þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the fiscal year ended December 31, 2008 | ||
OR | ||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the transition period from ____________ to ____________ |
Washington
State or other jurisdiction of incorporation or organization |
47-0956945
IRS Employer Identification No. |
Title of each class | Name of each exchange on which registered | |
Common Stock, par value $1.00 | NASDAQ Global Market |
Large accelerated
filer
o
|
Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
2
3
Years Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
(/$) | ||||||||||||||||||||
End of period
|
0.7184 | 0.6848 | 0.7577 | 0.8445 | 0.7942 | |||||||||||||||
High for period
|
0.8035 | 0.7750 | 0.8432 | 0.8571 | 0.8473 | |||||||||||||||
Low for period
|
0.6246 | 0.6729 | 0.7504 | 0.7421 | 0.7339 | |||||||||||||||
Average for period
|
0.6801 | 0.7294 | 0.7962 | 0.8033 | 0.8040 | |||||||||||||||
(C$/$) | ||||||||||||||||||||
End of period
|
1.2240 | 0.9881 | 1.1653 | 1.1659 | 1.2034 | |||||||||||||||
High for period
|
0.9717 | 0.9168 | 1.0989 | 1.1507 | 1.1775 | |||||||||||||||
Low for period
|
1.2971 | 1.1852 | 1.1726 | 1.2704 | 1.3970 | |||||||||||||||
Average for period
|
1.0669 | 1.0740 | 1.1344 | 1.2116 | 1.3017 |
Years Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
(C$/) | ||||||||||||||||||||
End of period
|
1.7046 | 1.4428 | 1.5377 | 1.3805 | 1.6292 | |||||||||||||||
High for period
|
1.4489 | 1.3448 | 1.3523 | 1.3576 | 1.5431 | |||||||||||||||
Low for period
|
1.7316 | 1.5628 | 1.5377 | 1.6400 | 1.6915 | |||||||||||||||
Average for period
|
1.5603 | 1.4690 | 1.4244 | 1.5095 | 1.6169 |
4
references to we, our, us,
the Company or Mercer mean Mercer
International Inc. and its subsidiaries, unless the context
clearly suggests otherwise, and references to Mercer
Inc. mean Mercer International Inc. excluding its
subsidiaries;
references to ADMTs mean air-dried metric tonnes;
information is provided as of December 31, 2008, unless
otherwise stated or the context clearly suggests otherwise;
all references to monetary amounts are to Euros, the
lawful currency adopted by most members of the European Union,
unless otherwise stated; and
refers to Euros; $ refers
to U.S. dollars; and C$ refers to Canadian dollars.
Rosenthal mill.
Our wholly-owned
subsidiary, Rosenthal, owns and operates a modern, efficient
ISO 9002 certified NBSK pulp mill that has a current annual
production capacity of approximately 325,000 ADMTs. The
Rosenthal mill is located near the town of Blankenstein, Germany.
Stendal mill.
Our 70.6% owned
subsidiary, Stendal, owns and operates a
state-of-the-art,
single-line NBSK pulp mill that has an annual production
capacity of approximately 635,000 ADMTs. The Stendal mill is
situated near the town of Stendal, Germany, approximately 300
kilometers north of the Rosenthal mill.
Celgar mill.
Our wholly owned
subsidiary, Celgar, owns and operates the Celgar mill, a modern,
efficient ISO 9001 certified NBSK pulp mill with an annual
production capacity of approximately 495,000 ADMTs. The Celgar
mill is located near the city of Castlegar, British Columbia,
Canada, approximately 600 kilometers east of the port city of
Vancouver, British Columbia, Canada.
5
6
Modern and Competitive Mills.
We
operate three large, modern, competitive NBSK pulp mills that
produce high quality NBSK pulp which is a premium grade of kraft
pulp. The relative age and production capacity of our NBSK pulp
mills provide us with certain manufacturing cost advantages over
many of our competitors including lower maintenance capital
expenditures.
Customer Proximity and Service.
We are
the only producer of market pulp in Germany, which is the
largest pulp import market in Europe. Due to the proximity of
our German mills to most of our European customers, we benefit
from lower transportation costs relative to our major
competitors. Our Celgar mill, located in Western Canada, is well
situated to serve Asian and North American customers. We
primarily work directly with customers to capitalize on our
geographic diversity, coordinate sales and enhance customer
relationships. We believe our ability to deliver high quality
pulp on a timely basis and our customer service makes us a
preferred supplier for many customers.
Renewable and Surplus Energy.
Our
modern mills generate electricity and steam in their boilers and
are generally energy self-sufficient. Such energy is primarily
produced from wood residuals which are a renewable carbon
neutral source. This has permitted our German mills to benefit
from the sales of emission allowances. All of our mills also
generate surplus energy which we sell to third parties. Our
Rosenthal and Stendal mills now benefit from recent amendments
to Germanys Renewable Energy Resources Act which have
raised the tariff for the sale of biomass energy. Additionally,
our Celgar mill has signed a contract for the sale of power from
its new green energy project. We believe our
generation of surplus renewable green energy and
high energy prices provide us with a competitive energy
advantage.
Advantageous Capital Investments and
Financing.
Our German mills are eligible to
receive government grants in respect of qualifying capital
investments. Over the last nine years, our German mills have
benefited from approximately 383.1 million of such
government grants. These grants are not reported in our income
but reduce the cost basis of the assets purchased when the
grants are received. During the last nine years, capital
investments at our German mills have reduced the amount of
overall wastewater fees that would otherwise be payable by over
43 million. Further, our Stendal mill benefits from
German governmental guarantees of its project financing which
permitted it to obtain better credit terms and lower interest
costs than would otherwise be available. The project debt of
Stendal matures in 2017 and is non-recourse to our other
operations and Mercer Inc.
7
Competitive Fiber Supply.
Although
fiber is cyclical in both price and supply, there is a
significant amount of high-quality fiber within a close radius
of each of our mills. This fiber supply, combined with our
purchasing power, enables us to enter into contracts and
arrangements which have generally provided us with a competitive
fiber supply.
Focusing on NBSK Market Pulp.
We focus
on NBSK pulp because it is a premium grade kraft pulp and
generally obtains the highest price relative to other kraft
pulps. Although demand is cyclical, between 1997 and 2007,
worldwide demand for softwood kraft market pulp grew at an
average of approximately 3.3% per annum. Since 2007, demand for
softwood pulp has grown in emerging markets such as Asia, in
particular China, and Eastern Europe.
Maximizing Energy Realizations.
In
2008, our mills generated 456,059 megawatt hours, or
MWh, of surplus energy, primarily from a renewable
carbon-neutral source. We are pursuing several initiatives to
increase our overall energy generation and the amount of and
price for our surplus power sales. Such initiatives include
targeted high return capital projects to increase generation and
connectivity to the electric grid including the installation of
a 48 megawatt, or MW, condensing turbine at our
Celgar mill to substantially increase the mills generating
capacity.
Enhancing Sustainability/Growth.
With
the recent global economic slowdown and well reported crisis in
financial and credit markets, our short-term focus is on
maintaining and enhancing the sustainability of our business. To
this end, we are working to reduce costs, cut discretionary
spending, including capital expenditures, reduce our working
capital consumption and otherwise enhance our liquidity. When
economies and markets recover and access to capital improves, we
intend to grow our operations and earning capacity both through
organic growth and targeted strategic acquisitions.
Operating Modern,
World-Class Mills.
In order to keep our
operating costs as low as possible, with a goal of generating
positive cash flow in all market conditions, we operate large,
modern NBSK pulp mills. We believe such production facilities
provide us with the best platform to be an efficient and
competitive producer of high-quality NBSK pulp without the need
for significant sustaining capital.
8
9
10
11
12
13
14
15
16
Years Ended December 31,
2008
2007
2006
(per ADMT)
247
247
192
36
43
46
44
39
42
21
18
23
43
46
41
391
393
344
(1)
Cost of production per ADMT
produced excluding depreciation.
Years Ended December 31,
2008
2007
2006
(in thousands)
198,340
198,575
154,388
131,412
159,553
141,296
56,487
50,177
60,057
133,621
136,434
117,016
65,192
58,242
75,522
78,718
66,229
39,761
17,146
26,639
28,586
680,916
695,849
616,626
(1)
Not including Germany or Italy;
includes new entrant countries to the European Union from their
time of admission.
(2)
Excluding intercompany sales
volumes of nil, nil and 13,234 tonnes of pulp and intercompany
net sales revenues of nil, nil and
6.4 million in 2008, 2007 and 2006, respectively.
Year Ended
Year Ended
Year Ended
December 31, 2008
December 31, 2007
December 31, 2006
(1)
Includes new entrant countries to
the European Union from their time of admission.
17
18
As at December 31,
2008
2007
2006
(in thousands)
881,704
933,258
972,143
290,187
304,366
341,710
1,171,891
1,237,624
1,313,853
19
20
21
22
if scheduled debt service for two consecutive periods is
partially or wholly financed by drawings from the DSRA and as a
result the DSRA is less than
33
1
/
3
%
Fully Funded;
if the DSRA is fully drawn and Stendal exercises its current
6-month
principal payment deferral right in respect of the next
repayment date; and
failure to meet the Senior Debt/EBITDA Cover Ratio or Annual
Debt Ratio as set out above.
23
24
our markets;
demand and prices for our products;
raw material costs and supply;
energy prices, sales and our initiatives to enhance sales of
surplus energy;
capital expenditures;
the economy;
foreign exchange rates particularly the U.S. dollar
and Canadian dollar;
our level of indebtedness; and
derivatives.
25
our ability to obtain additional financing for working capital,
capital expenditures, general corporate and other purposes or to
fund future operations may not be available on terms favorable
to us or at all;
a significant amount of our operating cash flow is dedicated to
the payment of interest and principal on our indebtedness,
thereby diminishing funds that would otherwise be available for
our operations and for other purposes;
increasing our vulnerability to current and future adverse
economic and industry conditions;
a substantial decrease in net operating cash flows or increase
in our expenses could make it more difficult for us to meet our
debt service requirements, which could force us to modify our
operations;
our leveraged capital structure may place us at a competitive
disadvantage by hindering our ability to adjust rapidly to
changing market conditions or by making us vulnerable to a
downturn in our business or the economy in general;
causing us to offer debt or equity securities on terms that may
not be favorable to us or our shareholders;
limiting our flexibility in planning for, or reacting to,
changes and opportunities in our business and our industry; and
our level of indebtedness increases the possibility that we may
be unable to generate cash sufficient to pay the principal or
interest due in respect of our indebtedness.
26
27
28
29
unlawful discharges to land, air, water and sewers;
waste collection, storage, transportation and disposal;
hazardous waste;
dangerous goods and hazardous materials and the collection,
storage, transportation and disposal of such substances;
the
clean-up
of unlawful discharges;
land use planning;
municipal zoning; and
employee health and safety.
30
sales and marketing;
31
reducing operating costs;
identifying capital projects which provide a high rate of
return; and
prioritizing expenditures and maintaining employee relations.
unscheduled maintenance outages;
prolonged power failures;
equipment failure;
design error or operator error;
chemical spill or release;
explosion of a boiler;
disruptions in the transportation infrastructure, including
roads, bridges, railway tracks and tunnels;
fires, floods, earthquakes or other natural catastrophes;
labor difficulties; and
other operational problems.
32
an approximately 315,000 square feet fiber storage area;
barking and chipping facilities for pulp logs;
an approximately 300,000 square feet roundwood yard;
a fiber line, which includes a Kamyr continuous digester and
bleaching facilities;
a pulp machine, which includes a dryer, a cutter and a bailing
line;
an approximately 63,000 square feet finished goods storage area;
a chemical recovery system, which includes a recovery boiler,
evaporation plant and recausticizing plant;
a fresh water plant;
33
a wastewater treatment plant; and
a power station with a turbine capable of producing 45 MW
of electric power from steam produced by the recovery boiler.
an approximately 920,000 square feet fiber storage area;
barking and chipping facilities for pulp logs;
a fiber line, which includes ten Superbatch digester and
bleaching facilities;
a pulp machine, which includes a dryer, a cutter and a bailing
line;
an approximately 108,000 square feet finished goods storage area;
a recovery line, which includes a recovery boiler, evaporation
plant, recausticizing plant and lime kiln;
a fresh water plant;
a wastewater treatment plant; and
a power station with a turbine capable of producing
approximately 100 MW of electric power from steam produced
by the recovery boiler and a power boiler.
chip storage facilities consisting of four vertical silos and an
asphalt surfaced yard with a capacity of 200,000 cubic meters of
chips;
a woodroom containing debarking and chipping equipment for pulp
logs;
a fiber line, which includes a dual vessel hydraulic digester,
pressure knotting and screening, single stage oxygen
delignification and a four stage bleach plant;
two pulp machines, which each include a dryer, a cutter and a
bailing line;
a chemical recovery system, which includes a recovery boiler,
evaporation plant, recausticizing area and effluent treatment
system; and
a turbine and generator capable of producing approximately
52 MW of electric power from steam produced by a recovery
boiler and power boiler fueled by natural gas.
34
Annual
Production
Years Ended December 31,
Capacity(1)
2008
2007
2006
(ADMTs)
325,000
328,693
326,838
306,188
495,000
485,893
476,243
438,855
635,000
610,401
601,592
557,217
1,455,000
1,424,987
1,404,673
1,302,260
(1)
Capacity is the rated capacity of
the plants for the year ended December 31, 2008, which is
based upon production for 365 days a year. Targeted
production is generally based upon 355 days per year.
35
ITEM 5.
MARKET
FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
High
Low
$
13.74
$
11.19
13.39
9.51
10.94
7.56
10.10
6.99
$
9.02
$
6.70
8.48
6.31
7.72
3.17
3.66
0.95
Number of Shares to be
Weighted-average
Number of Shares
Issued Upon Exercise
Exercise Price of
Available for Future
of Outstanding Options
Outstanding Options
Issuance Under Plan
30,000
$
7.30
166,700(1
)
898,334
$
6.41
(2
)
(1)
An aggregate of 232,685 restricted
shares have been issued under the plan. Grants for up to
570,614 shares have been made pursuant to the Performance
Supplement under the plan (as described below).
(2)
The plan has expired.
36
ASSUMES
$100 INVESTED ON DEC. 31, 2003
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC 31, 2008
Company
2003
2004
2005
2006
2007
2008
100.00
167.72
123.78
186.93
123.31
30.24
100.00
116.55
119.98
186.38
228.45
37.76
100.00
108.41
110.79
122.16
134.29
79.25
37
includes the operating results of the Stendal mill from its
start up in September 2004 and the results of operations and
financial condition of the Celgar mill from the time of its
acquisition in February 2005; and
excludes the results of operations of our paper operations which
were sold in 2006 and are accounted for as discontinued
operations. Previously reported data and the financial
statements and related notes included herein have been
reclassified to conform to the current presentation.
Years Ended December 31,
2008
2007
2006
2005
2004
(Euro in thousands, other than per share and per ADMT
amounts)
720,291
727,295
644,899
469,178
197,693
706,962
657,709
552,395
450,528
205,894
13,329
69,586
92,504
18,650
(8,201
)
(25,228
)
13,537
109,358
(69,308
)
(32,331
)
6,820
(3,510
)
(2,455
)
44,467
65,756
71,400
91,931
86,326
23,185
(1,174
)
4,453
6,090
2,422
2,772
(72,465
)
22,389
69,242
(112,058
)
30,139
(72,465
)
22,179
63,210
(117,146
)
19,980
(2.00
)
0.62
2.08
(3.59
)
1.73
(2.00
)
0.58
1.72
(3.59
)
1.25
(2.00
)
0.61
1.90
(3.75
)
1.15
36,285
36,081
33,336
31,218
17,426
36,287
45,303
43,084
31,218
28,525
258,901
290,259
221,800
251,522
207,409
104,527
121,516
120,002
140,327
229,068
154,374
168,743
101,798(2
)
111,195(2
)
(21,659
)(2)
1,180,230
1,283,517
1,302,594
1,393,816
1,255,649
909,478
885,339
963,791
1,104,746
863,840
166,225
276,662
218,801
148,743
162,741
1,423,300
1,352,590
1,326,355
1,101,304
421,716
1,424,987
1,404,673
1,302,260
1,184,619
446,710
478
516
465
407
423
(1)
We capitalized most of the interest
related to the Stendal mill prior to September 18, 2004.
(2)
We have applied for investment
grants from the federal and state governments of Germany and had
claims of approximately 0.3 million outstanding at
December 31, 2007, all of which was received in 2008,
1.6 million outstanding at December 31, 2006,
all of which was received in 2007 and approximately
7.0 million outstanding at December 31, 2005,
all of which was received in 2006. However, in accordance with
our accounting policies, we do not record these grants until
they are received.
(3)
We do not report the effect of
government grants relating to our assets in our income. These
grants reduce the cost basis of the assets purchased when the
grants are received. See Item 1
Business Capital Expenditures.
(4)
Excluding intercompany sales.
38
39
Commenced the Celgar Energy Project at our Celgar mill to
advance our objective of increasing production of and revenues
from green energy;
Submitted a proposal under the bioenergy call for
green power issued by British Columbias
primary public utility provider which was selected and has
resulted in the finalization of an electricity purchase
agreement with, the utility for the supply of electrical energy
generated from the Celgar Energy Project;
Worked with our lenders to restructure the Stendal Loan Facility
which resulted in the completion of an amending agreement in
February 2009;
Modernized the Celgar mills woodroom, established log
purchasing programs and implemented logistical changes to
improve Celgars fiber costs;
Continued to focus on cost reductions and working capital
management; and
Developed various initiatives to enhance short-term liquidity.
40
Years Ended December 31,
2008
2007
2006
1,425.0
1,404.7
1,302.3
47.0
46.0
60.0
1,423.3
1,352.6
1,326.4
689.3
704.4
624.0
$
839
$
800
$
680
571
584
542
478
516
465
1,456.6
1,401.9
1,297.4
456.1
430.4
414.4
31.0
22.9
20.9
68
53
50
0.6800
0.7294
0.7962
1.0669
1.0740
1.1344
1.5603
1.4690
1.4244
(1)
Excluding intercompany sales
volumes of nil, nil and 13,234 ADMTs of pulp and intercompany
net sales revenues of nil, nil and
6.4 million in 2008, 2007 and 2006, respectively.
(2)
List price less discounts and
commissions.
(3)
Average Federal Reserve Bank of New
York noon spot rate over the reporting period.
(4)
Average Bank of Canada noon spot
rate over the reporting period.
41
42
Years Ended December 31,
2008
2007
(in thousands)
(72,465
)
22,389
(13,075
)
1,251
2,477
10,314
65,756
71,400
1,174
(4,453
)
25,228
(20,357
)
4,234
(10,958
)
13,329
69,586
55,762
56,658
69,091
126,244
43
44
Years Ended December 31,
2007
2006
(in thousands)
22,389
69,242
1,251
1,071
10,314
57,443
71,400
91,931
(4,453
)
(6,090
)
(20,357
)
(105,848
)
(10,958
)
(15,245
)
69,586
92,504
56,658
55,834
126,244
148,338
45
Years Ended December 31,
2008
2007
(in thousands)
42,452
84,848
13,000
33,000
154,374
168,743
881,704
933,258
1,180,230
1,283,517
909,478
885,339
166,225
276,662
46
47
48
Years Ended December 31,
2008
2007
2006
(in thousands)
128
46,351
(210
)
394
(5,957
)
(210
)
(6,032
)
Years Ended December 31,
2008
2007
(in thousands)
(1,519
)
1,260
Payments Due By Period
2009
2010-2011
2012-2013
Beyond 2013
Total
(in thousands)
66,505
222,718
289,223
16,500
37,083
64,583
412,907
531,073
3,419
5,734
1,547
1,537
12,237
2,276
3,403
958
6,637
2,788
2,349
2,102
5,841
13,080
9,420
420
9,840
1,236
927
1,121
3,679
6,963
35,639
116,421
293,029
423,964
869,053
(1)
This reflects principal only
relating primarily to indebtedness under credit facilities
relating to the pulp mills, but does not reflect indebtedness
relating to the Stendal mill. See Item 1
Business Description of Certain Indebtedness,
footnote 2 below and Note 7 to our annual financial
statements included herein for a description of such
indebtedness. See Item 7A Quantitative
and Qualitative Disclosure about Market Risk for
information about our derivatives.
(2)
This reflects principal only in
connection with indebtedness relating to the Stendal mill,
including under the Stendal Loan Facility and convertible notes.
See Item 1 Business - Description of
Certain Indebtedness and Note 7 to our annual
financial statements included herein for a description of such
indebtedness. Principal payments totaling
101.4 million that were originally scheduled for 2009
to 2013 have been deferred to 2017 pursuant to the Amendment to
the Stendal Loan Facility as noted in Note 19 to our annual
financial statements. This does not include amounts associated
with derivatives entered into in connection with the Stendal
Loan Facility. See Item 7A Quantitative
and Qualitative Disclosure about Market Risk for
information about our derivatives.
(3)
Capital lease obligations relate to
transportation vehicles and production equipment. These amounts
reflect principal and interest.
(4)
Operating lease obligations relate
to transportation vehicles and other production and office
equipment.
49
(5)
Purchase obligations relate
primarily to
take-or-pay
contracts, including for purchases of raw materials, made in the
ordinary course of business.
(6)
Contractual commitments for capital
expenditures relate primarily to non-cancellable commitments
related to the Celgar Energy Project and the Rosenthal bleaching
line renewal project.
(7)
Other long-term liabilities relate
primarily to future payments that will be made for
post-employment benefits other than pensions. Those amounts are
estimated using actuarial assumptions, including expected future
service, to project the future obligations. Additionally, the
balance also includes pension funding which is calculated on an
annual basis. Consequently, the 2009 amount includes
0.8 million related to pension funding.
(8)
We have identified approximately
0.8 million of potential tax liabilities that are
more likely than not to be paid. However, due to the uncertain
timing related to the potential liabilities, we are unable to
allocate the payments in the contractual obligations table.
50
51
Years Ended December 31,
2008
2007
(in thousands)
(30,432
)
17,702
3,728
6,428
27,027
28,472
(6,834
)
(5,303
)
4,114
(10,629
)
(2,397
)
36,670
28,867
28,919
26,470
65,589
(1)
See Note 20 of the financial
statements included in this annual report on
Form 10-K
for a reconciliation to our consolidated results.
(2)
For the Restricted Group net income
from continuing operations and net income are the same for 2008,
but different for 2007.
52
Years Ended December 31,
2007
2006
(in thousands)
17,702
9,351
6,428
11,258
28,472
34,354
(5,303
)
(5,316
)
(10,629
)
(15,245
)
36,670
34,402
28,919
27,819
65,589
62,221
(1)
See Note 20 of the financial
statements included in this annual report on
Form 10-K
for a reconciliation to our consolidated results.
53
Years Ended
December 31,
2008
2007
(in thousands)
26,176
59,371
101,490
120,486
351,009
385,569
579,777
627,854
324,638
305,158
210,179
278,582
(1)
See Note 20 of the financial
statements included in this annual report on
Form 10-K
for a reconciliation to our consolidated results.
54
the history of the tax loss carryforwards and their expiry dates;
future reversals of temporary differences;
our projected earnings; and
tax planning opportunities.
55
56
57
Recognized
Recognized
Gain (Loss)
Gain (Loss)
Year Ended
Year Ended
Notional
December 31,
Notional
December 31,
Maturity Date
Amount
2008
Amount
2007
(in millions of
(in thousands)
(in millions)
(in thousands)
Euros or MWh)
October 2017
523.1
(25,228
)
556.6
19,470
Settled
(181
)
Settled
1,067
886
2009
MWh
104,000
9,172
2009
MWh
104,000
(5,901
)
3,271
(1)
In connection with the Stendal Loan
Facility, in the third quarter of 2002 Stendal entered into the
Stendal Interest Rate Contracts, which are
variable-to-fixed
interest rate swaps, for the term of the Stendal Loan Facility,
with respect to an aggregate maximum amount of approximately
612.6 million of the principal amount of the
long-term indebtedness under the Stendal Loan Facility. The
swaps took effect on October 1, 2002 and are comprised of
three contracts. The first contract commenced in October 2002
for a notional amount of 4.1 million, gradually
increasing to 464.9 million, with an interest rate of
3.795%, and matured in May 2004. The second contract commenced
in May 2004 for a notional amount of 464.9 million,
gradually increasing to 612.6 million, with an
interest rate of 5.28%, and matured in April 2005. The third
contract commenced in April 2005 for a notional amount of
612.6 million, with an interest rate of 5.28%, and
the notional amount gradually decreases and the contract
terminates upon the maturity of the Stendal Loan Facility in
October 2017.
58
(2)
For 306.3 million of the
outstanding principal amount under the Stendal Loan Facility,
all repayment installments from February 7, 2005 until
October 2, 2017 were swapped into U.S. dollar amounts at a
rate of $1.2960. The interest rate was swapped into the
following payments: pay six-month U.S. dollar to LIBOR plus 12
basis points and receive the six-month Euribor. The swap was
settled in March 2007.
(3)
For 153.2 million of the
outstanding principal amount under the Stendal Loan Facility,
all repayment installments from April 18, 2005 until
October 2, 2017 were swapped into U.S. dollar amounts at a
rate of $1.2799. The interest rate was swapped into the
following payments: pay six-month U.S. dollar to LIBOR plus 13
basis points and receive the six-month Euribor. The swap was
settled in March 2007.
(4)
During the year, 104,000 MWh
of electricity contracts were sold forward by Rosenthal and
Stendal. Subsequently 104,000 MWh were purchased forward,
effectively settling the forward sales. These contracts are
expected to settle in the first quarter of 2009. In addition,
66,000 MWh of electricity contracts were settled in 2008
for a net gain of approximately 1.2 million.
As at December 31, 2008
Carrying
Fair
Expected maturity date
Value
Value
2009
2010
2011
2012
2013
Thereafter
(in thousands)
13,000
13,000
130
130
130
130
130
13,650
222,718
116,927
222,718
9.25
%
9.25
%
9.25
%
48,319
31,891
48,391
8.5
%
8.5
%
8.5
%
531,073
531,073
16,500
13,916
23,167
24,583
40,000
412,907
6.3
%
6.3
%
6.3
%
6.3
%
6.3
%
6.3
%
6.3
%
6.3
%
18,186
18,186
18,186
3.9
%
3.9
%
3.9
%
As at December 31, 2008
Nominal
Fair
Expected maturity date
Amount
Value
2009
2010
2011
2012
2013
Thereafter
(in thousands)
523,062
(47,112
)
36,018
39,280
43,315
46,873
50,794
306,782
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
5.3
%
(1)
We are required to maintain a
restricted cash account pursuant to the Stendal Loan Facility.
The interest income on the restricted cash balance is estimated
to be 1.0% per annum.
(2)
Senior Notes due February 2013,
bearing interest at 9.25%, principal amount $310.0 million.
(3)
Subordinated convertible notes due
October 2010, bearing interest at 8.5%, principal amount
$67.3 million.
(4)
Stendal Loan Facility bears
interest at varying rates of between Euribor plus 0.90% to
Euribor plus 1.85%.
(5)
Celgar Working Capital Facility
bears interest at bankers acceptance plus 2.25% or Canadian
prime plus 0.50% on Canadian dollar denominated amounts and
bears interest at LIBOR plus 2.25% or U.S. base plus 0.50% on
U.S. dollar denominated amounts. As at December 31, 2008,
the principal amount owing was C$31.0 million.
(6)
Interest rate swaps put in place on
the Stendal Loan Facility, effectively converting it from a
variable interest rate to a fixed interest rate loan.
59
As at December 31, 2008
Carrying
Fair
Expected maturity date
Value
Value
2009
2010
2011
2012
2013
Thereafter
(in thousands)
222,718
116,927
222,718
9.25
%
9.25
%
9.25
%
48,319
31,891
48,319
8.5
%
8.5
%
8.5
%
18,186
18,186
18,186
3.9
%
3.9
%
3.9
%
(1)
Senior Notes due February 2013,
bearing interest at 9.25%, principal amount $310.0 million.
(2)
Subordinated convertible notes due
October 2010, principal amount $67.3 million.
(3)
Celgar Working Capital Facility
bears interest at bankers acceptance plus 2.25% or Canadian
prime plus 0.50% on Canadian dollar denominated amounts and
bears interest at LIBOR plus 2.25% or U.S. base plus 0.50% on
U.S. dollar denominated amounts. As at December 31, 2008,
the principal amount owning was C$31.0 million.
ITEM 9.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
60
Pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of Mercer;
Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures are being made only in accordance
with authorizations of management and directors; and
Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
assets that could have a material effect on the financial
statements.
61
62
63
64
65
ITEM 12.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
ITEM 13.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Whether the transaction is fair and reasonable to us;
The business reasons for the transaction;
Whether the transaction would impair the independence of one of
our non-employee directors; and
Whether the transaction is material, taking into account the
significance of the transaction.
66
68
69
Page
70
72
73
74
75
76
77
78
(1)
List of
Exhibits
Underwriting Agreement dated February 8, 2005 between
Mercer International Inc. and RBC Capital Markets Corporation,
on behalf of itself and CIBC World Markets Corp., Raymond
James & Associates, Inc. and D.A. Davidson &
Co. Incorporated by reference from
Form 8-K
dated February 10, 2005.
Underwriting Agreement dated February 8, 2005 among Mercer
International Inc. and RBC Capital Markets Corporation and
Credit Suisse First Boston LLC, on behalf of themselves and CIBC
World Markets Corp. Incorporated by reference from
Form 8-K
dated February 10, 2005.
Agreement and Plan of Merger among Mercer International Inc.,
Mercer International Regco Inc. and Mercer Delaware Inc. dated
December 14, 2005. Incorporated by reference to the Proxy
Statement/Prospectus filed on December 15, 2005.
Articles of Incorporation of the Company, as amended.
Incorporated by reference from
Form 8-A
dated March 1, 2006.
Bylaws of the Company. Incorporated by reference from
Form 8-A
dated March 1, 2006.
First Supplemental Indenture dated March 1, 2006 to
Indenture dated as of October 10, 2003 between Mercer
International Inc. and Wells Fargo Bank, N.A.
Indenture dated as of December 10, 2004 between Mercer
International Inc. and Wells Fargo Bank, N.A. Incorporated by
reference from
Form S-3
filed December 10, 2004.
First Supplemental Indenture dated February 14, 2005 to
Indenture dated December 10, 2004 between Mercer
International Inc. and Wells Fargo Bank, N.A. Incorporated by
reference from
Form 8-K
dated February 17, 2005.
Project Financing Facility Agreement dated August 26, 2002
between Zellstoff Stendal GmbH and Bayerische Hypo-und
Vereinsbank AG, as amended by Amendment, Restatement and
Undertaking Agreement dated February 3, 2009.
Shareholders Undertaking Agreement dated August 26,
2002 among Mercer International Inc., Stendal Pulp Holdings
GmbH, RWE Industrie-Lösungen GmbH, AIG Altmark Industrie AG
and FAHR Beteiligungen AG and Zellstoff Stendal GmbH and
Bayerische Hypo-und Vereinsbank AG. Incorporated by reference
from
Form 8-K
dated September 10, 2002.
Shareholders Agreement dated August 26, 2002 among
Zellstoff Stendal GmbH, Stendal Pulp Holdings GmbH, RWE
Industrie-Lösungen GmbH and FAHR Beteiligungen AG.
67
Contract for the Engineering, Design, Procurement, Construction,
Erection and
Start-Up
of
a Kraft Pulp Mill between Zellstoff Stendal GmbH and RWE
Industrie-Lösungen GmbH dated August 26, 2002. Certain
non-public information has been omitted from the appendices to
Exhibit 10.16 pursuant to a request for confidential
treatment filed with the SEC. Such non-public information was
filed with the SEC on a confidential basis. The SEC approved the
request for confidential treatment in January 2004.
Form of Trustees Indemnity Agreement between Mercer
International Inc. and its Trustees.
Employment Agreement dated for reference August 7, 2003
between Mercer International Inc. and David Gandossi.
Incorporated by reference from
Form 8-K
dated August 11, 2003.
Employment Agreement effective as of April 28, 2004 between
Mercer International Inc. and Jimmy S.H. Lee. Incorporated by
reference from
Form 8-K
dated April 28, 2004.
2004 Stock Incentive Plan. Incorporated by reference from
Form S-8
dated June 15, 2004.
Asset Purchase Agreement by and among Mercer International Inc.,
0706906 B.C. Ltd. and KPMG Inc., as receiver of all of the
assets and undertakings of Stone Venepal (Celgar) Pulp Inc.
dated November 22, 2004. Incorporated by reference from
Form 8-K
dated November 23, 2004.
Revolving Credit Facility Agreement dated February 9, 2005
among D&Z Holding GmbH, Zellstoff-und Papierfabrik
Rosenthal GmbH & Co. KG, ZPR Beteiligungs GmbH and
Bayerische Hypo-und Vereinsbank AG. Incorporated by reference
from
Form 8-K
dated February 17, 2005.
Shareholders Undertaking Agreement dated February 9,
2005 relating to Revolving Credit Facility Agreement.
Incorporated by reference from
Form 8-K
dated February 17, 2005.
Revolving Term Credit Facility dated for reference May 19,
2006 among Zellstoff Celgar Limited Partnership, as borrower,
and the lenders from time to time parties thereto, as lenders
and CIT Business Credit Canada Inc., as agent. Incorporated by
reference from
Form 8-K
dated May 30, 2006.
Employment Agreement dated October 2, 2006 between Stendal
Pulp Holding GmbH and Wolfram Ridder. Incorporated by reference
from
Form 8-K
dated October 2, 2006.
Employment Agreement effective October 16, 2006 between
Mercer International Inc. and David Ure dated September 22,
2006. Incorporated by reference from
Form 8-K
dated October 13, 2006.
Employment Agreement effective September 25, 2006 between
Mercer International Inc. and Claes-Inge Isacson dated
December 5, 2008.
Employment Agreement effective September 1, 2005 between
Mercer International Inc. and Leonhard Nossol dated
August 18, 2005. Incorporated by reference from
Form 10-Q
dated May 6, 2008.
Electricity Purchase Agreement effective January 27, 2009
between Zellstoff Celgar Limited Partnership and British
Columbia Hydro and Power Authority.
Code of Business Conduct and Ethics. Incorporated by reference
from the definitive proxy statement on Schedule 14A dated
August 11, 2003.
Exchange Agreement dated December 4, 2006 between Mercer
International Inc. and Nisswa Master Fund Ltd. Incorporated
by reference from
Form 8-K
dated December 5, 2006.
Exchange Agreement dated December 4, 2006 between Mercer
International Inc. and CC Arbitrage Ltd. Incorporated by
reference from
Form 8-K
dated December 5, 2006.
Audit Committee Charter. Incorporated by reference from the
definitive proxy statement on Schedule 14A dated
April 28, 2005.
Governance and Nominating Committee Charter. Incorporated by
reference from the definitive proxy statement on
Schedule 14A dated April 28, 2004.
List of Subsidiaries of Registrant.
Consent of Independent Registered Chartered
Accountants PricewaterhouseCoopers LLP.
Consent of Independent Registered Chartered
Accountants Deloitte & Touche LLP.
Section 302 Certificate of Chief Executive Officer.
Section 302 Certificate of Chief Financial Officer.
Section 906 Certificate of Chief Executive Officer.
Section 906 Certificate of Chief Financial Officer.
*
Filed in
Form 10-K
for prior years.
**
In accordance with Release
33-8212
of
the Commission, these Certifications: (i) are
furnished to the Commission and are not
filed for the purposes of liability under the
Securities Exchange Act of 1934
, as amended, or the
Exchange Act; and (ii) are not to be subject to
automatic incorporation by reference into any of our
Companys registration statements filed under the
Securities Act, as amended for the purposes of liability
thereunder or any offering memorandum, unless our Company
specifically incorporates them by reference therein.
***
Pursuant to
17 CFR 240.24b-2, confidential information has been
omitted and filed separately with the Commission pursuant to a
confidential treatment application filed with the Commission.
