue of this proceeding and this Motion in this District being proper pursuant to 28 U.S.C. §§ 1408 and 1409; notice of the Motion and the opportunity for a hearing on the Motion being
appropriate under the particular circumstances; and after due deliberation and sufficient cause appearing therefor, it is hereby ORDERED 1. 2. 3. The Motion is granted. The First Waiver and Amendment is hereby approved. Tronox Incorporated and Tronox Worldwide LLC are authorized to enter into the
First Waiver and Amendment and to perform all acts, to make, execute and deliver all instruments and documents in connection therewith that may be reasonably required or necessary for the performance of their obligations under the First Waiver and Amendment and to pay the Amendment Fees. 4. Upon execution and delivery of the First Waiver and Amendment, the First
Waiver and Amendment shall constitute valid and binding obligations of each of the Debtors, enforceable against each Debtor party thereto in accordance with the terms thereof. No
obligation or payment under the First Waiver and Amendment or this Order shall be stayed, restrained, voidable, avoidable or recoverable under the Bankruptcy Code or under any applicable law, or subject to any defense, reduction, setoff, recoupment or counterclaim. 5. Notwithstanding the possible applicability of Rules 6004(h), 7062, and 9014 of
the Federal Rules of Bankruptcy Procedure or otherwise, the terms and conditions of this Order shall be immediately effective and enforceable upon its entry. 6. The Court retains jurisdiction with respect to all matters arising from or related to
the implementation of this Order. New York, New York Dated: __________________________________ Hon. Allan L. Gropper United States Bankruptcy Judge
EXHIBIT B FIRST WAIVER AND AMENDMENT
WAIVER AND AMENDMENT dated as of May 11, 2009 (this “Waiver”), to the Credit Agreement dated as of January 13, 2009 (as amended, supplemented or otherwise modified through the date hereof, the “Credit Agreement”), among Tronox Incorporated (“Holdings”), Tronox Worldwide LLC (the “Borrower”), the Lenders from time to time party thereto, Credit Suisse, as Administrative Agent (in such capacity, the “Administrative Agent”) and JPMorgan Chase Bank, N.A., as Collateral Agent (together with the Administrative Agent, the “Agents”). WHEREAS, pursuant to the Credit Agreement, the Lenders have extended credit to the Borrower; WHEREAS, Holdings and the Borrower have informed the Lenders that they have not complied, or will not be able to comply, with certain provisions of the Credit Agreement and the Guarantee and Collateral Agreement (as defined in the Credit Agreement) referred to in Sections 1 and 2 below and have requested that the Lenders agree to amend and waive such provisions of the Credit Agreement and the Guarantee and Collateral Agreement; WHEREAS, the undersigned Lenders are willing to agree to such waivers and amendments on the terms and subject to the conditions set forth herein; and WHEREAS, capitalized terms used but not defined herein shall have the meanings assigned to them in the Credit Agreement; NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Waiver. Subject to satisfaction of the conditions set forth below, the undersigned Lenders hereby permanently waive, as of the Waiver Effective Date (as defined below), any Default that may have occurred as a result of (a) any inaccurate representation made prior to the Waiver Effective Date in or non-compliance prior to the Waiver Effective Date with, as the case may be, any of Sections 3.05, 3.06, 3.15, 3.17(a), (g) and (h) and 5.11 of the Credit Agreement, in each case to the extent relating to or arising out of the understatement of actual or contingent environmental and tort liabilities relating to the properties of the Borrower and its Subsidiaries set forth on Schedule 1 hereto or the failure to take adequate reserves relating to such liabilities for such properties, (b) the failure to deliver the financial statements of Holdings and its consolidated Subsidiaries for the fiscal year ended December 31, 2008 and related opinions, reports and certifications, in each case required to be delivered pursuant to Section 5.04(a), (d), (e) and (f) of the Credit Agreement within 100 days after the end of such fiscal year, (c) the failure to comply with Section 5.01 of the Credit Agreement to the extent relating to the insolvency proceedings involving Tronox GmbH and Tronox Pigments GmbH, (d) the failure to comply with Section 5.05 of the Credit Agreement prior to the Waiver Effective Date to the extent relating to any of the matters included in this