70
71
72
73
For the Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Revenues:
|
||||||||||||
Pulp revenue
|
| 689,320 | | 704,391 | | 623,977 | ||||||
Energy revenue
|
30,971 | 22,904 | 20,922 | |||||||||
720,291 | 727,295 | 644,899 | ||||||||||
Costs and expenses:
|
||||||||||||
Operating costs
|
626,933 | 575,238 | 477,526 | |||||||||
Operating depreciation and amortization
|
55,484 | 56,400 | 55,834 | |||||||||
37,874 | 95,657 | 111,539 | ||||||||||
Selling, general and administrative expenses
|
30,158 | 30,714 | 34,644 | |||||||||
(Sale) purchase of emission allowances
|
(5,613 | ) | (4,643 | ) | (15,609 | ) | ||||||
Operating income from continuing operations
|
13,329 | 69,586 | 92,504 | |||||||||
Other income (expense)
|
||||||||||||
Interest expense
|
(65,756 | ) | (71,400 | ) | (91,931 | ) | ||||||
Investment income (loss)
|
(1,174 | ) | 4,453 | 6,090 | ||||||||
Foreign exchange gain (loss) on debt
|
(4,234 | ) | 10,958 | 15,245 | ||||||||
Realized gain (loss) on derivative instruments (Note 14)
|
| 6,820 | (3,510 | ) | ||||||||
Unrealized gain (loss) on derivative instruments (Note 14)
|
(25,228 | ) | 13,537 | 109,358 | ||||||||
Total other income (expense)
|
(96,392 | ) | (35,632 | ) | 35,252 | |||||||
Income (loss) before income taxes and minority interest from
continuing operations
|
(83,063 | ) | 33,954 | 127,756 | ||||||||
Income tax benefit (provision) (Note 9)
|
||||||||||||
Current
|
(501 | ) | (2,170 | ) | (584 | ) | ||||||
Deferred
|
(1,976 | ) | (8,144 | ) | (56,859 | ) | ||||||
Income (loss) before minority interest from continuing operations
|
(85,540 | ) | 23,640 | 70,313 | ||||||||
Minority interest
|
13,075 | (1,251 | ) | (1,071 | ) | |||||||
Net income (loss) from continuing operations
|
(72,465 | ) | 22,389 | 69,242 | ||||||||
Net loss from discontinued operations
|
| (210 | ) | (6,032 | ) | |||||||
Net income (loss)
|
| (72,465 | ) | | 22,179 | | 63,210 | |||||
Net income (loss) per share from continuing operations
(Note 12)
|
||||||||||||
Basic
|
| (2.00 | ) | | 0.62 | | 2.08 | |||||
Diluted
|
| (2.00 | ) | | 0.58 | | 1.72 | |||||
Net income (loss) per share (Note 12)
|
||||||||||||
Basic
|
| (2.00 | ) | | 0.61 | | 1.90 | |||||
Diluted
|
| (2.00 | ) | | 0.58 | | 1.58 | |||||
74
For the Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Net income (loss)
|
| (72,465 | ) | | 22,179 | | 63,210 | |||||
Other comprehensive income (loss)
|
||||||||||||
Foreign currency translation adjustment
|
(41,876 | ) | 29,214 | (3,730 | ) | |||||||
FASB 158 pension income (expense)
|
4,079 | (809 | ) | | ||||||||
Unrealized gains (losses) on securities arising during the year
|
(340 | ) | 95 | 171 | ||||||||
Other comprehensive income (loss)
|
(38,137 | ) | 28,500 | (3,559 | ) | |||||||
Comprehensive income (loss)
|
| (110,602 | ) | | 50,679 | | 59,651 | |||||
75
Accumulated Other
|
||||||||||||||||||||||||||||||||||||||||
Common Shares | Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||||||||||
Amount
|
Foreign
|
Defined
|
Unrealized
|
|||||||||||||||||||||||||||||||||||||
Paid in
|
Retained
|
Currency
|
Benefit
|
Gains
|
||||||||||||||||||||||||||||||||||||
Number
|
Excess of
|
Paid-in
|
Earnings
|
Translation
|
Pension
|
(Losses) on
|
Shareholders
|
|||||||||||||||||||||||||||||||||
of Shares | Par Value | Par Value | Capital | (Deficit) | Adjustments | Plans | Securities | Total | Equity | |||||||||||||||||||||||||||||||
Balance at December 31, 2005
|
33,169,140 | | 25,448 | | 156,138 | | 14 | | (47,970 | ) | | 15,615 | | (331 | ) | | (171 | ) | | 15,113 | | 148,743 | ||||||||||||||||||
Shares issued on exercise of stock options
|
60,000 | 41 | 251 | | | | | | | 292 | ||||||||||||||||||||||||||||||
Shares issued on grants of restricted stock
|
45,000 | 32 | 297 | | | | | | | 329 | ||||||||||||||||||||||||||||||
Shares of restricted stock cancelled
|
(9,999 | ) | (7 | ) | (57 | ) | | | | | | | (64 | ) | ||||||||||||||||||||||||||
Shares issued on repurchase of notes
|
2,201,035 | 1,447 | 12,052 | | | | | | | 13,499 | ||||||||||||||||||||||||||||||
Stock compensation expense
|
| | | 140 | | | | | | 140 | ||||||||||||||||||||||||||||||
Adjustment to initially apply FASB Statement No. 158, net
of tax
|
| | | | | | (3,789 | ) | | (3,789 | ) | (3,789 | ) | |||||||||||||||||||||||||||
Net income
|
| | | | 63,210 | | | | | 63,210 | ||||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
| | | | | (3,730 | ) | | 171 | (3,559 | ) | (3,559 | ) | |||||||||||||||||||||||||||
Balance at December 31, 2006
|
35,465,176 | | 26,961 | | 168,681 | | 154 | | 15,240 | | 11,885 | | (4,120 | ) | | - | | 7,765 | | 218,801 | ||||||||||||||||||||
Shares issued on exercise of stock options
|
56,666 | 43 | 261 | | | | | | | 304 | ||||||||||||||||||||||||||||||
Shares issued on grants of restricted stock
|
21,000 | 15 | 145 | | | | | | | 160 | ||||||||||||||||||||||||||||||
Shares issued on repurchase of notes
|
742,185 | 557 | 6,181 | | | | | | | 6,738 | ||||||||||||||||||||||||||||||
Stock compensation expense
|
| | | (20 | ) | | | | | | (20 | ) | ||||||||||||||||||||||||||||
Net income
|
| | | | 22,179 | | | | | 22,179 | ||||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
| | | | | 29,214 | (809 | ) | 95 | 28,500 | 28,500 | |||||||||||||||||||||||||||||
Balance at December 31, 2007
|
36,285,027 | | 27,576 | | 175,268 | | 134 | | 37,419 | | 41,099 | | (4,929 | ) | | 95 | | 36,265 | | 276,662 | ||||||||||||||||||||
Shares issued on grants of restricted stock
|
21,000 | | | 61 | | | | | | 61 | ||||||||||||||||||||||||||||||
Shares issued on grants of performance stock
|
116,460 | | | 29 | | | | | | 29 | ||||||||||||||||||||||||||||||
Stock compensation expense
|
| | | 75 | | | | | | 75 | ||||||||||||||||||||||||||||||
Net loss
|
| | | | (72,465 | ) | | | | | (72,465 | ) | ||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
| | | | | (41,876 | ) | 4,079 | (340 | ) | (38,137 | ) | (38,137 | ) | ||||||||||||||||||||||||||
Balance at December 31, 2008
|
36,422,487 | | 27,576 | | 175,268 | | 299 | | (35,046 | ) | | (777 | ) | | (850 | ) | | (245 | ) | | (1,872 | ) | | 166,225 | ||||||||||||||||
76
For the Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Cash flows from (used in) operating activities
|
||||||||||||
Net income (loss)
|
| (72,465 | ) | | 22,179 | | 63,210 | |||||
Adjustments to reconcile net income (loss) to cash flows from
operating activities
|
||||||||||||
Unrealized (gain) loss on derivatives
|
25,228 | (13,537 | ) | (109,358 | ) | |||||||
Unrealized foreign exchange (gain) loss on debt
|
4,234 | (10,958 | ) | (15,245 | ) | |||||||
Operating depreciation and amortization
|
55,484 | 56,400 | 56,085 | |||||||||
Non-operating amortization
|
278 | 258 | 269 | |||||||||
Loss (gain) on sale of assets
|
(765 | ) | 179 | 5,957 | ||||||||
Minority interest
|
(13,075 | ) | 1,251 | 1,071 | ||||||||
Income from equity investee
|
| | (1,206 | ) | ||||||||
Deferred income taxes
|
1,976 | 8,144 | 56,859 | |||||||||
Stock compensation expense
|
264 | 243 | 541 | |||||||||
Pension and other post-retirement expense
|
1,981 | 1,806 | 1,638 | |||||||||
Pension and other post-retirement benefit funding
|
(2,739 | ) | (2,021 | ) | (1,941 | ) | ||||||
Inventory provisions
|
11,272 | | | |||||||||
Other
|
(123 | ) | 2,048 | 1,438 | ||||||||
Changes in current assets and liabilities
|
||||||||||||
Receivables
|
(14,811 | ) | (11,890 | ) | (7,381 | ) | ||||||
Inventories
|
(13,331 | ) | (38,703 | ) | 7,364 | |||||||
Accounts payable and accrued expenses
|
1,240 | 3,303 | (9,305 | ) | ||||||||
Other
|
3,486 | 447 | (773 | ) | ||||||||
Net cash from (used in) operating activities
|
(11,866 | ) | 19,149 | 49,223 | ||||||||
Cash flows from (used in) investing activities
|
||||||||||||
Cash, restricted
|
20,000 | 24,000 | (25,388 | ) | ||||||||
Purchase of property, plant and equipment(3)
|
(25,704 | ) | (4,864 | ) | (32,937 | ) | ||||||
Proceeds on sale of property, plant and equipment
|
2,000 | 881 | 1,765 | |||||||||
Note receivable
|
5,708 | 4,954 | (6,870 | ) | ||||||||
Proceeds from
available-for-sale
securities
|
| | 1,184 | |||||||||
Net cash from (used in) investing activities
|
2,004 | 24,971 | (62,246 | ) | ||||||||
Cash flows from (used in) financing activities
|
||||||||||||
Repayment of notes payable and debt
|
(34,023 | ) | (26,719 | ) | (87,911 | ) | ||||||
Repayment of capital lease obligations
|
(3,312 | ) | (5,562 | ) | (4,091 | ) | ||||||
Proceeds from investment grants
|
266 | 1,236 | 9,101 | |||||||||
Issuance of common shares
|
| 305 | 556 | |||||||||
Proceeds from borrowings of notes payable and debt
|
5,837 | | 78,100 | |||||||||
Proceeds from minority shareholders
|
| | 5,463 | |||||||||
Decrease in construction costs payable
|
| | (240 | ) | ||||||||
Net cash from (used in) financing activities
|
(31,232 | ) | (30,740 | ) | 978 | |||||||
Effect of exchange rate changes on cash and cash equivalents
|
(1,302 | ) | 1,664 | (1,698 | ) | |||||||
Net increase (decrease) in cash and cash equivalents
|
(42,396 | ) | 15,044 | (13,743 | ) | |||||||
Cash and cash equivalents, beginning of year (1)
|
84,848 | 69,804 | 83,547 | |||||||||
Cash and cash equivalents, end of year (2)
|
| 42,452 | | 84,848 | | 69,804 | ||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the period for:
|
||||||||||||
Interest
|
| 60,652 | | 73,318 | | 84,382 | ||||||
Income taxes
|
1,100 | 452 | 1,304 | |||||||||
Supplemental schedule of non-cash investing and financing
activities:
|
||||||||||||
Acquisition of production and other equipment under capital
lease obligations
|
| 5,318 | | 2,110 | | 3,301 | ||||||
Property, plant and equipment on acquisition of 7% interest in
Stendal
|
| | 8,067 | |||||||||
Acquisition of notes receivable on sale of paper assets
|
| | 11,321 | |||||||||
Increase (decrease) in accounts payable relating to investing
activities
|
2,627 | | |
(1) | Includes amounts related to discontinued operations of: 2008 nil, 2007 437, 2006 772 | |
(2) | Includes amounts related to discontinued operations of: 2008 nil, 2007 nil, 2006 437 | |
(3) | During 2007, purchases of property, plant, and equipment include amounts received and recorded as a reduction of property, plant and equipment (approximately 9,100) upon the settlement of the Stendal engineering, procurement and construction (EPC) contract. |
77
Note 1. | The Company and Summary of Significant Accounting Policies |
78
Note 1. | The Company and Summary of Significant Accounting Policies (Continued) |
79
Note 1. | The Company and Summary of Significant Accounting Policies (Continued) |
80
Note 1. | The Company and Summary of Significant Accounting Policies (Continued) |
81
Note 1. | The Company and Summary of Significant Accounting Policies (Continued) |
82
Note 1. | The Company and Summary of Significant Accounting Policies (Continued) |
83
Note 1. | The Company and Summary of Significant Accounting Policies (Continued) |
Note 2. | Cash, Cash Equivalents and Restricted Cash |
December 31, | ||||||||
2008 | 2007 | |||||||
Cash and cash equivalents
|
| 42,452 | | 84,848 | ||||
Cash, restricted
|
| 13,000 | | 33,000 | ||||
84
Note 2. | Cash, Cash Equivalents and Restricted Cash (Continued) |
Note 3. | Receivables |
December 31, | ||||||||
2008 | 2007 | |||||||
Sale of pulp (net of allowance of 614 and 626,
respectively)
|
| 85,120 | | 81,913 | ||||
Value added tax
|
3,433 | 2,673 | ||||||
Other
|
11,605 | 5,304 | ||||||
| 100,158 | | 89,890 | |||||
Note 4. | Inventories |
December 31, | ||||||||
2008 | 2007 | |||||||
Raw materials
|
| 38,225 | | 38,045 | ||||
Finished goods
|
37,881 | 43,127 | ||||||
Work in process and other
|
22,351 | 22,438 | ||||||
| 98,457 | | 103,610 | |||||
Note 5. | Property, Plant and Equipment |
December 31, | ||||||||
2008 | 2007 | |||||||
Land
|
| 24,661 | | 24,538 | ||||
Buildings
|
125,046 | 125,369 | ||||||
Production equipment and other
|
1,061,991 | 1,070,202 | ||||||
1,211,698 | 1,220,109 | |||||||
Less: Accumulated depreciation
|
(329,994 | ) | (286,851 | ) | ||||
| 881,704 | | 933,258 | |||||
85
Note 5. | Property, Plant and Equipment (Continued) |
Note 6. | Accounts Payable and Accrued Expenses |
December 31, | ||||||||
2008 | 2007 | |||||||
Trade payables
|
| 31,140 | | 37,245 | ||||
Accounts payable and other
|
4,559 | 3,097 | ||||||
Accrued expenses
|
31,181 | 25,752 | ||||||
Accrued interest
|
17,202 | 17,437 | ||||||
Capital leases, current portion
|
3,435 | 3,469 | ||||||
| 87,517 | | 87,000 | |||||
Note 7. | Debt |
December 31, | ||||||||
2008 | 2007 | |||||||
Note payable to bank, included in a total credit facility of
827,950 to finance the construction related to the Stendal
pulp mill (a)
|
| 531,073 | | 565,096 | ||||
Senior notes due February 2013, interest at 9.25% accrued and
payable semi-annually, unsecured (b) (Note 11)
|
222,718 | 212,285 | ||||||
Subordinated convertible notes due October 2010, interest at
8.5% accrued and payable semi-annually (c) (Note 11)
|
48,319 | 46,056 | ||||||
Credit agreement with a syndicate of banks with respect to a
revolving credit facility of C$40 million (d)
|
18,186 | 15,248 | ||||||
Loans payable to minority shareholders of Stendal pulp
mill (e)
|
| 11,170 | ||||||
Credit agreement with bank with respect to a revolving credit
facility of 40 million (f)
|
| | ||||||
820,296 | 849,855 | |||||||
Less: current portion
|
(16,500 | ) | (34,023 | ) | ||||
Debt, less current portion
|
| 803,796 | | 815,832 | ||||
86
Note 7. | Debt (Continued) |
Matures
|
Amount | |||
2009
|
| 16,500 | ||
2010
|
80,421 | |||
2011
|
23,167 | |||
2012
|
24,583 | |||
2013
|
262,718 | |||
Thereafter
|
412,907 | |||
| 820,296 | |||
(a) | Note payable to bank, included in a total credit facility of 827,950 to finance the construction related to the Stendal pulp mill, interest at rates varying from Euribor plus 0.90% to Euribor plus 1.85% (rates on amounts of borrowing at December 31, 2008 range from 6.19% to 6.42%), principal due in required installments beginning September 30, 2006 until September 30, 2017, collateralized by the assets of the Stendal pulp mill, and at December 31, 2008, restricted cash amounting to 13,000, with 48% and 32% guaranteed by the Federal Republic of Germany and the State of Saxony-Anhalt, respectively, of up to 516,073 of outstanding principal balance, subject to a debt service reserve account required to pay amounts due in the following twelve months under the terms of credit facility; payment of dividends is only permitted if certain cash flow requirements are met. See Note 19 Subsequent Events. |
(b) | In February 2005, the Company issued $310 million of senior notes due February 2013, interest at 9.25% accrued and payable semi-annually, unsecured. On or after February 15, 2009, the Company may redeem all or a part of the notes at redemption prices (expressed as a percentage of principal amount) equal to 104.63% for the twelve month period beginning on February 15, 2009, 102.31% for the twelve month period beginning on February 15, 2010, and 100.00% beginning on February 15, 2011 and at any time thereafter, plus accrued and unpaid interest. |
(c) | As at December 31, 2008, the subordinated convertible notes had approximately $67.3 million of principal outstanding. The subordinated convertible notes are due October 2010, bear interest at 8.5% accrued and payable semi-annually, are convertible at any time by the holder into common shares of the Company at $7.75 per share and are unsecured. The Company may redeem for cash all or a portion of these notes at any time on or after October 15, 2008 at 100% of the principal amount of the notes plus accrued and unpaid interest up to the redemption date. The holders of the convertible notes will have the option to require the Company to purchase for cash all or a portion of the notes not previously redeemed upon a specified change of control at a price equal to 100% of the principal. |
(d) | Credit agreement with respect to a revolving credit facility of C$40 million, on a three year term. Borrowings under the credit agreement are secured by pulp mill inventory and receivables. Canadian dollar denominated amounts bear interest at bankers acceptance plus 2.25% or Canadian prime plus 0.50%. U.S. dollar denominated amounts bear interest at LIBOR plus 2.25% or U.S. base plus 0.50%. As at December 31, 2008, this facility was drawn by C$31 million and was accruing interest at a rate of approximately 3.90%. The credit agreement matures May 19, 2009, but is subject to a one-year extension at the Companys request. On January 23, 2009, the Company was granted a one-year extension pursuant to the terms of the credit agreement. The extension carries the same general terms and matures May 19, 2010. |
87
Note 7. | Debt (Continued) |
(e) | Loans payable to the minority shareholder of Stendal pulp mill bear interest at 7%, payable in September 2006 then payable semi-annually beginning March 2007, unsecured, subordinated to all liabilities of the Stendal pulp mill, due in 2017. The amounts outstanding on these loans were 34,122 and 32,216 as at December 31, 2008 and 2007, respectively. Cumulative net losses of Stendal in the amounts of 34,122 and 21,305 were applied to these loans in 2008 and 2007, respectively. The net obligation of nil and 11,170 is reflected for 2008 and 2007, respectively. |
(f) | Credit agreement with respect to a revolving credit facility of 40,000. Borrowings under the credit agreement are secured by pulp mill inventory and receivables. Borrowings under the credit agreement bear interest at Euribor plus 1.55%. As at December 31, 2008, this facility was undrawn. |
Note 8. | Pension and Other Post-Retirement Benefit Obligations |
2008 | ||||||||||||
Other
|
||||||||||||
Post-Retirement
|
||||||||||||
Benefit
|
||||||||||||
Pension | Obligations | Total | ||||||||||
Change in benefit obligation
|
||||||||||||
Benefit obligation, December 31, 2007
|
| 27,832 | | 16,137 | | 43,969 | ||||||
Service cost
|
789 | 501 | 1,290 | |||||||||
Interest cost
|
1,356 | 800 | 2,156 | |||||||||
Benefit payments
|
(1,417 | ) | (381 | ) | (1,798 | ) | ||||||
Past service cost (credit)
|
973 | (1,152 | ) | (179 | ) | |||||||
Actuarial (gains) losses
|
(5,557 | ) | (3,442 | ) | (8,999 | ) | ||||||
Foreign currency exchange rate changes
|
(3,948 | ) | (2,166 | ) | (6,114 | ) | ||||||
Benefit obligation, December 31, 2008
|
20,028 | 10,297 | 30,325 | |||||||||
Reconciliation of fair value of plan assets
|
||||||||||||
Fair value of plan assets, December 31, 2007
|
23,903 | | 23,903 | |||||||||
Actual returns
|
(4,084 | ) | | (4,084 | ) | |||||||
Contributions
|
2,077 | 381 | 2,458 | |||||||||
Benefit payments
|
(1,417 | ) | (381 | ) | (1,798 | ) | ||||||
Foreign currency exchange rate changes
|
(3,381 | ) | | (3,381 | ) | |||||||
Fair value of plan assets, December 31, 2008
|
17,098 | | 17,098 | |||||||||
Funded status, December 31, 2008
|
| (2,930 | ) | | (10,297 | ) | | (13,227 | )(1) | |||
88
Note 8. | Pension and Other Post-Retirement Benefit Obligations (Continued) |
2008 | ||||||||||||
Other
|
||||||||||||
Post-Retirement
|
||||||||||||
Benefit
|
||||||||||||
Pension | Obligations | Total | ||||||||||
Components of the net benefit cost recognized
|
||||||||||||
Service cost
|
| 789 | | 501 | | 1,290 | ||||||
Interest cost
|
1,356 | 800 | 2,156 | |||||||||
Expected return on plan assets
|
(1,542 | ) | | (1,542 | ) | |||||||
Amortization of recognized items
|
(6 | ) | 83 | 77 | ||||||||
Net benefit costs
|
| 597 | | 1,384 | | 1,981 | ||||||
(1) | The total of 13,356 on the consolidated balance sheets also includes the pension liabilities of 129 relating to employees at the Companys German operations. |
2007 | ||||||||||||
Other
|
||||||||||||
Post-Retirement
|
||||||||||||
Benefit
|
||||||||||||
Pension | Obligations | Total | ||||||||||
Change in benefit obligation
|
||||||||||||
Benefit obligation, December 31, 2006
|
| 25,990 | | 13,867 | | 39,857 | ||||||
Service cost
|
840 | 473 | 1,313 | |||||||||
Interest cost
|
1,363 | 741 | 2,104 | |||||||||
Benefit payments
|
(1,593 | ) | (323 | ) | (1,916 | ) | ||||||
Actuarial (gains) losses
|
(481 | ) | 442 | (39 | ) | |||||||
Foreign currency exchange rate changes
|
1,713 | 937 | 2,650 | |||||||||
Benefit obligation, December 31, 2007
|
27,832 | 16,137 | 43,969 | |||||||||
Reconciliation of fair value of plan assets
|
||||||||||||
Fair value of plan assets, December 31, 2006
|
21,993 | | 21,993 | |||||||||
Actual returns
|
351 | | 351 | |||||||||
Contributions
|
1,698 | 323 | 2,021 | |||||||||
Benefit payments
|
(1,593 | ) | (323 | ) | (1,916 | ) | ||||||
Foreign currency exchange rate changes
|
1,454 | | 1,454 | |||||||||
Fair value of plan assets, December 31, 2007
|
23,903 | | 23,903 | |||||||||
Funded status, December 31, 2007
|
| (3,929 | ) | | (16,137 | ) | | (20,066 | )(1) | |||
Components of the net benefit cost recognized
|
||||||||||||
Service cost
|
| 840 | | 473 | | 1,313 | ||||||
Interest cost
|
1,363 | 741 | 2,104 | |||||||||
Expected return on plan assets
|
(1,673 | ) | | (1,673 | ) | |||||||
Amortization of recognized items
|
| 62 | 62 | |||||||||
Net benefit costs
|
| 530 | | 1,276 | | 1,806 | ||||||
(1) | The total of 20,476 on the consolidated balance sheets also includes the pension liabilities of 410 relating to employees at the Companys German operations. |
89
Note 8. | Pension and Other Post-Retirement Benefit Obligations (Continued) |
Amount | ||||
2009
|
| 1,765 | ||
2010
|
1,871 | |||
2011
|
1,963 | |||
2012
|
2,073 | |||
2013
|
2,197 | |||
2014 2018
|
13,108 |
December 31, | ||||||||
2008 | 2007 | |||||||
Benefit obligations
|
||||||||
Discount rate
|
7.25 | % | 5.25 | % | ||||
Rate of compensation increase
|
2.75 | % | 3.00 | % | ||||
Net benefit cost for year ended
|
||||||||
Discount rate
|
5.25 | % | 5.00 | % | ||||
Rate of compensation increase
|
3.00 | % | 3.00 | % | ||||
Expected rate of return on plan assets
|
7.00 | % | 7.25 | % | ||||
Assumed health care cost trend rate at
|
||||||||
Initial health care cost trend rate
|
12.00 | % | 12.00 | % | ||||
Annual rate of decline in trend rate
|
1.00 | % | 1.00 | % | ||||
Ultimate health care cost trend rate
|
4.50 | % | 5.00 | % | ||||
Medical services plan premiums trend rate
|
2.50 | % | 2.50 | % |
90
Note 8. | Pension and Other Post-Retirement Benefit Obligations (Continued) |
December 31, 2008 | December 31, 2007 | |||||||||||||||
1% increase | 1% decrease | 1% increase | 1% decrease | |||||||||||||
Effect on total service and interest rate components
|
| 235 | | (178 | ) | | 212 | | (160 | ) | ||||||
Effect on post-retirement benefit obligation
|
| 1,598 | | (1,251 | ) | | 2,252 | | (1,762 | ) |
Target | 2008 | 2007 | ||||||||||
Equity securities
|
50-70 | % | 61 | % | 59 | % | ||||||
Debt securities
|
30-45 | % | 36 | % | 34 | % | ||||||
Cash and cash equivalents
|
0-10 | % | 3 | % | 7 | % | ||||||
100 | % | 100 | % | |||||||||
Note 9. | Income Taxes |
2008 | 2007 | |||||||
Balance at January 1
|
| 4,000 | | 4,400 | ||||
Additions current year tax positions
|
| 200 | ||||||
Reductions prior year tax positions
|
(3,200 | ) | (300 | ) | ||||
Lapse of statute of limitations
|
| (300 | ) | |||||
Settlements
|
| | ||||||
Balance at December 31
|
| 800 | | 4,000 | ||||
91
Note 9. | Income Taxes (Continued) |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
U.S. Federal statutory rates
|
34 | % | 34 | % | 34 | % | ||||||
U.S. Federal statutory rates on (income) loss from continuing
operations before income tax and minority interest
|
| 28,241 | | (11,544 | ) | | (43,437 | ) | ||||
Tax differential on foreign income (loss)
|
(2,966 | ) | 2,902 | (4,070 | ) | |||||||
Effect of foreign earnings
|
(17,800 | ) | | | ||||||||
Valuation allowance
|
(5,530 | ) | 15,021 | (16,145 | ) | |||||||
Other
|
(4,422 | ) | (16,693 | ) | 6,209 | |||||||
| (2,477 | ) | | (10,314 | ) | | (57,443 | ) | ||||
Comprised of:
|
||||||||||||
Current
|
| (501 | ) | | (2,170 | ) | | (584 | ) | |||
Deferred
|
(1,976 | ) | (8,144 | ) | (56,859 | ) | ||||||
| (2,477 | ) | | (10,314 | ) | | (57,443 | ) | ||||
December 31, | ||||||||
2008 | 2007 | |||||||
German tax loss carryforwards
|
| 67,930 | | 50,725 | ||||
U.S. tax loss carryforwards
|
5,909 | 19,934 | ||||||
Canadian tax loss carryforwards
|
4,924 | 2,497 | ||||||
Basis difference between income tax and financial reporting with
respect to operating pulp mills
|
(17,118 | ) | (6,354 | ) | ||||
Derivative financial instruments
|
13,227 | 6,144 | ||||||
Long-term debt
|
(1,726 | ) | (2,736 | ) | ||||
Payables and accrued expenses
|
(780 | ) | 148 | |||||
Reserve for deferred pension liability
|
2,079 | 18 | ||||||
Capital leases
|
531 | 652 | ||||||
Other
|
956 | 1,149 | ||||||
75,932 | 72,177 | |||||||
Valuation allowance
|
(78,723 | ) | (73,193 | ) | ||||
Net deferred tax (liability) asset
|
| (2,791 | ) | | (1,016 | ) | ||
Comprised of:
|
||||||||
Deferred income tax asset
|
| 31,666 | | 17,624 | ||||
Deferred income tax liability
|
(34,457 | ) | (18,640 | ) | ||||
| (2,791 | ) | | (1,016 | ) | |||
92
Note 9. | Income Taxes (Continued) |
Note 10. | Shareholders Equity |
Note 11. | Stock-Based Compensation |
93
Note 11. | Stock-Based Compensation (Continued) |
Number
|
Weighted Average
|
|||||||
of Options | Exercise Price | |||||||
(In U.S. Dollars) | ||||||||
Outstanding at December 31, 2005
|
1,185,000 | $ | 6.71 | |||||
Exercised
|
(60,000 | ) | 6.38 | |||||
Outstanding at December 31, 2006
|
1,125,000 | 6.69 | ||||||
Exercised
|
(56,666 | ) | 7.10 | |||||
Cancelled
|
(5,000 | ) | 7.92 | |||||
Expired
|
(135,000 | ) | 8.50 | |||||
Outstanding at December 31, 2007 and 2008
|
928,334 | $ | 6.44 | |||||
94
Note 11. | Stock-Based Compensation (Continued) |
Outstanding Options | ||||||||||||||||||||
Weighted
|
Exercisable Options | |||||||||||||||||||
Exercise
|
Average
|
Weighted
|
Weighted
|
|||||||||||||||||
Price
|
Remaining
|
Average
|
Average
|
|||||||||||||||||
Range | Number | Contractual Life | Exercise Price | Number | Exercise Price | |||||||||||||||
(In U.S. Dollars) | ||||||||||||||||||||
(In U.S. Dollars) | (Years) | |||||||||||||||||||
$5.65 - $6.375
|
830,000 | 1.50 | $6.29 | 830,000 | $6.29 | |||||||||||||||
7.30
|
30,000 | 6.50 | 7.30 | 30,000 | 7.30 | |||||||||||||||
7.92
|
68,334 | 6.75 | 7.92 | 68,334 | 7.92 |
2006 | ||||
Risk-free interest rate
|
4.1% | |||
Expected life of the options
|
0.5 years | |||
Expected volatility(1)
|
34.1% | |||
Expected dividend yield
|
0.0% | |||
Weighted average fair value per option granted (in U.S. dollars)
|
$2.94 |
(1) | The expected volatility was based on the Companys three year historical stock prices. |
95
Note 11. | Stock-Based Compensation (Continued) |
Note 12. | Net Income (Loss) Per Share |
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Net income (loss) from continuing operations basic
|
| (72,465 | ) | | 22,389 | | 69,242 | |||||
Interest on convertible notes, net of tax
|
| 3,930 | 4,912 | |||||||||
Net income (loss) from continuing operations diluted
|
| (72,465 | ) | | 26,319 | | 74,154 | |||||
Net income (loss) from continuing operations per share:
|
||||||||||||
Basic
|
| (2.00 | ) | | 0.62 | | 2.08 | |||||
Diluted
|
| (2.00 | ) | | 0.58 | | 1.72 | |||||
Net income (loss) from continuing operations
|
| (72,465 | ) | | 22,389 | | 69,242 | |||||
Net loss from discontinued operations
|
| (210 | ) | (6,032 | ) | |||||||
Net income (loss) basic
|
(72,465 | ) | 22,179 | 63,210 | ||||||||
Interest on convertible notes, net of tax
|
| 3,930 | 4,912 | |||||||||
Net income (loss) diluted
|
| (72,465 | ) | | 26,109 | | 68,122 | |||||
Net income (loss) per share:
|
||||||||||||
Basic
|
| (2.00 | ) | | 0.61 | | 1.90 | |||||
Diluted
|
| (2.00 | ) | | 0.58 | | 1.58 | |||||
Weighted average number of common shares outstanding:
|
||||||||||||
Basic(1)
|
36,285,027 | 36,080,931 | 33,336,348 | |||||||||
Effect of dilutive shares:
|
||||||||||||
Stock options and awards
|
2,394 | 362,774 | 319,793 | |||||||||
Convertible notes
|
| 8,859,036 | 9,428,022 | |||||||||
Diluted
|
36,287,421 | 45,302,741 | 43,084,163 | |||||||||
(1) | The basic weighted average number of shares excludes performance and restricted stock which have been issued, but have not vested as at December 31, 2008. |
Note 13. | Business Segment Information |
96
Note 13. | Business Segment Information (Continued) |
2008 | 2007 | 2006 | ||||||||||
Germany
|
| 198,340 | | 198,575 | | 154,388 | ||||||
China
|
131,412 | 159,553 | 141,296 | |||||||||
Italy
|
56,487 | 50,177 | 60,057 | |||||||||
Other European Union countries(1)
|
133,621 | 136,434 | 117,016 | |||||||||
Other Asia
|
65,192 | 58,242 | 75,522 | |||||||||
North America
|
78,718 | 66,229 | 39,761 | |||||||||
Other countries
|
17,146 | 26,639 | 28,586 | |||||||||
680,916 | 695,849 | 616,626 | ||||||||||
Energy revenues
|
30,971 | 22,904 | 20,922 | |||||||||
Third party transportation revenues
|
8,404 | 8,542 | 7,351 | |||||||||
| 720,291 | | 727,295 | | 644,899 | |||||||
(1) | Not including Germany or Italy; includes new entrant countries to the European Union from their time of admission. |
2008 | 2007 | |||||||
Germany
|
| 732,766 | | 776,839 | ||||
Canada
|
161,850 | 189,277 | ||||||
Other
|
4,036 | 4,215 | ||||||
| 898,652 | | 970,331 | |||||
Note 14. | Financial Instruments |
2008 | 2007 | |||||||||||||||
Carrying
|
Carrying
|
|||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Cash and cash equivalents
|
| 42,452 | | 42,452 | | 84,848 | | 84,848 | ||||||||
Cash, restricted
|
13,000 | 13,000 | 33,000 | 33,000 | ||||||||||||
Receivables
|
100,158 | 100,158 | 89,890 | 89,890 | ||||||||||||
Notes receivable
|
4,171 | 4,171 | 9,873 | 9,873 | ||||||||||||
Accounts payable and accrued expenses
|
87,517 | 87,517 | 87,000 | 87,000 | ||||||||||||
Debt
|
820,296 | 704,901 | 849,855 | 845,026 | ||||||||||||
Interest rate derivative contracts liability
|
47,112 | 47,112 | 21,885 | 21,885 |
97
Note 14. | Financial Instruments (Continued) |
2008 | 2007 | 2006 | ||||||||||
Realized net gain on foreign exchange derivatives
|
| | | 6,820 | | (3,510 | ) | |||||
Unrealized net gain (loss) on interest rate derivatives
|
| (25,228 | ) | | 19,470 | | 37,292 | |||||
Unrealized net gain (loss) on foreign exchange derivatives
|
| (5,933 | ) | 72,066 | ||||||||
Unrealized net gain (loss) on derivative financial instruments
|
| (25,228 | ) | | 13,537 | | 109,358 | |||||
98
Note 14. | Financial Instruments (Continued) |
99
Note 14. | Financial Instruments (Continued) |
Quoted prices
|
Significant
|
|||||||||||||||
in active
|
other
|
Significant
|
||||||||||||||
markets for
|
observable
|
unobservable
|
||||||||||||||
identical assets
|
inputs
|
inputs
|
||||||||||||||
Description
|
(Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Assets
|
||||||||||||||||
Investments held in restricted cash(a)
|
| 6,622 | | | | | | 6,622 | ||||||||
Investments(a)
|
419 | | | 419 | ||||||||||||
Total assets
|
| 7,041 | | | | | | 7,041 | ||||||||
Liabilities
|
||||||||||||||||
Derivatives(b)
|
||||||||||||||||
Interest rate swaps
|
| 47,112 | | 47,112 | ||||||||||||
Total liabilities
|
| | | 47,112 | | | | 47,112 | ||||||||
(a) | Based on observable market data. | |
(b) | Based on observable inputs for the liability (interest rates and yield curves observable at specific intervals). |
Note 15. | Lease Commitments |
Capital
|
Operating
|
|||||||
Leases | Leases | |||||||
2009
|
| 3,419 | | 2,276 | ||||
2010
|
2,740 | 2,005 | ||||||
2011
|
2,994 | 1,398 | ||||||
2012
|
1,356 | 953 | ||||||
2013
|
191 | 5 | ||||||
Thereafter
|
1,537 | | ||||||
Total
|
| 12,237 | | 6,637 | ||||
Less imputed interest
|
(1,642 | ) | ||||||
Total present value of minimum capitalized payments
|
10,595 | |||||||
Less current portion of capital lease obligations
|
(3,435 | ) | ||||||
Long-term capital lease obligations
|
| 7,160 | ||||||
100
Note 15. | Lease Commitments (Continued) |
Note 16. | Commitments and Contingencies |
Note 17. | Discontinued Operations |
101
Note 17. | Discontinued Operations (Continued) |
2008 | 2007 | 2006 | ||||||||||
Revenues
|
| | | 128 | | 46,351 | ||||||
Operating (loss) income from discontinued operations
|
| | | (142 | ) | | 394 | |||||
Total other expenses
|
| (68 | ) | (469 | ) | |||||||
Loss on disposal of business
|
| | (5,957 | ) | ||||||||
Net loss from discontinued operations
|
| | | (210 | ) | | (6,032 | ) | ||||
Loss per common share from discontinued operations
|
||||||||||||
basic
|
| | | (0.01 | ) | | (0.18 | ) | ||||
diluted
|
| | | (0.01 | ) | | (0.18 | ) |
2008 | 2007 | 2006 | ||||||||||
Cash flows used in operating activities
|
| | | (1,519 | ) | | (2,121 | ) | ||||
Cash flows from (used in) investing activities
|
| 1,260 | 5,944 | |||||||||
Cash flows used in financing activities
|
| | (4,158 | ) | ||||||||
Cash flows used in discontinued operations
|
| | | (259 | ) | | (335 | ) | ||||
Note 18. | Minority Share Purchase |
Note 19. | Subsequent Events |
Note 20. | Restricted Group Supplemental Disclosure |
102
Note 20. | Restricted Group Supplemental Disclosure (Continued) |
Restricted
|
Unrestricted
|
Consolidated
|
||||||||||||||
Group | Subsidiaries | Eliminations | Group | |||||||||||||
ASSETS
|
||||||||||||||||
Current
|
||||||||||||||||
Cash and cash equivalents
|
| 26,176 | | 16,276 | | | | 42,452 | ||||||||
Cash, restricted
|
| 13,000 | | 13,000 | ||||||||||||
Receivables
|
57,258 | 42,900 | | 100,158 | ||||||||||||
Note receivable, current portion
|
642 | | | 642 | ||||||||||||
Inventories
|
59,801 | 38,656 | | 98,457 | ||||||||||||
Prepaid expenses and other
|
2,573 | 1,619 | | 4,192 | ||||||||||||
Total current assets
|
146,450 | 112,451 | | 258,901 | ||||||||||||
Property, plant and equipment
|
351,009 | 530,695 | | 881,704 | ||||||||||||
Other
|
4,425 | 5 | | 4,430 | ||||||||||||
Deferred income tax
|
18,439 | 13,227 | | 31,666 | ||||||||||||
Due from unrestricted group
|
55,925 | | (55,925 | ) | | |||||||||||
Note receivable, less current portion
|
3,529 | | | 3,529 | ||||||||||||
Total assets
|
| 579,777 | | 656,378 | | (55,925 | ) | | 1,180,230 | |||||||
LIABILITIES
|
||||||||||||||||
Current
|
||||||||||||||||
Accounts payable and accrued expenses
|
| 44,450 | | 43,067 | | | | 87,517 | ||||||||
Pension and other post-retirement benefit obligations, current
portion
|
510 | | | 510 | ||||||||||||
Debt, current portion
|
| 16,500 | | 16,500 | ||||||||||||
Total current liabilities
|
44,960 | 59,567 | | 104,527 | ||||||||||||
Debt, less current portion
|
289,222 | 514,574 | | 803,796 | ||||||||||||
Due to restricted group
|
| 55,925 | (55,925 | ) | | |||||||||||
Unrealized derivative loss
|
| 47,112 | | 47,112 | ||||||||||||
Pension and other post-retirement benefit
obligations |
12,846 | | | 12,846 | ||||||||||||
Capital leases and other
|
7,167 | 4,100 | | 11,267 | ||||||||||||
Deferred income tax
|
15,403 | 19,054 | | 34,457 | ||||||||||||
Total liabilities
|
369,598 | 700,332 | (55,925 | ) | 1,014,005 | |||||||||||
SHAREHOLDERS EQUITY
|
||||||||||||||||
Total shareholders equity (deficit)
|
210,179 | (43,954 | ) | | 166,225 | |||||||||||
Total liabilities and shareholders equity
|
| 579,777 | | 656,378 | | (55,925 | ) | | 1,180,230 | |||||||
103
Note 20. | Restricted Group Supplemental Disclosure (Continued) |
Restricted
|
Unrestricted
|
Consolidated
|
||||||||||||||
Group | Subsidiaries | Eliminations | Group | |||||||||||||
ASSETS
|
||||||||||||||||
Current
|
||||||||||||||||
Cash and cash equivalents
|
| 59,371 | | 25,477 | | | | 84,848 | ||||||||
Receivables
|
37,482 | 52,408 | | 89,890 | ||||||||||||
Note receivable, current portion
|
589 | 5,307 | | 5,896 | ||||||||||||
Inventories
|
63,444 | 40,166 | | 103,610 | ||||||||||||
Prepaid expenses and other
|
3,714 | 2,301 | | 6,015 | ||||||||||||
Total current assets
|
164,600 | 125,659 | | 290,259 | ||||||||||||
Cash, restricted
|
| 33,000 | | 33,000 | ||||||||||||
Property, plant and equipment
|
385,569 | 547,689 | | 933,258 | ||||||||||||
Other
|
5,399 | | | 5,399 | ||||||||||||
Deferred income tax
|
10,852 | 6,772 | | 17,624 | ||||||||||||
Due from unrestricted group
|
57,457 | | (57,457 | ) | | |||||||||||
Note receivable, less current portion
|
3,977 | | | 3,977 | ||||||||||||
Total assets
|
| 627,854 | | 713,120 | | (57,457 | ) | | 1,283,517 | |||||||
LIABILITIES
|
||||||||||||||||
Current
|
||||||||||||||||
Accounts payable and accrued expenses
|
| 43,621 | | 43,379 | | | | 87,000 | ||||||||
Pension and other post-retirement benefit obligations, current
portion
|
493 | | | 493 | ||||||||||||
Debt, current portion
|
| 34,023 | | 34,023 | ||||||||||||
Total current liabilities
|
44,114 | 77,402 | | 121,516 | ||||||||||||
Debt, less current portion
|
273,589 | 542,243 | | 815,832 | ||||||||||||
Due to restricted group
|
| 57,457 | (57,457 | ) | | |||||||||||
Unrealized derivative loss
|
| 21,885 | | 21,885 | ||||||||||||
Pension & other post-retirement benefit obligations
|
19,983 | | | 19,983 | ||||||||||||
Capital leases and other
|
7,033 | 1,966 | | 8,999 | ||||||||||||
Deferred income tax
|
4,553 | 14,087 | | 18,640 | ||||||||||||
Total liabilities
|
349,272 | 715,040 | (57,457 | ) | 1,006,855 | |||||||||||
SHAREHOLDERS EQUITY
|
||||||||||||||||
Total shareholders equity (deficit)
|
278,582 | (1,920 | ) | | 276,662 | |||||||||||
Total liabilities and shareholders equity
|
| 627,854 | | 713,120 | | (57,457 | ) | | 1,283,517 | |||||||
104
Note 20. | Restricted Group Supplemental Disclosure (Continued) |
Restricted
|
Unrestricted
|
Consolidated
|
||||||||||||||
Group | Subsidiaries | Eliminations | Group | |||||||||||||
Revenues
|
| 413,088 | | 307,203 | | | | 720,291 | ||||||||
Operating costs
|
369,923 | 257,010 | | 626,933 | ||||||||||||
Operating depreciation and amortization
|
28,589 | 26,895 | | 55,484 | ||||||||||||
Selling, general and administrative expenses
|
17,406 | 12,752 | | 30,158 | ||||||||||||
(Sale) purchase of emission allowances
|
(433 | ) | (5,180 | ) | | (5,613 | ) | |||||||||
Operating income from continuing operations
|
(2,397 | ) | 15,726 | | 13,329 | |||||||||||
Other income (expense)
|
||||||||||||||||
Interest expense
|
(27,027 | ) | (43,117 | ) | 4,388 | (65,756 | ) | |||||||||
Investment income (loss)
|
6,834 | (3,620 | ) | (4,388 | ) | (1,174 | ) | |||||||||
Derivative financial instruments, net
|
| (25,228 | ) | | (25,228 | ) | ||||||||||
Foreign exchange gain on debt
|
(4,114 | ) | (120 | ) | | (4,234 | ) | |||||||||
Total other income (expense)
|
(24,307 | ) | (72,085 | ) | | (96,392 | ) | |||||||||
Income (loss) before income taxes and minority interest from
continuing operations
|
(26,704 | ) | (56,359 | ) | | (83,063 | ) | |||||||||
Income tax benefit (provision)
|
||||||||||||||||
Current
|
(264 | ) | (237 | ) | | (501 | ) | |||||||||
Deferred
|
(3,464 | ) | 1,488 | | (1,976 | ) | ||||||||||
Income (loss) before minority interest from continuing operations
|
(30,432 | ) | (55,108 | ) | | (85,540 | ) | |||||||||
Minority interest
|
| 13,075 | | 13,075 | ||||||||||||
Net income (loss) from continuing operations
|
(30,432 | ) | (42,033 | ) | | (72,465 | ) | |||||||||
Net income (loss)
|
| (30,432 | ) | | (42,033 | ) | | | | (72,465 | ) | |||||
105
Note 20. | Restricted Group Supplemental Disclosure (Continued) |
Restricted
|
Unrestricted
|
Consolidated
|
||||||||||||||
Group | Subsidiaries | Eliminations | Group | |||||||||||||
Revenues
|
| 410,369 | | 316,926 | | | | 727,295 | ||||||||
Operating costs
|
328,954 | 246,284 | | 575,238 | ||||||||||||
Operating depreciation and amortization
|
28,661 | 27,739 | | 56,400 | ||||||||||||
Selling, general and administrative expenses
|
17,650 | 13,064 | | 30,714 | ||||||||||||
(Sale) purchase of emission allowances
|
(1,566 | ) | (3,077 | ) | | (4,643 | ) | |||||||||
Operating income from continuing operations
|
36,670 | 32,916 | | 69,586 | ||||||||||||
Other income (expense)
|
||||||||||||||||
Interest income (expense)
|
(28,472 | ) | (46,653 | ) | 3,725 | (71,400 | ) | |||||||||
Investment income
|
5,303 | 2,875 | (3,725 | ) | 4,453 | |||||||||||
Derivative financial instruments, net
|
| 20,357 | | 20,357 | ||||||||||||
Foreign exchange gain on debt
|
10,629 | 329 | | 10,958 | ||||||||||||
Total other income (expense)
|
(12,540 | ) | (23,092 | ) | | (35,632 | ) | |||||||||
Income (loss) before income taxes and minority interest from
continuing operations
|
24,130 | 9,824 | | 33,954 | ||||||||||||
Income tax benefit (provision)
|
||||||||||||||||
Current
|
(1,394 | ) | (776 | ) | | (2,170 | ) | |||||||||
Deferred
|
(5,034 | ) | (3,110 | ) | | (8,144 | ) | |||||||||
Income (loss) before minority interest from continuing operations
|
17,702 | 5,938 | | 23,640 | ||||||||||||
Minority interest
|
| (1,251 | ) | | (1,251 | ) | ||||||||||
Net income (loss) from continuing operations
|
17,702 | 4,687 | | 22,389 | ||||||||||||
Net income (loss) from discontinued operations
|
(210 | ) | | | (210 | ) | ||||||||||
Net income (loss)
|
| 17,492 | | 4,687 | | | | 22,179 | ||||||||
106
Note 20. | Restricted Group Supplemental Disclosure (Continued) |
Restricted
|
Unrestricted
|
Consolidated
|
||||||||||||||
Group | Subsidiaries | Eliminations | Group | |||||||||||||
Revenues
|
| 368,016 | | 276,883 | | | | 644,899 | ||||||||
Operating costs
|
287,867 | 189,659 | | 477,526 | ||||||||||||
Operating depreciation and amortization
|
27,819 | 28,015 | | 55,834 | ||||||||||||
Selling, general and administrative expenses
|
22,861 | 11,783 | | 34,644 | ||||||||||||
(Sale) purchase of emission allowances
|
(4,933 | ) | (10,676 | ) | | (15,609 | ) | |||||||||
Operating income from continuing operations
|
34,402 | 58,102 | | 92,504 | ||||||||||||
Other income (expense)
|
||||||||||||||||
Interest income (expense)
|
(34,354 | ) | (61,137 | ) | 3,560 | (91,931 | ) | |||||||||
Investment income
|
5,316 | 4,334 | (3,560 | ) | 6,090 | |||||||||||
Derivative financial instruments, net
|
| 105,848 | | 105,848 | ||||||||||||
Foreign exchange gain on debt
|
15,245 | | | 15,245 | ||||||||||||
Total other income (expense)
|
(13,793 | ) | 49,045 | | 35,252 | |||||||||||
Income (loss) before income taxes and minority interest from
continuing operations
|
20,609 | 107,147 | | 127,756 | ||||||||||||
Income tax benefit (provision)
|
||||||||||||||||
Current
|
(290 | ) | (294 | ) | | (584 | ) | |||||||||
Deferred
|
(10,968 | ) | (45,891 | ) | | (56,859 | ) | |||||||||
Income (loss)before minority interest from continuing operations
|
9,351 | 60,962 | | 70,313 | ||||||||||||
Minority interest
|
| (1,071 | ) | | (1,071 | ) | ||||||||||
Net income (loss) from continuing operations
|
9,351 | 59,891 | | 69,242 | ||||||||||||
Net income (loss) from discontinued operations
|
| (6,032 | ) | | (6,032 | ) | ||||||||||
Net income (loss)
|
| 9,351 | | 53,859 | | | | 63,210 | ||||||||
107
Quarter Ended | ||||||||||||||||
March 31 | June 30 | September 30 | December 31 | |||||||||||||
2008
|
||||||||||||||||
Revenues
|
| 186,816 | | 176,651 | | 184,828 | | 171,996 | ||||||||
Gross profit
|
18,643 | 6,216 | 9,854 | (21,384 | ) | |||||||||||
Income (loss) before extraordinary items and cumulative effect
of a change in accounting from continuing operations
|
2,869 | 871 | (17,173 | ) | (59,032 | ) | ||||||||||
Income (loss) before extraordinary items and cumulative effect
of a change in accounting from continuing operations, per share*
|
0.08 | 0.02 | (0.47 | ) | (1.63 | ) | ||||||||||
Net income (loss) from discontinued operations
|
| | | | ||||||||||||
Net income (loss)
|
2,869 | 871 | (17,173 | ) | (59,032 | ) | ||||||||||
Net income (loss) per share*
|
0.08 | 0.02 | (0.47 | ) | (1.63 | ) | ||||||||||
2007
|
||||||||||||||||
Revenues
|
| 175,773 | | 182,401 | | 195,734 | | 173,387 | ||||||||
Gross profit
|
14,477 | 10,943 | 21,457 | 22,709 | ||||||||||||
Income before extraordinary items and cumulative effect of a
change in accounting from continuing operations
|
1,093 | 3,340 | 10,706 | 7,250 | ||||||||||||
Income before extraordinary items and cumulative effect of a
change in accounting from continuing operations, per share*
|
0.03 | 0.09 | 0.26 | 0.18 | ||||||||||||
Net income (loss) from discontinued operations
|
(7 | ) | (181 | ) | (10 | ) | (12 | ) | ||||||||
Net income (loss)
|
1,086 | 3,159 | 10,696 | 7,238 | ||||||||||||
Net income (loss) per share*
|
0.03 | 0.09 | 0.26 | 0.18 |
* | On a diluted basis |
108
Mercer International
Inc.
Chairman
Chairman, Chief Executive Officer and
Director
Date: March 2, 2009
Secretary, Executive Vice President,
Chief Financial Officer and
Principal Accounting Officer
Date: March 2, 2009
Director
Date: March 2, 2009
Director
Date: March 2, 2009
Director
Date: March 2, 2009
Director
Date: March 2, 2009
Director
Date: March 2, 2009
Director
Date: March 2, 2009
109
Exhibit
1
.1
Underwriting Agreement dated February 8, 2005 between
Mercer International Inc. and RBC Capital Markets Corporation,
on behalf of itself and CIBC World Markets Corp., Raymond
James & Associates, Inc. and D.A. Davidson &
Co. Incorporated by reference from
Form 8-K
dated February 10, 2005
1
.2
Underwriting Agreement dated February 8, 2005 among Mercer
International Inc. and RBC Capital Markets Corporation and
Credit Suisse First Boston LLC, on behalf of themselves and CIBC
World Markets Corp. Incorporated by reference from
Form 8-K
dated February 10, 2005
2
.1
Agreement and Plan of Merger among Mercer International Inc.,
Mercer International Regco Inc. and Mercer Delaware Inc. dated
December 14, 2005. Incorporated by reference to the Proxy
Statement/Prospectus filed on December 15, 2005
3
.1
Articles of Incorporation of the Company, as amended.
Incorporated by reference from
Form 8-A
dated March 1, 2006
3
.2
Bylaws of the Company. Incorporated by reference from
Form 8-A
dated March 1, 2006
4
.1
Indenture dated as of October 10, 2003 between Mercer
International Inc. and Wells Fargo Bank Minnesota, N.A.
Incorporated by reference from
Form 8-K
dated October 15, 2003
4
.2
Indenture dated as of December 10, 2004 between Mercer
International Inc. and Wells Fargo Bank, N.A. Incorporated by
reference from
Form S-3
filed December 10, 2004
4
.3
First Supplemental Indenture dated February 14, 2005 to
Indenture dated December 10, 2004 between Mercer
International Inc. and Wells Fargo Bank, N.A. Incorporated by
reference from
Form 8-K
dated February 17, 2005
10
.1
Project Financing Facility Agreement dated August 26, 2002
between Zellstoff Stendal GmbH and Bayerische Hypo-und
Vereinsbank AG, as amended by Amendment, Restatement and
Undertaking Agreement dated February 3, 2009.
10
.2
Shareholders Undertaking Agreement dated August 26,
2002 among Mercer International Inc., Stendal Pulp Holdings
GmbH, RWE Industrie-Lösungen GmbH, AIG Altmark Industrie AG
and FAHR Beteiligungen AG and Zellstoff Stendal GmbH and
Bayerische Hypo-und Vereinsbank AG. Incorporated by reference
from
Form 8-K
dated September 10, 2002
10
.3*
Shareholders Agreement dated August 26, 2002 among
Zellstoff Stendal GmbH, Stendal Pulp Holdings GmbH, RWE
Industrie-Lösungen GmbH and FAHR Beteiligungen AG
10
.4*
Contract for the Engineering, Design, Procurement, Construction,
Erection and
Start-Up
of
a Kraft Pulp Mill between Zellstoff Stendal GmbH and RWE
Industrie-Lösungen GmbH dated August 26, 2002. Certain
non-public information has been omitted from the appendices to
Exhibit 10.16 pursuant to a request for confidential
treatment filed with the SEC. Such non-public information was
filed with the SEC on a confidential basis. The SEC approved the
request for confidential treatment in January 2004
10
.5*
Form of Trustees Indemnity Agreement between Mercer
International Inc. and its Trustees
10
.6
Employment Agreement dated for reference August 7, 2003
between Mercer International Inc. and David Gandossi.
Incorporated by reference from
Form 8-K
dated August 11, 2003
10
.7
Employment Agreement effective as of April 28, 2004 between
Mercer International Inc. and Jimmy S.H. Lee. Incorporated by
reference from
Form 8-K
dated April 28, 2004
10
.8
2004 Stock Incentive Plan. Incorporated by reference from
Form S-8
dated June 15, 2004
10
.9
Asset Purchase Agreement by and among Mercer International Inc.,
0706906 B.C. Ltd. and KPMG Inc., as receiver of all of the
assets and undertakings of Stone Venepal (Celgar) Pulp Inc.
dated November 22, 2004. Incorporated by reference from
Form 8-K
dated November 23, 2004
10
.10
Revolving Credit Facility Agreement dated February 9, 2005
among D&Z Holding GmbH, Zellstoff-und Papierfabrik
Rosenthal GmbH & Co. KG, ZPR Beteiligungs GmbH and
Bayerische Hypo-und Vereinsbank AG. Incorporated by reference
from
Form 8-K
dated February 17, 2005
110
Exhibit
10
.11
Shareholders Undertaking Agreement dated February 9,
2005 relating to Revolving Credit Facility Agreement.
Incorporated by reference from
Form 8-K
dated February 17, 2005
10
.12
Revolving Term Credit Facility dated for reference May 19,
2006 among Zellstoff Celgar Limited Partnership, as borrower,
and the lenders from time to time parties thereto, as lenders
and CIT Business Credit Canada Inc., as agent. Incorporated by
reference from
Form 8-K
dated May 30, 2006
10
.13
Employment Agreement dated October 2, 2006 between Stendal
Pulp Holding GmbH and Wolfram Ridder. Incorporated by reference
from
Form 8-K
dated October 2, 2006
10
.14
Employment Agreement effective October 16, 2006 between
Mercer International Inc. and David Ure dated September 22,
2006. Incorporated by reference from
Form 8-K
dated October 13, 2006
10
.15
Employment Agreement effective September 25, 2006 between
Mercer International Inc. and Claes-Inge Isacson dated
December 5, 2008
10
.16
Employment Agreement effective September 1, 2005 between
Mercer International Inc. and Leonhard Nossol dated
August 18, 2005. Incorporated by reference from
Form 10-Q
dated May 6, 2008
10
.17***
Electricity Purchase Agreement effective January 27, 2009
between Zellstoff Celgar Limited Partnership and British
Columbia Hydro and Power Authority
14
Code of Business Conduct and Ethics. Incorporated by reference
from the definitive proxy statement on Schedule 14A dated
August 11, 2003
99
.1
Exchange Agreement dated December 4, 2006 between Mercer
International Inc. and Nisswa Master Fund Ltd. Incorporated
by reference from
Form 8-K
dated December 5, 2006
99
.2
Exchange Agreement dated December 4, 2006 between Mercer
International Inc. and CC Arbitrage Ltd. Incorporated by
reference from
Form 8-K
dated December 5, 2006
99
.3
Audit Committee Charter. Incorporated by reference from the
definitive proxy statement on Schedule 14A dated
April 28, 2005
99
.4
Governance and Nominating Committee Charter. Incorporated by
reference from the definitive proxy statement on
Schedule 14A dated April 28, 2004
21
List of Subsidiaries of Registrant
23
.1
Consent of Independent Registered Chartered
Accountants PricewaterhouseCoopers LLP
23
.2
Consent of Independent Registered Chartered
Accountants Deloitte & Touche LLP
31
.1
Section 302 Certificate of Chief Executive Officer
31
.2
Section 302 Certificate of Chief Financial Officer
32
.1**
Section 906 Certificate of Chief Executive Officer
32
.2**
Section 906 Certificate of Chief Financial Officer
*
Filed in
Form 10-K
for prior years.
**
In accordance with Release
33-8212
of
the Commission, these Certifications: (i) are
furnished to the Commission and are not
filed for the purposes of liability under the
Securities Exchange Act of 1934, as amended; and (ii) are
not to be subject to automatic incorporation by reference into
any of the Companys registration statements filed under
the Securities Act of 1933, as amended for the purposes of
liability thereunder or any offering memorandum, unless the
Company specifically incorporates them by reference therein.
***
Pursuant to
17 CFR 240.24b-2, Confidential Information has been
omitted and filed separately with the Commission pursuant to a
confidential treatment application filed with the Commission.
111
|
Execution Version | |
|
Binding Version must be in German |
1.
|
Definitions and Interpretation | 2 | ||||
2.
|
Amendment and Restatement of the Facility Agreement/ Mercer Pulp Sales Fee | 4 | ||||
3.
|
Conditions Precedent | 6 | ||||
4.
|
Close-out Settlement Agreement Proceeds | 6 | ||||
5.
|
Representations and Warranties | 6 | ||||
6.
|
Waiver Provisions | 6 | ||||
7.
|
Security Agreements | 6 | ||||
8.
|
Fees | 7 | ||||
9.
|
Costs and Expenses | 7 | ||||
10.
|
Notices | 7 | ||||
11.
|
Miscellaneous | 11 | ||||
12.
|
Acknowledgement | 12 | ||||
SCHEDULE 1 Conditions Precedent | 13 | |||||
SCHEDULE 2 Amended Facility Agreement | 15 |
1
(1) | MERCER INTERNATIONAL, INC. ( Mercer International ) as Sponsor; | |
(2) | ZELLSTOFF STENDAL GMBH , a limited liability company incorporated, organized and validly existing under the laws of the Federal Republic of Germany, having its office at Goldbecker Strasse 1, 39596 Arneburg, Federal Republic of Germany and registered in the commercial register ( Amtsgericht ) of Stendal, number HRB 2446 (the Borrower ); | |
(3) | BAYERISCHE HYPO- UND VEREINSBANK AG, a stock corporation incorporated, organised and validly existing under the laws of the Federal Republic of Germany, having its office at Arabellastrasse 14, 81925 Munich, Federal Republic of Germany and registered in the commercial register ( Amtsgericht ) of Munich, number HRB 42148 (the Arranger , Agent , Security Agent ); | |
(4) | BAYERISCHE HYPO- UND VEREINSBANK AG, a stock corporation incorporated, organised and validly existing under the laws of the Federal Republic of Germany, having its office at Arabellastrasse 14, 81925 Munich, Federal Republic of Germany and registered in the commercial register ( Amtsgericht ) of Munich, number HRB 42148 (the Original Lender ); | |
(5) | NORDDEUTSCHE LANDESBANK GIROZENTRALE , Friedrichswall 10, 30159 Hannover, Federal Republic of Germany (a Lender ); | |
(6) | LANDESBANK BADEN-WÜRTTEMBERG , Am Hauptbahnhof 2, 70173 Stuttgart, Federal Republic of Germany (a Lender ); | |
(7) | BANK OF SCOTLAND PLC , 1 st Floor, New Uberior House, Edinburgh EH3 9BN, Scotland, (a Lender ); | |
(8) | DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK, FRANKFURT AM MAIN , Platz der Republik, 60265 Frankfurt am Main, Federal Republic of Germany (a Lender ); | |
(9) | NATIONAL BANK OF GREECE S.A., LONDON BRANCH , 75 King William Street, London EC4N7BE, England (a Lender ); | |
(10) | HSH NORDBANK AG , Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Federal Republic of Germany (a Lender ); |
2
(11) | BANCA MONTE DEI PASCHI DI SIENA S.P.A., LONDON BRANCH , 6 th Floor, Capital House, 85 King William Street, London EC4N 7BL, England (a Lender ); | |
(12) | INVESTKREDIT BANK AG , Renngasse 10, 1013 Vienna, Republic of Austria (a Lender ); and | |
(13) | NORDKAP BANK AG , Thurgauerstrasse 54, CH-8050 Zurich, Switzerland (a Lender ); | |
(together referred to as the Parties ); | ||
(the parties under 4 to 13 above are referred to herein together as the Lenders and each a Lender ) |
(A) | The Borrower, the Agent, the Security Agent, the Arranger and the Original Lender have entered into a project financing facility agreement, dated 26 August 2002, as amended pursuant to the Amendment and Restatement Agreement No 1 dated 23 March 2005 in the aggregate amount of EUR 827,950,000 (the Facility Agreement ) in order to provide financing to build and operate a bleached softwood kraft pulp mill located in Arneburg, Sachsen-Anhalt, Federal Republic of Germany. | |
(B) | The Original Lender has, pursuant to Clause 31.2 ( Assignments and Transfers by the Lenders ) of the Facility Agreement, transferred certain of its rights, benefits and obligations under the Facility Agreement to the Lenders. | |
(C) | The Parties hereto wish to agree on certain changes to the Facility Agreement as well as to supplement the obligations of Mercer International in connection with the transaction which shall be implemented by this Agreement. |
1. | DEFINITIONS AND INTERPRETATION | |
1.1 | Definitions | |
In this Agreement: | ||
Amended Facility Agreement means the Facility Agreement, as amended by this Agreement, the terms of which are set out in Schedule 2 ( Amended Facility Agreement ). | ||
Amendment Date means the date on which the Agent confirms to the Borrower and the Lenders in writing that it has received each of the documents |
3
listed in Schedule 1 ( Conditions Precedent ) in form and substance satisfactory to the Agent. | ||
Close-out Settlement Account means the following account: account number 668546951, bank code 70020270 at Bayerische Hypo- und Vereinsbank AG, Munich. | ||
Close-out Settlement Agreement means the close-out settlement agreement dated 20 August 2007 and entered into between the Borrower and E&Z Industrielösungen GmbH. | ||
Existing Shareholder Loans means |
(i) | the following subordinated shareholder loan agreements between the Borrower and Stendal Pulp Holding GmbH: |
| EUR 35.063.180 agreement dated 26 August 2002 | ||
| EUR 9.537.000 agreement dated 27 September 2005 | ||
| EUR 9.537.000 agreement dated 31 July 2006; |
(ii) | the following subordinated shareholder loan agreements between the Borrower and MFC Industrial Holdings AG, which have been assignend and transferred from MFC Industrial Holdings AG to Stendal Pulp Holding GmbH by way of assignment and transfer agreement dated 18 October 2006: |
| EUR 3.890.290 agreement dated 26 August 2002 | ||
| EUR 1.050.000 agreement dated 31 July 2006 | ||
| EUR 1.050.000 agreement dated 27 September 2005; and |
(iii) | the following subordinated shareholder loan agreements between the Borrower and E&Z Industrie-Lösungen GmbH: |
| EUR 16.302.176 agreement dated 26 August 2002 | ||
| EUR 4.413.000 agreement dated 27 September 2005 | ||
| EUR 4.413.000 agreement dated 31 July 2006. |
Marketing and Pulp Sales Agreement means the agreement dated 23 December 2005 between Mercer International and the Borrower in respect of the payment of pulp sales and marketing fees. |
4
Mercer Pulp Sales Fee means any pulp sales and marketing fees payable by the Borrower to Mercer International on pulp sales pursuant to the Marketing and Pulp Sales Agreement. |
1.2 | Incorporation of Defined Terms, Interpretation | |
Terms defined in the Facility Agreement shall, unless otherwise defined herein, have the same meaning herein and the principles of construction set out in the Facility Agreement shall have effect as if set out in this Agreement. | ||
1.3 | Clauses and Schedules | |
1.3.1 | In this Agreement any reference to a Clause or Schedule is, unless the context otherwise requires, a reference to a Clause or Schedule of this Agreement. | |
1.3.2 | Clauses and Schedules headings are for ease of reference only. | |
1.4 | Singular and Plural | |
Words incorporating the singular number include the plural and vice versa. | ||
2. | AMENDMENT AND RESTATEMENT OF THE FACILITY AGREEMENT / MERCER PULP SALES FEE | |
2.1 | Amendment and Restatement of the Facility Agreement | |
The Facility Agreement shall be amended with effect from the Amendment Date in the form as set out in Schedule 2 ( Amended Facility Agreement ) so that the rights and obligations of the parties to the Facility Agreement shall, on and from the Amendment Date, be governed and construed in accordance with the provisions of the Amended Facility Agreement. Prior to the Amendment Date, the Facility Agreement in its present form shall govern the rights and obligations of the parties to the Facility Agreement. | ||
2.2 | Mercer Pulp Sales Fee |
2.2.1 | With effect from the Amendment Date and subject to Clause 2.2.3, prior to 1 January 2011 and thereafter until such time as the Target Balance on the Debt Service Reserve Account is reached for the first time in accordance with Clause 11.3 ( Target Balance ) of the Facility Agreement, payment by the Borrower of any Mercer Pulp Sales Fee shall be deferred until 30 September 2017. Subject always to the provisions of the Financing Documents, any Mercer Pulp Sales Fee payable after 1 January 2011 and after the Debt Service Reserve Account is fully funded in accordance with the terms of the Facility Agreement shall be payable |
5
by the Borrower when due, unless an Event of Default has occurred and is
continuing. Any Mercer Pulp Sales Fee accruing during an Event of Default shall be
deferred until 30 September 2017;
2.2.2
any claim by Mercer International against the Borrower for payment of any
Mercer Pulp Sales Fee deferred pursuant to Clause 2.2.1 (the
Subordinated Amount
)
shall be (i) subordinated (
tritt im Rang zurück
) to any claims of the Finance Parties
under or in connection with the Financing Documents and (ii) assigned to the Security
Agent for the benefit of the Finance Parties as security for the fulfilment of the
obligations of the Borrower towards the Finance Parties under or in connection with
the Financing Documents; and
2.2.3
the Borrower may agree with Mercer International to convert any Subordinated
Amount (i) into Shares of the Borrower by the Borrower issuing to Mercer International
Shares of the Borrower at par (ii) into Shareholder Loans provided that such Shares or
Shareholder Loans are subject to security for the benefit of the Finance Parties
satisfactory to the Agent.
2.3 | Non occurrence of Amendment Date | |
If the Amendment Date does not occur by 15 March 2009, then this Agreement shall cease to have effect and shall cease to bind the Parties in respect of any obligations to be performed under this Agreement on or after such date, but all obligations and liabilities of the Parties prior to such date, or in respect of acts which are done, or events which occur, prior to such date, shall remain in full force and effect. | ||
2.4 | Continuing Obligations | |
The provisions of the Facility Agreement shall, save as amended hereby, continue in full force and effect. | ||
2.5 | Further Assurance | |
The Borrowers and Mercer International shall, at the request of the Agent and at their own expense, do all such reasonable acts and things necessary or desirable to give effect to the amendments effected or to be effected pursuant to this Agreement. | ||
2.6 | Financing Document | |
This Agreement shall be a Financing Document. |
6
3. | CONDITIONS PRECEDENT | |
The Agent shall notify the Borrower, Mercer International and the Lenders of the occurrence of the Amendment Date. If any of the conditions set out in Schedule 1 ( Conditions Precedent ) are waived or deferred by the Agent, the Agent may attach to such waiver or deferral such requirements and further or other conditions as agreed with the Borrower and the Borrower shall fulfill or procure fulfillment of all such requirements and further or other conditions as may be notified to the Borrower and Mercer International in writing in accordance with the terms of such notification as if such requirement or further or other condition was a term of the Amended Facility Agreement. | ||
4. | CLOSE-OUT SETTLEMENT AGREEMENT PROCEEDS | |
Any amount standing to the credit of the Close-Out Settlement Account following completion of the works and undertaking assumed by the parties under the Close-Out Settlement Agreement (currently estimated to be approximately EUR 3,201,200.13) shall be transferred to the Proceeds Account for application in accordance with the provisions of the Amended Facility Agreement. | ||
5. | REPRESENTATIONS AND WARRANTIES | |
The Borrower herewith represents and warrants to the Lenders that, as of the date of signing of this Agreement, the statements in Clause 16 ( Representations and Warranties ) of the Amended Facility Agreement are true and correct. The Borrower makes the representations and warranties as if each reference in those representations and warranties to this Agreement includes a reference to the Amended Facility Agreement. | ||
6. | WAIVER PROVISIONS | |
Neither the entry into this Agreement, nor the non-satisfaction of any condition precedent under Clause 3 ( Conditions Precedent ), nor anything else in this Agreement shall operate as a waiver of any outstanding Event of Default, unless otherwise provided expressly herein. | ||
7. | SECURITY AGREEMENTS | |
The Security Agreements shall continue in full force and effect in connection with the Facility Agreement as amended by this Agreement. The Parties acknowledge that all present and future, actual and contingent obligations and liabilities in their respective valid, amended, supplemented, or newly arranged forms of the Borrower and Mercer International to the Lenders, Agent and the Security Agent under each of the Financing Documents are to be regarded as secured obligations (as defined in each of the Security Agreements) under the Security Agreements. |
7
(a) | to the Borrower: | ||
Zellstoff Stendal GmbH
Goldbecker Strasse 1 |
8
39596 Arneburg
Federal Republic of Germany attn.: Managing Director Tel.: +49 (0) 39321 55 510 Fax.: +49 (0) 39321 55 129 |
|||
(b) | to Mercer International | ||
to Mercer International, Inc.
(Registered Office) |
|||
14900 Interurban Avenue South
Suite 282 Seattle, Washington 981 168 United States of America |
|||
via | |||
(Executive Office) | |||
Suite 2840, PO Box 11576
650 West Georgia Street Vancouver, BC Canada V6B 4N8 |
|||
attn.: Jimmy S.H. Lee
Tel.: +1 604 684 1099 Fax.: +1 604 684 1094 |
|||
(c) | to the Arranger and Original Lender: | ||
Bayerische Hypo- und Vereinsbank AG
Arabellastrasse 14 81925 München Federal Republic of Germany |
|||
attn.: Claudia Schmidt
Tel.: +49-(0) 89 378 46740 Fax.: +49-(0) 89 378 41518 |
|||
(d) | to the Agent and/or Security Agent: | ||
Bayerische Hypo- und Vereinsbank AG
Arabellastrasse 14 |
9
81925 München
Federal Republic of Germany |
|||
attn.: Loans Agency
Tel.: +49 (0) 89 378 25460 Fax.: +49 (0) 89 378 41517 |
|||
(e) | to the Lenders: | ||
Norddeutsche Landesbank Girozentrale
Friedrichswall 10 30159 Hannover Federal Republic of Germany |
|||
attn.: Holger Reinicke
Tel.: +49 (0) 511 361 4634 Fax.: +49 (0) 511 361 4443 |
|||
Landesbank Baden-Württemberg
Am Haupbahnhof 2 D-70173 Stuttgart |
|||
attn.: Tanja Reiter
Tel.: +49 (0) 711 127 49702 Fax.: +49 (0) 711 127 6649702 |
|||
attn.: Jürgen Klingel
Tel.: +49 (0) 6131 64 36123 Fax.: +49 (0) 6131 64 37120 |
|||
Bank of Scotland plc
Project Finance 1 st Floor, New Uberior House Edinburgh EH3 9BN Scotland |
|||
attn.: Alistair Malcom and Martin Metcalf
Tel.: +44 (0) 131 659 0086 and 0748 Fax.: +44 (0) 131 659 0763 |
|||
DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main
Platz der Republik 60265 Frankfurt am Main Federal Republic of Germany |
10
attn.: Anja Brügging and Frank Menn
Tel.: +49 (0) 69 7447 1330 and 7304 Fax.: +49 (0) 69 7447 6645 and 6098 |
|||
National Bank of Greece S.A., London Branch
75 King William Street London EC4N7BE England |
|||
attn.: Sotiris Charalambous
Tel.: +44 (0) 207 015-0616 Fax.: +44 (0) 207 015-0687 |
|||
HSH Nordbank AG
Gerhart-Hauptmann-Platz 50 20095 Hamburg Federal Republic of Germany |
|||
attn.: Werner Feldmann
Tel.: +49 (0) 40 3333 13712 Fax.: +49 (0) 40 3333 613712 |
|||
Banca Monte dei Paschi di Siena S.p.A., London Branch
6 th Floor Capital House 85 King William Street London EC4N 7BL England |
|||
attn.: Michael Given / Wendy Johnson
Tel.: +44 (0)20 7645 7800 Fax.: +44 (0)20 7929 3343 |
|||
Investkredit Bank AG
Renngasse 10 1013 Vienna Republic of Austria |
|||
attn.: Ernst Neuhold
Tel.: +43 (0) 1 53135 465 Fax.: +43 (0) 1 53135 919 |
|||
Nordkap Bank AG
Thurgauerstrasse 54 |
11
8050 Zurich
Switzerland |
|||
attn.:
Tel.: Fax.: |
11. | MISCELLANEOUS | |
11.1 | Non-Applicability of Section 181 German Civil Code ( Bürgerliches Gesetzbuch ) | |
The Agent and the Security Agent shall, for the purpose of this Agreement, be exempted from the restrictions of Section 181 German Civil Code ( Bürgerliches Gesetzbuch ). | ||
11.2 | Remedies and Waivers | |
No failure to exercise, nor any delay in exercising, on the part of any Lender, Agent, Arranger or Security Agent, any right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. | ||
11.3 | Partial Invalidity | |
Should any provision of this Agreement be invalid or unenforceable, in whole or in part, or should any provision later become invalid or unenforceable, this shall not affect the validity of the remaining provisions of this Agreement. In lieu of the invalid or unenforceable provision another reasonable provision shall apply, which as far as legally possible comes as close as possible to the intention of the contracting parties, or to what would have been their intention, in correspondence with the spirit and the purpose of this Agreement, had the parties upon entering into this Agreement taken into consideration the invalidity or unenforceability of the respective provision. The same shall apply mutatis mutandis to fill possible gaps ( Vertragslücken ) in this Agreement. | ||
11.4 | Conflicts | |
In the event of any conflict or inconsistency between the terms and conditions of either the Amended Facility Agreement and the terms and conditions hereof, the terms and conditions of this Agreement shall prevail. | ||
11.5 | Amendments |
12
Changes to this Agreement, including this Clause 11.5 (
Amendments
) shall be made in
writing.
11.6
Governing Law
This Agreement shall be governed by, and construed in accordance with, the laws of the
Federal Republic of Germany.
11.7
Jurisdiction
The exclusive place of jurisdiction to hear and determine any suit, action or proceeding,
and to settle any disputes which may arise out of or in connection with this Agreement is
Munich. The Lenders, the Agent and the Security Agent may, however, also commence
proceedings before any other court in which assets of the Borrower and Mercer International
are located. Mandatory places of jurisdiction remain unaffected.
11.8
Counterparts
This Agreement may be executed in any number of counterparts all of which taken together
constitute one and the same instrument.
12.
ACKNOWLEDGEMENT
The Parties acknowledge and confirm that
(a)
they have received a copy of the Amended Facility Agreement highlighting the
amendments as a comparite against the Facility Agreement and comprising all
amendments; and
(b)
have taken notice of all amendments in the Amended Facility Agreement.
13
(1) | A certified and up-to-date copy of the commercial register extract of the Borrower. | |
(2) | An up-to-date certificate of incorporation/authorization issued by the Washington Secretary of State in respect of Mercer International. | |
(3) | A copy of the corporate authorizations and/or shareholder resolutions or supervisory boards resolutions, as the case may be, of the Borrower relating to the execution, delivery and performance of this Agreement. | |
(4) | A certified copy of the Secretary Certificates of the Corporate Secretary of Mercer International, |
a) | authorizing the execution, delivery and performance of this Agreement as approved by Mercer Internationals board of directors, and | ||
b) | setting out the names and signatures of the authorized signatories for the signing of this Agreement duly certified to be true and correct. |
(5) | Specimen signatures of the persons authorized to sign this Agreement. | |
(6) | A legal opinion of the Borrowers counsel in form and substance satisfactory to the Agent with respect to the due execution and capacity of this Agreement relating to the Borrower. | |
(7) | A legal opinion of Mercer Internationals counsel in form and substance satisfactory to the Agent with respect to the due execution and capacity of this Agreement relating to Mercer International. | |
(8) | Evidence that Mercer International has irrevocably and unconditionally provided EUR 10m of capital contribution to the capital reserves of the Borrower or by way of Shareholder Loans. | |
(9) | Evidence that all Existing Shareholder Loans (including accrued interest thereon) have been converted into Share Capital of the Borrower (such additional Share Capital to be subject to Security for the benefit of the Finance Parties). | |
(10) | Confirmation by PricewaterhouseCoopers as auditor of the Borrower regarding the financial status of the Borrower as per 30 September 2008. |
14
(11) | Satisfactory legal memorandum from Cleary Gottlieb pursuant to which it is unlikely that the proposed amendments adversely effect the State Guarantee (the Cleary Gottlieb Memorandum ). | |
(12) | Satisfactory legal memorandum from Clifford Chance regarding the Cleary Gottlieb Memorandum. | |
(13) | A standard enforceability legal opinion from Clifford Chance Partnerschaftsgesellschaft regarding this Agreement. | |
(14) | Approval of the amendments pursuant to this Agreement by the State Guarantors. | |
(15) | Payment of any and all fees (including, but not limited to, those due and payable pursuant to Clause 8.1 ( Fees )), costs and expenses (including, but not limited to, those due and payable pursuant to Clause 9 ( Costs and Expenses )). |
15
CLAUSE | PAGE | |||||
|
||||||
1.
|
Definitions and Interpretation | 2 | ||||
2.
|
The Facility | 25 | ||||
3.
|
Utilisation of the Facility | 28 | ||||
4.
|
Interest | 31 | ||||
5.
|
Market Disruption | 34 | ||||
6.
|
Repayment | 35 | ||||
7.
|
Voluntary Prepayments | 39 | ||||
8.
|
Cancellation | 41 | ||||
9.
|
Payments | 41 | ||||
10.
|
Equity Reserve Account | 48 | ||||
11.
|
Debt Service Reserve Account | 49 | ||||
12.
|
Illegality | 51 | ||||
13.
|
Increased Costs | 51 | ||||
14.
|
Taxes | 53 | ||||
15.
|
Mitigation | 54 | ||||
16.
|
Representations And Warranties | 55 | ||||
17.
|
Financial Calculations (Wirtschaftlichkeitsberechnungen) | 62 | ||||
18.
|
Information Requirements | 64 | ||||
19.
|
Inspection Rights | 68 | ||||
20.
|
Hedging Requirements | 69 | ||||
21.
|
Covenants | 69 | ||||
22.
|
Insurances | 79 | ||||
23.
|
Events of Default | 83 | ||||
24.
|
Agent, Arranger and Lenders | 89 | ||||
25.
|
Advisers | 94 | ||||
26.
|
Fees | 94 | ||||
27.
|
Costs and Expenses | 95 | ||||
28.
|
Indemnity and Breakage Costs | 97 | ||||
29.
|
Set-Off | 98 |
CLAUSE
PAGE
Pro-Rata Sharing
98
Assignments and Transfers
99
Sub-Participations
101
Calculations and Evidence of Debt
101
Non-Applicability of § 181 BGB
102
Form Requirements and Amendments
102
Conditions of the State Guarantee
102
Remedies and Waivers, Cumulative Rights, Partial Invalidity
102
Notices
103
Governing Law
104
Jurisdiction
105
Counterparts
105
Confirmation pursuant to Section 8 of the German Money Laundering Act (
Geldwäschegesetz
)
105
SCHEDULE 1 Drawdown Request
106
SCHEDULE 2 Conditions for the First Drawdown
109
SCHEDULE 3 General Drawdown Conditions
113
SCHEDULE 4 Conditions Subsequent
114
SCHEDULE 5 Lenders and Commitments
116
SCHEDULE 6 Mandatory Cost Formulae
117
SCHEDULE 7 Form of Account Pledge Agreement
120
SCHEDULE 8 Form of Luxemburg Account Pledge Agreement
142
SCHEDULE 9 Security Agreements
160
SCHEDULE 10 State Guarantee
161
SCHEDULE 11 Financing of the Subsidiaries
162
SCHEDULE 12 Minimum Insurance Schedule
167
SCHEDULE 12a Minimum Insurance Operation Period Schedule
168
SCHEDULE 13 Sample Table of Content Regarding Quarterly Construction
Progress Reports
175
SCHEDULE 14 Transfer Certificate
177
SCHEDULE 15 Development Costs
181
SCHEDULE 16 Brokers Letter of Undertaking
182
CLAUSE
PAGE
SCHEDULE 17 Archeological Sites
185
SCHEDULE 18 Investment and Financing Plan
186
1
(1) | ZELLSTOFF STENDAL GMBH , a limited liability company incorporated, organized and validly existing under the laws of the Federal Republic of Germany, having its office at Goldbecker Strasse 1, 39596 Arneburg, Federal Republic of Germany and registered in the commercial register ( Amtsgericht ) of Stendal, number HRB 2446 (the Borrower ); | |
(2) | BAYERISCHE HYPO- UND VEREINSBANK AG , a stock corporation incorporated, organised and validly existing under the laws of the Federal Republic of Germany, having its office at Am Tucherpark 16, 80538 München, Federal Republic of Germany and registered in the commercial register ( Amtsgericht ) of Munich, number HRB 42148 (the Arranger ); | |
(3) | BAYERISCHE HYPO- UND VEREINSBANK AG (the Agent and Security Agent ); and | |
(4) | BAYERISCHE HYPO- UND VEREINSBANK AG , (the Original Lender ). |
(A) | The Borrower is a project company which was created as a limited liability company ( Gesellschaft mit beschränkter Haftung ) in 1996 as a project development company. | |
(B) | The Borrower intends to build and operate a 552,000 tonnes per annum bleached softwood kraft pulp mill located in Arneburg, Sachsen-Anhalt, Federal Republic of Germany. | |
(C) | Mercer International, Inc., a company incorporated under the laws of the state of Washington, United States of America ( Mercer International ), RWE Industrie-Lösungen GmbH, a limited liability company incorporated under the laws of the Federal Republic of Germany ( RWE-IN ) and Altmark Industriepark AG (formerly AIG Altmark Industrie AG), a company incorporated under the laws of the Federal Republic of Germany ( ALTMARK INDUSTRIEPARK AG ) and MFC Industrial Holdings AG (formerly FAHR Beteiligungen AG), a limited liability company incorporated under the laws of the Federal Republic of Germany initially agreed to act as sponsors of the Project. |
2
(D) | The Federal Republic of Germany and the State of Sachsen-Anhalt have agreed to guarantee 80 % of the claims of the Lenders in connection with Tranche A and Tranche B (each as defined below) by issuing guarantees in favour of the Lenders which guarantees will be administered by C&L Deutsche Revision AG. | |
(E) | The Original Lender has agreed to provide the Borrower with the Facility (as defined below) subject to the terms and conditions set out below. | |
(F) | The Borrower acknowledges that the Facility will initially be provided by the Original Lender but that the Original Lender intend to further syndicate the Facility. |
Acceptance : The date on which the Owner issues the Acceptance Certificate in accordance with the terms and conditions of the EPC Contract. | ||
Acceptance Waiver Agreement : The agreement dated [] entered into between the Borrower and RWE-IN. | ||
Additional Works : Has the same meaning as set out in the Acceptance Waiver Agreement. | ||
Advance : A principal sum drawn by the Borrower under this Agreement or, depending on the context, the principal sum outstanding as a result of such drawdown. | ||
Advisers : The Technical Adviser, the Wood Supply Adviser, the Pulp Market Adviser, the Insurance Adviser and any other consultant agreed from time to time between the Lenders and the Borrower to act as an adviser in relation to the Project or this Agreement. | ||
Agreement : This agreement including all of its schedules. | ||
Amortisation Schedule : The percentage amortisation Schedule pursuant to Clause 6.3.1 ( Repayments other than First Repayment ). | ||
Annual Debt Service Cover Ratio : On a Repayment Date following the First Repayment Date, the ratio of the Available Cash Flow for the twelve (12) calendar months ending on the previous 31 December or 30 June, as the case may be, to the total amount of interest, principal and fees payable pursuant to the Financing Documents (adjusted by interest rate hedging payments and currency rate hedging payments related to the debt service or receipts and excluding those |
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repayments of principal under Tranche E) for that period. In relation to the First Repayment Date, the relevant period for the Available Cash Flow and debt servicing will be from Acceptance to the 31 December or 30 June next proceeding the First Repayment Date (or, in the circumstances referred to in Clause 9.4.3(c)(ii) ( Restricted Application ), from Acceptance to the First Repayment Date). | ||
Assurance of Overall Financing : For the purposes of this Agreement, the overall financing is assured if in respect to the Project as a whole, the Overall Funding Requirements are covered by the Overall Funding Sources. | ||
Authority : Any national, supranational, regional or local government or governmental, administrative, fiscal, judicial, or government-owned body, department, commission, authority, tribunal, agency or entity, or any person, whether or not government owned and howsoever constituted or called, that exercises the functions of a central bank. | ||
Authorisation : Any consent, registration, filing, agreement, notarisation, certificate, license, approval, permit, authority or exemption from, by or with any Authority, whether given by express action or deemed given by failure to act within any specified time period and all corporate and creditors approvals or consents. | ||
Availability Period : The relevant period mentioned in Clause 2.2 ( Availability of Facility ). | ||
Available Cash Flow : In relation to any period, operating revenues ( Umsatzerlöse ) of the Borrower (including any interest earnings on the Cash Collateral Accounts, insurance proceeds for loss of revenue or business interruption and delay liquidated damages and other compensations under the EPC Contract and receipts of any settlement payments in relation to Hedging Agreements and payments under any currency hedging not related to the debt service and receipt of payments under pulp price hedging and any receipts from carbon certificate trading) for such period minus all operating costs for such period (for the avoidance of doubt, excluding depreciation and Financing Costs), Capital Expenditures (for the avoidance of doubt, excluding capital expenditure financed by Shareholders funds standing to the credit of the Shareholders Account, or by additional equity contributions or Shareholder Loans), corporate tax payments and local and other taxes (except VAT) and any expenditures of any settlement payments in relation to Hedging Agreements and expenditures under any currency hedging not related to the debt service and expenditures under pulp price hedging and any expenditures or payments to be made under carbon certificate trading. Revenues in the form of Government Grants and recovery of VAT are not included in the Available Cash Flow. |
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Base Case : A statement of the technical, economic and tax assumptions relating to the Project in the form of a run of the Financial Model as updated from time to time. | ||
Breakage Costs : The costs pursuant to Clause 28.2( Breakage Costs ). | ||
Business Day : A day (other than a Saturday or Sunday) which is not a public holiday and on which banks are open for general business in London, Munich and Frankfurt am Main and: |
(a) | (in relation to any date for payment or purchase of a sum denominated in a currency other than the euro) a day on which banks are open for general business in the financial centre of the country of such currency; or | ||
(b) | (in relation to any date for payment or purchase of a sum denominated in the euro) any TARGET Day. |
C&L : C&L Deutsche Revision AG, Wirtschaftsprüfungsgesellschaft, Düsseldorf as agent ( Mandatar ) of the Guarantors. | ||
Capital Contributions : means the subscription and purchase of Shares. | ||
Capital Expenditures : Costs and expenses of a capital nature pursuant to the generally accepted accounting principles in the Federal Republic of Germany incurred or to be incurred by the Borrower in the construction and operation of the Project and in the normal acquisition and/or replacement (but excluding any replacement cost which has been confirmed by the relevant insurers as being payable out of insurance proceeds) of fixed assets, machinery, parts and similar equipment in relation to the Project according to the Project Budget. | ||
Cash Collateral Accounts : The Disbursement Account, the Proceeds Account, the Insurance Account, Equity Reserve Account and the Debt Service Reserve Account. | ||
Change of Control : |
(a) | Any change after Financial Close in the direct or indirect ownership of the Shares without the Majority Lenders written consent (such consent not to be unreasonably withheld or delayed) after which the aggregate direct or indirect shareholding of Mercer International (on a fully diluted basis) no longer is equal to or exceeds 51% of the voting rights in the Borrower; and/or | ||
(b) | any change before Acceptance in the direct or indirect ownership of the Shares held by RWE-IN or MFC IH at Financial Close. |
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Commitment : In relation to each Lender, the sum of such Lenders commitments under the Facility, as specified in Schedule 5 ( Lenders and Commitments ) (as reduced by any assignments/transfers in accordance with this Agreement) or as specified in the relevant Transfer Certificate(s), to the extent not cancelled or reduced hereunder. | ||
Construction Period : The period from the date of commencement of any of the Works under the EPC Contract up to and including Acceptance. | ||
Cost Overruns : |
(a) | Any Project Construction Costs and Development Costs over and above those set out in the Investment and Financing Plan; | ||
(b) | any Financing Costs, start up costs and Working Capital Costs until completion of the Additional Works over and above those set out in the Investment and Financing Plan; | ||
(c) | any shortfall in Start Up Cash Flows below the budgeted amount therefore as set out in the agreed Base Case delivered pursuant to Schedule 2 ( Conditions for the First Drawdown ), paragraph 9; and | ||
(d) | any shortfall in Government Grants determined on or before the First Repayment Date. |
Debt Service Reserve Account : The accounts (including foreign currency and investment accounts) of the Borrower established for the purposes set out in Clause 11 ( Debt Service Reserve Account ) and maintained with Bayerische Hypo- und Vereinsbank AG or HVB Banque Luxembourg Société Anonyme. | ||
Derivative Transaction : Any swap agreement, warrant agreement, futures and forward contracts or similar arrangement with respect to interest rates, currencies, carbon certificates or commodity prices. | ||
Development Costs : Those development costs, fees and expenses in connection with the development of the Project incurred prior to Financial Close and which are listed in Schedule 15 ( Development Costs ) hereto. | ||
Direct Agreement : The contractors direct agreement on or about the date hereof and made between the Borrower, RWE-IN, RWE Solutions AG and the Security Agent. | ||
Disbursement Account : The account of the Borrower established for the purposes set out in Clause 9.1 ( Disbursement Account ) and maintained with the Agent. |
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Drawdown Date : The day an Advance is made. | ||
Drawdown Request : A request for an Advance pursuant to Schedule 1 ( Drawdown Request ). | ||
EBITDA : The net profit of the Borrower before deducting any negative or adding any positive extraordinary or exceptional items, |
(a) | plus the amount of taxes set against the net profits of the Borrower in its audited financial statements and (without double counting) any provision by the Borrower for taxes, | ||
(b) | plus any amortisation and depreciation stated in the relevant audited financial statements, | ||
(c) | plus any interest or similar charges payable by the Borrower, | ||
(d) | plus any other non cash charges set against the net profits of the Borrower in the relevant audited financial statements (including exchange rate gains or losses). |
Environmental Claim : Any claim, notice, prosecution, demand, action, official warning, abatement or other order (conditional or otherwise) relating to, or any notification or order requiring compliance with, any Environmental Law or Environmental Permits. | ||
Environmental Law : Any law applicable to the Project and the Borrower which relates to the protection of the environment or harm to or the protection of human health or the health of animals or plants. | ||
Environmental Permits : Any Authorisation required under any Environmental Law for the construction or operation of the Project and business of the Borrower conducted on or from the properties owned or used by the Borrower in connection with the Project. | ||
EPC Contract : The engineering, procurement and construction agreement dated 26 August 2002 between RWE-IN and the Borrower. | ||
EPC Contractor : RWE-IN. | ||
Equity Cure Measures : The Shareholders purchasing additional Shares in the Share Capital of the Borrower or making Shareholder Loans fully subordinated to the Finance Parties or making payments into the capital reserves of the Borrower, in each case in an amount at least equal to the Shortfall (provided such Shares or Shareholder Loans or amounts paid are subject to security for the benefit of the Finance Parties). |
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Equity Reserve Account : The accounts (including foreign currency and investment accounts) of the Borrower established for the purposes set out in Clause 10 ( Equity Reserve Account ) and maintained with Bayerische Hypo- und Vereinsbank AG or HVB Banque Luxembourg Société Anonyme. | ||
Equity Sales means any sale or issuance of any share capital of Mercer International other than: (i) shares, options or units issued pursuant to Mercer International share or equity incentive plans or issued in respect of executive compensation plans or arrangements; (ii) share capital issued to third parties to acquire assets, shares or other ownership interests from third parties; (iii) share capital issued to settle, compromise or satisfy (in whole or in part) indebtedness or other obligations; or (iv) share capital issued in respect of any shareholder rights plan or as part of a strategy used by Mercer International to discourage a hostile takeover by another company (poison pill). Convertible debt shall be included in the definition of Equity Sales upon actual conversion (except for Mercer Internationals current 8.25% convertible notes and convertible notes issued for the purpose of replacing or refinancing the same). | ||
EU-Decision : The decision by the EU-Commission dated 19 June 2002 in respect of the State Guarantee and the Government Grants. | ||
EU-Equity Test : The EU-equity test as defined in the Financial Model. | ||
EURIBOR : In relation to any amount outstanding for a particular period: |
(a) | the percentage rate per annum determined on the basis of quotations by first class banks in the European Interbank Euro Market for the relevant period which appears on the Telerate page Euribor for that period or any other page it is replaced by at 11.00 am; and | ||
(b) | if the Agent is unable to access the relevant screen rate or if a rate is not available on the relevant screen for the period, the arithmetic mean (rounded upwards to 4 decimal places) of the rates (as notified to the Agent) at which each of the Reference Banks was offered by prime banks in the European interbank market deposits in euro in such amount and for such period as of 12.00 noon, |
in each case on the Quotation Date for such period. If fewer than two Reference Banks provide the Agent with notifications for a particular period, this method of determining EURIBOR will not be used for that period and Clause 5 ( Market Disruption ) will apply instead. | ||
Event of Default : Any of the events mentioned in Clause 23 ( Events of Default ). |
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Event of Force Majeure : An Event of Force Majeure as defined in the EPC-Contract. | ||
Excess Start up Cash Flows : Any amount of Start up Cash Flows that exceeds the budgeted amount therefore as set out in the agreed Base Case delivered pursuant to Schedule 2 ( Conditions for the First Drawdown ), paragraph 9. | ||
Existing Financial Indebtedness : |
(a) | the indebtedness under the loan made by Dresdner Bank in the amount of EUR 12,286,000; | ||
(b) | the indebtedness to RWE-IN, ALTMARK INDUSTRIEPARK AG and Thyssen Rheinstahl Technik Projektgesellschaft mbH for ancilliary costs for which RWE-IN, ALTMARK INDUSTRIEPARK AG, Thyssen Rheinstahl Technik GmbH and its legal successor Thyssen Rheinstahl Technik Projektgesellschaft mbH have provided funds to the Borrower in connection with the purchase of the Site, in the amount of not more than EUR 2,708,339; and | ||
(c) | the indebtedness for Shareholder Loans in an amount not exceeding EUR 55,255,646. |
Facility : The facility comprising Tranche A, Tranche B, Tranche C, Tranche D1, Tranche D2 and Tranche E pursuant to Clause 2.1 ( Granting of the Facility ). | ||
Facility Office : The office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five (5) days written notice) as the office or offices through which it will perform its obligations under this Agreement. | ||
Federal Guarantor : The Federal Government of the Federal Republic of Germany. | ||
Fees : The fees payable pursuant to Clause 26 ( Fees ). | ||
Fee Letter : The fee letter by Bayerische Hypo- und Vereinsbank AG and addressed to the Borrower dated on or about the date hereof. | ||
Final Maturity Date : With respect to: |
(a) | Tranche A: the first (1st) Repayment Date following the fifteenth (15th) anniversary of the first Advance under Tranche A; |
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(b) | Sub-Tranches B1, B2 and B3: |
for each Sub-Tranche the first (1st) Repayment Date following the
eighth (8th) anniversary of the first Advance under such
Sub-Tranche;
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(c) | Sub-Tranche B4: |
the first (1st) Repayment Date following the fifteenth (15th)
anniversary of the first Advance under Tranche A;
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(d) | Tranche C: the third (3rd) Repayment Date following the Scheduled First Repayment Date; | ||
(e) | Tranche D1: the third (3rd) Repayment Date following the Scheduled First Repayment Date; | ||
(f) | Tranche D2: the third (3rd) Repayment Date following the Scheduled First Repayment Date; and | ||
(g) | Tranche E: the first (1st) Repayment Date following the fifth (5th) anniversary of the first Advance under Tranche A. |
Finance Party : The Agent, the Arranger or a Lender. | ||
Financial Close : The date on which all conditions precedent to first drawdown pursuant to Clause 3.3 ( Drawdown Conditions ) and 3.4 ( Drawdown Restrictions ) are fulfilled or waived. | ||
Financial Indebtedness : Without duplication, any indebtedness for or in respect of: |
(a) | moneys borrowed; | ||
(b) | any amount raised by acceptance under any acceptance credit facility; | ||
(c) | any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; | ||
(d) | the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with German generally accepted accounting principles, be treated as a capital or finance lease; | ||
(e) | receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); |
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(f) | any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; | ||
(g) | any Derivative Transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any Derivative Transaction, only the marked to market value shall be taken into account) unless entered into in accordance with the Hedging Strategy; | ||
(h) | any counter-indemnity obligation in respect of a guarantee, indemnity, surety, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and | ||
(i) | the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above. |
Financial Model : The audited financial model agreed between the Parties at the time of the signing of this Agreement as amended from time to time according to the provisions of this Agreement. | ||
Financing Costs : The interest costs and fees under the Financing Documents, but excluding during the Pre Production Period interest payments on and fees pursuant to Clauses 26.4 ( Fees to the Federal Guarantor ) and 26.5 ( Fees to the State Guarantor ) attributable to Tranche A Advances. | ||
Financing Documents : This Agreement, any agreement entered into with any Permitted Subsidiary in connection with the financing of the wood supply or logistics aspects of the Project, the Hedging Agreements, the Security Agreements, the Shareholders Undertaking Agreement, the Step-in-Rights Agreement between SP Holding, RWE-IN, MFC IH and the Agent dated on or about the date hereof, the RWE Solutions AG Guarantee, any agreement regarding Shareholder Loans and the corresponding subordination declarations, the Stand-By Equity Security, the Fee Letter, any waiver requests, waivers and other binding notifications, the Direct Agreement, the Parent Company Guarantee, the advance payment, performance and defects liability guarantee issued in favour of the Borrower by a first class bank in respect of the performance of the EPC Contractor under the EPC Contract, the State Guarantee and any other document in relation to the financing of the Project. | ||
First Repayment : bears the meaning ascribed to it in Clause 6.2 ( First Repayment ). | ||
First Repayment Date : The date on which the First Repayment is made in full. |
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Government Grants : The grants which will be given as direct grants ( GA-Zuschuss (investment incentives)) by the State of Sachsen-Anhalt and as Investitionszulagen (tax grants) by the Federal Republic of Germany, both as approved by the EU-Decision, for the Project in favour of the Borrower. | ||
Group : The Borrower and its subsidiaries from time to time. | ||
Guarantors : The Federal Guarantor and the State Guarantor in their function as guarantors under the State Guarantee. | ||
Hedging Agreements : The agreements to be concluded in relation to any Derivative Transaction in accordance with the Hedging Strategy. | ||
Hedging Counterparty : Bayerische Hypo- und Vereinsbank AG. | ||
Hedging Strategy : The hedging strategy in relation to the Facility to be agreed in writing between the Borrower and the Arranger, as amended from time to time, for the hedging of the interest, currency and commodity price risks of the Borrower. | ||
Information Memorandum : The information memorandum relating to the Project to be sent to other credit institutions for their information with respect to the syndication of the Facility. | ||
Infrastructure Agreement : The infrastructure agreement ( Vereinbarung über die Durchführung von Infrastrukturmaßnahmen und die Bereitstellung finanzieller Mittel ) dated 17 July 2002 between the Borrower and the city of Arneburg. | ||
Insurance Account : Account no. 57 53 171, banking code 700 202 70 with the Agent in the name of the Borrower to be maintained for certain payments by insurers. | ||
Insurance Adviser : Bankrisk Services Marsh Ltd. and its successors as advisers to the Lenders in relation to insurance issues. | ||
Intellectual Property Rights : Any patent, trade secret, trademark, copyright or other proprietary rights or knowhow, licences or design registrations required in connection with the Project. | ||
Interest Period : The interest periods pursuant to Clause 4.1 ( Interest Period ). | ||
Interest Rate : The interest rate pursuant to Clause 4.2 ( Interest Rate ). |
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Investment Account : The accounts referred to in Clause 9.2 ( Proceeds Account ) maintained with the Agent or HVB Banque Luxembourg Société Anonyme in the name of the Borrower. | ||
Investment and Financing Plan : The investment and financing plan agreed by the Arranger and the Borrower at the time of the signing of this Agreement in relation to the Project and attached as Schedule 18 ( Investment and Financing Plan ). | ||
Lenders : The lenders (including the Original Lender), acting through their respective Facility Offices, and as far as permissible under this Agreement, their successors, transferees and assignees. | ||
Majority Lenders : Lenders representing at least 66 2 / 3 % of the total aggregate of unutilised Commitments and outstanding Advances under the Facility. When collecting a vote of the Lenders, the voting rights of a Lender which does not respond within such period as is fixed by the Agent (being a period of at least five (5) Business Days) or, if requested by the Borrower, within thirty (30) Business Days from receipt of any request by the Borrower for a consent, waiver or amendment under the Financing Documents, will be disregarded in determining whether the required majority was achieved. | ||
Mandatory Costs : The percentage rate per annum calculated by the Agent in accordance with Schedule 6 ( Mandatory Cost Formulae ). | ||
Margin : For: |
(a) |
Tranche A: 0.75 % per annum before 31 March 2003 and 1.05 % per annum from (and including) 31 March 2003;
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||
(b) |
Tranche B: 0.60 % per annum before 31 March 2003 and 0.90 % per annum from
(and including) 31 March 2003; (for the guaranteed portion of Tranche B);
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1.50 % per annum before 31 March 2003 and 1.80 % per
annum from (and including) 31 March 2003; (for the non guaranteed portion of Tranche B);
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(c) |
Tranche C: 1.55 % per annum before 31 March 2003 and 1.85 % per annum from
(and including) 31 March 2003;
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(d) |
Tranches D1 and D2: 1.55 % per annum before 31 March 2003 and 1.85 % per
annum from (and including) 31 March 2003; and
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||
(e) |
Tranche E: 1.25% per annum before 31 March 2003 and 1.55 % per annum from
(and including) 31 March 2003.