2 Section 1 and Section 2 of this Waiver and (e) the failure to comply with Section 5.13 of the Credit Agreement and Section 5.07(a) of the Guarantee and Collateral Agreement prior to the Waiver Effective Date, to the extent relating to the failure to meet the requirements of clause (e) of the Collateral and Guarantee Requirement by the date required prior to giving effect to this Waiver. SECTION 2. Amendments to Credit Agreement. (a) Section 1.01 of the Credit Agreement is hereby amended by adding the following definition in proper alphabetical order: “First Waiver and Amendment” means the Waiver and Amendment dated as of May 11, 2009, among Holdings, the Borrower, the Administrative Agent, the Collateral Agent and the Lenders party thereto. (b) Section 1.01 of the Credit Agreement is hereby further amended by revising clause (e) of the definition of the term “Collateral and Guarantee Requirement” in its entirety as follows: “(e) on or prior to May 11, 2009, the requirements of the Guarantee and Collateral Agreement relating to the concentration and application of collections on Accounts shall have been satisfied; and”. (c) Section 1.01 of the Credit Agreement is hereby further amended by revising the definition of “Consolidated Net Income” by replacing the word “and” immediately before clause (c) thereof with a comma and adding the following immediately before the period at the end thereof: “and (d) the income or loss of Tronox GmbH and Tronox Pigments GmbH”. (d) Section 3.05(a) of the Credit Agreement is hereby amended by inserting the following at the beginning of each of the second and third sentences thereof: “Except to the extent relating to or arising out of the understatement of actual or contingent environmental and tort liabilities relating to the properties of the Borrower and its Subsidiaries set forth on Schedule 1 to the First Waiver and Amendment, or the failure to take adequate reserves relating to such liabilities for such properties,”. (e) Section 3.06 of the Credit Agreement is hereby amended by inserting the following immediately after the words “Bankruptcy Cases” therein: “and to the extent relating to or arising out of the understatement of actual or contingent environmental and tort liabilities relating to the properties of the Borrower and its Subsidiaries set forth on Schedule 1 to the First Waiver and Amendment, or the failure to take adequate reserves relating to such liabilities for such properties”.
[[3140053]]
3 (f) Each of Sections 3.15 and 3.17(a), (g) and (h) of the Credit Agreement is hereby amended by inserting the following at the beginning thereof: “Except to the extent relating to or arising out of the understatement of actual or contingent environmental and tort liabilities relating to the properties of the Borrower and its Subsidiaries set forth on Schedule 1 to the First Waiver and Amendment, or the failure to take adequate reserves relating to such liabilities for such properties,”. (g) Section 5.04(a) of the Credit Agreement is hereby amended by replacing “100” with “220” in each instance in which it appears therein. (h) Section 5.11 of the Credit Agreement is hereby amended by deleting the words “and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP” therein. (i) Section 5.17 of the Credit Agreement is hereby amended by deleting such section in its entirety and replacing it with the following: “SECTION 5.17. Sale of the Borrower. (a) On or prior to May 31, 2009 (which date may be extended by the Administrative Agent, in its sole discretion, for up to an additional 10 Business Days), Holdings shall have executed one or more asset purchase agreements, in form and substance reasonably satisfactory to the Agents and which the Administrative Agent shall have provided to the Lenders prior to its approval thereof, with a “stalking