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If repayments under the guaranteed portions of Tranche A and Tranche B are deferred according to Clause 6.5 ( Deferred Amortisation ), the margin in respect of the portions so deferred will be increased by 0.10 % per annum until such deferred repayments are paid. | ||
Material Adverse Effect : An event, occurrence or condition which has materially impaired, or which will materially impair (as compared with the situation which would have prevailed but for such event, occurrence or condition): |
(a) | the business, operation, property and financial condition of the Borrower and as a result, the ability of the Borrower to perform any of its obligations under the Financing Documents; or | ||
(b) | the validity or enforceability of the Financing Documents. |
An event, occurrence or condition (other than an event, occurrence or condition affecting a Shareholder itself) shall not be capable of having a Material Adverse Effect if the risks and consequences of such event, occurrence or condition are fully borne by a Shareholder under the terms of any of the Transaction Documents within a period of thirty (30) days following such event, occurrence or condition. | ||
Material Insurances : All insurances required to be taken out by the Borrower pursuant to the Minimum Insurance Schedule as set out in Schedule 12 ( Minimum Insurance Schedule ) and Schedule 12a ( Minimum Insurance Operation Period Schedule ) apart from any employers liability or motor vehicle liability insurance. | ||
Minimum Insurance Schedule : The Schedule prepared by the Insurance Adviser and set out in Schedule 12 ( Minimum Insurance Schedule ) relating to insurances during the Construction Period and Schedule 12a ( Minimum Insurance Operation Period Schedule ) relating to insurance during the Operation Period. | ||
Operation Period : The period beginning on the day immediately following Acceptance. |
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Original Financial Statements : The financial statements of the Borrower as of 31 December 2001. | ||
Overall Funding Requirements ( Gesamtfinanzierungs-Planbedarf ) : The financing requirements for the Project pursuant to the Project Budget as of the date hereof. | ||
Overall Funding Sources ( Gesamtfinanzierungsquellen ) : The financing sources for the Project comprising: |
(a) | Shareholder Contributions; | ||
(b) | Government Grants (and, pending receipt thereof, Tranche E); | ||
(c) | the Facility; and | ||
(d) | Start up Cash Flows but excluding Excess Start-up Cash Flows. |
Owners Scope : Has the meaning set out in the EPC-Contract. | ||
Parent Company Guarantee : The parent company guarantee to be granted by RWE Solutions AG in favour of the Borrower in respect of RWE-INs obligations under the EPC Contract. | ||
Permitted Disposals : |
(a) | Annual disposals of assets with an aggregate market value of not more than EUR 5 million if such disposals do not have a Material Adverse Effect; and | ||
(b) | disposals of assets which are replaced according to the Base Case or funded by Shareholders funds. |
Permitted Encumbrances : Encumbrances: |
(a) | created by operation of law or arising in the ordinary course of business (including any retention of title arrangements) which do not secure indebtedness for money borrowed; | ||
(b) | existing at Financial Close which will be released following the first drawdown of an Advance under this Agreement; | ||
(c) | created with the Majority Lenders consent, which consent shall not be unreasonably withheld, provided all consents required by the Guarantors have been obtained; | ||
(d) | constituting Security; and |
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(e) | additional encumbrances in an aggregate amount of not more than EUR 1 million. |
Permitted Financial Indebtedness : Financial Indebtedness: |
(a) | incurred under the Financing Documents; | ||
(b) | Existing Financial Indebtedness; | ||
(c) | which is unsecured and subordinated to the claims of the Lenders hereunder; | ||
(d) | incurred under Derivatives Transactions permitted under the Hedging Strategy; and | ||
(e) | an additional aggregate amount of not more than EUR 5 million. |
Permitted Investments : Investments made in time deposits ( Festgeld ) and short term euro debt securities (and, to the extent that funds are held in USD, also in USD debt securities) with a maximum duration of 3 years of issuers with a short term BBB- rating or better of Standard & Poors Corporation or an equivalent rating from such other rating agency approved by the Agent. The average rating of the investments should be A+ or better of Standard & Poors Corporation or an equivalent rating agency approved by the Agent. | ||
Permitted Subsidiaries : The two support holding companies, the wood supply company and the logistic company and any subsidiary approved by the Agent. | ||
Post-Acceptance Costs : The amounts of costs specified by the Borrower in a Drawdown Request, requesting a drawdown at or about the last day of the Availability Period, as the Project Construction Costs (plus Cost Overruns in relation thereto) and Working Capital Costs expected to be incurred in relation to the Project after Acceptance. | ||
Potential Event of Default : Any event which might reasonably be expected to become (with the passage of time, the giving of notice, the making of any determination hereunder or any combination thereof) an Event of Default. | ||
Pre-Production Period : The portion of the Construction Period ending on the date of the production of saleable pulp from the Project. | ||
Proceeds Account : The Revenue Account and the Investment Account. |
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Project : The design, development, financing, construction and operation of a 552,000 tonnes per annum bleached softwood kraft pulp mill located in Arneburg, near Stendal in Sachsen-Anhalt, Federal Republic of Germany. | ||
Project Budget : The financial budget of the Borrower and its Permitted Subsidiaries in the form delivered to and agreed by the Agent from time to time pursuant to the provisions of Clause 18.3( Project Budget ). | ||
Project Construction Costs : All Project Costs excluding: |
(a) | Financing Costs, start up costs to the extent not capitalised, Development Costs and Working Capital Costs; and | ||
(b) | recoverable VAT payments on such costs, |
but including during the Pre Production Period interest payments on and fees pursuant to Clauses 26.4 ( Fees to the Federal Guarantor ) and 26.5 ( Fees to the State Guarantor ) attributable to Tranche A Advances. | ||
Project Contracts : The EPC contract as well as all other contracts in relation to the planning, development and construction of the Project as well as the construction of infrastructure, the sale of energy and the agreement on reserve electricity services. | ||
Project Costs : All costs of the Borrower in relation to the Project up to Acceptance (including, in any event, Post Acceptance Costs) as shown in the Financial Model or, as the case may be, as approved by the relevant Advisers. | ||
Pulp Market Adviser : NLK Consultants Inc., Canada and its successors as advisers to the Lenders in relation to pulp market issues. | ||
Quotation Date : With respect to any Interest Period, the Business Day which is two (2) Business Days prior to the commencement of such Interest Period. | ||
Reference Banks : Bayerische Hypo und Vereinsbank AG, Deutsche Bank AG and Barclays Bank PLC. | ||
Related Party : A company or person related to the Borrower, i.e. part of the Konzern within the meaning of § 18 German Act on Stock Corporation ( Aktiengesetz ). | ||
Repayment Date : The First Repayment Date and each subsequent 31 March and 30 September on which a repayment of any part of any Tranche (or Sub-Tranche) is scheduled to take place. |
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Repayment Schedule : The repayment Schedule pursuant to Clause 6.4 ( Repayment Schedule ). | ||
Required Level : EUR 590 million plus 30% of the aggregate Advances made under Tranche D2, but in no event more than EUR 599 million. | ||
Responsible Officer : The chief executive officer or general manager, the senior financial officer and/or the responsible project manager. | ||
Revenue Account : The account referred to in Clause 9.2 ( Proceeds Account ) maintained with the Agent in the name of the Borrower. | ||
RWE Solutions AG Guarantee : The guarantee given by RWE Solutions AG in respect of RWE-INs obligations under the Shareholders Undertaking Agreement. | ||
Scheduled Debt Service : The total amount of interest, principal and fees payable pursuant to the Financing Documents (adjusted by payments and receipts under Hedging Agreements relating to the debt service for that period). | ||
Scheduled First Repayment Date : The repayment date set out in Clause 6.2.1 ( First Repayment ). | ||
Security : The security from time to time constituted by or pursuant to the Security Agreements securing all obligations of the Borrower and its Permitted Subsidiaries in relation to the Project. | ||
Security Agreements : The security agreements listed in Schedule 9 ( Security Agreements ), the Security Pooling Agreement and any other agreement pursuant to which the Borrower, the Shareholders, the Sponsors or any third party grant security to the Security Agent and/or the Lenders (other than the State Guarantee), including security agreements granting security in favour of or on behalf of the subsidiaries. | ||
Security Pooling Agreement : The security pooling agreement dated on or about the date hereof between the Security Agent, the Lenders, the Hedging Counterparty, the Shareholders, the Sponsors and the Borrower. | ||
Senior Debt : The total Advances outstanding as at each Repayment Date. | ||
Senior Debt/EBITDA Cover Ratio : The ratio of Senior Debt to EBITDA at a point in time. | ||
Share : An ordinary fully paid up share in the Share Capital. |
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Share Capital : The share capital of the Borrower as increased from time to time in accordance with this Agreement. | ||
Shareholder Contributions : Contributions of the Shareholders to be made by way of Capital Contributions or Shareholder Loans in accordance with the Shareholders Undertaking Agreement. | ||
Shareholder Loans : Loans by the Shareholders to the Borrower made and subordinated in accordance with the terms and conditions of the Shareholders Undertaking Agreement. | ||
Shareholders : As at the date of this Agreement, SP Holding, RWE-IN and MFC IH and thereafter includes any person to whom Shares may be transferred. | ||
Shareholders Account : An account in the name of the Borrower over which the Lenders have no security and to which the Borrower is allowed to make payments in accordance with Clauses 9.4.3(a) ( Priority of Payments ) and 9.4.3(c) ( Restricted Application ). | ||
Shareholders Agreement : The agreement dated on or about the date hereof between the Shareholders and the Borrower. | ||
Shareholders Undertaking Agreement : The agreement of even date between the Sponsors, the Shareholders, the Borrower and the Agent. | ||
Shortfall : An amount in Euro, being the greater of (a) the difference between the Available Cash Flow for a particular measurement period and the amount the Available Cash Flow for such period would have to have been for the then applicable Annual Debt Service Cover Ratio to be met, and (b) the amount by which the Senior Debt would be required to be reduced in order to meet the then applicable Senior Debt/EBITDA Cover Ratio. | ||
Site : That portion of land |
(a) | more particularly defined in the Land Register ( Grundbuch ) of the Stendal Local Court ( Amtsgericht ) for Arneburg folio ( Blatt ) 3129, communal district ( Gemarkung ) Arneburg, under plot ( Flur ) 18, sub-plots ( Flurstück ) nos. 90, 105/0 and 107/0, under plot ( Flur ) 21, sub-plots ( Flurstück ) nos. 52, 36, 44, 35, 40 and 38, under plot ( Flur ) 22, sub-plot ( Flurstück ) no. 5 and under plot ( Flur ) 24, sub-plot ( Flurstück ) no. 14/8; | ||
(b) | more particularly defined in the Land Register ( Grundbuch ) of the Stendal Local Court ( Amtsgericht ) for Arneburg folio ( Blatt ) 3215, communal district ( Gemarkung ) Arneburg, under plot ( Flur ) 18, sub-plot ( Flurstück ) no. 108 and under plot ( Flur ) 21, sub-plot ( Flurstück ) no. 67; |
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(c) | more particularly defined in the Land Register ( Grundbuch ) of the Stendal Local Court ( Amtsgericht ) for Arneburg folio ( Blatt ) 3230, communal district ( Gemarkung ) Arneburg, under plot ( Flur ) 21, sub-plots ( Flurstück ) nos. 1/57 and 33; | ||
(d) | more particularly defined in the Land Register ( Grundbuch ) of the Osterburg Local Court ( Amtsgericht ) for Altenzaun folio ( Blatt ) 284, communal district ( Gemarkung ) Altenzaun, under plot ( Flur ) 1, sub-plot ( Flurstück ) 324; | ||
(e) | Land Register ( Grundbuch ) of the Stendal Local Court ( Amtsgericht ) for Schönfeld (for the time being) folio ( Blatt ) 542, plot ( Flur ) 9, sub-plot ( Flurstück ) no. 2/23; | ||
(f) | and that portion of land currently leased to the Borrower pursuant to a lease contract dated 16 May 2002 and made between ALTMARK INDUSTRIEPARK AG and the Borrower (Land Register ( Grundbuch ) of the Stendal Local Court ( Amtsgericht ) for Arneburg folio ( Blatt ) 3215, communal district ( Gemarkung ) Arneburg, under plot ( Flur ) 21, sub-plot ( Flurstück ) no. 61). |
SP Holding : Stendal Pulp Holding GmbH. | ||
Sponsors : Mercer International, RWE-IN, ALTMARK INDUSTRIEPARK AG and MFC IH as defined in the Recitals to this Agreement and any of their respective successors. | ||
Stand-By Equity Security : |
(a) | an irrevocable letter of credit; or | ||
(b) | an unconditional guarantee on first demand, |
in each case in form and substance satisfactory to the Agent and issued by a bank whose long term unsecured credit rating is at least A from Standard & Poors Rating Services and A 2 from Moodys Investors Services Inc.; or |
(c) | an interest bearing cash deposit in the amount required by the Shareholders Undertaking Agreement to be held by the Agent or at HVB Banque Luxembourg Société Anonyme, such account to be pledged in favour of the Lenders by entering into an account pledge agreement providing for similar terms as set out in Schedule 7 ( Form of Account Pledge Agreement ) in case the account is held by the Agent and an account pledge agreement providing for similar terms as set out in |
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Schedule 8 ( Form of Luxembourg Account Pledge Agreement ) in case the account is held by HVB Banque Luxembourg Société Anonyme. |
Start-up : bears the meaning ascribed thereto in the EPC Contract. | ||
Start-Up Cash Flows : Net operating cash flows generated by the Project from the 18 September 2004 (as end of construction pursuant to the German Commercial Code, HGB ) until Acceptance in the amount confirmed by an auditor acceptable to the Agent after Acceptance including the financing advantages arising out of the provision of funds made available by the European Investment Bank in the aggregate amount of EUR 4,022,725.80, proceeds resulting from the termination of a cross currency swap in the amount of EUR 29,394,000.00, proceeds resulting from forward sales in an amount of EUR 743,010.26 and EUR 1,820,459.00 and a penalty payment in the amount of EUR 250,000.00 paid by Hochtief AG to the Borrower according to an agreement dated 26 April 2004 entered into between the Borrower and Hochtief AG in respect of the installation of an effluent pipe to Elbesite. | ||
State Guarantee : The guarantees ( Ausfallbürgschaften ) issued by the Federal Republic of Germany (for 48 % of the aggregate amount of Advances under Tranches A and B) and the State of Sachsen-Anhalt (for 32 % of the aggregate amount of Advances under Tranches A and B) issued in the form attached to this Agreement as Schedule 10 ( State Guarantee ) in favour of the Lenders with respect to this Agreement including the Allgemeinen Bestimmungen für Bürgschaftsübernahmen durch die Bundesrepublik Deutschland (Bund) und parallel bürgende Bundesländer (General Conditions for the issuing of guarantees by the Federal Republic of Germany and Länder). | ||
State Guarantor : The State Government of Sachsen-Anhalt. | ||
Sub-Tranche : a sub-tranche of Tranche B as more particularly referred to in Clause 2.1.1(b). | ||
Supplier : Suppliers and vendors of services and goods to the Borrower and the EPC Contractor in connection with the EPC Contract. | ||
Suspension Notice : The notice pursuant to Clause 5.1 ( Market Disruption ). | ||
TARGET : The Trans-European Automated Real-time Gross Settlement Express Transfer payment system. | ||
Target Balance : The balance targeted to be standing to the credit of the Debt Service Reserve Account pursuant to Clause 11.3 ( Target Balance ). |
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TARGET Day : Any day on which TARGET is open for the settlement of payments in euro. | ||
Technical Adviser : JP Management Consulting (Europe) OY, Vantaa, Finland and its successors as advisers to the Lenders in relation to technical issues. | ||
Tranche or Tranches : Any or all of Tranche A, Tranche B, Tranche C, Tranche D1, Tranche D2 and Tranche E as the case may be. | ||
Tranche A : That part of the Facility granted to the Borrower pursuant to Clause 2.1.1(a) ( Granting of the Facility ) and split into, and comprising thereafter, Tranche A1 and Tranche A2 pursuant to Clause 6.3.3. | ||
Tranche A1 : Has the meaning ascribed thereto in Clause 6.3.3. | ||
Tranche A2 : Has the meaning ascribed thereto in Clause 6.3.3. | ||
Tranche B : That part of the Facility granted to the Borrower pursuant to Clause 2.1.1(b) ( Granting of the Facility ) (comprising up to 4 separate Sub-Tranches). | ||
Tranche C : That part of the Facility granted to the Borrower pursuant to Clause 2.1.1(c) ( Granting of the Facility ). | ||
Tranche D1 : That part of the Facility granted to the Borrower pursuant to Clause 2.1.1(d) ( Granting of the Facility ). | ||
Tranche D2 : That part of the Facility granted to the Borrower pursuant to Clause 2.1.1(e) ( Granting of the Facility ). | ||
Tranche E : That part of the Facility granted to the Borrower pursuant to Clause 2.1.2 ( Granting of the Facility ). | ||
Transaction Documents : The Financing Documents, the Project Contracts and the Shareholders Agreement. | ||
Transfer Certificate : The transfer certificate pursuant to Schedule 14 ( Transfer Certificate ). | ||
Transferee : Any transferee pursuant to Clause 31.2 ( Assignments and Transfers by the Lenders ). | ||
Transferor : Any transferor pursuant to Clause 31.2 ( Assignments and Transfers by the Lenders ). |
Wood Supply Adviser : JP Management Consulting (Europe) OY, Vantaa, Finland and its successors as advisers to the Lenders in relation to wood supply issues. | ||
Working Capital : Accounts receivable |
(a) | plus inventory, | ||
(b) | plus receivables in respect of taxes, | ||
(c) | plus accrued revenue (prepaids, accrued revenue and other), | ||
(d) | less accounts payable, | ||
(e) | less taxes payable, | ||
(f) | less accrued interest, | ||
(g) | less accrued liabilities, | ||
(h) | less unearned revenue. |
Working Capital Costs : Costs of working capital needed for the operation of the Groups business, including operating costs, wood, chemicals and other raw material and consumables stock costs as well as intermediate and end products and funds for cash deposits which the Borrower needs to provide to banks as a security for the provision of guarantees by such banks. | ||
Works : Has the meaning as set out in the EPC Contract. | ||
1.2 | Interpretation | |
Any reference in this Agreement to: | ||
an affiliate of a specified person is construed as any other person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the person specified, or who holds or beneficially owns 10% or more of the equity interest in the person specified or 10% or more of any class of voting securities of the person specified; | ||
the Agent , Arranger , Lender and Security Agent is construed so as to include it and any subsequent successors and permitted transferees and assigns in accordance with their respective interests; | ||
assets includes present and future properties, revenues and rights of every description; |
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calendar quarter is a reference to the period from (and including) January 1 to (and including) March 31, or from (and including) April 1 to (and including) June 30, or from (and including) July 1 to (and including) September 30, or from (and including) October 1 to (and including) December 31; | ||
continuing , in relation to an Event of Default, is construed as a reference to an Event of Default which has not been waived in accordance with the terms hereof or remedied and, in relation to a Potential Event of Default, one which has not been remedied within the relevant grace period or waived in accordance with the terms hereof; | ||
disposal is construed as any sale, lease, transfer, conveyance, assignment or other disposal and dispose and disposals is construed accordingly, but the payment of cash permitted hereunder shall not constitute a disposal; | ||
encumbrance is construed as a reference to a mortgage, pledge, lien, charge, hypothecation, security interest, title retention, preferential right or trust arrangement, obligations under leasing agreements and conditional purchase agreements, and any other collateral agreement or similar arrangement whether on existing or future assets (including, without limitation, Sicherungsübereignung, Sicherungsabtretung, Eigentumsvorbehalt, Pfandrecht, Grundpfandrechte, Treuhandvereinbarung, Nießbrauch ); | ||
include or including is construed without limitation and for avoidance of doubt; | ||
indebtedness is construed so as to include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent; | ||
a law is construed as any law, statute, constitution, binding ( bestandskräftig ) decree, treaty, regulation, legally binding ( bestands- oder rechtskräftig ) directive, rules or any other legally binding ( bestands- oder rechtskräftig ) legislative measure of any government, supranational, local government, statutory or regulatory body or court; | ||
a month is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next succeeding calendar month save that: |
(a) | if any such numerically corresponding day is not a Business Day, such period shall end on the immediately succeeding Business Day in that calendar month or, if none, it shall end on the immediately preceding Business Day; and |
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(b) | if there is no numerically corresponding day in that next succeeding calendar month, that period shall end on the last Business Day in that next succeeding calendar month, |
(and references to months shall be construed accordingly); | ||
a person is construed as a reference to any person, firm, company, corporation, state or Bundesland, or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing; | ||
repay (or any derivative form thereof) is, subject to any contrary indication, construed to include prepay (or, as the case may be, the corresponding derivative form thereof); | ||
a subsidiary of a company or corporation is construed as a reference to any company: |
(a) | which is controlled, directly or indirectly, by the first-mentioned company or corporation and, for these purposes, a company shall be treated as being controlled by a company if that other company is able to direct its affairs and/or to control the composition of its board of directors or equivalent body; | ||
(b) | more than half the issued share capital or partnership interest of which is beneficially owned, directly or indirectly, by the first-mentioned company; or | ||
(c) | which is a subsidiary of another subsidiary of the first mentioned company; |
a successor is construed so as to include a permitted assignee or successor in title of such party and any person who under the laws of its jurisdiction of incorporation or domicile has assumed the rights and obligations of such party under this Agreement or to which, under such laws, such rights and obligations have been transferred; | ||
tax is construed so as to include any tax, levy, impost, duty or other charge of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same); | ||
VAT is construed as a reference to value added tax including any similar tax which may be imposed in place thereof from time to time; | ||
the winding-up or dissolution of a company or corporation is construed so as to include any equivalent or analogous proceedings under the law of the jurisdiction in which such company or corporation is incorporated or any |
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(a) | Tranche A in an amount of EUR 464.55 million ( Tranche A ); | ||
(b) | Tranche B in an amount of EUR 122 million (Tranche B) containing no more than four (4) Sub-Tranches in the respective amounts of EUR 20,666,666 (Sub-Tranche B1), EUR 20,666,667 (Sub-Tranche B2), EUR 20,666,667 (Sub-Tranche B3) and EUR 60 million (Sub-Tranche B4); | ||
(c) | Tranche C in an amount of EUR 42 million (Tranche C); | ||
(d) | Tranche D1 in an amount of EUR 9.40 million (Tranche D1); and | ||
(e) | Tranche D2 that may be drawn in an amount of up to EUR 30 million ( Tranche D2 ); |
2.1.2 | a euro denominated revolving loan facility in an aggregate amount of up to EUR 160 million ( Tranche E ). | |
2.2 | Availability of Facility | |
Provided that the first Advance hereunder is made on or prior to the date falling three months after the date hereof, the Facility will, subject to the next following sentence, be available for disbursement, on and in accordance with the terms hereof, from Financial Close up to and including the date on which Acceptance is achieved, but no later than the date falling 40 months after Financial Close. However, Tranche C will be available until and including the 30 September 2005. Tranche D2 and E will, however, be available up to and including the date falling one (1) month prior to the First Repayment Date. | ||
2.3 | Borrowers Obligations | |
2.3.1 | The obligations of the Borrower to the Agent and each Lender hereunder are created vis-à-vis each of them as separate and independent obligations ( Teilschuldnerschaft ). | |
2.3.2 | Unless otherwise provided for under the Financing Documents, the Agent and each Lender may separately enforce their rights hereunder. | |
2.4 | Lenders Obligations | |
The obligations of each Lender under this Agreement are several. Failure of a Lender to carry out its obligations pursuant to this Agreement in a proper manner does not relieve any other party of its obligations under this Agreement. No Lender is responsible for the obligations of any other party under this Agreement. Joint liability ( gemeinschaftliche Schuld ) or joint and several liability ( Gesamtschuldnerschaft ) is excluded. |
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(a) | the portion of all costs in relation to the Project for which the Government Grants are expected to be received; and | ||
(b) | recoverable VAT payments on Project Construction Costs. |
2.5.8 | Without affecting the obligations of the Borrower, neither the Arranger, the Agent, the Security Agent, the Lenders nor any of them is required to monitor or verify the application of any amount borrowed pursuant to this Agreement. The Agent will however require from the Borrower the documents regarding the application of funds in accordance with Clause 3.4.3 ( Drawdown Restrictions ). |
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(a) | with respect to Tranche A a minimum amount of EUR 5 million or any larger amount which is an integral multiple of EUR 1 million unless it is in respect of Post-Acceptance Costs; and | ||
(b) | with respect to Tranches B, D1 and D2 a minimum amount of EUR 2 million or any larger amount which is an integral multiple of EUR 1 million unless it is in respect of Post-Acceptance Costs; and |
3.2.4 | the specific purposes for which the Advance will be used by the Borrower and which Tranche it forms part of; Advances made under Tranche B (other than in respect of Working Capital Costs which will be allocated to Sub-Tranche B4) will be allocated first to Sub-Tranche B1, then to Sub-Tranche B2 and lastly to Sub-Tranche B3. |
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3.3 | Drawdown Conditions | |
3.3.1 | The Borrower may only deliver a Drawdown Request to the Agent if: |
(a) | the conditions precedent listed in Schedule 2 ( Conditions for the First Drawdown ) are met with respect to the first Advance and the Agent has notified the Borrower and the Lenders that it has received all of the documents and other evidence to be delivered in respect of such conditions precedent and each is in form and substance satisfactory to the Agent (and the Agent undertakes to promptly after receipt of such documents and evidence notify the Borrower that such conditions are met or inform the Borrower of the reasons they are not met); | ||
(b) | the conditions precedent listed in Schedule 3 ( General Drawdown Conditions ) are met with respect to any Advance; and | ||
(c) | each condition subsequent listed in Schedule 4 ( Conditions Subsequent) has been met to the satisfaction of the Agent within three months of the date indicated in such Schedule for its satisfaction unless (i) the Agent, acting on the instruction of Majority Lenders, determines that failure to meet the relevant condition subsequent will not be materially adverse in relation to the Borrowers ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents or (ii) such failure is subsequently remedied. |
(a) | on the Drawdown Date no Event of Default or Potential Event of Default has occurred and remains uncured or unwaived or would occur as a result of the making of the Advance to be drawn down; and | ||
(b) | the representations to be made by the Borrower remain true in all respects, |
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(c) | the Shareholders have made the additional Shareholder Loans which they are required to make under the last paragraph of Clause 2.6.1 of the Shareholders Undertaking Agreement. |
(a) | if approved by the Agent, and, in the case of (b), the Technical Adviser and the Wood Supply Adviser, such approval or, as the case may be, the procurement of such approval not to be unreasonably withheld or delayed; | ||
(b) | up to and including the earlier of (i) the completion of the Additional Works and (ii) one (1) month prior to the First Repayment Date to the extent that such Cost Overruns are not required to be paid by the Shareholders under the Shareholders Undertaking Agreement and in any case only so long as the portion thereof required to be paid by the Shareholders under the Shareholders Undertaking Agreement has first been paid; | ||
(c) | up to a maximum amount of EUR 5,000,000 with respect to a prepayment of Tranche A (not already funded pursuant to Clause 2.6.2 (b) (iv) of the Shareholders Undertaking Agreement) to the extent necessary to meet the EU-Equity Test; and | ||
(d) | for the financing of shortfalls in Government Grants (not already funded pursuant to Clause 2.6.2 (b) (i) of the Shareholders Undertaking Agreement or by an earlier drawing under Tranche D2) as finally calculated at the earlier of the conclusion of the subsidy audit ( Mittelverwendungsnachweis ) and one month prior to the First Repayment Date. |
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3.4.5 | Drawings under Tranche C shall take place on or before 30 September 2005 to fund the Debt Service Reserve Account and will be permitted only to the extent that the Agent has received evidence that on or before the date of such Advance the Shareholders have deposited into the Debt Service Reserve Account the amount determined pursuant to Clause 2.6.2 (b) (iii) of the Shareholders Undertaking Agreement. | |
3.5 | Participation of the Lenders in Advances | |
3.5.1 | Each Lender will contribute to each Advance made hereunder in the proportion to which its Commitment bears to the total Commitments of all the Lenders at the relevant time. | |
3.5.2 | The Agent shall no later than three (3) Business Days prior to the Drawdown Date notify each Lender of the amount of the Advance, the Drawdown Date, the Interest Period and such Lenders participation in the Advance. | |
3.5.3 | Upon receipt of the written notice pursuant to the previous paragraph, each Lender will, no later than 10:00 a.m. on the Drawdown Date, credit the account in the name of the Agent with Bayerische Hypo- und Vereinsbank AG, which has been notified by the Agent to Lenders at the latest three (3) Business Days prior to such Drawdown Date, with its participation in the Advance and the Agent will, with same day value as the Drawdown Date, transfer the amount of the Advance to the Disbursement Account in accordance with Clause 9.3.1 ( Payments to the Borrower ). | |
4. | INTEREST AND LIQUIDITY CHARGE | |
4.1 | Interest Period | |
4.1.1 | Tranche A, Tranche B, Tranche C, Tranche D1 and Tranche D2 |
(a) | Prior to the Scheduled First Repayment Date Interest Periods relating to Advances made under Tranche A, Tranche B, Tranche C, Tranche D1 or Tranche D2 will be of one (1), three (3) or six (6) months duration (or such lesser duration as may be necessary so that all Interest Periods in relation to Advances made under each Tranche will end on the Scheduled First Repayment Date) at the option of the Borrower provided that any Interest Period relating to an Advance made under any Tranche commencing at the same time as or during another Interest Period relating to an Advance made under the same Tranche shall be of such duration that it shall end on the same date as that other Interest Period. | ||
(b) | Interest Periods commencing on or after the Scheduled First Repayment Date relating to Advances made under Tranche A, Tranche B, Tranche |
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C, Tranche D1 and Tranche D2 will, subject to paragraph (c) below, end on a Repayment Date, thus in each case (other than the first such Interest Period) being of six (6) months duration. | |||
(c) | Interest Periods relating to Advances made under Tranche A2 will end on the Business Day immediately following a Repayment Date. |
4.1.2 | Tranche E : The Interest Periods relating to Advances under Tranche E will be of one (1), three (3) or six (6) months duration at the option of the Borrower (or such shorter period as is required in order for the Interest Periods of the Advances under Tranche E to end on the Scheduled First Repayment Date). | |
4.1.3 | The Borrower will, where appropriate, give irrevocable notice to the Agent of the chosen Interest Period in the relevant Drawdown Request or, if the Advance has already been made, in an irrevocable written notice to be received by the Agent no later than 11:00 a.m. on the fifth (5th) Business Day prior to the commencement of that Interest Period. At the latest three (3) Business Days prior to the commencement of the Interest Period chosen by the Borrower, the Agent will give notice to the Lenders and the Guarantors of any notice given by the Borrower pursuant to this Clause 4.1.3. | |
4.1.4 | If the Borrower fails to give notice of an Interest Period, its term will be one (1) month, or any shorter period as the Agent determines to be necessary to comply with the requirements pursuant to Clauses 4.1.5. | |
4.1.5 | The first Interest Period with respect to an Advance will commence on its Drawdown Date, and each subsequent Interest Period will commence on the last day of its preceding Interest Period. | |
4.1.6 | The Agent may, with the approval of the Borrower, determine other Interest Periods with respect to any or all Advances if the Agent deems such other Interest Periods necessary or appropriate to facilitate syndication, provided that any such other Interest Period will not be shorter than five (5) Business Days nor longer than six (6) months. | |
4.1.7 | If two or more Interest Periods relating to Advances under the same Tranche end at the same time, then, on the last day of those Interest Periods, the Advances to which they relate will be consolidated into and treated as a single Advance under such Tranche. Advances under Tranche B forming part of any Sub-Tranche will however, not be consolidated with any Advance forming part of a different Sub-Tranche. | |
4.1.8 | The Agent will notify the Borrower and the Lenders of the duration of each Interest Period in respect of each Advance promptly after having determined the same. |
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(a) | in relation to an amount becoming due and payable before expiration of the Interest Period applicable thereto, for the period until the expiration of such Interest Period the rate applicable to such overdue amount immediately prior to the due date; and | ||
(b) | in all other cases, the Interest Rate on the most recent Quotation Date for such periods as the Agent may designate, provided, however, that such Interest Period will not exceed three (3) months. |
4.6.2 | If the Borrower fails to pay any interest payable by it hereunder on its due date, it will make, at the time of payment of all arrears of interest, a lump sum |
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payment for all arrears of interest in the amount of 1.5 per cent. above EURIBOR applicable to the respective Interest Period of the amount due and payable. | ||
4.6.3 | The right of the Lenders to compensation for any loss arising from the default remains unaffected. Payments made under Clause 4.6.2 will however be deducted from such compensation. | |
4.6.4 | The Agent will promptly notify the Borrower and the Lenders of the determination of any default interest. Each determination by the Agent will, in the absence of a manifest error, be conclusive and binding on the Borrower and the Lenders. | |
5. | MARKET DISRUPTION | |
5.1 | Market Disruption | |
If, on any Quotation Date in relation to any Advance and any Interest Period: | ||
5.1.1 | EURIBOR is to be determined by reference to Reference Banks and at or about 11.00 a.m. on the Quotation Date for the relevant Interest Period none or only one of the Reference Banks supplies a rate for the purpose of determining the EURIBOR for the relevant Interest Period; or | |
5.1.2 | before the close of business in Frankfurt am Main on the Quotation Date for such Advance, the Agent has been notified by Lenders to whom in aggregate 50 per cent. or more of the principal of the relevant Advance is owed that EURIBOR does not, by reason of circumstances affecting the inter-bank market generally, accurately reflect the cost to them of obtaining matching deposits for their participation in such Advance, | |
then, notwithstanding anything contrary in this Agreement, the Agent will promptly give written notice (the Suspension Notice ) to the Borrower and the Lenders of such event. | ||
5.2 | Alternative Basis of Interest | |
5.2.1 | If Clause 5.1.1 ( Market Disruption ) applies, the applicable Interest Period will be one (1), three (3) or six (6) month(s) at the option of the Agent or such shorter period to end on any Repayment Date, and the interest rate applicable will be the weighted average of the interest rates notified by the Lenders to the Agent on or before the last day of the relevant Interest Period to reflect the cost of funding (regardless from what sources a Lender may reasonably select to fund its participation) their participation in the relevant Advance, expressed as a percentage per annum plus the Margin applicable to such Advance and Mandatory Costs, if any. |
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5.2.2 | If Clause 5.1.2 ( Market Disruption ) applies, the interest rate applicable to the affected Lenders participation in the relevant Advance shall be: |
(a) | in respect of each Lender having notified the Agent in accordance with Clause 5.1.2 ( Market Disruption ) the interest rate notified by it to the Agent pursuant to the principles as set out in Clause 5.2 ( Alternative Basis of Interest ); and | ||
(b) | in respect of all other Lenders EURIBOR and the Margin applicable to such Advance and Mandatory Costs, if any. |
(a) | first , for the repayment of 70 % of Tranche D2; |
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(b) | second, for the repayment of 70 % of Tranche D1; | ||
(c) | third, for the repayment of 70 % of Tranche C; | ||
(d) | fourth, for the repayment of part of any Sub-Tranche B1 to B3; | ||
(e) | fifth, for the repayment of Tranche A. |
6.3 | Repayments other than First Repayment | |
6.3.1 | Subject to Clauses 6.3.3 and 6.3.4, the Amortisation Schedule (expressed as a maximum percentage of the Required Level to be outstanding at the close of business in Munich on the relevant Repayment Date) to be delivered pursuant to paragraph 12 of Schedule 2 ( Conditions for the First Drawdown ) shall be prepared on the basis that a minimum Annual Debt Service Cover Ratio, as shown by the Base Case delivered pursuant to paragraph 9 of Schedule 2 ( Conditions for the First Drawdown ) of 1.73 is achieved at each Repayment Date assuming repayment of all Advances made hereunder (other than under Tranche E) in accordance with the following sub-clauses of this Clause 6.3 ( Repayments other than First Repayment ). | |
6.3.2 | Following the repayment referred to in Clause 6.2 ( First Repayment ) and subject to Clause 6.3.3, Clause 6.4.2 and Clause Error! Reference source not found. , the Borrower will repay the outstanding Advances under Tranche A in 22 instalments semi-annually on each 31 March and 30 September following the Scheduled First Repayment Date in accordance with the Amortisation Schedule. The amount of each instalment shall be such that, after the repayments of Tranches B, C, D1 and D2 required to be made on the relevant Repayment Date pursuant to the following sub-clauses of this Clause 6.3 ( Repayments other than first Repayment ) have been made, the aggregate outstanding amount of all Advances, other than Advances under Tranche E, (at close of business in Munich on the relevant Repayment Date) expressed as a percentage of the Required Level does not exceed the percentage set out in the Amortisation Schedule against that Repayment Date. | |
6.3.3 | As of (and including) the Repayment Date falling on 31 March 2009, Tranche A shall be split into a sub-tranche of EUR 270,686,833 ( Tranche A1 ) and a sub-tranche of EUR 164,219,900 ( Tranche A2 ). | |
6.3.4 | The Borrower will repay the outstanding Advances under each of Sub-Tranche B1, B2 and B3, following the repayment referred to in Clause 6.2 ( First Repayment ), in eight (8) equal semi-annual instalments on the eight (8) Repayment Dates ending on the (1st) first Repayment Date following the eighth (8th) anniversary of the first Advance under the relevant Sub-Tranche. |
37
6.3.5
The Borrower will repay Sub-Tranche B4 in one amount on the Final Maturity Date for
Sub-Tranche B4.
6.3.6
The Borrower will repay the outstanding Advances under Tranche C, following the repayment
referred to in Clause 6.2, in three (3) equal semi-annual instalments on the three (3)
Repayment Dates falling after the Scheduled First Repayment Date.
6.3.7
The Borrower will repay the outstanding Advances under Tranche D1 in three (3) equal
semi-annual instalments on the three (3) Repayment Dates falling after the Scheduled First
Repayment Date.
6.3.8
The Borrower will repay the outstanding Advances under Tranche D2 in three (3) equal
semi-annual instalments on the three (3) Repayment Dates falling after the Scheduled First
Repayment Date.
6.3.9
The Borrower will repay the outstanding Advances under Tranche E in an amount equal to the
proceeds of Government Grants and/or VAT refunds on Project Costs received from time to time
and/or, as the case may be, out of one or more drawings made under Clause 2.6.2 (b) of the
Shareholders Undertaking Agreement and/or moneys on the Proceeds Account which are available
in accordance with Clause 9.4.3(a)(xi) (
Application of Moneys on Proceeds Account
). Any such
repayment shall be made on the interest payment date(s) relating to any Advance(s) outstanding
under Tranche E next following receipt of such proceeds or, in relation to the moneys on the
Proceeds Account, with a seven (7) Banking Days prior written notice to the Agent on the
relevant Repayment Date. Should there be less than seven (7) Banking Days between receipt of
Government Grants and/or VAT refunds on Project Costs and/or, as the case may be, drawings
made under Clause 2.6.2 (b) of the Shareholders Undertaking Agreement, and the interest
payment date(s) mentioned in the previous sentence, then such repayment shall be made on the
following interest payment date(s). Such repayment is, however, not necessary to the extent
the Borrower uses the proceeds of Government Grants and/or VAT refunds for purposes
corresponding to the purpose of Tranche E. Any Advances under Tranche E remaining outstanding
at Tranche Es Final Maturity Date will be repaid on that date by the Borrower. Any such
repayment shall be made together with accrued interest thereon and any other amounts
outstanding under this Agreement in respect thereof.
6.4
Repayment Schedule
6.4.1
The Agent will forward to the Borrower and the Lenders with respect to Tranche A, Tranche B,
Tranche C, Tranche D1 and Tranche D2 a repayment Schedule setting out in accordance with
Clause 6.3 (
Repayments other than First Repayment
) the amount of the repayment instalments and
their respective
38
payment dates at the latest 15 days prior to the Scheduled First Repayment Date (the Repayment Schedule ), provided that the Repayment Schedule for Tranche A for the period commencing as of (and including) the Repayment Date falling on 31 March 2009 shall be as set out in Clause 6.4.2. The Repayment Schedule will be amended pro rata by the Agent following the making of any voluntary prepayments or mandatory prepayments according to this Agreement and will be submitted to the Borrower and the Lenders upon its amendment. | ||
6.4.2 | As of (and including) the Repayment Date falling on 31 March 2009, the Repayment Schedule in relation to Tranche A shall be as follows: |
Repayment in Euro in | Repayment in Euro in | |||||||
Repayment Date | relation to Tranche A1 | relation to Tranche A2 | ||||||
31 March 2009
|
500,000 | 0 | ||||||
30 September 2009
|
500,000 | 0 | ||||||
31 March 2010
|
500,000 | 0 | ||||||
30 September 2010
|
500,000 | 0 | ||||||
31 March 2011
|
12,000,000 | |||||||
30 September 2011
|
6,000,000 | 0 | ||||||
31 March 2012
|
7,000,000 | 0 | ||||||
30 September 2012
|
15,000,000 | 0 | ||||||
31 March 2013
|
20,000,000 | 0 | ||||||
30 September 2013
|
20,000,000 | 0 | ||||||
31 March 2014
|
20,000,000 | 0 | ||||||
30 September 2014
|
20,000,000 | 0 | ||||||
31 March 2015
|
22,000,000 | 0 | ||||||
30 September 2015
|
22,000,000 | 0 | ||||||
31 March 2016
|
22,000,000 | 0 | ||||||
30 September 2016
|
22,000,000 | 0 | ||||||
31 March 2017
|
24,906,733 | 0 | ||||||
30 September 2017
|
35,780,100 | 164,219,900 |
39
6.5
Deferred Amortisation
6.5.1
If there are insufficient funds available to meet scheduled amortisation payments from the
Proceeds Account, the Equity Reserve Account and the Debt Service Reserve Account, deferral of
the amortisation of the amounts outstanding (less any amount payable by the Shareholders
pursuant to the proviso to Clause 2.6.2 (b) (vi) of the Shareholders Undertaking Agreement),
excluding Advances under Tranche E, remaining after application of the available funds will,
at the request of the Borrower, subject to Clause 6.1 (
General
), be permitted without
triggering an Event of Default for a period of not more than six (6) months and subject to the
maximum permitted deferred amortisation amount under any Tranche at any Repayment Date being
no greater than the principal amortisation amount due on such Repayment Date.
6.5.2
Any deferral shall be apportioned rateably across the Tranches due for repayment on the
relevant Repayment Date. On the First Repayment Date any deferral shall, however, first be
apportioned rateably across Tranches D2, D1 and C and only then rateably across Tranche A and
Sub-Tranches B1, B2 and B3.
6.6
No Other Repayments
The Borrower will not repay all or any part of the Advances except at the times and in the
manner expressly provided for in this Agreement.
7.
VOLUNTARY AND MANDATORY PREPAYMENTS
7.1
General
At any time after the Scheduled First Repayment Date the Borrower may, after having given
to the Agent not less than fifteen (15) Business Days prior irrevocable written notice to
that effect, prepay any part of the amount outstanding under Tranche A, Tranche B, Tranche
C, Tranche D1 and Tranche D2 on a Repayment Date in respect of such Tranche without
Breakage Costs, subject to a minimum prepayment amount of EUR 5 million or the total
outstanding amount, whichever is smaller. Voluntary prepayments under this Clause 7.1
(
General
) will be applied first to Tranche D2, then to Tranche D1, then to Tranche C, then
to Tranche B (in reduction of Sub-Tranche B1 and then Sub-Tranche B2 and then Sub-Tranche
B3) then to Tranche A and will be applied
pro rata
over the remaining instalments of the
respective Tranche and/or Sub-Tranche. The Borrower may, subject to paying Breakage Costs,
where applicable, at any time following the Scheduled First Repayment Date, by submitting
at least fifteen (15) Business Days in advance a written and
40
irrevocable notice thereof, repay on a Repayment Date any outstanding amounts under Tranche E in whole or in part. | ||
7.2 | Prepayment of First Repayment | |
The Borrower may, by giving not less than seven (7) Business Days prior irrevocable and written notice to the Agent, prepay all or from time to time any part of the First Repayment prior to the Scheduled First Repayment Date. Such prepayment must fall on the last day of an Interest Period relating to one or more Advances having an aggregate principal amount at least equivalent to the amount of such prepayment. | ||
7.3 | Prepayment for meeting of EU-Equity Test | |
The Borrower shall have the right, effective on the first day of any Interest Period commencing within 18 months after Acceptance, to prepay any amount outstanding under Tranche A by drawing an equivalent amount from the Equity Reserve Account or, if the balance standing to the credit of such account is insufficient for the purpose, by drawing an amount of up to EUR 5 million under Tranche D2 to the extent necessary to meet the EU-Equity Test. The Borrower shall give the Agent at least ten (10) Business Days prior written notice, specifying the principal amount outstanding under Tranche A to be prepaid, and the amount to be drawn under the Equity Reserve Account or, as the case may be, Tranche D2. Any such prepayment made by the Borrower shall satisfy rateably the remaining obligations of the Borrower to repay Tranche A. | ||
7.4 | Prepayment of Tranche A2 | |
As of (and including) the Repayment Date falling on 30 September 2009, any surplus standing to the credit of the Proceeds Account after application in accordance with Clause 9.4.3(a)(i) to 9.4.3(a)(xi)( Proceeds Account ) on a Repayment Date shall be applied on the Business Day following that Repayment Date in prepayment of Tranche A2 until Tranche A2 has been prepaid in full. | ||
7.5 | Scope of Prepayment | |
All prepayments will be made together with accrued interest on the amount prepaid and all other amounts, if any, owing by the Borrower to the Lenders hereunder. | ||
7.6 | Notice of Prepayment | |
Any notice of prepayment given by the Borrower pursuant to this Clause [ ] is irrevocable and will specify the date upon which such prepayment is to be made and the amount of such prepayment. The Agent will notify the Lenders promptly of receipt of any such notice. |
41
(a) | amounts which are disbursed under the Facility (Tranche E) (unless otherwise provided for in Clause 9.3.2 to 9.3.4), |
(b) | amounts which are provided by the Shareholders as Shareholder Contributions up to Acceptance, | ||
(c) | Start-Up Cash Flows to the extent they do not exceed the budgeted amount therefore as set out in the Base Case delivered pursuant to Schedule 2 (Conditions for the First Drawdown), paragraph 9, | ||
(d) | material loss or damage insurance proceeds received prior to Acceptance which will be applied in making good the related loss; and | ||
(e) | delayed start-up or business interruption insurance proceeds and/or any delay liquidated damages under the EPC Contract received, in either case, prior to Acceptance which will be applied first in or towards any increased costs and expenses incurred by the Borrower as a result of the related delay. |
9.1.3 | Save as otherwise specifically provided herein, the Borrower is entitled to apply any moneys standing to the credit of the Disbursement Account exclusively, and, in the case of a continuing Event of Default, only with the Agents prior written consent, in or towards payment of all due and payable Project Costs. | |
9.1.4 | Any amount remaining on the Disbursement Account after Acceptance, except for amounts to be used for the payment of Post-Acceptance Costs, shall be transferred by the Borrower on to the Revenue Account. | |
9.2 | Proceeds Account | |
9.2.1 | The Borrower will open a current account ( Kontokorrentkonto ) with the Agent at the latest at Financial Close, such account to be pledged by the Borrower in favour of the Lenders by entering into an account pledge agreement substantially in the form set out in Schedule 7 ( Form of Account Pledge Agreement ) (the Revenue Account ). | |
9.2.2 | The Revenue Account will be used to collect all revenues and income generated by the Borrowers business apart from the budgeted Start-up Cash Flows as set out in the Base Case delivered pursuant to Schedule 2 ( Conditions for First Drawdown ) paragraph 9 and Excess Start-up Cash Flows in an amount of up to EUR 15 million. The Borrower will ensure that all payments to be made by the respective counterparties to any agreement concluded with the Borrower, apart from Shareholder Contributions, are made into the Revenue Account. | |
9.2.3 | The Borrower may elect to open a further account with HVB Banque Luxembourg Société Anonyme and/or the Agent in respect of investments which may be made by the Borrower pursuant to Clause 9.2.4 (each an Investment Account , together with the Revenue Account, the Proceeds Account ), such |
43
accounts to be pledged by the Borrower in favour of the Lenders by entering into an account pledge agreement substantially in the form set out in Schedule 8 ( Form of Luxembourg Account Pledge Agreement ) in respect of the Investment Account maintained with HVB Banque Luxembourg Société Anonyme and in the form set out in Schedule 7 ( Form of Account Pledge Agreement ) in respect of the Investment Account maintained with the Agent. The Borrower will at its own cost provide the Agent with a legal opinion satisfactory to the Agent and issued by a reputable Luxembourg law firm in respect of, inter alia , the validity and enforceability of such Luxembourg account pledge agreement. |
9.2.4 | The Borrower may invest the balance standing to the credit of the Revenue Account in Permitted Investments, provided that such Permitted Investments are deposited in the Investment Account and the maturity of such Permitted Investments does not conflict with the anticipated payments to be made by the Borrower pursuant to Clause 9.4.3 ( Application of Moneys on Proceeds Account ). To the extent necessary to make payments in accordance with Clause 9.4.3 ( Application of Moneys on Proceeds Account ), the Borrower will transfer sufficient funds from the Investment Account to the Revenue Account and will liquidate any of the Permitted Investments if necessary to meet its payment obligations. | |
9.3 | Payments to or on behalf of the Borrower | |
9.3.1 | The proceeds of all Advances to be made to the Borrower under this Agreement will, to the extent not otherwise provided in the following Clauses 9.3.2 and 9.3.4, be made into the Disbursement Account in accordance with Clause 3.5.3. The Borrower will procure that until Acceptance all funds in respect of Shareholder Contributions will be made into the Disbursement Account. | |
9.3.2 | The Borrower authorises the Agent to make payments on behalf of the Borrower relating to the Financing Costs until Acceptance and costs for interest payments for Tranche A Advances during the Pre Production Period directly to the Lender having incurred such costs. | |
9.3.3 | The Borrower authorises the Agent to make payments on behalf of the Borrower with respect to the provision of funds to the Debt Service Reserve Account directly into the Debt Service Reserve Account. | |
9.3.4 | The Borrower relieves the Agent from the restrictions of § 181 BGB in respect of the authority conferred upon the Agent in Clauses 9.3.2 and 9.3.3. | |
9.4 | Payments by the Borrower and the Lenders | |
9.4.1 | Time and Currency : Unless otherwise permitted, all payments required to be made by the Borrower to the Lenders under any Financing Document will be |
44
made in euro to the Agent on the due date therefore not later than 10:00 a.m. If a payment is due on a day which is not a Business Day, the due date for that payment will instead be the next Business Day in the same calendar month and, if there is none, on the immediately preceding Business Day. |
(a) | Priority of Payments : The Borrower is entitled to apply any moneys standing to the credit of the Proceeds Account with the exception of proceeds from Government Grants and/or VAT refunds on Project Costs applied in accordance with Clauses 6.3.9 ( Repayments other than First Repayment ) and 21.1.11 ( Payments and Application of Payments ) exclusively in the following order and, in the case of a continuing Event of Default, only with the Agents written consent: |
(i) | first , in or towards payment of all due and payable operating costs, on-going capital costs, and Working Capital Costs as well as extraordinary costs and expenses in relation to which a payment is due and any scheduled amount then due and payable under the Hedging Agreement; | ||
(ii) | second, in and towards payment of any tax payment and fee for State Guarantee then due and payable; | ||
(iii) | third, in and towards payment of any unpaid costs and expenses of the Lenders, the Agent and the Security Agent due from the Borrower pursuant to Clause 27 ( Costs and Expenses ) and any accrued interest and fees due and payable to the Lenders hereunder, with the exception of the payments mentioned under paragraphs 9.4.3(a)(iv) to 9.4.3(a)(vii); | ||
(iv) | fourth, in or towards payment of any deferred principal then due and payable to the Lenders under Tranche D2, Tranche D1, Tranche C, Tranche B and Tranche A (in that order and rateably, other than in respect of any principal deferred on the First Repayment Date where any principal relating to Tranches A and B will be repaid first); | ||
(v) | fifth, in or towards payment of any principal then due and payable to the Lenders under Tranche D2, Tranche D1 and Tranche C (in that order); |
45
(vi) | sixth, at the Final Maturity Date of Tranche E in or towards payment of any principal due and payable to the Lenders under Tranche E, but not repaid due to delays in the receipt of Government Grants and/or VAT refunds; | ||
(vii) | seventh, in or towards payment of any principal then due and payable to the Lenders under Tranche B and Tranche A and the net amount of any close-out or termination sums then due and payable under the Hedging Agreements; | ||
(viii) | eighth, in or towards payment of any interest and principal due and payable under any other Permitted Financial Indebtedness | ||
(ix) | ninth, an amount to be retained in the Proceeds Account such that the amount retained should be of such value so that the retained balance for operational liquidity purposes always be EUR 15,000,000; | ||
(x) | tenth , but only following Acceptance in or towards any payment due and payable into the Debt Service Reserve Account in accordance with Clause 11.3 ( Target Balance ); | ||
(xi) | eleventh, on a Repayment Date, towards repayment of amounts outstanding under Tranche E; | ||
(xii) | twelfth ; any surplus in or towards prepayment of Tranche A2 in accordance with Clause 7.4 ( Prepayment of Tranche A2 ); | ||
(xiii) | thirteenth, subject to Clause 9.4.3(c)) into the Shareholders Account to include any interest payable on any Shareholder Loan. |
(b) | Authorisation of Agent : The Borrower authorises the Agent (on behalf of the Lenders) to debit and, to the extent necessary, to liquidate any Permitted Investments previously purchased with any funds standing to the credit of the relevant account: |
(i) | the Proceeds Account with all amounts referred to in Clause 9.4.3(a)(ii) (but only regarding the payment of fees in relation to the State Guarantee) and Clause 9.4.3(a)(iv) to 9.4.3(a)(vii) inclusive when due; and | ||
(ii) | if the funds in the Proceeds Account are not sufficient to pay any amounts set out in Clause 9.4.3(a)(iv) to 9.4.3(a)(vii) inclusive, to debit the Equity Reserve Account and then the Debt Service Reserve Account with any such amount, |
46
and to apply any amount so debited in payment of the relevant amounts. |
(c) | Restricted Application: |
(i) | Payments by the Borrower from the Proceeds Account to the Shareholders Account pursuant to Clause 9.4.3(a)(xiii) are permitted only: |
(1) | from the time the aggregate outstanding amounts have been paid down to the Required Level; | ||
(2) | Tranche E has been repaid in full; | ||
(3) | Tranche A2 has been prepaid in full in accordance with Clause 7.4 ( Prepayment of Tranche A2 ); | ||
(4) | subject to the absence of a continuing Event of Default or Potential Event of Default; and | ||
(5) | within a period of ten Business Days following a Repayment Date. |
(ii) | If the Annual Debt Service Cover Ratio at any Repayment Date is less than 1.15, the moneys available to be paid into the Shareholders Account will be retained in the Proceeds Account, provided that if the Annual Debt Service Cover Ratio (taking Available Cash Flow from Acceptance to the 31 December or 30 June next preceding the First Repayment Date) is less than 1.15 on the First Repayment Date, the Borrower may nevertheless (notwithstanding Clause 9.4.3(c)(i)(5) make payments into the Shareholders Account pursuant to Clause 9.4.3(a)(xiii) prior to the next following Repayment Date if it submits to the Agent a further calculation of the Annual Debt Service Cover Ratio (taking into account Available Cash Flow from Acceptance to the First Repayment Date) certified by its independent auditors demonstrating that its Annual Debt Service Cover Ratio at the First Repayment Date equalled or exceeded 1.15. |
9.4.4 | Application of Insurance Proceeds: |
(a) | Material loss or damage insurance proceeds each below or equal to EUR 10 million until Acceptance and below or equal to EUR 5 million after Acceptance will be applied, for repairs or replacements by the Borrower. |
47
(b) | Material loss or damage insurance proceeds, each in excess of EUR 10 million but only up to a total of EUR 50 million until Acceptance and each in excess of EUR 5 million after Acceptance, but only up to a total of EUR 50 million will be applied, if insured damage occurs which, in the opinion of the Technical Adviser and the Wood Supply Adviser, is repairable or replaceable by application of insurance proceeds (together with any monies then available to the Borrower), directly to meet the cost of such repairs or replacements. |
(c) | Material loss or damage insurance proceeds |
(i) | in excess of EUR 10 million each, but only up to EUR 50 million until Acceptance and in excess of EUR 5 million each, but only up to EUR 50 million after Acceptance, if damage occurs which, in the opinion of the Technical Adviser and the Wood Supply Adviser, is not replaceable by application of insurance proceeds (together with any monies then available to the Borrower), | ||
(ii) | in excess of EUR 50 million, | ||
will be applied at the direction of the Majority Lenders. For the avoidance of doubt, the Lenders will however forward to the Borrower any insurance proceeds received by them in respect of security measures provided by the EPC Contractor pursuant to Clause 13.2 of the EPC Contract. |
(d) | Notwithstanding the provisions of Clauses 9.4.4(a) and 9.4.4(b) and to the extent no material interests ( versicherte Interessen ) under the Construction/Erection All Risks Material Damage Insurance Contract of any co-insured are affected, payments by the Borrower from the Insurance Account will be permitted only if no Event of Default has occurred and is continuing unless such Event of Default would be cured by the application of such payment. |
9.4.5 | Distribution of Payments: |
(a) | Each payment made to the Agent by the Borrower pursuant to this Clause 9 will be promptly distributed proportionately by the Agent among the Lenders entitled thereto. Each such distribution will be made in like funds as and for value the date on which such payment is received by the Agent. | ||
(b) | The previous paragraph applies mutatis mutandis to payments made to the Agent by third parties under any Financing Document. |
48
10. | EQUITY RESERVE ACCOUNT | |
10.1 | Maintenance | |
The Borrower will open an interest bearing equity reserve account at the latest at the First Repayment Date or earlier if required so that Excess Start-Up Cash Flows can be deposited into it as they arise. | ||
10.2 | Purpose | |
The Equity Reserve Account will be used for securing the Lenders claims under the Financing Documents in priority to the funds on the Debt Service Reserve Account. | ||
10.3 | ERA-Balance | |
The Equity Reserve Account will be funded by Excess Start-Up Cash Flows and by the amount determined in accordance with Clause 2.6.2 (b) (vi) of the Shareholders Undertaking Agreement in accordance with the provisions of the Shareholders Undertaking Agreement. | ||
10.4 | Set-off | |
The Agent is entitled to set off the credit balance in the Equity Reserve Account against any obligations of the Borrower due and payable under the Financing Documents to the Lenders if the Borrower does not, does not on time or does not entirely perform such obligations. | ||
10.5 | Investments | |
10.5.1 | The Borrower may elect to open a further account with HVB Banque Luxembourg Société Anonyme and/or the Agent in respect of investments which may be made by the Borrower pursuant to Clause 10.5.2 (the ERA Investment Account ), such account to be pledged by the Borrower in favour of the Lenders by entering into an account pledge agreement substantially in the form set out in Schedule 8 ( Form of Luxembourg Account Pledge Agreement ) in respect of the ERA Investment Account maintained with HVB Banque Luxembourg Société Anonyme and in the form set out in Schedule 7 (Form of Account Pledge Agreement) in respect of the ERA Investment Account maintained with the Agent. The Borrower will at its own cost provide the Agent with a legal opinion satisfactory to the Agent and issued by a reputable Luxembourg law firm in respect of, inter alia , the validity and enforceability of such Luxembourg account pledge agreement. Any interest or other income earned on balances on the Equity Reserve Account may, so long as: |
(a) | the balance standing to the credit of the Debt Service Reserve Account is at least equal to the then Target Balance; and |
49
(b) | no Event of Default or Potential Event of Default has occurred and is then continuing, |
be paid into the Shareholders Account. | ||
10.5.2 | The Borrower may invest the balance standing to the credit of the ERA Investment Account in Permitted Investments, provided that such Permitted Investments are deposited in the ERA Investment Account and the maturity of such Permitted Investments does not conflict with any anticipated payments to be made by the Borrower out of the ERA Investment Account. To the extent necessary to make any payments out of the ERA Equity Account, the Borrower will transfer sufficient funds from the ERA Investment Account to the ERA Equity Account and will liquidate any of the Permitted Investments if necessary to meet its payment obligations. | |
11. | DEBT SERVICE RESERVE ACCOUNT | |
11.1 | Maintenance | |
The Borrower will open an interest bearing debt service reserve account at the latest on 30 September 2005. | ||
11.2 | Purpose | |
The Debt Service Reserve Account will be used for securing the Lenders claims under the Financing Documents. | ||
11.3 | Target Balance | |
The target balance to be maintained on the Debt Service Reserve Account prior to the First Repayment Date is EUR 57 million and thereafter such amount as is sufficient to service the amounts due and payable under the Facility during the following twelve (12) months, taking into consideration any amounts held in USD in accordance with Clause 11.5 ( Currency ) (the Target Balance ). Any balance on the Equity Reserve Account from time to time will count towards the Target Balance. The Debt Service Reserve Account will be funded through |
(a) | a drawdown under Tranche C, | ||
(b) | the amount determined in accordance with Clause 2.6.2 (iii) of the Shareholders Undertaking Agreement, | ||
(c) | out of the Proceeds Account taking into consideration Clause 9.4.3(a) ( Priority of Payments ). |
When determining the twelve (12) months debt service, the Agent will estimate the costs of interest on the basis of the interest rates then currently payable on outstanding Advances (taking into consideration the Hedging Agreements entered into for the hedging of the interest risks and the hedging of the currency |
50
rate risk related to the debt service of the Borrower) and that repayments are made only according to Clauses 6.1 ( General ) to 6.3 ( Repayments other than First Repayment ). The Agent will notify the Borrower of the Target Balance at the latest two (2) Business Days before the 30 September 2005 and each subsequent Repayment Date following the notification on such date pursuant to Clause 4.4 ( Notification ). |
11.4 | Set-off | |
The Agent is entitled to set off the credit balance in the Debt Service Reserve Account against any obligations of the Borrower due and payable under the Financing Documents to the Lenders if the Borrower does not, does not on time or does not entirely perform such obligations. | ||
11.5 | Currency | |
The Borrower may elect to hold the moneys on the Debt Service Reserve Account in USD up to an amount corresponding to the notional amount of interest payments and payments of principal with regard to the EUR/USD cross-currency-swaps concluded in accordance with the Hedging Strategy if (a) the respective USD-account is held with the Agent or HVB Banque Luxembourg Société Anonyme, and (b) the USD account is pledged by the Borrower in favour of the Lenders by entering into an account pledge agreement substantially in the form set out in Schedule 8 ( Form of Luxembourg Account Pledge Agreement ) in respect of the USD-account maintained with HVB Banque Luxembourg Société Anonyme and in the form set out in Schedule 7 ( Form of Account Pledge Agreement ) in respect of the USD-account maintained with the Agent, and (c) the Agent is provided with a legal opinion satisfactory to the Agent and issued by a reputable Luxembourg law firm in respect of, inter alia , the validity and enforceability of such account pledge agreement. The Agent will notify the Borrower of the minimum amount of the Debt Service Reserve Account that may be held in USD from time to time. | ||
11.6 | Investments | |
The Borrower may elect to open a further account with HVB Banque Luxembourg Société Anonyme and/or the Agent in respect of investments which may be made by the Borrower pursuant to Clause 11.6.1 (the DSRA Investment Account ), such account to be pledged by the Borrower in favour of the Lenders by entering into an account pledge agreement substantially in the form set out in Schedule 8 ( Form of Luxembourg Account Pledge Agreement ) in respect of the DSRA Investment Account maintained with HVB Banque Luxembourg Société Anonyme and in the form and substance of the Account Pledge Agreement between the Borrower and the Security Agent as of the date hereof in respect of the DSRA Investment Account maintained with the Agent. The Borrower will at its own cost provide the Agent with a legal opinion satisfactory to the Agent and issued by a reputable Luxembourg law firm in |
51
respect of, inter alia , the validity and enforceability of such Luxembourg account pledge agreement. Any balance on the Debt Service Reserve Account in excess of the Target Balance from time to time may be paid into the Revenue Account. |
11.6.1 | The Borrower may invest the balance standing to the credit of the DSRA Investment Account in Permitted Investments, provided that such Permitted Investments are deposited in the DSRA Investment Account and the maturity of such Permitted Investments does not conflict with any anticipated payments to be made by the Borrower out of the DSRA Investment Account. To the extent necessary to make any payments out of the Debt Service Reserve Account, the Borrower will transfer sufficient funds from the DSRA Investment Account to the Debt Service Reserve Account and will liquidate any of the Permitted Investments if necessary to meet its payment obligations. | |
12. | ILLEGALITY | |
If at any time it is or becomes unlawful or impracticable, by reason of any adoption, amendment or change of official application or interpretation of any law or regulation or any directive, request or requirement (whether or not having the force of law) from any central bank or other fiscal, monetary or other authority, having jurisdiction over any Lender for such Lender to fund, or to allow to remain outstanding, all or any of its participations in Advances made or to be made, or to maintain its Commitment, or to charge or receive interest or fees hereunder at the rate applicable, such Lender will promptly after becoming aware thereof notify the Borrower through the Agent and: | ||
12.1 | the Commitment of such Lender under the Facility will forthwith be reduced to zero; and | |
12.2 | the Borrower will prepay to such Lender its participation in any relevant Advances together with accrued interest and all other amounts owing to such Lender hereunder on the next following date on which interest is payable on the relevant Advance, or on such earlier date as such Lender certifies to be necessary having regard to the relevant circumstances. | |
13. | INCREASED COSTS | |
13.1 | Increased Costs | |
Where any Lender certifies that, as a result of the adoption or amendment of or any change of official application or interpretation of any law, regulation, directive, request or requirement (being legally binding or, if not legally binding to the extent that non-compliance therewith would be impracticable) (including without limitation any law, regulation or requirement relating to taxation, reserve assets, special deposits, cash ratio, liquidity or capital adequacy |
52
requirements, but not including any law, directive, request, regulation or requirement as in effect on the date hereof or already adopted but not yet in force on the date hereof): |
13.1.1 | such Lender or any of its affiliated companies incurs a cost in relation to such Lender being a party to and/or performing its obligations and/or exercising its rights under this Agreement; | |
13.1.2 | the cost to such Lender of making available or maintaining or funding its participation in any Advance or maintaining its Commitment is increased; | |
13.1.3 | any sum received or receivable by such Lender under or in connection with this Agreement is reduced; | |
13.1.4 | the effective return of such Lender in connection with this Agreement is reduced; or | |
13.1.5 | such Lender becomes liable to make any payment on account of tax or otherwise (except for taxes imposed on its net income or net worth) or is required to forego any interest or other return on or calculated by reference to the amount of any sum received or receivable by it under or in connection with this Agreement, | |
then in any such case: |
(a) | a Lender intending to make a claim pursuant to the above will notify the Borrower through the Agent setting forth in reasonable detail the basis for such claim; | ||
(b) | the Borrower will pay to the Agent for the account of such Lender upon demand of the Agent such amounts as are certified by such Lender to be necessary to fully compensate such Lender for such cost, reduction, payment or foregone interest or other return, after reduction of benefits which accrue to such Lender directly or indirectly because of such event and reasonably allocable to such costs; and | ||
(c) | the Borrower may, by giving irrevocable notice to the Agent, prepay to such Lender its participation in each Advance together with accrued interest and all other amounts owing to such Lender hereunder on the last day of the then current Interest Period for that Advance, or on such earlier date as such Lender certifies to be necessary having regard to the relevant circumstances. |
13.2 | For the avoidance of doubt, this Clause 13 shall not apply in case of a removal of the guarantors liability ( Gewährträgerhaftung ) regarding German public |
53
savings banks, state banks and public credit institutions of the Federal Republic of Germany and its states. |
14. | TAXES | |
14.1 | All payments by the Borrower under this Agreement will be made without any deduction or withholding on account of any taxes unless the Borrower is required by law to make such deduction or withholding, in which case the Borrower will: | |
14.1.1 | ensure that the deduction or withholding does not exceed the minimum amount legally required; and | |
14.1.2 | forthwith pay to the Lenders such additional amounts so as to ensure that the amount received by each Lender will equal the full amount which would have been received by it had no deduction or withholding been made, | |
provided that the foregoing obligation to pay such additional amounts will not apply in respect of: |
(a) | any taxes measured or imposed upon the overall net income or the overall capital or net worth of any Lender or its applicable lending office, or any branch or affiliate thereof, and all franchise taxes, branch taxes, or taxes on doing business; or | ||
(b) | any taxes that would not have been imposed but for the failure of any Lender to comply with any certification, identification, information, documentation or other reporting requirement, if compliance is required by law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or reduction in the rate of, such taxes. |
14.2 | The Borrower will pay all stamp, recording or similar taxes payable in respect of the execution, delivery and enforcement of the Transaction Documents promptly when due. | |
14.3 | If any Lender or the Agent is obliged to make any payment on account of taxes referred to in Clause 14.2 or if any other additional tax burdens occur in connection with the Transaction Documents the Borrower will indemnify each Lender and the Agent from any payment on account of such taxes. | |
14.4 | If, in the good faith determination of a Lender: |
(a) | such Lender has obtained a tax refund or tax allowance or tax credit as a result of, and directly attributable to, an additional payment of the Borrower under Clause 14.1; and |
54
(b) | it can make a lawful payment to the Borrower in an amount leaving it in no better or worse position than it would have been had the payment by the Borrower been made without any deduction or withholding, | ||
then after actual receipt or usage of such tax refund or tax allowance or tax credit it will pay such amount to the Agent for the account of the Borrower. The Lender will make commercially reasonable efforts where permitted by law to claim a refund or allowance or credit, but will not be obliged to disclose any information as to its tax situation to the Borrower or to any other person acting on the Borrowers behalf. |
14.5 | If the Borrower is required to make any payment to a relevant tax or other authority for which the Borrower has made a deduction or withholding under Clause 14.1, the Borrower will pay the full amount of the deduction or withholding within the applicable periods to the relevant authority and will deliver to the Agent for the account of each Lender concerned as soon as reasonably practical following the making of such payment the original receipt or a certified copy thereof and/or other evidence reasonably satisfactory to such Lender that the payment has been made. | |
15. | MITIGATION | |
15.1 | Mitigation | |
15.1.1 | Each Finance Party shall, in consultation with the Borrower, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 12 ( Illegality ), Clause 13 ( Increased Costs ) or Clause 14 ( Taxes ), including, but not limited to, transferring its rights and obligations under the Financing Documents to another affiliate or Facility Office. | |
15.1.2 | Clause 15.1.1 does not in any way limit the obligations of the Borrower under the Financing Documents. | |
15.2 | Limitation of Liability | |
15.2.1 | The Borrower shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1. | |
15.2.2 | A Finance Party is not obliged to take any steps under Clause 15.1 if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it. |
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16. | REPRESENTATIONS AND WARRANTIES | |
16.1 | Representations and Warranties | |
The Borrower represents and warrants to each of the Arranger, Agent, Security Agent and Lenders that: | ||
16.1.1 | Status : it is a limited liability company duly organised and validly existing under the laws of the Federal Republic of Germany, has the capacity to sue and be sued in its own name and has the corporate power and authority to own its assets and to carry on its business as currently conducted and the Project; | |
16.1.2 | Powers and Authority : it has the corporate power and authority to enter into and perform its obligations under the Transaction Documents and has taken all necessary corporate and other action required to authorise the execution, delivery and performance of the Transaction Documents; | |
16.1.3 | Legal Validity : the Transaction Documents that have been executed by the Borrower on or before the date as of which this representation is made or repeated, create legal, valid and binding obligations of the Borrower and the other parties thereto (apart from the Lenders in their various capacities) enforceable in accordance with the terms and conditions of the respective agreements and such agreements are in proper form for enforcement in the courts of the Federal Republic of Germany, subject to applicable bankruptcy, insolvency, liquidation or other laws affecting creditors rights generally; | |
16.1.4 | Non-Conflict : the entry into and the execution and performance of the Transaction Documents by the Borrower do not and will not conflict: |
(a) | in any material respect with any agreement, mortgage, bond or other instrument or treaty to which it is a party or which is binding upon it or any of its assets which could reasonably be expected to have a Material Adverse Effect; | ||
(b) | with its constitutive documents; or | ||
(c) | with any applicable law in a manner which could reasonably be expected to be materially adverse in relation to its ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents; |
16.1.5 | No Event of Default : no Event of Default or Potential Event of Default has occurred and is continuing; |
16.1.6 | Authorisations : except for such Authorisations not obtainable by the date as of which this representation is made or repeated, as to which the Borrower reasonably believes that they will be obtained as and when necessary for the |
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Project, all authorisations listed in Appendix 3, Exhibits 4.4 and 13 of the EPC Contract and any other material Authorisations required for the Project, including, without limitation, in connection with the performance by each of the parties of their obligations under the Infrastructure Agreement, or the performance of its obligations under the Transaction Documents are in full force and effect, have not been revoked or annulled by a first instance decision, to the best of the Borrowers knowledge and after inquiry with the relevant authority, have not been contested as a result of which the direct enforceability of such Authorisation has been suspended until a final decision and it has complied with the terms and conditions of such Authorisations in all material respects; and such Authorisations have not been modified or amended and there are no proposals to amend or modify the same unless such modification or amendment is not materially adverse in relation to the Borrowers ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents; |
16.1.7 | Further Authorisations : to the best of its knowledge, having made due inquiry, it knows of no reason why any Authorisation required for the Project or the performance of its obligations under the Transaction Documents (i) will not be granted when applied for or requested, or (ii) will be withdrawn ( zurückgenommen ) or revoked ( widerrufen ); | |
16.1.8 | Financial Statements : its most recent audited consolidated annual financial statements: |
(a) | were prepared in accordance with accounting principles generally accepted in the Federal Republic of Germany and consistently applied; | ||
(b) | disclose all material liabilities (contingent or otherwise) and all unrealised or anticipated losses of any member of the Group required to be disclosed by accounting principles generally accepted and (except as disclosed therein) consistently applied in the Federal Republic of Germany; and | ||
(c) | give a true and fair view of the financial condition and operations of the Group during the relevant period. | ||
Its financial year-end and the financial year end of the Group is 31 December; |
16.1.9 | No Material Adverse Change : since the date as at which the latest audited consolidated financial statements were stated to be prepared there has been no material adverse change in its business or financial condition (or the business or consolidated financial condition of the Group) apart from changes affecting the industry generally; |
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16.1.10 | Taxation : each member of the Group has duly and punctually paid and discharged all taxes, assessments and governmental charges imposed upon it or its assets within the time period allowed therefore without imposing tax penalties, or creating any encumbrance having priority to the Lenders or the Security (save to the extent payment thereof is being contested in good faith by the relevant member of the Group and where payment thereof can lawfully be withheld and would not result in any encumbrance having priority to the Lenders or the Security); | |
16.1.11 | Claims Pari-Passu : the claims of the Lenders against it under the Financing Documents to which it is a party will rank at least pari passu with the claims of all its unsecured and unsubordinated creditors save for those preferred solely as a matter of law or resulting from those land charges which will be released following the first Advance; | |
16.1.12 | No Insolvency or Winding-Up : neither the Borrower or any of its material subsidiaries has taken any corporate action nor have any other steps been taken or legal proceedings been started or (to the best of its knowledge and belief) threatened against the Borrower or any such subsidiary for the opening of insolvency proceedings against it or its winding-up, dissolution, administration or re-organisation (whether by voluntary arrangement, scheme of arrangement or otherwise) or for the appointment of a receiver, administrator, administrative receiver, conservator, custodian, trustee or similar officer of it or of any or all of its assets or revenues; | |
16.1.13 | No Material Proceedings : no action or administrative proceeding of or before any court, arbitrator or agency (including, but not limited to, investigative proceedings), which is materially adverse in relation to the Borrowers ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents, has been started or to the best of its knowledge threatened against any member of the Group or its assets, nor are there to the best of its knowledge any circumstances likely to give rise to any such action or proceedings which, if resolved adversely could reasonably be expected to be materially adverse to its ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents; | |
16.1.14 | No Material Defaults : it is not in breach of or in default under any agreement to which it is a party or which is binding on it or any of its assets in a way which is materially adverse in relation to the Borrowers ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents; |
58
16.1.15 | Project Contracts : (i) all existing Project Contracts are or will be in full force and effect at the time of the first drawdown under this Agreement (except for the EPC Contract, which will be in full force and effect once the down payment under the EPC Contract has been made), (ii) no other material Project Contracts have been concluded, which have not been disclosed to the Agent, (iii) the Borrower has no notice of any material breaches by any contracting party under the Project Contracts, and (iv) with regard to Project Contracts, which will not be available before the day on which this representation and warranty is made or repeated, the Borrower assumes that these are produced as soon as and to the extent that they may become necessary for the Project; | |
16.1.16 | Information : all financial projections contained in the Financial Model were prepared or made in good faith and on the basis of assumptions believed by the Borrower to be reasonable; | |
16.1.17 | Environmental Compliance : it has duly performed and observed in all material respects all Environmental Law, Environmental Permits and all other material covenants, conditions, restrictions or agreements including in connection with any contamination, pollution, emissions, waste, release or discharge of any toxic or hazardous substance where failure to do so is materially adverse in relation to the Borrowers ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents; | |
16.1.18 | Environmental Claims : no Environmental Claim has been commenced against it or its officers, or is to the best of its knowledge threatened against it or its officers materially adverse in relation to the Borrowers ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents; | |
16.1.19 | Relevant Substances : no substance which is capable of causing harm to any living organism or damaging the environment, public health or welfare has been deposited, disposed of, kept, treated, imported, exported, transported, processed, manufactured, used, collected, sorted or produced at any time or is present in the environment (whether or not on property owned, leased, owned, occupied or controlled by any member of the Group) in circumstances which are likely to result in any liability of any member of the Group under Environmental Laws which is materially adverse in relation to the Borrowers ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents; | |
16.1.20 | Ownership of Assets : the Borrower is the sole owner of or fully entitled to use all of its assets and is the legal and beneficial owner of its assets subject only to the Security Agreements and other Permitted Encumbrances; |
59
16.1.21 | Easements : it has all easements, rights of way, rights of ingress and egress necessary for the construction and operation of the Project, except for those as to which it has no reason to believe will not be in place when so necessary; | |
16.1.22 | Encumbrances : save for Permitted Encumbrances no encumbrance exists over all or any of the assets of any member of the Group and the execution of the Transaction Documents to which it is a party and the exercise by it of its rights thereunder will not result in the existence or imposition of nor oblige any member of the Group to create any encumbrance (save for Permitted Encumbrances) in favour of any person over any of its or any member of the Groups assets; | |
16.1.23 | Indebtedness : on the day of signing this Agreement, the Borrower has no indebtedness save for: |
(a) | Permitted Financial Indebtedness (except for indebtedness named under paragraph (e) of the definition of Permitted Financial Indebtedness); | ||
(b) | indebtedness for Development Costs and other similar costs, not exceeding EUR 1.3 million, envisaged in the Investment and Financing Plan and incurred but not yet invoiced or paid); | ||
(c) | indebtedness under the Pre-Activity Agreement (as defined under the EPC Contract) not exceeding EUR 4,210,000 plus VAT; and | ||
(d) | indebtedness to the former shareholders, Kvaerner plc in the amount of EUR 478,687 and Thyssen Rheinstahl Technik Projektgesellschaft mbH in the amount of EUR 2,648,000; | ||
(e) | indebtedness for the payment of the second purchase price instalment for the Site towards ALTMARK INDUSTRIEPARK AG in the amount of EUR 1,755,686 plus VAT and for liabilities under the tenancy agreement dated 16 May 2002; | ||
(f) | further indebtedness to the Shareholders and ALTMARK INDUSTRIEPARK AG to be waived at the latest on the day after Financial Close; | ||
(g) | indebtedness for the ongoing payments which become due at the date the guarantee decision is delivered; and | ||
(h) | further indebtedness not exceeding EUR 100,000; |
16.1.24 | Tax Grants : it is not aware of any reason why the Tax Grants ( Investitionszulagen ) should not be paid in the amounts assumed in the Base |
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Case and no encumbrances exist over any of its claims thereunder or rights and title thereto; |
16.1.25 | Investment Incentives and State Guarantee : the Investment Incentives ( GA-Zuschuss ) given by the State of Sachsen-Anhalt and the State Guarantee are legal, valid and binding obligations of the State Guarantor and the Guarantors respectively and no encumbrances (other than as contemplated hereby) exist over any of its claims under the Investment Incentives ( GA-Zuschuss ) or rights and title thereto; | |
16.1.26 | EU-Decision : the EU-Decision is in full force and effect, it has complied with the terms and conditions of the EU-Decision in all respects, and the EU-Decision has not been modified or amended in any material respect, withdrawn or revoked, since the date of its issuance, and there are no proposals known to the Borrower to amend or modify in any material respect, withdraw or revoke the same, nor is it the subject of any existing challenge by any third party in connection with which the EU-Decision has been suspended pending the outcome of any appeal; | |
16.1.27 | Intellectual Property : it has, or as the case may be, will have available all material Intellectual Property Rights and is not in material breach of or has not infringed in any material respect any Intellectual Property Rights of any other person; | |
16.1.28 | Insurances : all insurances required to be in place, as provided in the Minimum Insurance Schedule, are in full force and effect and all premia then due in respect thereof have been paid in full or will be paid in full out of the proceeds of the next following Advance; | |
16.1.29 | No Deduction or Withholdings : under the laws of its jurisdiction of incorporation in force at the date hereof, it will not be required to make any deduction or withholding from any payment it may make hereunder; | |
16.1.30 | Shareholding : upon the making of the Capital Contributions pursuant to Clause 2.6.1 of the Shareholders Undertaking Agreement, the Share Capital will be EUR 15,000,000 and the Shareholders will be the owner of the following Shares |
Number of | Nominal Value of | |||||||
Shareholder | Shares | Shares | Percentage | |||||
SP Holding
|
5 | EUR 27,360 | 63,58 | % | ||||
|
EUR 27,360 | |||||||
|
EUR 9,160 | |||||||
|
EUR 30,320 | |||||||
|
EUR 9,442,800 |
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Number of
Nominal Value of
Shareholder
Shares
Shares
Percentage
4
EUR 51,130
29,42
%
EUR 31,100
EUR 38,970
EUR 4,291,800
3
EUR 27,360
7
%
EUR 12,940
EUR 1,009,700
and no person will have any right to subscribe for any additional Shares in the Share Capital; |
16.1.31 | Liability vis-à-vis Former Shareholders : it has no liabilities or outstanding obligations to any of its former shareholders other than those to be paid to |
(i) | Kvaerner plc in the amount of EUR 478,687, | ||
(ii) | Thyssen Rheinstahl Technik Projektgesellschaft mbH in the amount of EUR 2,648,000 for compensation payments and EUR 570,646 for ancilliary costs in relation to the purchase of the Site for which Thyssen Rheinstahl Technik GmbH and its legal successor Thyssen Rheinstahl Technik Projektgesellschaft mbH have provided funds; and | ||
(iii) | ALTMARK INDUSTRIEPARK AG in the amount of EUR 1,755,686 plus VAT purchase price in relation to the Site, EUR 546,794 for ancilliary costs in relation to the purchase of the Site for which ALTMARK INDUSTRIEPARK AG has provided funds to the Borrower, and the lease agreement dated 16 May 2002 between the Borrower and ALTMARK INDUSTRIEPARK AG all of which (except for the obligations under the lease agreement) will be repaid under the first Advance; |
16.1.32 | Assurance of Overall Financing : to the best of its knowledge there is an Assurance of Overall Financing; | |
16.1.33 | Accounts : the Borrower has no accounts other than those established or to be established in accordance with this Agreement; | |
16.1.34 | Subsidiaries and Affiliates : it does not have any subsidiaries, other than the Permitted Subsidiaries, or any investments in any other person other than Permitted Investments; |
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16.1.35
Utilities and Facilities
: all utility services, means of transportation, facilities and
other materials necessary for the importation, construction, installation, and operation of
the Project (including, without limitation, gas, wood receiving, pulp dispatching, fuel,
electrical, water supply, storm drainage, rail, port, telephone and sewage services and
facilities, as necessary) are or, to the best of the Borrowers knowledge after due inquiry,
will be available to the Project (in the case of utility services, at or within the boundaries
of the Site) as soon as required for the construction, operation, testing and start-up of the
Project, and to the extent necessary or desirable, arrangements have been made on commercially
reasonable terms for such services, means of transportation, facilities and other materials,
except for such arrangements as are not required to be made as of the date hereof by the
applicable Transaction Documents, with respect to which arrangements the Borrower has no
reason to believe such arrangements will not be made at the time so required;
16.1.36
Adequate Facilities
: other than those services to be performed and materials to be supplied
that can reasonably be expected to be commercially available as and when required or those
described in Clause 16.1.35 (
Utilities and Facilities
) which are not yet available, the
services to be performed, the facilities and materials to be supplied and the property
interests and other rights granted pursuant to the Project Contracts comprise all of the
property interests and other rights necessary to secure any right or privilege which is
material to the acquisition, development, construction, installation, completion, operation
and maintenance of the Project in accordance in all material respects with the Transaction
Documents and all Authorisations required for the Project or the performance of its
obligations under the Transaction Documents;
16.2
Repetition
Each of the representations and warranties pursuant to Clause 16.1 (
Representations and
Warranties
) (other than Clause 16.1.29) will be repeated by the Borrower by reference to
the facts and circumstances then existing in each Drawdown Request and on the first day of
each Interest Period.
17.
FINANCIAL CALCULATIONS (WIRTSCHAFTLICHKEITSBERECHNUNGEN) AND FINANCIAL COVENANTS
17.1
Annual Debt Service Cover Ratio
The Borrower shall ensure that the Annual Debt Service Cover Ratio does not fall below 110
per cent. in the period from 31 December 2011 to 31 December 2013 and 120 per cent. at any
time thereafter.
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17.2 | Senior Debt/EBITDA Cover Ratio | |
The Borrower shall ensure that the Senior Debt/EBITDA Cover Ratio does not exceed the ratios set out in the following table: |
Testing Date | Ratio | |||
31 December 2009
|
13.0 | |||
30 June 2010
|
11.0 | |||
31 December 2010
|
11.0 | |||
30 June 2011
|
7.5 | |||
31 December 2011
|
7.5 | |||
30 June 2012
|
7.0 | |||
31 December 2012
|
6.5 | |||
30 June 2013
|
6.5 | |||
31 December 2013
|
6.0 | |||
30 June 2014
|
5.5 | |||
31 December 2014
|
5.5 | |||
30 June 2015
|
5.0 | |||
31 December 2015
|
5.0 | |||
30 June 2016
|
5.0 | |||
31 December 2016
|
4.5 | |||
30 June 2017
|
4.5 |
17.3 | Ratio default cure right |
(a) | If, on any relevant date, the required ratios pursuant to Clause 17.1 ( Annual Debt Service Cover Ratio ) or 17.2 ( Senior Debt/EBITDA Cover Ratio ) is or would, but for paragraph (c) below, be breached (the Ratio Default ), the Borrower may, within twenty Business Days of the breach being notified to the Borrower by the Agent, cure the Ratio Default by means of an Equity Cure Measure. | ||
(b) | The right to cure pursuant to paragraph (a) above may not be exercised more than once in each fiscal year of the Borrower for each of the ratios pursuant to 17.1 ( Annual Debt Service Cover Ratio ) or 17.2 ( Senior Debt/EBITDA Cover Ratio ). | ||
(c) | Subject to paragraph (b) above, no Event of Default shall arise in respect of any breach of the ratios pursuant to Clause 17.1 ( Annual Debt Service Cover Ratio ) or 17.2 ( Senior Debt/EBITDA Cover Ratio ), as the case may be, until the twenty Business Days period referred to in paragraph (a) above has expired. |
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17.4 | Method of Calculation of Annual Debt Service Cover Ratio | |
The initial projected Annual Debt Service Cover Ratios are set out in the Base Case delivered pursuant to paragraph 9 of Schedule 2 ( Conditions for the First Drawdown ). | ||
17.5 | Recalculation | |
The Borrower will calculate the Annual Debt Service Cover Ratio and the Senior Debt/EBITDA Cover Ratio on each Repayment Date and on the basis of the financial statements most recently delivered to the Agent pursuant to Clauses 18.1.1(a), 18.1.1(b) or as the case may be Clause 9.4.3(c)(ii). The Borrower will prepare a certificate of compliance, which shall be executed on behalf of the Borrower, in respect of the financial covenants in form and substance satisfactory to the Agent and containing details of the calculation of by the Borrower of the financial covenants enabling the Agent to ascertain compliance by the Borrower with the financial covenants. | ||
17.6 | Adjustments to Financial Model | |
The Borrower will provide information reasonably requested by the Agent for the updating of the Financial Model. | ||
18. | INFORMATION REQUIREMENTS | |
18.1 | Financial Statements | |
18.1.1 | The Borrower will deliver to the Agent and C&L in sufficient copies for each of the Lenders: |
(a) | as soon as available, but no later than 90 days after the end of its financial year: |
(i) | the balance sheet, profit and loss statement and cash flow statement for the Borrower and (on a consolidated basis) for the Group for such financial year, audited by a recognised firm of independent auditors licensed to practise in the Federal Republic of Germany, together with a statement from the Borrower reconciling such financial statements with the budgeted yearly accounts and explaining all material deviations of such financial statements from the budgeted yearly accounts referred to in Clause 18.3 ( Project Budget ); | ||
(ii) | the related auditors report; and | ||
(iii) | a confirmation by such auditors that all transactions effected by the Borrower with Related Parties in such financial year have been made on terms no less beneficial to the Borrower than those obtainable on an arms length basis; |
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(b) | as soon as available, but no later than 60 days after the end of its financial half year, the balance sheet, profit and loss statement and cash flow statement for the Borrower and (on a consolidated basis) for the Group for such period which will be in a form reasonably acceptable to the Lenders and will be accompanied by data necessary for the calculation of the Annual Debt Service Coverage Ratio, certified by its independent auditors; and | ||
(c) | no later than thirty (30) days after the end of each calendar quarter, a management commentary as to, inter alia , the Borrowers and the Groups performance during such calendar quarter and any material developments or proposals affecting the Borrower and the Group or its business. |
18.1.2 | The Borrower will ensure that each set of accounts delivered by it pursuant to this Clause 18 is prepared on the same basis as was used in the preparation of its Original Financial Statements or, in the case of a divergence therefrom, will be accompanied by a statement explaining each changed accounting principle and its effects. | |
18.1.3 | The Borrower will at the request of the Agent require and authorise its auditors to discuss with the Lenders matters reasonably related to or arising out of the annual audit of the Borrower by such auditors. | |
18.1.4 | The Borrower will provide the financial information required to be provided to the Lenders under this Clause 18 in the German and the English language. | |
18.2 | Compliance Certificates | |
Each of the financial statements delivered by the Borrower under Clause 18.1.1(a) and 18.1.1(b) will be accompanied by a compliance certificate signed by two directors of the Borrower certifying that all payments effected by the Borrower out of the Proceeds Account were in compliance with the priorities set out in Clause 9.4.3 ( Application of Moneys on Proceeds Account ). | ||
18.3 | Project Budget | |
18.3.1 | The Borrower will deliver to the Agent, with sufficient copies for each of the Lenders, starting from the calendar year in which the Start-Up is expected to occur as soon as available, but no later than 30 days prior to the beginning of the relevant financial year, the budgeted balance sheet, the budgeted profit and loss statement and the budgeted cash flow statement for the next following financial year and the Borrower will be available for a meeting with the Lenders within two (2) weeks thereafter, to discuss such documents with the Lenders. Such statements will forecast the costs of maintenance, overhauls and Capital |
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Expenditure for the next following three years in each case for the Borrower and for the Group. | ||
18.3.2 | Following review by the Agent and if necessary the Technical Adviser and the Wood Supply Adviser, if the Agent is satisfied with the information supplied pursuant to Clause 18.3.1, it will confirm the same to the Borrower. If the Technical Adviser, the Wood Supply Adviser or the Agent is not satisfied with such information, the Borrower shall make such amendments to such documents as may be reasonably required by the Technical Advisor and/or Wood Supply Adviser and/or the Agent. | |
18.4 | Reports during Construction Period | |
18.4.1 | During the Construction Period the Borrower will provide the Agent, the Technical Adviser and the Wood Supply Adviser with the following information within fifteen (15) days of the last day of each calendar quarter: |
(a) | quarterly construction progress reports in accordance with the conditions set out in Schedule 14 ( Sample Table of Content regarding Quarterly Construction Progress Reports ); and | ||
(b) | quarterly reports on the development of the costs budgeted for construction, including a confirmation or a proposal for a revised version of the Project Budget including a budgeted cost/actual cost comparison; and | ||
(c) | any material reports and other material notifications issued by the EPC Contractor and/or any of its sub-contractors to the Borrower in respect of the Project, including but not limited to the Detailed Program and any work around plan (both as described in Clauses 8.7 and 8.11, respectively, of the EPC Contract). |
18.4.2 | The Technical Adviser and the Wood Supply Adviser will review such reports as to their compliance with the requirements of this Agreement, the EPC Contract and the Investment and Financing Plan. If the Technical Adviser and the Wood Supply Adviser is satisfied with such reports, he will confirm the same to the Agent. If the Technical Adviser and/or the Wood Supply Adviser and/or the Agent is not satisfied with such reports, the Borrower shall consult with the Agent, the EPC Contractor and/or any of its subcontractors with a view to rectifying the situation and ensuring that all future reports are satisfactory to the Technical Adviser and/or Wood Supply Adviser and/or the Agent. | |
18.5 | Reports during Operation Period | |
During the Operation Period the Borrower will provide the Agent with a quarterly production report, including, inter alia , actual production figures, |
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operating cost figures, sales and sales price figures and the budgeted figures thereof plus
an actual/budget comparison within thirty (30) Business Days of the last day of each
calendar quarter.