horse” bidder or bidders providing, in the aggregate, for the sale of all or substantially all of the assets of Holdings and its Subsidiaries under Section 363 of the Bankruptcy Code. Within seven days after the date of execution and delivery of such asset purchase agreements, Holdings shall have filed a motion with the Bankruptcy Court seeking approval of such asset purchase agreements. (b) Holdings shall provide to the Agents’ counsel and financial advisor all asset purchase agreements received by or on behalf of Holdings for the sale of all or substantially all of the assets of Holdings and its Subsidiaries under Section 363 of the Bankruptcy Code and all other agreements relating to such asset purchase agreements and such additional information with respect to such asset purchase agreements as the Agents’ professionals may reasonably request.” (j) Article V of the Credit Agreement is hereby amended by adding a new Section 5.20 as follows: “SECTION 5.20. Lender Updates. Holdings and the Borrower shall cause members of senior management to participate in (i) telephone conference calls with, and arranged by, the Agents and the Lenders at 11:00 a.m. (New York City time) on Friday of each week (or less often, if so requested by the Administrative Agent), or at such other time as may be reasonably
4 acceptable to the Administrative Agent, Holdings and the Borrower and (ii) a meeting with the Agents and the Lenders at a date and time to be determined by the Administrative Agent and reasonably acceptable to Holdings and the Borrower, during which calls and meeting it shall provide any reasonable and non-privileged information that may reasonably be requested regarding the status of and developments in the operations, business affairs and financial condition of Holdings and its Subsidiaries, including with respect to the process for the sale of all or substantially all of the assets of Holdings and its Subsidiaries under Section 363 of the Bankruptcy Code.” (k) Clause (b)(i) of Section 6.04 of the Credit Agreement is hereby amended by replacing “$5,000,000” with “(1) $7,500,000” and inserting the following immediately after the words “at any time outstanding” in clause (i)(C)(y) thereof: “(no more than $2,500,000 of which loans and advances may be at any time outstanding to Tronox Pigments (Holland) B.V.) and (2) the amount permitted by clause (m) below to Tronox Pigments (Holland) B.V.”. (l) Section 6.04 of the Credit Agreement is hereby further amended by deleting the word “and” at the end of clause (k) thereof, replacing the period at the end of clause (l) thereof with a semicolon and the word “and” and adding the following new clause (m): “(m) loans or advances made by the Borrower or any Subsidiary Guarantor to Tronox Pigments (Holland) B.V. in an aggregate principal amount not to exceed (i) $2,500,000 at any time outstanding following selection by Holdings of a “stalking horse” bidder or bidders for the sale, in the aggregate, of all or substantially all of the assets of Holdings and its Subsidiaries under Section 363 of the Bankruptcy Code and disclosure to the Administrative Agent of the name or names of such bidder or bidders and such other information with respect to such bidder or bidders as the Administrative Agent may reasonably request or (ii) $5,000,000 at any time outstanding following the execution by Holdings of one or more asset purchase agreements, in form and substance reasonably satisfactory to the Agents, with such bidder or bidders providing for such sale; provided that (i) any such loans or advances shall be evidenced by a promissory note pledged to the Collateral Agent for the ratable benefit of the Secured Parties and, to the extent permitted under applicable law, secured on a first priority basis by substantially all assets of Tronox Pigments (Holland) B.V., (ii) Tronox Pigments (Holland) B.V. shall use the proceeds of any such loans or advances only for expenditures made in the ordinary course of business consistent with its past practices and (iii) at any time that any such loans or advances are outstanding, Tronox Pigments (Holland) B.V. shall not (A) incur or permit to exist any other Indebtedness or (B) make any investment in any other Subsidiary.