18.6
Other Financial Information
The Borrower will from time to time on the request of the Agent or any Lender, furnish the
Agent or such Lender with such information about its business, condition (financial or
otherwise), operations, performance, properties or prospects as the Agent or such Lender
through the Agent may reasonably require, in particular all information and documents as
may be required under the provisions of the German Banking Act (
Gesetz über das
Kreditwesen
) and any material changes to the information included in the Information
Memorandum and the Financial Model.
18.7
Miscellaneous Information
18.7.1
The Borrower will inform the Agent in writing:
(a)
promptly upon a Responsible Officer becoming aware of it, of the occurrence
of any Event of Default or Potential Event of Default and confirm to the Agent in each
Drawdown Request and, after the Facility has been fully drawn, not later than thirty
(30) days after the end of each calendar quarter that, save as previously notified to
the Agent or as notified in such Drawdown Request or, as the case may be,
confirmation, no Event of Default or Potential Event of Default has occurred and is
continuing;
(b)
promptly upon a Responsible Officer becoming aware of it, of any
circumstances which are likely to delay in any material respect the completion of the
Project in accordance with the Base Case, including any event which might reasonably
be expected to result in Cost Overruns;
(c)
promptly upon a Responsible Officer becoming aware of it, of any material
delay in the payment or non-payment of the Government Grants compared with the
assumption made in the Finance Model;
(d)
promptly upon a Responsible Officer becoming aware of it, of any
circumstances which are likely to have a materially adverse impact on the validity,
enforceability and continuance of the State Guarantee, the Government Grants and the
EU-Decision;
(e)
promptly upon a Responsible Officer becoming aware of it, of any Event of
Force Majeure or any other event which might delay construction or operation or which
might reasonably be expected to interrupt or reduce
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the operation of the plant excluding any planned outage or maintenance period previously notified to the Agent or which might reasonably be expected to have a Material Adverse Effect; | |||
(f) | promptly upon a Responsible Officer becoming aware of it, of any Environmental Claim commenced or threatened against it; | ||
(g) | promptly upon a Responsible Officer becoming aware of it, of any material default of any party to a Project Contract; | ||
(h) | within ten (10) Business Days upon a Responsible Officer becoming aware thereof, of the details of each litigation, arbitration or administrative proceeding pending or threatened against it which is likely to result in a liability of the Borrower in an amount or amounts exceeding, in aggregate, EUR 2,000,000 or the equivalent in other currencies; | ||
(i) | of any Change of Control; | ||
(j) | of any changes in its senior management; | ||
(k) | as soon as reasonably possible after a Responsible Officer becoming aware of it, of possible Capital Expenditures in an amount of more than EUR 2 million in excess of the Project Budget for that financial year. |
18.7.2 | The Borrower will provide upon request such verbal or written information concerning the Project as the Agent or the Lenders may reasonably require including information that is publicly available. | |
The Borrower will fulfil its reporting requirements pursuant to this Clause 18 in a form which will allow the Agent to make the information available to the Lenders without material effort. The Agent will notify the Borrower of the number of copies needed and the form (e-mail, fax, mail) in which the information will have to be provided. The Agent will promptly upon receipt forward any information to the Lenders and, to the extent necessary, to the Guarantors. | ||
19. | INSPECTION RIGHTS | |
The Borrower shall permit the Agent, the Lenders or any of their representatives or the Advisers to inspect the Site and its books and records during usual business hours, and upon reasonable prior notice, for the purpose of checking whether the Borrower is in compliance with the provisions of the Transaction Documents. Any requests for such inspections shall be made through the Agent. |
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20.
HEDGING REQUIREMENTS
20.1
Implementation
The Borrower will implement the Hedging Strategy in a manner which is in form and substance
acceptable to the Agent and will enter into all Derivative Transactions necessary for such
purpose with the Hedging Counterparty.
20.2
Compliance with Hedging Strategy
The Borrower will not enter into any Derivative Transaction except in compliance with the
Hedging Strategy.
20.3
Adjustments
The Borrower and the Agent will negotiate in good faith and agree to adjustments of the
Hedging Strategy from time to time whenever adjustments are considered necessary by the
Borrower or the Agent at all times having regard to the interests of the Lenders and the
financial condition of the Borrower.
21.
COVENANTS
21.1
Positive Covenants
The Borrower shall:
21.1.1
Maintenance of Legal Validity and Legal Status
: do all things necessary to maintain its
existence as a legal person and to ensure the legality, validity, enforceability or
admissibility in evidence in the Federal Republic of Germany of the Transaction Documents
including the obtaining and maintaining of all applicable Authorisations necessary for the
Project and the performance of its obligations under the Transaction Documents, as and when
required, and, on request of the Agent, shall supply copies (certified by a director of the
Borrower as true, complete and up to date) of any such Authorisations;
21.1.2
Applicable Laws and Authorisations
: with the exception of Environmental Laws and
Environmental Permits where the obligations of the Borrower with respect thereto are set out
in Clause 21.1.15 (
Environmental Compliance
) comply in all material respects with all laws and
comply with, obtain, maintain and renew, all applicable Authorisations in each case which are
applicable in connection with the Project and the Borrowers business and operation generally
and required for its ability to perform its obligations under the Transaction Documents. As
soon as the Authorisations granted after the conclusion of this Agreement become valid and
upon request by the Agent, the Borrower will obtain legal opinions on such validity from a
reputable law firm addressed to and for the benefit of the Agent;
21.1.3
Transaction Documents
: Subject to Clause 21.2.15(b) (
Additional Project Contracts and
Amendments to Project Contracts
) enter into, maintain in full force and effect and comply with
all Transaction Documents;
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21.1.4 | Authorised signatories : provide the Agent with a list of persons authorised to sign Change Orders as defined in the EPC Contract and amendments to the EPC Contract; | |
21.1.5 | Relevant Advisers : from time to time and on the reasonable request of the Agent inform the relevant Advisers and co operate with them to enable each such Adviser fully to perform its obligations under its advisory agreement; | |
21.1.6 | Information regarding Permitted Encumbrances and Permitted Financial Indebtedness : provide details to the Agent of any newly created Permitted Encumbrance granted outside the ordinary course of business or any newly incurred Permitted Financial Indebtedness incurred to any person; | |
21.1.7 | Information of Technical Adviser and Wood Supply Adviser : provide the Technical Adviser and the Wood Supply Adviser during the Construction Period on a quarterly basis and upon request with all information and documentation reasonably required for the purposes of this Agreement and bear the reasonable costs of the report to be provided by the Technical Adviser and the Wood Supply Adviser pursuant to Clause 18.4.2 ( Reports during Construction Period ); | |
21.1.8 | Preservation of Assets : maintain and preserve all of its assets in good condition and undertake regular maintenance, except disposal of obsolete assets, in accordance with prudent industry practice or the EPC Contractors and Suppliers recommendations; | |
21.1.9 | Transactions with Third Parties : conclude and procure that any subsidiary of the Borrower concludes any transaction with a third party, irrespective of whether or not it is a Related Party, only on terms no less beneficial to it than those obtainable on an arms length basis. All contracts to be concluded by it with a Related Party will be submitted to the Agent in their final draft form for approval, such approval not to be unreasonably withheld. It will further waive any Financial Indebtedness owed by any person to it only for valuable market consideration; | |
21.1.10 | Conduct of Business : cause the Project to be built, operated and maintained in accordance with good industry practices, the Project Contracts and all conditions, obligations, requirements set out in any Authorisation or technical specifications from time to time agreed with the EPC Contractor or by Suppliers, or issued by any Authority in respect of the Borrower or the Project and ensure that all staff necessary for the proper and efficient operation of its business or that of its subsidiaries in place; | |
21.1.11 | Payments and Application of Payments : otherwise than as referred to in Clause 9.1.2 ( Disbursement Account ) and save for |
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(a) | any proceeds of material loss and damage insurance obtained after Acceptance which will be paid to the Insurance Account and applied in accordance with Clause 9.4.4 ( Application of Insurance Proceeds ), | ||
(b) | any third party liability insurance which will be paid directly to the relevant third party, and | ||
(c) | Excess Start-up Cash Flows up to a maximum amount of EUR 15 million which will be paid into the Equity Reserve Account |
ensure that all monies received by it in connection with the Project are paid to the Proceeds Account and applied in accordance with Clause 9.4.3 ( Application of Moneys on Proceeds Account ). | ||
Amounts received in respect of the Government Grants and VAT refunds shall, however, be applied to the repayment of Tranche E in accordance with Clause 6.3.9 ( Repayments other than First Repayment ) or for purposes corresponding to the purpose of Tranche E. To the extent that, at the time these amounts are received on a date after the First Repayment Date on which Tranche E has been completely repaid in accordance with Clause 9.4.3(a)(xi) ( Application of Moneys on Proceeds Account ), the Borrower will however transfer these amounts to the Shareholders Account. | ||
21.1.12 | Tax : duly and punctually pay and discharge: |
(a) | all taxes, assessments and governmental charges imposed upon it or its assets within the time period allowed therefore without imposing penalties and without resulting in an encumbrance having priority to the Lenders or any security purported to be granted by or created pursuant to the Security Agreements; and | ||
(b) | all lawful claims which, if unpaid, would by law become encumbrances upon its assets |
(save to the extent payment thereof is being contested in good faith by the Borrower and where payment thereof can lawfully be withheld and would not result in an encumbrance having priority to the Lenders or any security purported to be granted by or created pursuant to the Security Agreements). | ||
21.1.13 | Filing of Tax Returns : file or cause to be filed all tax returns required to be filed in all jurisdictions in which the Borrower or any of its subsidiaries is situated or carries on business or is otherwise subject to tax; | |
21.1.14 | Claims Pari-Passu : ensure that at all times the claims of the Lenders against it under the Financing Documents rank at least pari passu with the claims of all its |
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unsecured and unsubordinated creditors save those whose claims are preferred by any bankruptcy, insolvency, liquidation or other similar laws of general application and save for the claims resulting from those land charges, which will be released following first drawdown; | ||
21.1.15 | Environmental Compliance : comply in all material respects with all Environmental Law and obtain and maintain any Environmental Permits and notify the Agent, promptly after a Responsible Officer becomes aware of the same of: |
(a) | any material Environmental Claim made on it or to any occupier of any property owned or leased by it under any Environmental Law which may affect the compliance with this Agreement; and | ||
(b) | any circumstances which arise whereby any material remedial action is likely to be required to be taken by, or at the expense of, it pursuant to any Environmental Law; |
21.1.16 | Enforcement : take all reasonable steps to promptly enforce its rights under any Project Contract where failure to do so is material in relation to the Project and the rights and obligations of the parties to any of the Financing Documents; | |
21.1.17 | Compliance with Conditions for State Guarantee and Government Grants : comply, at all times, with all conditions, obligations and requirements of, and assume all undertakings in, the EU-Decision, the State Guarantee and the Government Grants, in particular: |
(a) | to allow inspections by the Guarantors or C&L (either by themselves or by agents appointed by them) at any time for the purpose of checking whether a drawdown under the State Guarantee may be made or whether the conditions for such drawdown are satisfied or have been satisfied; | ||
(b) | to authorise the Agent and the Lenders to submit to the Guarantors and C&L all documents concerning the Facility and the Security and to give to the Guarantors and C&L all information requested by each of them; | ||
(c) | to pay all fees in connection with the State Guarantee; and | ||
(d) | to discharge the Arranger, the Agent, the Security Agent and the Lenders vis-à-vis the Guarantor and C&L from any duty of discretion ( Schweigepflicht ) whereby any requests by the Lenders shall be made through the Agent; |
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21.1.18 | Intellectual Property : procure and comply in all material respects with all material Intellectual Property Rights necessary to construct and operate the Project and conduct the Borrowers business; | |
21.1.19 | Security : provide and maintain the Security and any other security to be provided to the Lenders pursuant to the Financing Documents and procure that the Security is effective and maintained and upon reasonable request of the Agent provide additional security over its assets in favour of the Lenders. The Agent will determine the details of the additional security within its reasonable discretion ( billiges Ermessen ) pursuant to § 315 BGB. The provision of additional security will not affect existing Permitted Encumbrances; | |
21.1.20 | Defects Liability Protection : refrain from any acts which may prejudice materially and adversely any defects liability protection afforded to the Borrower by the Contractor under the EPC Contract or, to the Borrowers knowledge, by any subcontractor (at any level) to the Contractor and/or the Borrower; | |
21.1.21 | Management : employ experienced professionals in the paper and pulp industry; | |
21.1.22 | Syndication : provide at its own cost assistance to the Original Lender in the syndication of the Facility, including without limitation, by taking all reasonable steps to make management available for the purpose of making presentations to, or meeting, potential lending institutions and comply with all reasonable requests for information from potential syndicate members; | |
21.1.23 | Technical Assistance : as and when reasonably requested obtain such assistance as may be necessary prior to Acceptance in connection with the construction, commissioning, testing, start-up, management, operation and maintenance of the Project; | |
21.1.24 | Information Memorandum : use best endeavours to assist the Arranger in the preparation of the Information Memorandum and ensure that, save as otherwise disclosed in the Information Memorandum, the factual information contained in the Information Memorandum is true and accurate and complete in all material respects on the date thereof (or, if different, as of the date when it is stated) and that the Borrower and the Sponsors do not omit to make any disclosure which would make the Information Memorandum misleading in any material respect, and in the case of any financial projections or expressions of opinion contained in the Information Memorandum, procure that such projections and expressions are prepared or made in good faith and on the basis of assumptions believed by the Borrower or any of its subsidiaries to be reasonable and ensure that, if in the opinion of the Arranger it is necessary for the purpose of syndication, the Information Memorandum is updated immediately prior to syndication; |
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21.1.25 | Rented part of the Site : not terminate the site lease agreement dated 16 May 2002 and made between the Borrower and ALTMARK INDUSTRIEPARK AG, before the acquisition of the part of the Site leased to it without the Majority Lenders consent; | |
21.1.26 | Owners Scope : implement the Owners Scope in accordance with internationally recognised engineering standards in a prudent and timely manner so as not to hinder achievement of Acceptance by month 28 after the Commencement Date (as defined in the EPC-Contract) and so that such additional works are free from any Defects and do not violate any intellectual property rights of third parties; | |
21.1.27 | Permitted Subsidiaries : save as the Majority Lenders may otherwise agree (such agreement not to be unreasonably withheld) ensure that any Permitted Subsidiaries operate their respective businesses in a proper and efficient manner and in accordance with the principles set out in Schedule 11 ( Financing of the Subsidiaries ); | |
21.1.28 | Reduction of Existing Financial Indebtedness : repay in full, using funds from the first Advance, and in any event within 5 Business Days following such Advance: |
(a) | the EUR 12,286,000 loan made to the Borrower by Dresdner Bank AG and discharge all encumbrances securing any amounts payable thereunder; | ||
(b) | the claims of ex-shareholder Kvaerner plc in the amount of EUR 478,687 and Thyssen Rheinstahl Technik Projektgesellschaft mbH in the amount of EUR 2,648,000; | ||
(c) | the claims of ALTMARK INDUSTRIEPARK AG for the payment of the second instalment of the purchase price for the Site in the amount of EUR 1,755,686 plus VAT; and | ||
(d) | the claims of RWE-IN, ALTMARK INDUSTRIEPARK AG and Thyssen Rheinstahl Technik Projektgesellschaft mbH for the ancilliary costs in connection with the purchase of the Site for which RWE-IN, ALTMARK INDUSTRIEPARK AG, Thyssen Rheinstahl Technik GmbH and its successor in title Thyssen Rheinstahl Technik Projektgesellschaft mbH have provided to the Borrower funds in the amount of EUR 2,708,339. |
21.1.29 | Accounts : close any existing bank account within one (1) month after the first Advance other than as contemplated by this Agreement. |
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21.2 | Negative Covenants | |
The Borrower will not (by action or omission): | ||
21.2.1 | Negative Pledge : create or permit to subsist any encumbrance over all or any of its assets other than a Permitted Encumbrance or create any restriction or prohibition on encumbrances over all or any of its assets; | |
21.2.2 | Investments, Loans and Guarantees : make any investment in, make any loans to, grant any credit or other financial accommodation to or for the benefit of any person or give or have outstanding any guarantee or indemnity to or for the benefit of any person other than in respect of product liability assumed in the ordinary course of business or otherwise voluntarily assume any liability, whether actual or contingent, in respect of any obligation of any other person other than Permitted Investments and save as set out in the principles set out in Schedule 11 ( Financing of the Subsidiaries ), nor will it make any material fixed asset investments ( Sachinvestitionen ) or financial investments ( Finanzinvestitionen ) without the prior consent of the Guarantors or except as permitted by this Agreement in relation to the Project; | |
21.2.3 | Disposals : dispose of the whole or any part of its assets other than in the ordinary course of business or other than by way of Permitted Disposals, nor sell any material investments ( Beteiligungen ) or divisions of its business ( Betriebsteile ) without the prior consent of the Majority Lenders and the Guarantors. Any emission permits under the Kyoto Protocol to the United Nations Framework Convention on Climate Change dated 11. December 1997 shall, however, be disposed of only with the Agents consent; | |
21.2.4 | Financing : use the proceeds of any Advances for any other purposes than those set out herein; | |
21.2.5 | Transfer of Shares or Shareholder Loans : consent to any transfer of Shares or Shareholder Loans in violation of the Shareholders Undertaking Agreement; | |
21.2.6 | Shares in Subsidiaries : |
(a) | sell or otherwise dispose of (in any transaction or series of transactions whether related or not) its existing shares in any direct subsidiary; and | ||
(b) | procure that no direct subsidiary shall sell or dispose of (in any transaction or series of transactions whether related or not) its existing shares in any of its subsidiaries or issue any new shares to any third party where following any such sale more than 49% of the issued ordinary share capital of the relevant subsidiary would be owned by one or more third parties, |
76
unless the terms of such sale and/or issue (including the terms upon which any new shareholder may enter into contracts with such subsidiary) have been previously approved in writing by the Majority Lenders, such approval not to be unreasonably withheld. In no event shall any such new shareholder be a Sponsor or any affiliate of a Sponsor unless previously approved in writing by the Majority Lenders (such approval not to be unreasonably withheld). |
21.2.7 | Shareholders Account : make any payments to the Shareholders Account other than in compliance with the provisions of this Agreement; | |
21.2.8 | Capital Expenditures : incur any Capital Expenditures at any time or in any amount of more than EUR 2 million in excess of the Project Budget for that financial year other than with the consent of the Majority Lenders unless the same is required to comply with applicable Environmental Law in Germany; | |
21.2.9 | Capital Reserves : repay any capital reserves set up for Kvaerner plcs, Thyssen Rheinstahl Technik Projektgesellschaft mbH or any Shareholders waivers of repayment claims under the shareholder loans granted by them to the Borrower unless (a) the tax audit of the accounts has accepted the amount of such capital reserves and (b) they are funded out of the Shareholders Account and identify such capital reserves as a separate balance sheet item; | |
21.2.10 | Shareholder Loans : (a) prior to the First Repayment Date pay interest on any Shareholder Loans and thereafter only in accordance with the terms hereof and of the Shareholder Loans and (b) prepay, repay, redeem, purchase or otherwise acquire any Shareholder Loans prior to the Tranche A Final Repayment Date and the repayment in full of each outstanding Advance hereunder; | |
21.2.11 | Financial Indebtedness : incur, create or permit to subsist or have outstanding any Financial Indebtedness or enter into any agreement or arrangement whereby it is entitled to incur, create or permit to subsist any Financial Indebtedness other than, in each case, Permitted Financial Indebtedness; | |
21.2.12 | Encumbrances : create or permit to subsist any encumbrance on any of its assets other than Permitted Encumbrances; | |
21.2.13 | Mergers : split, merge or consolidate with any other person, enter into any demerger transaction, or participate in any other type of corporate reconstruction without the prior consent of the Majority Lenders and the Guarantors; | |
21.2.14 | Subsidiaries : create any subsidiary or permit to exist any interest in any person (whether by shareholding, joint venture, partnership, whether any income or profits are, or would be, shared or transferred with any other party or otherwise), other than the Permitted Subsidiaries; |
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21.2.15 | Additional Project Contracts and Amendments to Project Contracts : |
(a) | enter into any additional material Project Contracts with a value of more than EUR 4 million or contracts for the sale of energy and the agreement on reserve electricity services save with the prior written consent of the Majority Lenders (such consent not to be unreasonably withheld or delayed); | ||
(b) | subject to Clause 21.2.16 ( Project Specifications ), only, amend in any material respect, or grant any waiver or consent under, any Project Contract if such amendment, waiver or consent would not reasonably be expected to be materially adverse in relation to the Borrowers ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents. In the case of Project Contracts with a value of more than EUR 4 million or contracts for the sale of energy and the agreement on reserve electricity services such amendments, waivers and consents will have to be notified to the Agent in writing seven (7) days in advance; | ||
(c) | cancel or terminate any Project Contract with a value of more than EUR 4 million or any contract for the sale of energy and the agreement on reserve electricity services (other than the EPC Contract or any contract for the carrying out of the necessary infrastructure works at the Site), without having given thirty (30) days prior written notice to the Agent and then only so long as a replacement contract is in place on terms no less beneficial to the Borrower as the cancelled/terminated Project Contract; and | ||
(d) | cancel, terminate or suspend the EPC Contract or any contract for the carrying out of the necessary infrastructure works at the Site or (subject to Clause 21.2.16 ( Project Specifications )) grant any waiver or consent under or amend the same without Majority Lenders prior written consent; |
21.2.16 | Project Specifications : make any changes to the design, specification or configuration of the plant without Majority Lenders consent except for such amendments and changes which are in conformity with the EPC Contract or are of a minor nature, it being understood that any such change which might result in an increase in the Project Costs in an aggregate amount of at least EUR 1 million or a delay in a System Start-Up as defined in the EPC Contract or in Acceptance will not be deemed to be of a minor nature; |
21.2.17 | Waiver of tests under EPC Contract : waive or materially alter any test procedures or approve any test results in connection with the tests under Clauses |
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16 to 19 of the EPC Contract where this could have an adverse effect on the Project without Majority Lenders consent (such consent not to be unreasonably withheld or delayed); | ||
21.2.18 | Acceptance Certificate : issue the Acceptance Certificate as defined in the EPC Contract without the Agents consent (such consent not to be unreasonably withheld or delayed); | |
21.2.19 | Shares : purchase, cancel or redeem any Share Capital, reduce the Share Capital, issue any Shares otherwise than to an existing Shareholder, grant any option over or make any offer of Shares to any person or alter any material rights attaching to the Shares without the Majority Lenders and the Guarantors consent. Their consent is however not required in relation to the offer of Shares; | |
21.2.20 | Shareholders Agreement : change its articles of association in any manner which would be inconsistent with the provisions of any Transaction Document without Majority Lenders consent (such consent not to be unreasonably withheld); | |
21.2.21 | Change of Business : make any material changes to the general nature of its business as a pulp mill (including wood harvesting and procurement as well as logistic services) and any business incidental thereto or carry on any other business which results in any material change to the nature of such business; | |
21.2.22 | Abandonment : abandon the Project; | |
21.2.23 | Withdrawals from Cash Collateral Accounts : withdraw any moneys on the Cash Collateral Accounts other than pursuant to the provisions of the Financing Documents; | |
21.2.24 | Accounts : open or operate any bank accounts other than as contemplated by this Agreement; | |
21.2.25 | Assignment and Encumbrance of Government Grants : assign, pledge or otherwise charge, encumber or dispose of its claims, rights and title under and to the Government Grants except as provided in the Investment Incentives Assignment Agreement listed in Schedule 9 ( Security Agreements ); | |
21.2.26 | Financial Year : change its financial year; | |
21.2.27 | Obligations : incur any material obligations not contemplated by or permissible under this Agreement or which the Borrower assumes in connection with deliveries and services undertaken by it in the ordinary course of business without the prior consent of the Guarantors. |
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22. | INSURANCES | |
22.1 | General | |
The Borrower will effect through brokers, previously approved in writing by the Agent, pay the premiums when due, maintain in full force and effect and comply with all provisions of the insurances for the Construction Period and the Operation Period, under forms of policies commonly accepted in the industry and with reputable insurance companies reasonably acceptable to the Agent. Such insurances include the insurances set out in Schedule 12 ( Minimum Insurance Schedule ) and Schedule 12a ( Minimum Insurance Operation Period Schedule ) and such other insurances as the Agent specifies are required to be maintained in connection with the Project in accordance with prudent operating practice. | ||
22.2 | Specific Provisions of the Insurances | |
The Borrower will provide for the following with respect to all Material Insurances: | ||
22.2.1 | Sole Loss Payee : the Security Agent to be named as sole loss payee in all policies save, in relation to policies relating to third party liability, where payment is made directly to the third party claiming thereunder in full and final settlement of his claim. A payment to the loss payee in accordance with this Clause shall, to the extent of that payment, be made to the Insurance Account or any other account specified to the insurers by the Security Agent and discharge the liability of the respective insurer to pay the Borrower or other claimant insured party. The arrangements in this Clause shall continue to apply notwithstanding the liquidation or insolvency of the Borrower or any of the insurers; | |
22.2.2 | Waiver : the insurers to agree to waive all rights of subrogation or action against the Security Agent unless any of the members of the executive board ( Vorstand ) of the Security Agent acted with gross negligence or wilful misconduct ( Vorsatz ); | |
22.2.3 | Reduction of Insurance Proceeds : the insurers not to reduce any insurance proceeds due and payable to the Security Agent (on behalf of itself and other beneficiaries) as loss payee, save in respect of any unpaid premium if so required by the respective insurer; | |
22.2.4 | Insurance Claims Assignment : cause the insurers to acknowledge that they have noticed that, by the Insurance Claims Assignment Agreement as set out in Schedule 9 ( Security Agreements ), the Borrower assigned to the Security Agent (for and on behalf of the Lenders) all its existing and future rights and claims in and to the Material Insurances (including all claims of whatsoever nature thereunder and return of premiums and proceeds in respect thereof). The insurers |
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shall also confirm that they have not received notice of any other assignment, charge or other encumbrance of the Borrowers rights and claims under the respective insurance. | ||
22.2.5 | Adequate Information : the insurers to acknowledge that they have received adequate information in order to evaluate the risk of insuring the Borrower in respect of the risks hereby insured; | |
22.2.6 | Cancellation : the insurers not to cancel ( kündigen ) the Material Insurances during the Construction Period; | |
22.2.7 | Notices : the insurers to give in writing to the Security Agent |
(a) | subject to 22.2.6 a thirty (30) days notice of cancellation, non-renewal (whether for non-payment of premium or otherwise), suspension (if applicable) or adverse change of terms; | ||
(b) | a thirty (30) days notice of any reduction in limits or coverage, any increase in deductibles or any termination before the original expiry date is to take effect; and | ||
(c) | as soon as any of the insurers becomes aware, notice of any act, event or omission which such insurer considers may invalidate or render unenforceable in whole or in part any insurance. |
22.2.8 | Delivery of Notices and Documents : the policies to stipulate that any notice or document to be served in relation to any policy may be delivered or sent by prepaid recorded delivery post (if within the Federal Republic of Germany), by prepaid airmail (if elsewhere) or facsimile process to the party to be served at its registered office or at such other address as it may have notified to the other parties in writing in accordance with this Clause. Any such notice will be deemed to be given as follows: |
(a) | if delivered by hand or by mail, when delivered; and | ||
(b) | if by facsimile when transmitted, but only if, immediately after the transmission, the senders fax machine records the correct answerback; |
22.2.9 | Governing Law and Jurisdiction : the insurance policies to be governed by German law and each of the insurers and co-insured to agree that any legal proceedings arising out of or in connection with the policies will be brought in the exclusive jurisdiction of a German court. | |
22.3 | Insurance Documentation | |
The Borrower will promptly provide to the Security Agent copies of all cover notes and policies (including endorsements) issued from time to time in relation |
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to each insurance, and of all changes requested or effected thereto, and, if so requested by the Security Agent, of placing slips and all documents disclosed or disclosable to the insurers of each insurance and relating to claims notified or notifiable to insurers or the insurance brokers. In addition, the Borrower will promptly deliver to the Security Agent the originals of all policies (including endorsements) and placing slips. | ||
22.4 | Inspection Right | |
The Security Agent or any of its representatives or the Advisers will be entitled to review from time to time the compliance of the insurances effected by the Borrower with the above provisions and the provisions contained in the Minimum Insurance Schedule and the Borrower undertakes to co-operate with the Security Agent or any of its representatives or the Advisers, respectively, in this respect and to furnish to it all information requested by it for such purpose. | ||
22.5 | Brokers Letter of Undertaking | |
The Borrower will procure that every insurance broker who effects an insurance writes a brokers letter of undertaking (substantially in the form set out in Schedule 16 ( Brokers Letter of Undertaking )) to the Security Agent. Such letters have to be provided prior to Financial Close with respect to insurances during the Construction Period and at least five (5) Banking Days prior to inception with respect to insurances during the Operation Period. | ||
22.6 | Changes to Insurance Programme | |
22.6.1 | If any variation is proposed to be made to the terms of any insurance, the Borrower will give at least thirty (30) days prior written notice thereof to the Security Agent. No variation to any insurance should be effected or agreed by the Borrower until the Security Agent notifies the Borrower in writing either that the variation is not material to the Lenders or is otherwise agreeable to the Security Agent. The Security Agent will not unreasonably withhold or delay its agreement after obtaining any advice that it deems appropriate in considering the Borrowers request. | |
22.6.2 | No Event of Default occurs to the extent the Borrower has given notice pursuant to Clause 22.6.1 ( Changes to Insurance Programme ), and for so long as, cover required to be maintained is not available to the Borrower in the international insurance or reinsurance market on what the Security Agent accepts in writing to the Borrower to be reasonable commercial terms. In determining whether such cover is available on reasonable commercial terms, the Security Agent shall have on-going regard to the scope of such insurance, its cost in the context of the financing of the Project and the direct and indirect interests of the Lenders under the Financing Documents. |
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22.7 | Notification | |
The Borrower will promptly notify the Security Agent and the insurers of any increase or material change in any risk insured under any Material Insurance. | ||
22.8 | Claim Handling | |
The Borrower will |
(a) | diligently pursue any valid claim under any insurance, | ||
(b) | promptly notify the Security Agent and the insurers of any matter for which it may be entitled to a claim under any insurance, | ||
(c) | keep the Security Agent informed on a regular basis regarding progress towards settling any such claim, | ||
(d) | take account of any representations made by the Security Agent in relation to any such claim, and | ||
(e) | not negotiate, compromise or settle any claims with a potential value in excess of EUR 5 million without the written consent of the Security Agent, such consent not to be reasonably withheld or delayed. |
22.9 | Renewals | |
The Borrower will, at least thirty (30) days prior to the renewal of any insurance satisfy the Security Agent that the cover proposed to be effected for the renewal period will, on and after the renewal date, comply with the requirements of the Minimum Insurance Schedule. | ||
22.10 | Changes in Insurer Security | |
If an insurer under a Material Insurance ceases to carry a claims paying rating from Standard & Poors Corporation of at least A-, or an equivalent rating from such other rating agency approved by the Security Agent, the Borrower will promptly inform the Security Agent thereof and, at the request of the Security Agent, promptly replace the affected cover with cover from another insurer, or insurers, reasonably acceptable to the Security Agent and terminate the affected insurers participation in the risk, provided that there will at no time be any period when any relevant risk is not insured as required by the Financing Documents. | ||
22.11 | Lenders Right to Insure if Borrower Defaults | |
If at any time and for any reason any insurance is not in full force and effect on the terms or for the insured values required under the Financing Documents, then the Security Agent shall forthwith be entitled, at the cost and expense of the Borrower, to procure and pay for such insurance as the Borrower should have |
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effected or procured pursuant to the terms hereof or at any time whilst such failure is
continuing.
22.12
Disputes over Availability of Cover Borrower Defaults
Any disagreement between the Borrower and the Security Agent over the availability of cover
in the international insurance market will be referred to an independent expert appointed
with the agreement of the Borrower and the Security Agent, or, if the parties cannot so
agree within 20 days of the notice given by the Borrower under the covenant referred to in
Clause 22.6 (
Changes to Insurance Programme
), to a person nominated at the request of
either party by the President of the German Association of Insurers, in each case acting as
an independent expert. The experts decision will be final and binding on the parties
hereto. The experts fees and disbursements will be borne by the Borrower.
23.