5 SECTION 3. Amendments to Guarantee and Collateral Agreement. Section 5.07(a) of the Guarantee and Collateral Agreement is hereby amended by inserting “(i)” immediately following the words “provided that” and inserting the following immediately before the period at the end thereof: “and (ii) payments received in respect of Canadian Accounts may be deposited in a deposit account of the Loan Parties at the Royal Bank of Canada, which account shall not be required to be subject to a deposit account control agreement; provided that the balance in such account shall not exceed $250,000 at any time”. SECTION 4. Certain Agreements. Holdings and the Borrower hereby agree to file a motion with the Bankruptcy Court, in form and substance satisfactory to the Administrative Agent, seeking approval of this Waiver. SECTION 5. Representations and Warranties. To induce the other parties hereto to enter into this Waiver, each of Holdings and the Borrower hereby represents and warrants to each Lender and the Agents that, after giving effect to this Waiver: (a) the representations and warranties of each Loan Party contained in any Loan Document are true and correct on and as of the Waiver Effective Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties are true and correct as of such earlier date; and (b) as of the Waiver Effective Date, no Default has occurred and is continuing. SECTION 6. Waiver Fees. The Borrower agrees to pay to the Administrative Agent for the account of each Lender that executes and delivers a copy of this Waiver to the Administrative Agent (or its counsel) at or prior to 5:00 p.m. New York City time, on May 11, 2009 (or such other time or date on which the Administrative Agent and the Borrower shall agree), a waiver fee (the “Waiver Fees”) in an amount equal to 0.50% of each such Lender’s Commitment as of such date. The Waiver Fees shall be payable in immediately available funds on, and subject to the occurrence of, the Waiver Effective Date. SECTION 7. Conditions to Effectiveness. This Waiver shall become effective on and as of the date on which each of the following conditions precedent is satisfied in full (such date, the “Waiver Effective Date”): (a) The Administrative Agent shall have received duly executed counterparts hereof that, when taken together, bear the authorized signatures of Holdings, the Borrower and the Required Lenders. (b) The Administrative Agent shall have received the Waiver Fees and all other amounts due and payable on or prior to the Waiver Effective Date, including reimbursement or payment of all expenses required to be reimbursed or paid by
6 the Borrower hereunder or under any other Loan Document to the extent such expenses have been invoiced at least two Business Days prior to the Waiver Effective Date. (c) The Bankruptcy Court shall have entered an order, in form and substance reasonably satisfactory to the Administrative Agent, approving this Waiver. SECTION 8. Credit Agreement. Except as specifically waived or amended hereby, the Credit Agreement and the Guarantee and Collateral Agreement shall continue in full force and effect in accordance with the provisions thereof as in existence on the date hereof. After the Waiver Effective Date, any reference to the Credit Agreement or the Guarantee and Collateral Agreement shall mean such Agreement as amended or modified hereby. This Waiver shall constitute a Loan Document for all purposes of the Credit Agreement and the other Loan Documents. SECTION 9. Applicable Law. THIS WAIVER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE. SECTION 10. Counterparts. This Waiver may be executed in any number of counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. Delivery of an executed signature page to this Waiver by facsimile or other customary means of electronic transmission (e.g., “pdf”) shall be as effective as delivery of a manually signed counterpart of this Waiver. SECTION 11. Headings. The Section headings used herein are for convenience of reference only, are not part of this Waiver and are not to affect the construction or, or to be taken into consideration in interpreting, this Waiver.
7 IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be duly executed by their respective authorized officers as of the day and year first written above.
TRONOX INCORPORATED, by Name: Title:
TRONOX WORLDWIDE LLC, by Name: Title:
CREDIT SUISSE, CAYMAN ISLANDS BRANCH, individually and as Administrative Agent, by Name: Title: by Name: Title:
SIGNATURE PAGE TO WAIVER DATED AS OF MAY ___, 2009, IN RESPECT OF THE CREDIT AGREEMENT DATED AS OF JANUARY 13, 2009, AMONG TRONOX INCORPORATED, TRONOX WORLDWIDE LLC, THE LENDERS FROM TIME TO TIME PARTY THERETO, CREDIT SUISSE, AS ADMINISTRATIVE AGENT, AND JPMORGAN CHASE BANK, N.A., AS COLLATERAL AGENT.
Lender Name: ______ by Name: Title:
All properties owned, formerly owned, operated or formerly operated by Holdings or any of the Subsidiaries or any of their respective predecessors.
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