EVENTS OF DEFAULT
23.1
Each of following circumstances constitutes an Event of Default for the purposes of this
Agreement, irrespective of whether or not caused by any reason within the control of the
Borrower or any other person:
23.1.1
Payment Obligations
: subject to Clause 6.5, failure by the Borrower to make:
(a)
any payment of principal or interest due under the Facility within seven (7)
Business Days from the due date thereof; and
(b)
any other payment due under the Financing Documents within five (5) Business
Days from a notification by the Agent of the Borrowers failure to pay;
23.1.2
Representations and Warranties
: any representation, warranty or statement made in any
Financing Document, certificate, statement or opinion delivered by or on behalf of the
Borrower hereunder or in connection herewith is or proves to have been incorrect, untrue or
misleading in any material respect when made and which, if capable of being remedied, has not
been remedied within thirty (30) days from notification by the Agent of such breach;
23.1.3
Covenants
: the Borrower or any of its Shareholders breaches any covenant or material
obligation under the Financing Documents which, if capable of being remedied, has not been
remedied within fifteen (15) Business Days from notification by the Agent of such breach;
23.1.4
Debt Service Reserve
: (i) Scheduled Debt Service for two consecutive half year periods is
partially or wholly financed by drawings from the Debt Service Reserve Account, and as a
result the balance standing to the credit of the Debt Service Reserve Account is less than one
third of the Target Balance, or (ii) a
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drawing on the Debt Service Reserve Account resulting in full utilisation of the Debt Service Reserve Account is followed on the Repayment Date immediately following such full utilisation by a deferred amortisation in accordance with Clause 6.5 ( Deferred Amortisation ), in each case unless waived by the Majority Lenders. |
23.1.5 | Annual Debt Service Cover Ratio : Failure by the Borrower to meet the Annual Debt Service Cover Ratio as provided for in Clause 17.1 ( Annual Debt Service Cover Ratio ), unless waived by the Majority Lenders. | |
23.1.6 | Senior Debt/EBITDA Cover Ratio : Failure by the Borrower to meet the Senior Debt/EBITDA Cover Ratio as provided for in Clause 17.2 ( Senior Debt/EBITDA Cover Ratio ), unless waived by the Majority Lenders. | |
23.1.7 | Consents and Approvals : any Authorisation necessary to enable the Borrower to comply with any of its material obligations under the Transaction Documents and Project is revoked, withheld or modified or is limited in a way which materially prejudices the validity and enforceability of the Transaction Documents and/or the ability of the Borrower to meet its obligations thereunder; | |
23.1.8 | EU-Decision, State Guarantee and Government Grants : any of the EU-Decision, State Guarantee or Government Grants is modified in any material respect, revoked, withdrawn, withheld or suspended, or does not remain in full force and effect; | |
23.1.9 | Insolvency and Rescheduling : any cause exists on the basis of which insolvency proceedings under the German Insolvency Code should be initiated against the Borrower, the Borrower commences negotiations with any one or more of its creditors with a view to the general readjustment or rescheduling of its indebtedness or makes a composition with its creditors; | |
23.1.10 | Winding-up : (a) the Borrower, (b) while it has any liability under the Shareholders Undertaking Agreement any of the Shareholders or any of the Sponsors or (c) while it has any liability under the RWE Solutions AG Guarantee, the Direct Agreement or the Parent Company Guarantee RWE Solutions AG takes any corporate action or any other steps are taken or legal proceedings are started for its winding-up, dissolution or reorganisation or for the appointment of a liquidator, receiver, administrator, administrative receiver, conservator, custodian, trustee or similar officer of it or of any part or all of its revenues and assets; | |
23.1.11 | Insolvency or Winding-up of EPC Contractor : the EPC-Contractor during the Construction Period is unable to pay its debts as they fall due, commences negotiations with any one or more of its creditors with a view to the general readjustments or rescheduling of its indebtedness, makes a composition with its |
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creditors, or takes any corporate action or other steps or legal proceedings are started for its winding-up, dissolution, re-organisation (except for a solvent re-organisation previously approved in writing by the Agent) or for the appointment of a liquidator, receiver, administrator, administrative receiver or similar officer of it or of any or all of its revenues and assets; | ||
23.1.12 | Indebtedness : failure by the Borrower to pay any other Financial Indebtedness over EUR 1,000,000 when due or after the expiry of any applicable grace period unless such payment is contested in good faith by the Borrower; | |
23.1.13 | Obligations of the Borrower : at any time it is unlawful for the Borrower to perform any of its material obligations under the Transaction Documents, or to own its material assets or to carry on its business in materially the same fashion as contemplated in the Financing Documents and such condition continues for period of sixty (60) days; | |
23.1.14 | Obligations of the Parties to Shareholders Undertaking Agreement and the RWE Solutions AG Guarantee : any of the Shareholders or Sponsors (or any of their successors) fails to comply with any obligation assumed by it in the Shareholders Undertaking Agreement and/or RWE Solutions AG (or any of its successors) fails to comply with any obligation assumed by it in the RWE Solutions AG Guarantee, the Direct Agreement or the Parent Company Guarantee and such failure, if capable of remedy, is not remedied within thirty (30) days after receipt of written notice from the Agent requesting the same; | |
23.1.15 | Change of Control : a Change of Control occurs without the prior written consent of the Majority Lenders; | |
23.1.16 | The Borrowers Business : the Borrower ceases or threatens to cease to carry on all or a substantial part of the business it carries on at the date hereof, abandons or threatens to abandon the Project or disposes of a substantial part of its business or assets or a substantial part of its business or assets is seized, nationalised or expropriated or compulsorily acquired by or under the authority of any government; | |
23.1.17 | Assets of the Borrower : except as permitted by the Financing Documents, the Borrower ceases to be the sole lawful and beneficial owner of, and having good title to, any material part of its assets, and such assets or part thereof, are not re-acquired or replaced in a manner satisfactory to the Lenders within fifteen (15) days of such cessation; | |
23.1.18 | Acceptance : Acceptance does not occur by the date falling 40 months after Financial Close; |
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23.1.19 | Default under Transaction Documents : a material default under any of the Transaction Documents which, if capable of being remedied, has not been remedied within thirty (30) days in the case of any Financing Document and ninety (90) days in the case of any Project Contract in each case of notification by the Agent of such default; | |
23.1.20 | Invalid, Non-binding and Non-enforceable Obligations : a material provision of the Financing Documents is not, or is contested by a party other than a Lender to be not, legal, valid, binding and enforceable; | |
23.1.21 | Qualifications in the Auditors Report : the auditors have made a qualification in their report and there are reasonable doubts ( vernünftige Zweifel ) concerning the continuation of the Borrowers business on a going concern basis unless within twenty (20) Business Days from the date of the auditors report the Borrower has presented a certificate from the auditors showing that the reasons for the doubts raised have been remedied or sufficient measures have been taken for their remedy; | |
23.1.22 | Security : any Security ceases to be in full force and effect for any reason other than: |
(a) | the assignment of any credit or portion of the finance to which such Security relates; | ||
(b) | the failure to make the required filings or registrations where such filings or registrations are under the control of the Lenders; |
23.1.23 | Litigation : any material judgement, award or decision on any litigation, arbitration, administrative proceedings or governmental or regulatory investigations, proceedings or disputes is commenced against the Borrower or its assets which is materially adverse in relation to the Borrowers ability to perform its obligations under the Transaction Documents and/or the validity or enforceability of the Transaction Documents unless such judgement, award or decision is stayed pending appeal without the necessity for the Borrower to provide any security in connection therewith; | |
23.1.24 | Enforceability of Encumbrance : any encumbrance over any assets of the Borrower securing an indebtedness of not less than EUR 100,000 becomes enforceable; | |
23.1.25 | Execution or Distress : any execution ( Zwangsvollstreckung ) or distress ( Beschlagnahme ) is levied against, or an encumbrancer takes possession of the whole, or any material part of the assets of the Borrower or any event which under the laws of any jurisdiction has a similar effect is not discharged within thirty (30) days; |
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23.1.26 | Insurances : Subject to Clause 22.6.2 ( Changes to Insurance Programme ), the Borrower fails to maintain the insurances pursuant to the provisions of Clause 22 ( Insurances ); | |
23.1.27 | Destruction of Project : the Project or any substantial part thereof is destroyed or damaged in a manner which is not covered in full by proceeds of insurance, (excluding any agreed deductibles); | |
23.1.28 | Material Adverse Change : any event or circumstance (or series of events or circumstances) occurs which has a Material Adverse Effect; | |
23.1.29 | Force Majeure : an Event of Force Majeure occurs or a series of Events of Force Majeure occur the effects of which continue (on an aggregated basis) for a period of 230 days under the EPC-Contract. | |
23.1.30 | Registration of Capital Increase : (i) the Borrower has failed to produce within four (4) Business Days from receipt by it and the notary (who, in accordance with Clause 2.6.1 of the Shareholders Undertaking Agreement has certified the capital increase) of a written confirmation by the Agent that the Shareholder Contributions have been credited to the Disbursement Account, the confirmation by the notary required as proof thereof that the registration of the EUR 15,000,000 has been sent to the commercial register, or (ii) the registration of the capital increase has been revoked by the Shareholders. | |
23.1.31 | Equity Contribution : If at any time after 31 December 2011 (i) on the first day of trading of the shares issued under any Equity Sale the Debt Service Reserve Account is not fully funded, and (ii) Mercer International fails to contribute 50 per cent. of the net amount raised under any such Equity Sale (up to an aggregate maximum amount equal to EUR 10,000,000) to the Borrower, by way of Capital Contribution or Shareholder Loans, within 30 days of any Equity Sale. | |
23.2 | Acceleration and Cancellation | |
23.2.1 | Upon the occurrence of an Event of Default and at any time thereafter while such Event of Default is continuing, the Agent may and shall upon the direction of the Majority Lenders by notice to the Borrower: |
(a) | declare all or any part of the Advances to be immediately due and payable or declare all or any part of the Advances to be due and payable on its demand (whereupon the same will become so payable together with accrued interest thereon and any other sums then owed by the Borrower under the Financing Documents); |
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(b) | declare that any unutilised portion of the Facility will be cancelled, whereupon the Lenders undrawn Commitments shall be cancelled and each Lenders undrawn Commitment will be reduced to zero, provided that , notwithstanding the foregoing, upon the occurrence of an Event of Default specified in Clauses 23.1.8 ( Insolvency and Rescheduling ), 23.1.7 ( Winding Up ), the undrawn Commitments of each Lender will immediately be reduced to zero and all Advances and other sums then owed by the Borrower hereunder shall become immediately due and payable; and/or | ||
(c) | exercise all rights and remedies under any Financing Document or instruct the Security Agent to do so. |
23.2.2 | A notice of the Agent pursuant to Clause 23.2.1 may only be given (a) if an Event of Default pursuant to Clauses 23.1.1 ( Payment Obligations ), 23.1.6 ( Insolvency and Rescheduling ), 23.1.10 ( Winding-Up ), 23.1.16 ( The Borrowers Business ) and 23.1.24 ( Destruction of Project ) has occurred and is continuing, or (b) if any other Event of Default has occurred and is continuing only after careful consideration of the reasonable concerns of the Borrower or in case the Majority Lenders have determined in their reasonable opinion that due to such Event of Default the ability of the Borrower to perform any of its obligations under the Financing Documents has been materially impaired. | |
23.3 | Advances Due on Demand | |
If, pursuant to Clause 23.2.1(a), the Agent declares all or any part of the Advances to be due and payable on demand of the Agent, then, and at any time thereafter within a period of three months, the Agent may by notice to the Borrower: |
(a) | require repayment of all or such part of the Advances on such date as it may specify in such notice (whereupon the same will become due and payable on the date specified together with accrued interest thereon and any other sums then owed by the Borrower under the Financing Documents); and/or | ||
(b) | select as the duration of any Interest Period which begins whilst such declaration remains in effect a period of six months or less. |
23.4 | Waivers | |
The Lenders may, subject to Clause 23.5.2, waive any Event of Default with the Majority Lenders consent upon written request by the Borrower to the Agent. |
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23.5 | Participation of Guarantors | |
23.5.1 | Upon the occurrence of an Event of Default the Agent will promptly inform the Guarantors thereof. | |
23.5.2 | The Lenders may waive any Event of Default pursuant to Clause 23.4 ( Waivers ) only with the consent of the Guarantors. | |
24. | AGENT, ARRANGER AND LENDERS | |
24.1 | Appointment and Authorisation | |
Each Lender hereby irrevocably (except for a removal under Clause 24.15 ( Resignation )) appoints the Agent to act as its agent in connection with the administration of the Facility under the Financing Documents, and irrevocably (except for a removal under Clause 24.15 ( Resignation )) authorises the Agent, to take such action and to exercise and carry out such rights, discretions, authorities, powers and duties as are specifically delegated to the Agent in this Agreement, in the Shareholders Undertaking Agreement, the Security Agreements and the RWE Solutions AG Guarantee together with such rights, discretions, authorities, powers and duties as are reasonably incidental thereto, provided that the Agent will not commence any legal action or proceedings on behalf of any Lender without such Lenders consent. Each Lender hereby relieves the Agent from the restrictions of § 181 BGB in respect of the authority conferred upon it in this Agreement. | ||
24.2 | No Obligation | |
Neither the Agent nor the Arranger is obliged: | ||
24.2.1 | to take any action to ascertain whether any Event of Default has occurred or is outstanding; | |
24.2.2 | to ascertain the correctness of any representation made by the Borrower or any other party in connection with this Agreement or any other Transaction Document; | |
24.2.3 | to inquire as to the performance by the Borrower or any other party of its obligations under this Agreement or any other Transaction Document, or any breach of the Borrower or any other party of its obligations under this Agreement or any other Transaction Document; or | |
24.2.4 | to give notice to the Lenders of any information or event of which the Agent becomes aware otherwise than by notice given by a party to this Agreement or to any of the Advisers in accordance with this Agreement. | |
The Agent will not be deemed to have knowledge of the occurrence of a Event of Default until it has received notice thereof from a party to this Agreement |
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describing the Event of Default and stating that the event is an Event of Default, in which case it will promptly notify the Lenders. |
24.3 | Reliance | |
The Agent is entitled to rely on any communication or document believed by it to be genuine and correct, and on the advice given in connection with this Agreement by any of the Advisers appointed in connection with this Agreement, and will not be liable to any of the parties hereto and any of the Lenders for any of the consequences of such reliance where such reliance is in good faith. | ||
24.4 | Information Obligations | |
Notwithstanding any specific provisions in this Agreement relating to reporting requirements, the Agent will within the scope of its appointment: | ||
24.4.1 | promptly upon receipt notify each of the Lenders affected thereby of any material information and notice received by it from the Borrower, any of its Shareholders or any of the Advisers and will, to the extent it has obtained a sufficient number of photocopies from the Borrower, any of its Shareholders or such Adviser, supply photocopies of relevant documents to the Lenders; | |
24.4.2 | promptly notify each of the Lenders of the occurrence of an Event of Default or any default by the Borrower, any of its Shareholders or any other party in the performance of or compliance with its respective obligations under this Agreement and the other Transaction Documents of which the Agent has received notice from a party to this Agreement or any of the Advisers in accordance with this Agreement. | |
24.5 | Compliance with Legal Provisions | |
Nothing in this Agreement obliges the Agent to do anything which would or might in its opinion be contrary to the law of any relevant jurisdiction or render it liable to any person, and the Agent may do anything which in its opinion is necessary to comply with any such law. | ||
24.6 | Advisers | |
The Agent may retain and pay for the advice or services of any of the Advisers or any expert whose advice in its opinion is necessary or appropriate and rely upon any advice so obtained and shall not be liable to any of the parties hereto or to any of the Lenders for any of the consequences where such reliance is in good faith. | ||
24.7 | Liability | |
Neither the Agent nor the Arranger nor any of their respective directors, officers, employees or agents will be liable for any action taken or omitted by it, him or them under or in connection with this Agreement, the Security Agreements, the Shareholders Undertaking Agreement or any other Transaction Document and |
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any related documentation except, notwithstanding any other provision of this Agreement, to the extent of its, his, or their gross negligence, wilful misconduct or bad faith. | ||
24.8 | Agency | |
The Agent will in performing its functions and duties under this Agreement, the Security Agreements, Shareholders Undertaking Agreement and any other Transaction Document solely act as the agent of the Lenders and will not assume or be deemed to have assumed any obligation as agent or otherwise for the Borrower or any of its Shareholders, except as specifically stated herein or in any other Transaction Document. The Agent will have no liability or responsibility to the Borrower or any Lender in connection with any failure or delay in performance or breach by any Lender or Lenders (other than the Agent in its capacity as a Lender) or the Borrower of any of its obligations under this Agreement, the Security Agreements, the Shareholders Undertaking Agreement or any other Transaction Document. | ||
24.9 | No Verification Duties | |
Neither the Agent nor the Arranger will be responsible for or obliged to verify: | ||
24.9.1 | the accuracy and/or completeness of any statements, representations or warranties made in or in connection with this Agreement, the Security Agreements, the Shareholders Undertaking Agreement or any other Transaction Document; | |
24.9.2 | for any information given to any of the Lenders in respect of the Borrower or any matter relating to the Facility (including, without limitation, the Information Memorandum); | |
24.9.3 | the recoverability of any of the sums due or to become due under this Agreement; | |
24.9.4 | any failure, omission or defect in perfecting any Security, or the enforceability or value of any Security; or | |
24.9.5 | the legality, validity, effectiveness, adequacy or sufficiency of this Agreement, the Security Agreements and the other Financing Documents. | |
24.10 | Transaction Analysis | |
Each Lender acknowledges that it has made its own analysis of this transaction (including, without limitation, all agreements entered into in connection with this Agreement) without relying on the Agent or the Arranger and based on such information as it has deemed appropriate, and has reached its decision to enter into this Agreement based on its own investigations, and that it will continue to make its decisions in taking or not taking action under this Agreement based on |
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such investigations as it shall deem appropriate. Each Lender hereby confirms that it does not have any objections against any agreements entered into in accordance with this Agreement. |
24.11 | Instruction by Majority Lenders | |
In the exercise of any right or power and in relation to any matter not expressly provided for by this Agreement, the Security Agreements, the Shareholders Undertaking Agreement or any other Transaction Document the Agent may act (or refrain from acting) in accordance with the instructions of the Majority Lenders to be given by the Lenders within ten (10) Business Days of the Lenders having received a respective request from the Agent and will be fully protected in so doing, except to the extent of its own gross negligence, wilful misconduct or bad faith. In the absence of such instructions being given, or if the Agent were not provided with security satisfactory to it, whether by way of payment in advance or otherwise, against any liability or loss which it may incur in taking any proceedings or action in connection with this Agreement, the Security Agreements, the Shareholders Undertaking Agreement or any other Transaction Document, then the Agent may act (or refrain from acting) as it thinks fit provided that it shall only take action while the above period for the issue of instructions is running if it determines that there is an urgent need to do so. | ||
24.12 | Indemnity | |
Each Lender will indemnify the Agent and the Arranger on demand from and against any and all liabilities, losses, damages, costs and expenses of any kind or nature whatsoever including any VAT thereon which the Agent or the Arranger may incur other than by reason of its own gross negligence or wilful misconduct in acting in its respective capacity as Agent or Arranger. Such indemnification will be made rateably in proportion to each Lenders Commitment. | ||
24.13 | Same Rights and Liabilities, Business with the Borrower | |
In relation to its participation in the Facility which the Agent or any Lender and/or the Arranger will or may have from time to time, each of them will have the same rights, liabilities and powers under this Agreement as though it had not assumed such capacity. The Agent, the Arranger or any Lender or any of their respective associated companies may engage in any kind of business with the Borrower or any of their respective associated companies as if it were not the Agent, a Lender or, as the case may be, the Arranger. | ||
24.14 | Designation of New Office | |
Subject to Clause 24.5 ( Compliance with Legal Provisions ), the Agent may from time to time by giving notice to the Borrower and the Lenders designate an office or branch different from that acting at the time of giving notice, from which its duties under this Agreement will be performed thereafter provided that the Borrower will not be obligated to pay any fees, taxes or other costs or |
93
expenses to the extent the same would not have been payable in the absence of such designation. |
24.15 | Resignation | |
The Agent may resign at any time its appointment under this Agreement by giving written notice thereof to the other parties hereto, and the Agent may be removed from its position under this Agreement by the Majority Lenders giving written notice to that effect to the Borrower and the Agent. Any such resignation or removal shall take effect upon the notification of the acceptance of the appointment by the successor in its respective position in accordance with Clause 24.16 ( Appointment of Successor ). | ||
24.16 | Appointment of Successor | |
In the event of a resignation or removal of the Agent, the Majority Lenders will be entitled to appoint a successor in the position, upon agreement of the Borrower. If no such successor has been appointed within 30 days from the notice of resignation or notice of removal then the Agent will be entitled, upon agreement of the Borrower, to appoint any reputable and experienced bank or other financial institution as its successor. | ||
24.17 | Acceptance of Appointment | |
The acceptance of the appointment will be notified by any Lender being appointed for such purpose by the Majority Lenders to the Agent and upon such notification the relevant successor will succeed to and become vested with all rights, powers, privileges and duties of its predecessor. The resigning or removed Agent will do all such things as may be necessary to give effect to the succession and will thereupon be discharged from its duties and obligations under this Agreement (except for those under Clause 24.7 ( Liability )), but shall continue to benefit from the provisions of this Clause 24.7 ( Liability ) in respect of any actions or omissions taken in its capacity as Agent. Such discharges do not exempt the Borrower from any of its liabilities. | ||
24.18 | Arranger | |
The Arranger has no duties or responsibilities whatsoever in connection with the operation or administration of the Facility. | ||
24.19 | Facility Office | |
The Agent may assume that the Facility Office or, as the case may be, each Facility Office of each Lender is that identified in Schedule 5 ( Lenders and Commitments ) (or, in the case of a transferee, at the end of the Transfer Certificate to which it is a party as transferee) until it has received from such Lender a notice designating some other office of such Lender to replace any such Facility Office, and the Agent may act upon any such notice until the same is superseded by a further such notice. |
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24.20 | Missing Communication | |
The Agent may, if it is unable to obtain instructions or communicate with a Lender after making reasonable attempts to do so, either refrain from acting as Agent on behalf of such Lender or take such action on behalf of such Lender as it in its absolute discretion deems appropriate, and shall not be liable to such Lender as a result of any such action or inaction. | ||
24.21 | Majority Lenders Decisions | |
To the extent not otherwise stated in the Financing Documents, all amendments, consents and waivers under the Financing Documents may be given by the Agent acting on the direction of the Majority Lenders. Any changes in maturity, amounts payable, size of Commitments, the definition of Majority Lenders and this Clause 24.21 will, however, require unanimity of all Lenders. | ||
25. | ADVISERS | |
25.1 | The resignation or dismissal of an Adviser will be in accordance with its respective mandate. | |
25.2 | Subject to the terms of the relevant mandate the Agent or the Arranger, as the case may be, will, if so instructed by the Majority Lenders cancel the appointment of an Adviser. | |
25.3 | If the mandate of an Adviser is terminated prematurely for whatever reason, the Agent will, with the consent of the Majority Lenders and with the consent of the Borrower, appoint a successor at terms and conditions which are as similar to the terms and conditions on the initial mandate as is reasonably practical, and in such a manner that the duties of the relevant Adviser are continuously performed. | |
25.4 | The Borrower hereby consents to the appointment of the Technical Adviser and the Wood Supply Adviser until six (6) months after Acceptance upon the expiry of its existing mandate. | |
26. | FEES | |
26.1 | Commitment Fee | |
From the date of signing of this Agreement the Borrower will pay to the Lenders quarterly in arrears on each 31 March, 30 June, 30 September and 31 December on the undrawn portion of each Tranche a commitment fee to be calculated at the following rates: | ||
Tranche A: 0.375 % per annum | ||
Tranche B: 0.250 % per annum | ||
Tranche C: 0.375 % per annum | ||
Tranche D1: 0.375 % per annum |
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Tranche D2: 0.375 % per annum
Tranche E: 0.375 % per annum
26.2
Arranging Fee
The Borrower will pay to the Arranger an arranging fee in accordance with the Fee Letter.
26.3
Agency Fee
The Borrower will pay to the Agent an agency fee in accordance with the Fee Letter.
26.4
Federal Guarantee Fee
The Borrower will pay to the Federal Guarantor a guarantee fee on each 1 April and 1
October. The guarantee fee will be calculated for each half year starting at these dates
at a per annum rate of 0.25 % of the amount guaranteed by the Federal Guarantor at those
dates and is payable to C&L Deutsche Revision AG, Düsseldorf, Anderkonto Bundesminister der
Finanzen, account 301 51 12 with Westdeutsche Landesbank Girozentrale, by making reference
to the State Guarantee number. An amount of 0.25 % of the maximum guaranteed amount is due
and payable by the Borrower in accordance with the grading granted by the Federal
Guarantor. The Borrower will promptly inform the Agent of any payments made pursuant to
this Clause 26.4 (
Federal Guarantee Fee
).
26.5
State Guarantee Fee
The Borrower will pay to the State Guarantor a guarantee fee on each 1 April and 1 October.
The guarantee fee will be calculated for each half year starting at these dates at a per
annum rate of 0.25 % of the amount guaranteed by the State Guarantor at those dates and is
payable to C&L Deutsche Revision AG, Düsseldorf, Anderkonto Bundesminister der Finanzen,
account 301 51 12 with Westdeutsche Landesbank Girozentrale, by making reference to the
State Guarantee number. An amount of 0.25 % of the maximum guaranteed amount is due and
payable by the Borrower in accordance with the sliding scale granted by the State
Guarantor. The Borrower will promptly inform the Agent of any payments made pursuant to
this Clause 26.5 (
State Guarantee Fee
).
26.6
VAT
Any fee referred to in this Clause 26 (
Fees
) is exclusive of any VAT or other tax which
might be chargeable in connection with that fee.
27.
COSTS AND EXPENSES
27.1
Transaction Expenses
The Borrower will, from time to time on demand of the Agent, reimburse the Agent, the
Security Agent and the Arranger for all reasonable external costs and expenses properly
incurred (including travel and out-of-pocket expenses,
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notarial fees, the reasonable fees for the Advisers and counsel to the Agent and related expenses) on a full indemnity basis together with any VAT thereon incurred by them in connection with: |
(a) | the carrying out of all due diligence enquiries and searches in connection with the Transaction Documents; | ||
(b) | the negotiation, preparation and execution and translation of each of the Financing Documents and if any such party is involved in the negotiation of any Project Contract, the relevant Project Contract; | ||
(c) | the completion and performance of the transactions contemplated in the Transaction Documents; | ||
(d) | the activities of C&L pursuant to Clause 21.1.17 ( Compliance with Conditions for State Guarantee and Government Grants ); | ||
(e) | any initial syndication (excluding any legal counsels fees of any transferee under the syndication); | ||
(f) | the conduct of any audits; or | ||
(g) | any exercise or attempted exercise of any right, power or remedy under any Financing Document or any failure to exercise any right, power or remedy except where that failure is due to the wilful misconduct or gross negligence of, as the case may be, the Arranger, the Agent or the Security Agent; | ||
in each case subject to the terms of any agreement then made by the Borrower and the Agent relating to such costs and expenses. |
27.2 | Preservation and Enforcement of Rights | |
The Borrower will, from time to time on demand of the Agent reimburse the Lenders, the Agent, the Security Agent and the Arranger for all reasonable costs and expenses (including reasonable legal fees) on a full indemnity basis together with any VAT thereon incurred by them in connection with the preservation and/or enforcement of any of the rights of the Agent, the Security Agent or the Lenders under the Financing Documents and any document referred to in the Financing Documents. | ||
27.3 | Registration Fee | |
The Borrower will pay all registration and other fees to which the Financing Documents, any other document referred to in the Financing Documents or any judgment given in connection therewith is or at any time may be subject and shall, from time to time on demand of the Agent, indemnify the Lenders, the |
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Agent and the Security Agent against any liabilities, costs, claims and expenses resulting from any failure to pay or any delay in paying any such fees. |
27.4 | Amendment Costs | |
If the Borrower requests any amendment, waiver or consent then it will, within five (5) Business Days of demand by the Agent, reimburse the Lenders for all reasonable external costs and expenses (including reasonable legal fees of one law firm for the Lenders selected by the Agent) together with any VAT thereon incurred by such Lender in responding to or complying with such request. | ||
27.5 | Lenders Liabilities for Costs | |
If the Borrower fails to perform any of its obligations under this Clause 27 ( Costs and Expenses ), each Lender will, in proportion to its aggregate participation in the Advances (or, if no Advances have been made, the Facility) for the time being (or, if the Advances have been repaid in full, immediately prior to the final repayment), indemnify the Agent (or as the case may be the Security Agent) against any loss incurred by it as a result of the failure and the Borrower will immediately reimburse each Lender for any payment made by it pursuant to this Clause 27.5 ( Lenders Liabilities for Costs ). | ||
28. | INDEMNITY AND BREAKAGE COSTS | |
28.1 | Indemnity | |
The Borrower undertakes to indemnify the Lenders, the Agent and the Security Agent, except where any such costs, loss, expense or liability results from a Lenders, the Agents and the Security Agents gross negligence, wilful default, bad faith or the breach of any of a Lenders, the Agents and the Security Agents obligations under the Financing Documents against: | ||
28.1.1 | any reasonable cost, claim, loss, expense (including reasonable legal fees) or liability together with any VAT thereon, which it may sustain or incur as a consequence of the occurrence of any Event of Default or any default by the Borrower in the performance of any of the obligations expressed to be assumed by it in any of the Transaction Documents; and | |
28.1.2 | any reasonable cost or loss it may suffer as a result of any claim or proceeding against it relating to its involvement in the transactions contemplated hereby or any use of the proceeds of the Facility. | |
28.2 | Breakage Costs | |
28.2.1 | If: |
(a) | any payment is made otherwise than on the last day of an Interest Period applicable thereto; |
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(b) | any other payment is made otherwise than on the due date therefore; | ||
(c) | any Advance requested cannot be made because the Borrower has failed to fulfil a condition precedent; or | ||
(d) | the Borrower refuses to accept a requested Advance, |
then the Borrower will pay to the Agent for the account of each Lender to which such payment is made or who participated in the Advance requested, such additional amount as the relevant Lender may reasonably certify as being necessary to compensate it for any loss (excluding however the Margin) or expense incurred on account of funds borrowed, funds contracted for or utilised to fund its participation in the amount so paid or the Advance so requested, which it has suffered or incurred as the result of such amount not having been paid on the last day of such Interest Period or on its due date or the Advance not having been disbursed or accepted, as the case may be. | ||
28.2.2 | The Borrower will pay to the Agent for the account of the Hedging Counterparty to which such payment is made, such additional amount as the Hedging Counterparty may reasonably certify as being necessary to compensate it for any loss or expense arising as a result of the termination, in whole or in part, of any Hedging Agreement entered into in relation to any amounts cancelled or prepaid hereunder. | |
29. | SET-OFF | |
Each Lender may set off any matured obligation owed by the Borrower under this Agreement against any obligation owed by the Lender to the Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of set-off. | ||
30. | PRO-RATA SHARING | |
30.1 | If at any time the proportion received or recovered by any Lender by way of set-off or otherwise (other than through the Agent in accordance with Clause 9 ( Payments )) in respect of its portion of any amounts due from the Borrower to the Lenders under this Agreement is greater than the proportion thereof which the Lender would have received through the Agent if distributed in accordance with Clause 9 ( Payments ) (the difference between the amount received or recovered (after deduction of any costs incurred by the Lender in connection with such receipt or recovery) by the Lender and the amount which the Lender would have received or recovered had the recovery been received through the Agent if distributed in accordance with Clause 9 ( Payments ) hereinafter called the Excess Amount ), then: |
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30.1.1 | such Lender will promptly notify the Agent and pay to the Agent an amount equal to the Excess Amount within three (3) Business Days of such notification; | |
30.1.2 | the Agent will account for such payment to the Lenders (excluding the Lender having received the Excess Amount) as if it were a payment by the Borrower on account of the sum owed to the Lenders under this Agreement; and | |
30.1.3 | the liability of the Borrower to the Lenders will be adjusted in accordance with the distribution of the Excess Amount among the Lenders, | |
provided that: |
(a) | if the Excess Amount or any part thereof thereafter has to be repaid to the Borrower by the Lender having received the Excess Amount, each of the Lenders will repay to the Agent for the account of such Lender such proportion of the amount received by it out of the Excess Amount (plus any interest legally demanded by the Borrower in respect of such proportion) as corresponds to the proportion of the Excess Amount which has to be repaid by the relevant Lender to the Borrower; and | ||
(b) | sums recovered as a result of litigation started by a Lender to enforce its rights under this Agreement and resulting in an Excess Amount will only be shared with all Lenders other than Lenders which were aware of such litigation and did not join in such litigation without being legally prevented from doing so. |
31. | ASSIGNMENTS AND TRANSFERS | |
31.1 | Assignments and Transfers by the Borrower | |
The Borrower is not entitled to assign or transfer all or any of its rights, benefits and obligations under the Financing Documents. | ||
31.2 | Assignments and Transfers by the Lenders | |
31.2.1 | Each of the Lenders (a Transferor ) may at any time assign all its rights and benefits under this Agreement or transfer its rights and obligations under this Agreement in whole or in part to members of the European Central Bank System, banks, financial service providers, financial institutions, insurance companies, institutional investors, funds, pension funds, public pension schemes and similar institutions (a Transferee ) subject to Clause 31.2.2 and any such transfer will comprise a pro rata share of the entirety of the Transferors rights and obligations in relation to this Agreement. Participations in any disbursement of an Advance may not be transferred independently from corresponding participations in Commitments. | |
31.2.2 | A transfer will only be permissible: |
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(a) | if the amount of the Commitment and/or Advance, as the case may be, under the Facilities which is transferred is not less than EUR 10 million applied rateably across the Tranches and in any particular Tranche rateably between the Transferors share in each outstanding Advance thereunder and its undrawn Commitment in relation thereto; | ||
(b) | with the consent of the Borrower, such consent not to be unreasonably withheld provided that consent will not be required if such transfer is made to an affiliate (belonging to the same group of companies within the meaning of § 18 AktG) of a Lender or to another Lender provided there are no adverse tax or other detriments (e.g. Germanys thin capitalisation rules, § 8a KStG) to the Borrower; and | ||
(c) | following such transfer the circumstances envisaged in Clauses 12 ( Illegality ) or 13 ( Increased Costs ) would neither apply, nor reasonably be expected to apply and the Borrower would not have, and would not reasonably be expected to have, any obligations under Clause 14.1.2 ( Taxes ). |
31.2.3 | A transfer will only become effective upon execution by the Transferor and the Transferee and countersignature by the Agent of a transfer certificate in the form of Schedule 14 ( Transfer Certificate ) (the Transfer Certificate ) or, if later, at the time specified in the Transfer Certificate and the payment by the Transferee of a transfer fee of EUR 1,000. Upon the transfer becoming effective, and for such part of the Transferors rights and obligations, as is transferred, the Transferor shall be released from its obligations under the Financing Documents and all other related documentation, and its rights and obligations under such documents shall transfer to and vest in the Transferee provided that it will be the sole responsibility of the Transferee to ensure that any additional action which may be required for securing the valid transfer to it of any rights in respect of Security is taken. | |
31.2.4 | The Transferor will give prompt notice of any proposed transfer to the Agent who will promptly inform the Borrower. | |
31.2.5 | The Agent will promptly inform the Borrower of any perfected transfer. | |
31.2.6 | The Borrower will undertake all reasonable efforts to assist the Arranger in all acts in connection with a syndication pursuant to this Clause 31.2 ( Assignments and Transfers by the Lenders ). | |
31.2.7 | The Guarantors must consent to any transfer by the Lenders provided that consent shall not be required if the transfer is to a credit institution or branch of a credit institution within the European Union and the Transferor assumes the |
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Transferees rights and obligations under the Financing Documents on a fiduciary basis. | ||
31.3 | Disclosure of Information | |
The Agent may disclose to any actual or potential assignee, participant or Transferee or to any person who may otherwise enter into contractual relations with such bank or financial institution in relation to any of the Financing Documents such information about the Borrower or such details of the Project Contracts as the Agent considers appropriate provided that such person has executed and delivered to the Borrower a confidentiality undertaking reasonably satisfactory to the Borrower. The Agent will not in any way be liable or responsible for such information not being kept confidential by such proposed assignee, participant or Transferee or other person if a reasonable confidentiality undertaking was obtained prior to such disclosure. | ||
32. | SUB-PARTICIPATIONS | |
32.1 | Each Transferor may, in accordance with standard banking practices, grant at any time sub-participations with respect to all or any part of its rights and claims under this Agreement to Transferees and may make dispositions with respect to such rights and claims. | |
32.2 | Clauses 31.2.4, 31.2.7 ( Assignment and Transfers by the Lenders ) and 31.3 ( Disclosure of Information ) apply mutatis mutandis . | |
33. | CALCULATIONS AND EVIDENCE OF DEBT | |
33.1 | Basis of Accrual | |
Unless otherwise provided, interest and Fees payable per annum will accrue from day to day and be calculated for the actual number of days elapsed and on the basis of a year of 360 days. | ||
33.2 | Prima Facie Evidence | |
33.2.1 | In any legal action or proceeding arising out of or in connection with this Agreement, the entries made in the accounts maintained with the Agent and/or the Lenders are, in the absence of manifest error, prima facie evidence of the existence and amounts of the specified obligations of the Borrowers. | |
33.2.2 | A certificate of and determination by the Agent, Security Agent or a Lender as to the interest rate and amounts owed under the Financing Documents are, in the absence of manifest error, prima facie evidence of the existence and amounts of the specified obligations of the Borrower. |
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(a) | to the Borrower: |
(b) | to the Arranger: |
(c) | to the Agent and/or Security Agent: |
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(d) | to the Lenders: | ||
to the contact addresses mentioned in Schedule 5 ( Lenders and Commitments ). |
38.2.2 | Communications or documents addressed to C&L in connection with this Agreement or any other Financing Document, not containing a provision corresponding to this Clause 38.2, shall be addressed to it at: |
38.3 | Delivery | |
Any communication or document to be made or delivered by one person to another pursuant to the Financing Documents will (if by way of fax) be deemed to have been received when transmission has been completed and evidenced by a positive transmission statement (and, if such date is not a Business Day or if transmission is completed after 5.30 p.m. in the place of receipt on a Business Day, will be deemed to have been received on the next Business Day) or (if by way of letter) deemed to have been delivered when left at that address or, as the case may be, ten days after being deposited in the post postage prepaid in an envelope addressed to it at that address, provided that any communication or document to be made or delivered to the Agent will be effective only when received by its agency division and then only if the same is expressly marked for the attention of the department or officer identified with the Agents signature below (or such other department or officer as the Agent shall from time to time specify for this purpose). | ||
39. | GOVERNING LAW | |
This Agreement will be governed by, and construed in accordance with, the laws of the Federal Republic of Germany. |
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40. | JURISDICTION | |
The exclusive place of jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes which may arise out of or in connection with this Agreement is Munich. The Lenders, the Agent and the Security Agent may, however, also commence proceedings before any other court in which assets of the Borrower are located. Mandatory places of jurisdiction remain unaffected. | ||
41. | COUNTERPARTS | |
This Agreement may be executed in any number of counterparts, all of which taken together constitute one and the same instrument. | ||
42. | CONFIRMATION PURSUANT TO SECTION 8 OF THE GERMAN MONEY LAUNDERING ACT ( GELDWÄSCHEGESETZ ) | |
The Borrower expressly confirms to the Finance Parties, that all funds made or to be made available to it under this Agreement have been drawn for its own account and that it is the economic beneficiary within the meaning of Section 8 Money Laundering Act ( Geldwäschegesetz ). |
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¨
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Tranche A | |||||
¨
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Tranche B: | |||||
|
¨ | Sub Tranche B1 | ||||
|
¨ | Sub Tranche B2 | ||||
|
¨ | Sub Tranche B3 | ||||
|
¨ | Sub Tranche B4 | ||||
¨
|
Tranche C | |||||
¨
|
Tranche D1 | |||||
¨
|
Tranche D2 | |||||
¨
|
Tranche E | |||||
|
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of the Facility Agreement: |
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|
1. | the representations and warranties pursuant to Clause 16.1 ( Representation and Warranties ) of the Facility Agreement are correct as at the date hereof and will be correct immediately after the Advance is made; | |
2. | no Event of Default or Potential Event of Default as set out in Article 21 of the Facility Agreement has occurred and is continuing or might result from the making of the Advance; | |
3. | no Material Adverse Effect has occurred and is continuing; | |
4. | Assurance of Overall Financing is still fulfilled; | |
5. | the drawdown conditions for the requested Advance have been met [unless otherwise waived pursuant to Clause 3.3.2 ( Drawdown Conditions ) of the Facility Agreement]. |
Zellstoff Stendal GmbH
|
||||
by: | ||||
1. | A certified and up-to-date copy of the commercial register extract and the articles of association of the Borrower, RWE-IN, ALTMARK INDUSTRIEPARK AG, MFC IH, Mercer International and SP Holding. | |
2. | A copy of the corporate authorisations and/or shareholder resolutions of the Borrower relating to the execution, delivery and performance of all Financing Documents to which it is a party. | |
3. | A certified copy of the Secretary Certificates of the Corporate Secretary of Mercer International : |
(a) | authorising the execution, delivery and performance of all Financing Documents to which Mercer International is a party as approved by Mercer Internationals board of trustees; and | ||
(b) | setting out the names and signatures of the authorised signatories for the signing of such documents duly certified to be true and correct. |
4. | Specimen signatures of the persons authorised to sign the Financing Documents and notices thereunder. | |
5. | Original executed copies of the Transaction Documents, in each case, in full force and effect (with respect to the Hedging Agreements, however, only the agreement for the interest rate swaps) other than: |
(a) | in the case of the Transaction Documents, which will be concluded or be in full force and effect upon first drawdown hereunder and | ||
(b) | in the case of the EPC Contract, which will be in full force and effect upon the payment of the down payment under the EPC Contract, |
together, in each case, with any necessary notices of assignment and acknowledgements thereof in form and substance acceptable to the Agent, registrations (save for the land charges to be created) etc in each case, in full force and effect. |
6. | Evidence that the Shareholders have paid into the Disbursement Account the following funds: |
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(a) | EUR 14,744,354 in the form of equity in respect of a subscription for Share Capital; and | ||
(b) | EUR 37,520,412 million in the form of Shareholder Loans, |
and have made Shareholder Loans in the amount of EUR 17,735,234. |
7. | Evidence that the Government Grants for the Project as contemplated in the Investment and Financing Plan in an amount of not less than EUR 274,7 million are available of which EUR 109,2 will be given as direct grants ( GA-Zuschuss (Investment Incentives )) by the State of Sachsen-Anhalt and the Agent is satisfied that EUR 165,5 million as Investitionszulagen (Tax Grants) by the Federal Republic of Germany will be granted, both approved by EU notification, for the Project in favour of the Borrower. | |
8. | A copy of the EU-Decision the contents of which is satisfactory to the Agent and its legal advisors. | |
9. | The audited Financial Model and the agreed Base Case and the model auditors report thereon as well as the Investment and Financing Plan. | |
10. | Provision of the Amortisation Schedule. | |
11. | The Project Budget in accordance with the Financial Model setting out all costs over the Construction Phase. | |
12. | Execution by the parties thereto of the letter setting out the Hedging Strategy. | |
13. | Uncontested ( nicht angefochten ) official approval of the subsidies ( Fördermittelzuwendungsbescheid ) to be granted by the State of Sachsen-Anhalt to the city of Arneburg with respect to infrastructure measures. | |
14. | Evidence from RWE-IN satisfactory to the Agent that such part of the Owners Scope in relation to the EPC Contract required to have been completed prior to first drawdown has been fulfilled. | |
15. | All Authorisations required for the Project and the performance of the Borrowers obligations under the Transaction Documents required as of the first Drawdown Date as contemplated by Clause 16.1.6 ( Authorisations ) have been obtained. | |
16. | Written confirmation by the Borrower that the official approval of the plan ( Planfeststellungsbeschluß ) has not been contested ( nicht angefochten ) and all Authorisations required for the Project and the performance of the Borrowers obligations under the Transaction Documents required as of the first Drawdown Date as contemplated by Clause 16.1.6 ( Authorisations ) have been obtained. The |
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Borrower will further present copies of the official approval of the plan ( Planfeststellungsbeschluß ) and the other Authorisations required for the Project and the performance of the Borrowers obligations under the Transaction Documents required as of the first Drawdown Date as contemplated by Clause 16.1.6 ( Authorisations ). | ||
17. | Written confirmation from the Technical Adviser and the Wood Supply Adviser and an auditor acceptable to Agent that the Development Costs are reasonable. | |
18. | Delivery of final reports from the Technical Adviser and the Wood Supply Adviser and the Pulp Market Adviser satisfactory to the Agent. | |
19. | Delivery of plan concepts prepared by the Borrower regarding wood supply, logistics (and sales). | |
20. | Presentation of wood supply Letters of Intent (LOI) covering, together with own procured volumes, 1.25x the required wood volume of 3 Mio. m 3 . | |
21. | Report by the Insurance Adviser containing, inter alia , the confirmation that the insurances entered into are satisfactory. | |
22. | Brokers letter(s) of undertaking, insurance cover notes and agreed draft policy wordings satisfactory to the Insurance Advisor. | |
23. | Presentation of clearance letter by the German Federal Cartel Office ( Bundeskartellamt ) concerning a positive decision on the capital increase in the Borrower. | |
24. | The most recent audited financial statements of the Borrower. | |
25. | The most recent audited accounts of each of the Sponsors and Shareholders. | |
26. | Written confirmation by Kvaerner plc that, vis-à-vis the Borrower, it only has one claim in the amount of EUR 478,687, by Thyssen Rheinstahl Technik Projektgesellschaft mbH that it only has claims in the amount of EUR 2,648,000 (compensation payment) and EUR 570,646 for ancilliary costs for the provision of funds by Thyssen Rheinstahl Technik GmbH and its successor Thyssen Rheinstahl Technik Projektgesellschaft mbH to the Borrower in connection with the purchase of the Site. | |
27. | Written confirmation by RWE-IN that the profit loss transfer agreement between RWE AG and RWE Solutions AG dated 27/29 June 2000 is in full force and effect at Financial Close. | |
28. | Evidence that all real estate necessary for the construction of the Project has been acquired and is free of any right of third parties (save under that certain site |
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lease agreement dated 16 May 2002 and made between the Borrower and ALTMARK INDUSTRIEPARK AG and except for Permitted Encumbrances) which may interfere with the Project as contemplated in the Financing Documents. | ||
29. | Delivery of the confirmation by the local office of archeology ( Landesamt für Archäologie ) declaring that the excavations on locations 1 to 4 as set out in Schedule 17 ( Archeological Sites ) have been finalised. |
30. | All Advisers fees and amounts payable hereunder have been paid in full or will be paid in full out of the first Advance. | |
31. | Receipt by the Agent of evidence that the proceeds of the first Advance will be used, inter alia , to repay indebtedness of the Borrower to Dresdner Bank AG; to Kvaerner plc in the amount of EUR 478,687; to Thyssen Rheinstahl Technik Projektgesellschaft mbH in the amount of EUR 2,648,000; to ALTMARK INDUSTRIEPARK AG in the amount of EUR 546,794; to RWE-IN in the amount of EUR 1,590,899; and to Thyssen Rheinstahl Technik Projektgesellschaft mbH in the amount of EUR 570,646 for ancilliary costs for the provision of funds by ALTMARK INDUSTRIEPARK AG, RWE-IN and Thyssen Rheinstahl Technik Projektgesellschaft to the Borrower in connection with the purchase of the Site; and for payment of the second instalment of the purchase price to ALTMARK INDUSTRIEPARK AG for the Site. | |
32. | The Lenders are satisfied in all respects with the construction and operating arrangements for the Project. | |
33. | Evidence satisfactory to the Agent that SP Holding (on a fully diluted basis) holds at least 63.58 % of the voting rights in the Borrower and has control over the board of directors of the Borrower and that SP Holding is a wholly owned subsidiary of Mercer International. | |
34. | A legal opinion from Cleary, Gottlieb, Steen & Hamilton with respect to the obligations of Mercer International, SP Holding, ALTMARK INDUSTRIEPARK AG, MFC IH and RWE-IN under the Transaction Documents to which it is a party. | |
35. | A legal opinion of the Borrowers legal counsel with respect to the EU-Decision having been validly issued together with a report analysing the risks of an appeal from this decision. | |
36. | A legal opinion of the Agents German legal counsel regarding the transaction in form and substance satisfactory to the Agent. |
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1. | The Agent has received a duly completed irrevocable Drawdown Request not later than 11:00 a.m. on the fifth (5th) Business Day before the Drawdown Date proposed in the Drawdown Request. | |
2. | The representations and warranties continue to be true and correct. | |
3. | No Event of Default or Potential Event of Default has occurred and remains uncured or unwaived or would occur as a result of the making of the Advance to be drawn down. | |
4. | Neither of the events mentioned in Clauses 5.1.1 and 5.1.2 has occurred. | |
5. | All terms and conditions of the State Guarantee are met, no event has occurred, as a result of which C&L refuses to allow disbursements under this Agreement and the State Guarantee continues to be valid and in full force and effect. | |
6. | Certificate by the Insurance Adviser stating that the Project is sufficiently insured in accordance with the construction progress. Such certificate is not needed if the respective insurance company is obliged to inform the Lenders promptly of a termination of any insurance. | |
7. | The Borrower has: |
(a) | paid all due and unpaid fees and expenses due under any of the Financing Documents; or | ||
(b) | instructed the Lenders to deduct the amount of such fees and expenses from the amount of the Advance to be disbursed to the Borrower and the amount of the Advance is sufficient to satisfy all such outstanding fees and expenses. |
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(A) | Wood and Logistic related Issues |
6 months after
first drawdown
|
Employment of a wood supply manager satisfactory to the Agent | |
|
||
10 months after
first drawdown
|
Management, in particular a purchasing director and a harvesting manager, in place satisfactory to the Agent | |
|
||
10 months after
first drawdown
|
The wood supply company and the logistic company have been incorporated | |
|
||
10 months after
first drawdown
|
Final company agreement of the wood supply company and the logistic company and final agreements to be entered into between the Borrower and the Permitted Subsidiaries in place and heads of terms regarding the agreements to be entered into between the Borrower and the Permitted Subsidiaries in place | |
|
||
5 months before
expected Start-up
|
Presentation of final agreements, including prices and volume, for 45 % of the required first year volume of about 2.2 mio. m 3 of round wood and chips volumes with chips making up at least 20 % of the contracted volume | |
|
||
3 months before
expected Start-up
|
All staff required for the Start-up with regard to the wood supply company and the logistic company has been contracted | |
|
||
2 months before
expected Start-up
|
Wood inventory of 230.000 m 3 at the mill or road side | |
|
||
2 months before
expected Start-up
|
Presentation of final agreements, including prices and volume, for 55 % in aggregate of the required first year volume of about 2.2 mio. m 3 of round wood and chips volumes with chips making up at least 20 % of the contracted volume | |
|
(B) | Pulp production related Issues |
4 months after
first drawdown
|
Employment of a Pulp Mill manager satisfactory to the Agent | |
|
||
4 months after
first drawdown
|
Technical plans regarding railroad and natural gas connection in place |
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Presentation of final personnel recruitment and training plan
Employment of senior production, sales and maintenance
management
Presentation of a detailed production start-up and operation
plan showing that the whole corporate structure will be in
place for operation
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Lenders and Commitments
Commitment in Euro
Am Tucherpark 1 (MCS3IN)
D 80538 München
827,950,000
Fax: +49 89 378 41518
827,950,000
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1. | The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of their functions) or (b) the requirements of the European Central Bank. | |
2. | On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the Additional Cost Rate ) for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Advance) and will be expressed as a percentage rate per annum. | |
3. | The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Agent. This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lenders participation in all Advances made from that Facility Office) of complying in respect of Advances made from that Facility Office. | |
4. | The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Agent in accordance with the formula set out below (expressed as a percentage rate per annum): |
A
x 0.01
|
% per annum. | |
|
||
300
|
||
|
Where A is the rate of charge payable by that Lender to the Financial Services Authority pursuant to the Fees Rules (calculated for this purpose by the Agent as being the average of the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors, ignoring any minimum fee or zero related fee required pursuant to the Fees Rules) and expressed in pounds per £1,000,000 of the Tariff Base of that Lender. | ||
5. | For the purposes of this Schedule: |
(a) | Fee Rules means the Banking Supervision (Fees) Regulations 2000 or such other law as may be in force from time to time in respect of the payment of fees for banking supervision; |
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(b) | Participating Member State means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to European Monetary Union; | ||
(c) | Special Deposits has the meanings given to it from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England; | ||
(d) | Tariff Base has the meaning given to it in, and will be calculated in accordance with, the Fees Rules; and | ||
(e) | the resulting figure will be rounded to four decimal places. |
6. | The Agent may from time to time, after consultation with the Borrower and the Lenders, determine and notify to all parties hereto any amendments or variations which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority and/or the European Central Bank (or, in any case, any other authority which replaces all or any of their functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all the parties hereto. | |
7. | Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information in writing on or prior to the date on which it becomes a Lender: |
(a) | its jurisdiction of incorporation and the jurisdiction of its Facility Office; and | ||
(b) | any other information that the Agent may reasonably require for such purpose. |
Each Lender shall promptly notify the Agent in writing of any change to the information provided by it pursuant to this paragraph. |
8. | The percentages or rates of charge of each Lender for the purpose of A above shall be determined b the Agent based upon the information supplied to it pursuant to paragraph 7 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lenders obligations in relation to cash ratio deposits, Special Deposits and the Fee Rules are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office. |
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9. | The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender pursuant to paragraphs 3 and 7 above is true and correct in all respects. | |
10. | The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender pursuant to paragraphs 3 and 7 above. | |
11. | Any determination by the Agent pursuant to this Schedule in relation to the formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all of the parties to this Agreement. |
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121
122
123
(1) | ZELLSTOFF STENDAL GMBH , a limited liability company incorporated, organised and validly existing under the laws of the Federal Republic of Germany, having its office at Goldbecker Strasse 1, 39596 Arneburg, Federal Republic of Germany and registered in the commercial register ( Amtsgericht ) of Stendal, number HRB 2446 (the Borrower and Pledgor ); |
(2) | BAYERISCHE HYPO- UND VEREINSBANK AG , a stock corporation incorporated, organised and validly existing under the laws of the Federal Republic of Germany, having its office at Am Tucherpark 16, 80538 München, Federal Republic of Germany and registered in the commercial register ( Amtsgericht ) of Munich, number HRB 42148 (the Original Pledgee and Security Agent ). |
(A) | The Lenders and the Pledgor have concluded a facility agreement dated [·] August 2002 in the amount of EUR 827,950,000 for the purpose of the design, development, construction and operation of a pulp mill located in Arneburg, near Stendal in Sachsen-Anhalt (the Facility Agreement ). |
(B) | Pursuant to the Facility Agreement the Pledgor and its shareholders are obliged to grant certain security for the purpose of securing the obligations under the Financing Documents in accordance with the terms and conditions therein. |
1. | DEFINITIONS |
1.1 | Unless otherwise stated in this Agreement or required by the context the definitions and principles of interpretation in the Facility Agreement are to be used in this Agreement. |
1.2 | Definitions: | |
Accounts : The bank accounts listed in Schedule 1 hereto and Account means any of them. | ||
Account Bank : A bank administering any of the Accounts. |
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Advance : A principal sum drawn by the Borrower under the Facility Agreement or, depending on the context, the principal sum outstanding as a result of such drawdown. | ||
Agent : Bayerische Hypo- und Vereinsbank AG or its successor. | ||
ALTMARK INDUSTRIEPARK AG : Altmark Industriepark AG, a company incorporated under the laws of the Federal Republic of Germany. | ||
Arranger : Bayerische Hypo- und Vereinsbank AG and its successors. | ||
Derivative Transaction : Any swap agreement, option agreement, futures contract, forward contract or similar arrangement with respect to interest rates, currencies or commodity prices. | ||
EPC Contract : The engineering, procurement and construction agreement dated 26 August 2002 between REW-IN and the Borrower. | ||
EPC-Contractor : RWE-IN. | ||
EU-Decision : The decision by the EU-Commission dated 19 June 2002 in respect of the State Guarantee and the Government Grants. | ||
Event of Default : Any of the events mentioned in Clause 23 ( Events of Default ) of the Facility Agreement. | ||
Facility : The facility comprising Tranche A, Tranche B, Tranche C, Tranche D1, Tranche D2 and Tranche E pursuant to Clause 2.1 ( Granting of the Facility ) of the Facility Agreement. | ||
Facility Office : The office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than (5) five days written notice) as the office or offices through which it will perform its obligations under the Facility Agreement. | ||
Fee Letter : The fee letter by Bayerische Hypo- und Vereinsbank AG and addressed to the Borrower dated on or about the date hereof. | ||
Financing Documents : The Facility Agreement, any agreement entered into with any Permitted Subsidiary in connection with the financing of the wood supply or logistics aspects of the Project, the Hedging Agreements, the Security Agreements, the Shareholders Undertaking Agreement, the Step-In-Rights Agreement between SP Holding, RWE-In, MFC IH and the agent on or about the date hereof, the RWE Solutions AG Guarantee, any agreement regarding Shareholder Loans and the corresponding subordination declarations, the Stand-By Equity Security, the Fee Letter, any waiver requests, waivers and other |
125
binding notifications, the Direct Agreement, the Parent Company Guarantee, the advance payment, performance and defects liability guarantee issued in favour of the Borrower by a first class bank in respect of the performance of the EPC Contractor under the EPC-Contract, the State Guarantee and any other document in relation to the financing of the Project. | ||
Future Pledgees : any entity which may become a pledgee hereunder by way of (i) transfer of the Pledges by operation of law following the transfer or assignment (including by way of novation or assumption ( Vertragsübernahme )) of any part of the Secured Obligations (as defined hereinafter) from the Original Pledgee or any Future Pledgee to such future pledgee and/or (ii) accession to this Agreement pursuant to Clause 2.6 hereof as pledgee. | ||
Government Grants : The grants which will be given as direct grants ( GA-Zuschuss (investment incentives)) by the State of Sachsen-Anhalt and as Investitionszulagen (tax grants) by the Federal Republic of Germany, both as approved by the EU-Decision, for the Project in favour of the Borrower. | ||
Hedging Agreements : The Hedging Agreement dated 26 August 2002 between the Hedging Counterparts and the Borrower in relation to any swap agreements, cap agreements, collar agreements, future agreements, forward agreements and similar agreements with respect to interest rates, currencies or commodity prices as well as any single transactions to be concluded by the Hedging Agreement. | ||
Hedging Counterparty : Bayerische Hypo- und Vereinsbank AG. | ||
Hedging Strategy : The hedging strategy in relation to the Facility to be agreed in writing between the Borrower and the Arranger, as amended from time to time, for the hedging of the interest, currency and commodity price risks of the Pledgor. | ||
Lenders : The lenders (including the Original Lender), acting through their respective Facility Offices, and their successors, transferees and assignees, as permitted under the Facility Agreement. | ||
Mercer International : Mercer International Inc., a Massachussetts trust incorporated und the laws of the state of Washington, United States of America. | ||
MFC IH : MFC Industrial Holdings AG. | ||
Original Lender : Bayerische Hypo- und Vereinsbank AG. |
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Parent Company Guarantee : The parent company guarantee to be granted by RWE Solutions AG in favour of the Borrower in respect of RWE-INs obligations under the EPC Contract. | ||
Permitted Subsidiaries : The two support holding companies, the wood supply company and the logistic company. | ||
Pledgees : the Original Pledgee and the Future Pledgees. | ||
Project : The design, development, financing, construction and operation of a 552,000 tonnes per annum bleached softwood kraft pulp mill located in Arneburg, near Stendal in Sachsen-Anhalt, Federal Republic of Germany. | ||
RWE Solutions AG Guarantee : The guarantee given by RWE Solutions AG in respect of RWE-INs obligations under the Shareholders Undertaking Agreement. | ||
RWE-IN : RWE Industrie-Lösungen GmbH, a limited liability company incorporated under the laws of the Federal Republic of Germany. | ||
Secured Creditors : The Lenders and the Hedging Counterparty. | ||
Security Agreements : The security agreements listed in Schedule 2 ( Security Agreements ), the Security Pooling Agreement and any other agreement pursuant to which the Borrower, the Shareholders, the Sponsors or any third party grant security to the Security Agent and/or the Lenders (other than the State Guarantee), including security agreements granting security in favour of or on behalf of the subsidiaries. | ||
Security Pooling Agreement : The security pooling agreement dated on or about the date hereof between the Security Agent, the Lenders, the Hedging Counterparty, SP Holding, RWE-IN, MFC IH and the Borrower. | ||
Share Capital : The share capital of the Borrower as increased from time to time in accordance with the Facility Agreement. | ||
Share : An ordinary fully paid up share in the Share Capital. | ||
Shareholder Loans : Loans by the Shareholders to the Borrower made and subordinated in accordance with the terms and conditions of the Shareholders Undertaking Agreement. | ||
Shareholders Undertaking Agreement : The agreement of even date between the Sponsors, the Shareholders, the Borrower and the Agent. |
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Shareholders : As at the date of this Agreement, SP Holding, RWE-IN and MFC IH, and thereafter includes any person to whom Shares may be transferred. | ||
Shareholders Account : An account in the name of the Borrower over which the Lenders have no security and to which the Borrower is allowed to make payments in accordance with Clauses 9.4.3(a) ( Priority of Payments ) and 9.4.3(c) ( Restricted Application ) of the Facility Agreement. | ||
Sponsors : Mercer International, RWE-IN and ALTMARK INDUSTRIEPARK AG and any of their respective successors. | ||
Stand-By Equity Security : |
(a) | an unconditional letter of credit; or | ||
(b) | an unconditional guarantee on first demand, |
in each case in form and substance satisfactory to the Agent and issued by a bank whose long term unsecured credit rating is at least A from Standard & Poors Rating Services and A 2 from Moodys Investors Services Inc.; or | ||
an interest bearing cash deposit in the amount required by the Shareholders Undertaking Agreement to be held by the Agent or at HVB Banque Luxembourg Société Anonyme, such account to be pledged in favour of the Lenders by entering into an account pledge agreement substantially in the form set out in Schedule 7 ( Form of Account Pledge Agreement ) of the Facility Agreement in case the account is held by the Agent and an account pledge agreement substantially in the form set out in Schedule 8 ( Form of Luxembourg Account Pledge Agreement ) of the Facility Agreement in case the account is held by HVB Banque Luxembourg Société Anonyme. | ||
State Guarantee : The guarantees ( Ausfallbürgschaften ) issued by the Federal Republic of Germany (for 48 % of the aggregate amount of Advances under Tranches A and B) and the State of Sachsen-Anhalt (for 32 % of the aggregate amount of Advances under Tranches A and B) issued pursuant to the EU-Decision in the form attached to the Facility Agreement as Schedule 11 ( State Guarantee ) of the Facility Agreement in favour of the Lenders with respect to this Agreement including the Allgemeinen Bestimmungen für Bürgschaftsübernahmen durch die Bundesrepublik Deutschland (Bund) und parallel bürgende Bundesländer (General Conditions for the issuing of guarantees by the Federal Republic of Germany and Länder). | ||
2. | PLEDGE | |
2.1 | The Pledgor hereby pledges to the Pledgees: |
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(a) | all present, conditional and future claims including the account balances ( Salden ) of current accounts ( Kontokorrentkonten ), as the case may be, and all respective rights of the Pledgor arising under all of its accounts, including the bank accounts listed in Schedule 1 hereto and all such accounts which will be mentioned in the relevant Account Lists pursuant to Clause 4; | ||
(b) | all securities and other instruments including all secondary rights, in particular the rights from interest and profit share coupons, which are or will in the future be credited into the custody accounts mentioned in Schedule 1 hereto; |
(each right of the Pledgees created hereunder is hereinafter referred to as a Pledge ). | ||
2.2 | Excluded from the Pledge is the Shareholders Account. | |
2.3 | The Original Pledgee hereby accepts its Pledges for itself. | |
2.4 | For the purpose of the Pledges the Pledgor hereby assigns to the Pledgees its claims for possession regarding the items listed in Clause 2.1(b) above against the account holding bank. If order papers ( Orderpapiere ) are deposited or will be deposited in the deposit of security mentioned under Clause 2.1(b) the Pledgor of such order papers will be provided with a blank endorsement, if it has not been provided with such blank endorsement already. | |
2.5 | The Pledgor undertakes to notify the Account Bank and any other relevant third party of the Pledges in substantially the form set out in Schedule 4 attached to this Agreement without undue delay requesting to acknowledge receipt of the notification of and acceptance of the terms thereof to the Security Agent. | |
2.6 |
(a) | Upon transfer or assignment (including by way of assumption ( Vertragsübernahme )) of all or part of the Secured Obligations by a Pledgee the Pledges created hereunder shall transfer by operation of law pursuant to para. 401 BGB. In the event that for any reason such transfer by operation of law is not totally effective then the Security Agent shall, and hereby does accept, as representative without power of attorney ( Vertreter ohne Vertretungsmacht ), the respective Pledges for and on behalf of each Future Pledgee. Each Future Pledgee ratifies and confirms the declarations and acts so made by the Security Agent on its behalf by accepting the transfer or assignment (including by way of novation or assumption ( Vertragsübernahme )) of the Secured Obligations (or part of them) from a Pledgee. Upon such ratification |
129
( Genehmigung ) such Future Pledgee becomes a party to this Agreement, it being understood that any future or conditional claim ( zukünftiger oder bedingter Anspruch ) of such Future Pledgee arising under the Secured Obligations shall be secured by the Pledges constituted hereunder. | |||
(b) | All parties hereby confirm that the validity of the Pledges granted hereunder shall not be affected by the Security Agent acting as representative without power of attorney for each Future Pledgee. | ||
(c) | The Pledgor herewith authorises the Security Agent to notify the identity of such Future Pledgee and the new pledges created pursuant to Clause 2.6(a) above to the Pledgor and the Account Bank. Upon request of the Security Agent, the Pledgor shall without undue delay give such notice and provide the Security Agent with a copy thereof. |
2.7 | The validity and effect of each of the Pledges shall be independent from the validity and the effect of the other Pledges created hereunder. The Pledges to each of the Pledgees shall be separate and individual pledges ranking pari passu with the other Pledges created hereunder. |
2.8 | Each of the Pledges is in addition, and without prejudice, to any other security a Pledgee may now or hereafter hold in respect of the Secured Obligations. |
2.9 | The Pledgor is not entitled to demand the delivery of interest and profit share coupons with regard to securities which are pledged hereunder other than provided in Clause 10.5.1 of the Facility Agreement. | |
3. | SECURED OBLIGATIONS | |
The Pledges hereunder shall secure all claims (present and future, actual and contingent) of the Secured Creditors which are or become owing by the Pledgor pursuant to or in connection with: |
(i) | the Facility Agreement; | ||
(ii) | the Security Agreements and all of the other Financing Documents; and | ||
(iii) | the Hedging Agreements between the Hedging Counterparty and the Pledgor; |
in their respective valid, amended, supplemented, novated or newly arranged forms. | ||
(The claims mentioned in this Clause 3 will be hereinafter referred to as the Secured Obligations ). |
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4. | LIST OF BANK ACCOUNTS | |
4.1 | The Pledgor shall supply at its own expense to the Security Agent a list of the pledged accounts referred to in this Agreement within a period of ten (10) days from the end of each calendar quarter. The first list shall be supplied on the [Date] (the Account List ). | |
4.2 | The Account List shall contain the account number, the accounting balances, the bank code number and the addresses of the banks holding these accounts. | |
4.3 | The parties to this Agreement agree that all claims from the bank accounts that are specified in the Account List pursuant to Clause 4.1 are pledged to the Pledgees having equal priority. | |
4.4 | The Pledgees are entitled to request further Account Lists from the Pledgor at its expense, such Account Lists to be supplied by the Pledgor to the Security Agent. | |
5. | ENFORCEMENT OF THE PLEDGES | |
5.1 | Until the Security Agent gives notice to the contrary to the Pledgor, the Pledgor shall be authorised to withdraw money from the pledged accounts and to transfer monies within the ordinary course of its business and pursuant to Clause 9.2 of the Facility Agreement. The same does apply mutatis mutandis with regard to transactions concerning the pledged custody accounts. | |
5.2 | If the requirements set forth in Section 1204 et seq. of the German Civil Code ( Bürgerliches Gesetzbuch ) with regard to the enforcement of any of the Pledges are met ( Pfandreife ), in particular, if any of the Secured Obligations have become due and payable and, in addition, an Enforcement Event pursuant to the Facility Agreement has occurred, then in order to enforce the Pledges, the Pledgees (acting through the Security Agent) may at any time hereafter avail themselves of all rights and remedies to enforce the pledges that a pledgee has upon default of a pledgor by rights (the Enforcement Event ). | |
5.3 | Notwithstanding Section 1277 of the German Civil Code, the Pledgees, acting through the Security Agent are entitled to exercise their rights without obtaining enforceable judgment or other instrument ( vollstreckbarer Titel ). | |
5.4 | The Pledgor hereby expressly agrees that two (2) weeks prior written notice to the Pledgor of the place and time of any such public auction shall be sufficient. The public auction may take place at any place in the Federal Republic of Germany designated by the Security Agent, acting for and on behalf of the Pledgees. |
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5.5 | The Pledgor hereby expressly waives all defences of voidability and set-off pursuant to sections 770 and 1211 of the German Civil Code ( Einrede der Anfechtbarkeit und der Aufrechenbarkeit ). | |
5.6 | Provided that the other requirements in Clause 5.2 are met and to the extent permissible under the applicable law the Pledgees acting through the Security Agent shall be entitled to: |
(a) | collect the monies standing to the credit of the pledged accounts and to apply them to the satisfaction of the Secured Obligations; | ||
(b) | realise the securities booked on the Accounts; | ||
(c) | request that all documents relating to the Pledge be handed over to the Security Agent and the Pledgor hereby agrees to comply promptly with any such request; and | ||
(d) | take any other actions not mentioned in Section 5.5 (a) to 5.5 (c) above which are necessary or appropriate for the purpose of realising the security granted by the Pledgor in accordance with this Agreement, to the extent that such actions are permissible under the applicable law. |
5.7 | The Pledgees acting through the Security Agent may realise the Pledges only to the extent necessary to satisfy any outstanding Secured Obligations. |
5.8 | Among several claims the Pledgees acting through the Security Agent may select at their own discretion which claims shall be realised. The Pledgees shall, however, use their best efforts to give priority to actions which will not endanger the ongoing concern of the Pledgors business. Other actions shall only be taken if necessary to satisfy in full the Secured Obligations. |
5.9 | The proceeds resulting from the realisation of the Pledges shall be applied pursuant to Clause 7.7 of the Security Pooling Agreement. | |
6. | RIGHT OF INSPECTION |
6.1 | The Security Agent is entitled during usual business-hours and with a reasonable advance notice to demand and to inspect all information, records and instruments which are required or useful in order to examine or to assert the value of the Pledges created under this Agreement. If the Pledgor employs data processing systems it will at its own cost and on reasonable request of the Security Agent produce print-outs of the information, records and instruments which are required or useful for the aforementioned purposes or will supply data carriers to the Security Agent on which such information, records and instruments are recorded. |
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6.2 | In case any third party other than the Pledgor has access to information, records and instruments described in Section 6 the Pledgor already hereby irrevocably authorises the Security Agent and its successors acting for and on behalf of the Pledgees to obtain such information, records and instruments in the name of the Pledgor. The Security Agent shall immediately inform the Pledgor of any such acts under the conditions set out in Clause 6.2. |
6.3 | The Pledgor shall on request update all information, records and instruments relating to the claims and securities pledged under this Agreement. |
6.4 | A consultant or adviser authorised by the Security Agent may exercise the Security Agents rights under this Section 6. | |
7. | REPRESENTATIONS AND WARRANTIES | |
7.1 | The Pledgor represents and warrants to the Pledgees that: |
(a) | it alone holds title to and may freely dispose of the Accounts; | ||
(b) | the Accounts have not been pledged to third parties or encumbered in any other way in favour of third parties; | ||
(c) | no counterclaims as to which a right to set-off or a right of retention could be exercised exist to date and, to the extent that this is legally practicable and from a reasonable business perspective appropriate and within the ordinary course of business, such counterclaims will not be allowed to come into existence in the future; and | ||
(d) | it does not hold any bank accounts other than the accounts allowed under the Facility Agreement. |
7.2 | If any of the warranties of the Pledgor under Section 7.1 should be incorrect, wholly or in part, the Pledgor will place the Pledgees in the same position as if the respective warranty given by the Pledgor had been correct. The aforementioned claim of the Pledgees does not require negligence on the part of the Pledgor. | |
8. | PLEDGORS UNDERTAKINGS | |
The Pledgor undertakes: |
(e) | unless permitted in this Agreement and the Facility Agreement, not to dispose of any assets booked on the accounts pledged hereunder other than in the ordinary course of its business and in accordance with the Facility Agreement as well as to refrain from encumbrances or any acts or omissions which might result in a material decline of the aggregate |
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value or in a loss of the assets and not to enter into obligations to refrain from disposals of assets ( Verfügungsverbote ); | |||
(f) | to identify the Pledge immediately in its books and records and to refrain from any acts or omissions which could prevent third parties who may have a legitimate interest in obtaining knowledge of the Pledge from obtaining knowledge thereof; | ||
(g) | to open a new account only with prior written consent of the Pledgees, which consent shall not be unreasonably withheld. In such a case, the Pledgor shall grant a corresponding account pledge to the Pledgees over the newly established account; | ||
(h) | to inform the Security Agent as soon as possible in the case the Pledgees rights in respect of the Pledge are prejudiced or jeopardised by attachment or are prejudiced or jeopardised by other material actions of third parties. Such information shall be accompanied, in the case of any attachment, by a copy of the order for attachment as well as all documents required for the filing of an objection against the attachment, and, in case of any other actions by third parties, by copies evidencing which actions have or will be taken, respectively, as well as all documents required for the filing of an objection against such actions. The Pledgor shall further be obliged to inform as soon as possible the attaching creditors or other third parties asserting rights with respect to the transferred rights and claims in writing of the Pledgees rights in respect of the assets. All reasonable and adequately documented costs and expenses for countermeasures of the Pledgees shall be borne by the Pledgor. This shall also apply to the institution of legal action which the Pledgees reasonably consider necessary; | ||
(i) | to inform the Security Agent promptly of any subsequent material changes in the value of the accounts pledged hereunder resulting from any set off or other reasons, after becoming aware of such changes other than in the ordinary course of business; and | ||
(j) | to notify the Security Agent promptly of any event or circumstance which might be expected to have a material adverse effect on the validity or enforceability of this Agreement. |
9. | NOTICES | |
9.1 | Communications in Writing | |
Each communication to be made by the parties hereto under this Agreement will be made in writing and, unless otherwise stated, will be made by letter, fax or |
134
e-mail. Any communication to be made by the parties hereto in connection with the enforcement of the security created hereunder shall, however, only be made by letter. Each communication will be in German or English. | ||
9.2 | Addresses | |
Any communication, information or document to be made or delivered by the parties hereto pursuant to this Agreement will (unless the recipient of such communication or document has, by fifteen (15) days written notice to the Security Agent, specified another address or fax number) be made or delivered to the address set out below: |
(a) | to the Pledgor: | ||
Zellstoff Stendal GmbH
Goldbecker Strasse 1 D 39596 Arneburg attn.: Wolfram Ridder Tel.: +49 (0) 39321 50321 Fax.: +49 (0) 39321 50422 |
|||
(b) | to the Security Agent: | ||
Bayerische Hypo- und Vereinsbank AG
Am Tucherpark 1 (MCS4LA) D 80538 München attn.: Loans Agency Tel.: +49 (0)89-378 25460 Fax: +49 (0)89-378 41517 |
10. | LEGAL SUCCESSION | |
10.1 | This Agreement shall create rights and obligations of the parties hereto and of their respective permitted successors. | |
10.2 | The Security Agent may transfer its rights and obligations under this Agreement to third parties at any time after having resigned from its office as Security Agent. However, all rights and obligations shall only be transferred collectively to the same third party. The Borrower hereby irrevocably grants its consent that the relevant third party shall become a party hereto in lieu and as successor of the Security Agent upon the transfer becoming effective. The Borrower is |
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obliged not to transfer its rights and
obligations under this Agreement without the prior written consent of the Security Agent.
10.3
This Agreement shall continue to apply in the case of a change of the Pledgors shareholders
or legal form and in the case of a universal succession (
Gesamtrechtsnachfolge
) on the part of
the Pledgor or the Security Agent.
11.
AMENDMENTS
Changes to this Agreement and any waiver of rights under this Agreement shall be made in
writing. The parties may waive this form requirement by written agreement only.
12.
RELEASE (
PFANDFREIGABE
)
Upon complete and irrevocable satisfaction of the Secured Obligations, the Pledgees will as
soon as reasonably practical declare the release of the Pledges (
Pfandfreigabe
) to the
Pledgor as a matter of record. For the avoidance of doubt, the parties are aware that upon
full and complete satisfaction of the Secured Obligations the Pledges, due to their
accessory nature (
Akzessorietät
) cease to exist by operation of German mandatory law.
13.
PARTIAL INVALIDITY, WAIVER
13.1
Should any provision of this Agreement be invalid or unenforceable, wholly or in part, or
should any provision later become invalid or unenforceable, this shall not affect the validity
of the remaining provisions of this Agreement. In lieu of the invalid or unenforceable
provision another reasonable and enforceable provision shall apply which corresponds to what
the parties would have agreed taking into account the spirit and purpose of this Agreement had
they considered the invalidity or lack of enforceability of the relevant provision upon
conclusion of this Agreement, and which corresponds to the intentions of the parties in
relation to the spirit and purpose of this Agreement. The above provision shall apply
mutatis
mutandis
to fill possible gaps in this Agreement.
13.2
No failure to exercise, nor any delay in exercising, on the part of the Security Agent, any
right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy prevent any further or other exercise thereof or the exercise
of any other right or remedy. The rights and
remedies provided hereunder are cumulative and not exclusive of any rights or remedies
provided by law.
14.
MISCELLANEOUS
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14.1
The Security Agent acts as agent for each of the Stendal Creditors against the Borrower in
the event of an assertion of the rights and obligations under this Agreement. The Security
Agent is authorised to authorise a third party if necessary. The Security Agent and the third
party are exempt from the restrictions laid down in Section 181 of the German Civil Code
(
BGB
).
14.2
Each Pledgee authorises the Security Agent to act as agent for the Pledgees in the event of
an assertion of the rights and obligations under this Agreement. The Security Agent is
authorised to authorise a third party if necessary. The Security Agent and the third party
are exempt from the restrictions laid down in Section 181 of the German Civil Code (
BGB
).
14.3
The Security Agent in its capacity as account keeping bank herewith agrees that its lien
pursuant to its general business conditions (
AGB-Pfandrecht
) shall rank behind all the pledges
over the Account granted to the Pledgees by the Pledgor pursuant to this Agreement.
14.4
This Agreement has been translated into the English language for convenience purposes only.
For the avoidance of doubt, the German version of this Agreement shall prevail.
15.
APPLICABLE LAW, JURISDICTION
15.1
This Agreement shall be governed by the laws of the Federal Republic of Germany.
15.2
The courts in Munich shall have exclusive jurisdiction in respect of any dispute out of or in
connection with this Agreement. The Pledgees, however, shall be entitled to take action
against the Pledgor in any other court of competent jurisdiction.
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Bank | Currency | Account Number | Use | |||
|
138
1. | First ranking Land Charge by the Borrower in an aggregate amount of EUR 827,950,000 on the site of the Borrower dated on or about the date hereof whereby the Borrower submits in a separate certificate to the immediate enforcement of judgement concerning the Site in an amount of EUR 60,000,000; | |
2. | Security Purpose Agreement between the Borrower and the Security Agent dated on or about the date hereof; | |
3. | Security Transfer Agreement between the Borrower and the Security Agent as of the date hereof; | |
4. | Global Assignment Agreement between the Borrower and the Security Agent dated on or about the date hereof; | |
5. | Insurance Claims Assignment Agreement between the Borrower and the Security Agent dated on or about the date hereof; | |
6. | Investment Incentives Assignment Agreement between the Borrower and the Security Agent dated on or about the date hereof; | |
7. | Account Pledge Agreement between the Borrower and the Security Agent dated on or about the date hereof; | |
8. | Pledge of Hedging Claims between the Borrower and the Security Agent dated on or about the date hereof; | |
9. | Share Pledge Agreement between SP Holding, RWE-IN and MFC IH and the Security Agent dated on or about the date hereof; and |
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Yours faithfully,
|
||||
For and on behalf of Zellstoff Stendal GmbH | ||||
Re: | [Account No. -[ ], Banking Code [ ] (the Account)] |
|
||||
|
||||
|
||||
For and on behalf of [Account Bank]
|
Date |
141
as
Borrower
and
Pledgor
)
Name:
Goldbecker Strasse 1
D-39596 Arneburg
|
||||||||
Name:
|
Name: | |||||||
Address:
|
Am Tucherpark 16
D-80538 München |
142
143
144
145
(1) | ZELLSTOFF STENDAL GMBH , a limited liability company incorporated, organised and validly existing under the laws of the Federal Republic of Germany, having its office at Goldbecker Strasse 1, 39596 Arneburg, Federal Republic of Germany and registered in the commercial register ( Amtsgericht ) of Stendal, number HRB 2446 (the Pledgor ); | |
(2) | BAYERISCHE HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT , a stock corporation incorporated organised and validly under the laws of the Federal Republic of Germany as Security Agent and as such acting for and on behalf of the secured creditors (the Security Agent ); |
(3) | HVB BANQUE LUXEMBOURG SOCIÉTÉ ANONYME , a company duly organized and existing under the laws of the Grand Duchy of Luxembourg, having its registered office in 4, rue Alphonse Weicker, 2099 luxembourg (the Account Bank ); |
(A) | The Lenders and the Pledgor have concluded a Facility Agreement dated 26 August 2002 in the amount of EUR 827,950,000 for the purpose of the design, development, construction and operation of a pulp mill located in Arneburg, near Stendal in Sachsen-Anhalt (the Facility Agreement ). | |
(B) | Pursuant to the Facility Agreement the Pledgor is obliged to grant certain security for the purpose of securing the obligations under the Facility Agreement in accordance with the terms and conditions therein. |
1. | DEFINITIONS | |
1.1 | Unless otherwise stated in this Agreement the definitions and principles of interpretation in the Facility Agreement shall apply to this Agreement. | |
2001 Law means the Luxembourg law dated 1 August 2001 on the circulation of securities and other fungible instruments ( loi du 1er août 2001 sur la circulation de titres et dautres instruments fongibles ). |
146
Bank Account means the bank account held with the Account Bank as set out in Schedule 1 ( List of Bank Accounts ) including any sub account, renewal, redesignation or replacement thereof. | ||
Eligible Securities means investments made in short term [euro] debt securities with a maximum duration of 3 years of issuers with a short term A1 rating or better of Standard & Poor s Corporation or an equivalent rating from such other rating agency approved by the agent. | ||
Hedging Counterparty means Bayerische Hypo- und Vereinsbank AG. | ||
Lenders means the financial institutions being, from time to time, Lenders under the Facility Agreement. | ||
Pledged Assets means the Pledged Account Claims, the Pledged Securities and the Related Assets. | ||
Pledged Account Claims means any claim to the cash credit balance of the Bank Account as well as any other claim the Pledgor may have against the Account Bank in relation to such Bank Account, including, for the avoidance of doubt, any pecuniary claim for the payment of the relevant credit balance or for the repayment of a terms deposit ( Festgeld ) as well as any other claim, regardless of the nature thereof in relation to the Bank Account, including, for the avoidance of doubt, any claim for the payment of the interests paid into the Bank Account. | ||
Pledged Securities means any securities and, in particular, any Eligible Securities which, from time to time will be deposited by the Pledgor on the securities ledger of the Bank Account. | ||
Related Assets means all dividends, interest and other monies payable in respect of the Pledged Securities and all other rights, benefits and proceeds in respect of or derived from the Pledged Securities (whether by way of redemption, bonus, preference, option, substitution, conversion or otherwise). | ||
Secured Creditors means the Lenders and the Hedging Counterparty. | ||
Secured Obligations means all present and future, conditional and unconditional claims, rights, title, interests (whether actual or contingent) of the Secured Creditors or any of them against the Pledgor or any of its successors which are or become owing by the Pledgor or any of its successors to the Secured Creditors under or in connection with the Facility Agreement, the Security Agreements, all other Financing Documents, the Hedging Agreement between the Hedging Counterparty and the Pledgor and any other agreement including any renewal, extension, novation or any other amendment, |
147
modification or supplement to such agreements including the Financing Documents concluded between the Pledgor, on the one hand, and the Secured Creditors or any of them, on the other hand, in connection with or related to the Financing Documents irrespective of whether any other persons or entities are parties to such agreements or supplements including letters of credit and/or guarantees including all obligations of the Pledgor now or hereafter existing under this Agreement including, without limitation, all fees, costs and expenses whether in connection with a collection action hereunder or other enforcement action hereunder. |
1.2 | References to Clauses, Recitals and Schedules are to clauses, recitals and schedules of this Agreement. | |
2. | PLEDGE OVER PLEDGED ACCOUNT CLAIMS | |
2.1 | Pursuant to Article 110 et seq. of the Luxembourg Code of Commerce, the Pledgor hereby irrevocably and unconditionally grants a first priority pledge ( gage ) over the Pledged Account Claims (the Pledge over Account ) in favour of the Security Agent, who accepts, as security for the due and full payment and discharge of all of the Secured Obligations. | |
2.2 | Pursuant to Article 110 et seq. of the Luxembourg Code of Commerce and Article 9 of the 2001 Law, the Pledgor hereby irrevocably and unconditionally grants a first priority pledge ( gage ) over the Pledged Securities (the Pledge over Securities , and together with the Pledge over Accounts, the Pledges ) in favour of the Security Agent, who accepts, as security for the due and full payment and discharge of all of the Secured Obligations. | |
2.3 | The parties agree, to the extent necessary, that the Pledged Securities shall be subject to the fungibility regime organised by the 2001 Law. | |
2.4 | The Pledgor undertakes that the Pledge over Securities shall at all times remain perfected in accordance with article 9 of the 2001 Law and, in particular, that the Pledged Securities shall be held in a sub-account to the Bank Account which shall be identified as an account holding securities pledged in favour of the Security Agent (the Securities Sub-Account ). | |
2.5 | Without prejudice to the above provisions, the Pledgor hereby irrevocably authorises and empowers the Security Agent to cause any formal steps to be taken by the Account Bank or any other person for the purpose of perfecting the Pledges and, for the avoidance of doubt, undertakes to take any such steps itself if so directed by the Security Agent. In particular, should any such steps be required in relation to Pledged Securities acquired in the future, the Pledgor undertakes to take any such steps immediately upon acquisition or delivery of the relevant Pledged Securities. |
148
2.6 | Without prejudice to the restrictions contained in this respect in the Facility Agreement, the Pledgor shall be allowed to dispose of any monies standing to the credit of the Bank Account. The parties however expressly agree that the Account Bank shall not be under an obligation to monitor compliance with the restrictions contained in the Facility Agreement. | |
3. | UNDERTAKING | |
The Pledgor undertakes to the Security Agent during the subsistence of this Agreement that: | ||
3.1 | it shall from time to time promptly execute, acknowledge, deliver, file and register all such additional documents, instruments, agreements, certificates, consents and assurances and do all such other acts and things as may be necessary or as the Security Agent may reasonably request from time to time in order to perfect the security constituted by this Agreement and to exercise and enforce the rights and remedies under this Pledge Agreement or in respect of the Pledged Assets; | |
3.2 | it shall promptly furnish to the Security Agent such information, reports and records in respect of the Pledged Assets as the Security Agent may reasonably request from time to time; | |
3.3 | it shall abstain from any act or omissions affecting the enforceability of the pledge or through which the rights and interests of the Security Agent as the owner of security rights therein may be impaired; | |
3.4 | it shall not close the Bank Account without the prior written consent of the Security Agent; | |
3.5 | it shall refrain from any acts or omissions including but not limited to, the creation of any encumbrances, which might result in a material decline of the aggregate value or in a loss of the Bank Account; | |
3.6 | it shall identify the Pledge immediately in its books and records and refrain from any acts or omissions which would reasonably be likely to prevent third parties who may have a legitimate interest in obtaining knowledge of the Pledge; | |
3.7 | it shall inform the Security Agent as soon as possible in case the Security Agents rights in respect of the Bank Account are prejudiced or jeopardised by attachment or are materially prejudiced or jeopardised by other actions of third parties. Such information shall be accompanied, in case of any attachment, by a copy of the order for attachment, as well as all documents required for the filing of an objection against the attachment, and, in case of any other actions by third parties, by copies evidencing which actions have or will be taken, respectively, |
149
as well as all documents required for the filing of an objection against such actions. The Pledgor shall further be obliged to promptly inform as soon as possible the attaching creditors or other third parties asserting rights with respect to the Bank Account in writing of the Security Agents rights in respect of the claims. All reasonable and adequately documented costs and expenses for any actions of intervention and countermeasures of the Security Agent shall be borne by the Pledgor. This shall also apply to the institution of legal action, which the Security Agent considers necessary; |
3.8 | it shall inform the Security Agent, forthwith upon becoming aware of such event, in the event that any Pledged Securities no longer qualify as Eligible Securities; | |
3.9 | it shall sell, if so requested by the Security Agent, any Pledged Securities in accordance with (i) Clauses 2.3 and 3.5 and (ii) any particular instructions the Security Agent may have given; and | |
3.10 | it shall notify the Security Agent as soon as possible of any event or circumstance which may be expected to have a material adverse effect on the validity or enforceability of this Agreement. | |
4. | POWER OF ATTORNEY | |
4.1 | The Pledgor irrevocably appoints the Security Agent to be its attorney and in its name and on its behalf to execute, deliver and perfect all documents and do all things that the Security Agent may consider to be requisite for (a) carrying out any obligation imposed on the Pledgor under this Agreement, (b) perfecting or maintaining the security interest created hereunder or (c) exercising any of the rights conferred on the Security Agent by this Agreement or by law, it being understood that the enforcement of the pledge over the Pledged Assets must be carried out as described in Clause 5 ( Remedies upon Default ) hereunder. The Pledgor shall ratify and confirm all things done and all documents executed by the Security Agent in the exercise of that power of attorney. | |
5. | REMEDIES UPON DEFAULT | |
5.1 | Three Eight days after a demand to pay ( mise en demeure ) the Secured Obligations (or any part thereof) which may only be made if an Event of Default ( Kündigungsgrund ) according to Clause 23.1.1 of the Facility Agreement has occurred and is continuing is given to the Pledgor in the form provided for in Clause 13, the Security Agent shall be entitled, and in addition to all other rights and remedies granted hereunder and under any other instrument or agreement securing, evidencing or relating to the Secured Obligations, to exercise all rights and remedies of a pledgee under the laws of Luxembourg (or any other applicable laws) and may enforce the Pledge in the most favourable manner |
150
available under applicable law, including, but not limited to, by using any right of set off arising under Article 118 (2) of the Code of Commerce or by requesting direct payment from the Account Bank pursuant to the same provision. |
5.2 | For that purpose, the Security Agent shall be irrevocably empowered and authorised to represent the Pledgor in relation to the Account Bank, in particular but not limited to for the purpose of requesting the temporary closure ( arrêt de compte ) of the Bank Accounts or for the purpose of making any other administrative arrangements necessary for the enforcement of the Pledge. It may also request the attribution judiciaire of any claim or asset pursuant to Article 2078 of the Civil Code, as well as exercise all other rights to which it is entitled in such circumstances under Luxembourg law or any other applicable laws. | |
6. | CHANGE OF VALUE | |
In the event the Bank Account will substantially change in its value due to objections, suspension or due to set offs or for any other reasons the Pledgor is obliged to promptly inform the Security Agent thereof. | ||
7. | INDEMNITY | |
7.1 | The Security Agent and the Secured Creditors shall not be liable for any loss or damage suffered by the Pledgor save in respect of such loss or damage which is suffered as a result of wilful misconduct or gross negligence of either of them. | |
7.2 | The Pledgor will indemnify the Secured Creditors and the Security Agent and keep the Secured Creditors and the Security Agent indemnified against all damages, losses, actions, claims, expenses, demands and liabilities which may be incurred by or made against the Secured Creditors and the Security Agent for anything done or omitted in the exercise or purported exercise of the powers contained herein and occasioned by any breach of the Pledgor of any of its obligations or undertakings herein contained other than to the extent that such damages, losses, actions, claims, expenses, demands and liabilities are incurred or made against the Secured Creditors or the Security Agent as a result of gross negligence or wilful misconduct of the Secured Creditors or the Security Agent. | |
8. | REPRESENTATIONS AND WARRANTIES | |
8.1 | The Pledgor represents and warrants to the Security Agent that, except as expressly provided in the Facility Agreement and the Security Documents: |
8.1.1 | it alone holds title to and may, except for the Pledge created hereunder, freely dispose of the Bank Account; |
151
8.1.2 | the Bank Account has not been pledged to third parties or encumbered in any way in favour of third parties; | ||
8.1.3 | the pledgeability of the Bank Account is neither excluded nor restricted in any way; | ||
8.1.4 | it has the power to execute and perform its obligations under this Agreement and all necessary corporate, shareholder and other action has been taken to authorise the execution and performance of the same; | ||
8.1.5 | no litigation, arbitration or administrative proceeding is presently in progress, and the Pledgor has not received notice that the initiation of any such proceedings is intended, to restrain the entry into, exercise of any of the Pledgors rights under and/or performance or enforcement of or compliance with any of its obligations under this Agreement, which, if adversely determined, is reasonably likely to have a material adverse effect on the ability of the Pledgor to perform its obligations under this Agreement; and | ||
8.1.6 | no counterclaims as to which a right to set off or right of retention could be exercised exist with respect to the Bank Account. |
8.2 | The representations under Clause 8.1 ( Representations and Warranties ) shall be expressly repeated by the Pledgor by reference to the facts and circumstances then existing at each Drawdown Date. | |
8.3 | If any of the representations and warranties of the Pledgor under Clause 8.1 ( Representations and Warranties ) should be incorrect, in whole or in part, the Pledgor will use its best efforts to place the Security Agent in the same position as if the respective representation or warranty given by the Pledgor had been correct. The rights and claims of the Security Agent contained in this Clause 8.3 do not require negligence on the part of the Pledgor. | |
9. | RELEASE OF SECURITY | |
The Pledge shall be discharged by, and only by, the express release thereof granted by the Security Agent. The Pledgor shall be entitled to demand the release and the Security Agent shall be under the obligation to grant such release upon good and final discharge of the Secured Obligations. | ||
10. | PARTIAL ENFORCEMENT | |
The Security Agent shall have the right, pursuant to the procedures set forth in Clause 5 ( Remedies upon Default ) of this Agreement, to request enforcement of all or part of the Pledge in its most absolute discretion. In particular, the |
152
Security Agent shall, in its most absolute discretion, be entitled to enforce the Pledge over all or part of the Pledged Account Claims only and/or over all or part of the Pledged Securities only. No action, choice or absence of action in this respect, or partial enforcement, shall in any manner affect the Pledge as it then shall be. The security interest/pledge thereover shall continue to remain in full and valid existence until the Security Agent releases the Pledges in accordance with Clause 9. |
11. | EFFECTIVENESS OF COLLATERAL | |
11.1 | The Pledge shall be a continuing security and shall not be considered as satisfied or discharged or prejudiced by any partial payment, satisfaction or settlement of any part of the Secured Obligations and shall remain in full force and effect until the Security Agent releases the Pledges in accordance with Clause 9. | |
11.2 | The Pledge shall be cumulative, in addition to and independent of every other security which the Security Agent may at any time hold as security for the Secured Obligations or any rights, powers and remedies provided by law and shall not operate so as in any way to prejudice or affect or be prejudiced or affected by any security interest or other right or remedy which the Secured Creditors or the Security Agent may now or at any time in the future have in respect of the Secured Obligations. | |
11.3 | This Pledge shall not be prejudiced by any time or indulgence granted to any person, or any abstention or delay by the Secured Creditors or the Security Agent in perfecting or enforcing any security interest or rights or remedies that they may now or at any time in the future have from or against the Pledgor or any other person having granted security for the Secured Obligations. | |
11.4 | No failure on the part of the Security Agent to exercise, or delay on its part in exercising, any of the rights under this Pledge Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any further or other exercise of that or any other rights. | |
11.5 | None of the Secured Creditors or the Security Agent or any of their agents shall be liable by reason of (a) taking any action permitted by this Pledge Agreement or (b) any neglect or default in connection with the Pledged Assets or (c) the realisation of all or any part of the Pledged Assets, except in the case of gross negligence or wilful default upon its part. | |
11.6 | The Pledgor hereby expressly renounces the benefit of article 2037 of the Luxembourg Civil Code. |
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12. | COST AND EXPENSES | |
12.1 | All reasonable costs, charges, fees and expenses incurred in connection with the negotiation, preparation, execution registration, implementation and preservation and amendments, waivers or consents of this Agreement and all reasonable costs, charges, fees and expenses incurred in connection with the enforcement of this Agreement (in each case including fees for legal advisers to the Security Agent) shall be borne by the Pledgor. | |
13. | NOTICES | |
13.1 | All notices or communications pursuant, under or in connection with this Agreement shall be made pursuant to and in accordance with Clause 38 ( Notices ) of the Facility Agreement. | |
13.2 | Any notice or other communication under or in connection with this Agreement to the Account Bank shall be made or delivered with a copy to the Security Agent to the following address of the Account Bank: | |
HVB Banque Luxembourg Société Anonyme
address: 4, rue Alphonse Weicker L-2099 Luxembourg Luxembourg |
||
attention of: FKA/PKR
telephone: +352 42 722 131 fax: +352 42 724 548 |
||
For the avoidance of doubt, unless another address has been communicated in accordance with Clause 38 ( Notices ) of the Facility Agreement the addresses of any other party to the Agreement shall be determined pursuant to Clause 38 ( Notices ) of the Facility Agreement. | ||
13.3 | Any notice or other communication under or in connection with this Agreement shall be in the English language or, if in any other language, accompanied by a translation into English. In the event of any conflict between the English text and the text in any other language, the English text shall prevail. | |
14. | LEGAL SUCCESSORS | |
14.1 | This Pledge Agreement shall remain in effect despite any amalgamation or merger (howsoever effected) relating to Secured Creditors or the Security Agent, and references to the Secured Creditors or the Security Agent shall be deemed to include any assignee or successor in title of Secured Creditors or the Security Agent and any person who, under any applicable law, has assumed the rights |
154
and obligations of Secured Creditors or the Security Agent hereunder or under any other agreements or to which under such laws the same have been transferred or novated or assigned in any manner. To the extent a further notification or registration or any other step is required by law to give effect to the above, such further registration shall be made and the Pledgor hereby gives power of attorney to the Security Agent to make any notifications, or to take any other steps, and undertakes to do so himself if so requested by the Security Agent. |
14.2 | For the purpose of Article 1278 of the Luxembourg Civil Code, to the extent required under applicable law and without prejudice to any other terms hereof or of any other agreements and in particular paragraph 1 of this Clause, the Security Agent hereby expressly reserve and the Pledgor agrees to the preservation of this Pledge and the security interest created thereunder in case of assignment, novation, amendment or any other transfer of the Secured Obligations or any other rights arising for it under the Financing Documents or any other agreements to which the Pledgor is a party. | |
15. | AMENDMENTS AND PARTIAL INVALIDITY | |
15.1 | Changes to this Agreement and any waiver of rights under this Agreement shall require written form. The parties may waive this form requirement by written agreement only. | |
15.2 | Should any provision of this Agreement be invalid or unenforceable, wholly or in part, or should any provision later become invalid or unenforceable, this shall not affect the validity of the remaining provisions of this Agreement. In lieu of the invalid or unenforceable provision another reasonable and enforceable provision shall apply which corresponds to what the parties would have agreed taking into account the spirit and purpose of this Agreement had they considered the invalidity or lack of enforceability of the relevant provision upon conclusion of this Agreement, and which corresponds to the intentions of the parties in relation to the spirit and purpose of this Agreement. | |
16. | LAW AND JURISDICTION | |
16.1 | This Pledge Agreement shall be governed by Luxembourg law and the courts of Luxembourg City shall have exclusive jurisdiction to settle any dispute which may arise from or in connection with it. | |
16.2 | To the extent that the Pledgor may in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgement or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Pledgor hereby irrevocably agrees not to claim and hereby |
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irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction. |
Currency and amount | ||||||
Bank | Address | outstanding | Account No.: | |||
HVB Banque | 4, rue Alphonse | EUR [ ] | [ ] | |||
Luxembourg Société | Weicker 2099 | |||||
Anonyme | Luxembourg |
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ACCOUNT PLEDGE AGREEMENT
158
The Pledgor
ZELLSTOFF STENDAL GMBH |
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By:
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By: | |||||||
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Name: Harald Gatzke | Name: Wolfram Ridder | ||||||
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Title: | Title: |
By:
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By: | |||||||
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Title: | Title: |
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1. | First ranking Land Charge by the Borrower in an aggregate amount of EUR 827,950,000 on the Site of the Borrower dated on or about the date hereof whereby the Borrower submits in a separate certificate to the immediate enforcement of judgement concerning the Site in an amount of EUR 60,000,000; | |
2. | Security Purpose Agreement with regard to the first ranking Land Charge between the Borrower and the Security Agent dated on or about the date hereof; | |
3. | Security Transfer Agreement as security transfer of equipment (plant or machinery) and as security transfer of all assets of the Borrower on the Secured Site between the Borrower and the Security Agent as of the date hereof; | |
4. | Global Assignment Agreement (including claims out of pocket and delivery agreements) between the Borrower and the Security Agent dated on or about the date hereof; | |
5. | Insurance Claims Assignment Agreement between the Borrower and the Security Agent dated on or about the date hereof; | |
6. | Investment Incentives Assignment Agreement between the Borrower and the Security Agent dated on or about the date hereof; | |
7. | Account Pledge Agreement between the Borrower and the Security Agent dated on or about the date hereof; | |
8. | Pledge of Hedging Claims Agreement between the Borrower and the Security Agent dated on or about the date hereof; and | |
9. | Share Pledge Agreement between SP Holding, RWE-IN and MFC IH and the Security Agent dated on or about the date hereof. |
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162
| All pulp sales contracts entered into by ZSG as principal. | |
| Up to 50% of the wood will be sourced through the wood supply operating company acting as principal. Contracts for the balance will be entered into by ZSG as principal acting either directly or through the wood supply operating company as its agent. | |
| Profit and Loss Transfer Agreement entered into between ZSG and support holding companies. | |
| Maximum working capital limited to EUR 12mn down-streamed by ZSG to the support holding companies and, from such companies, to subsidaries. | |
| Service agreement entered into between ZSG and wood supply operating company providing for provision of up to 100% of total wood supply requirement. Payment for wood supplied by wood supply operating company only against actual delivery at mill. Average price over any 12 month period not |
163
to exceed average market price over similar period as evidenced by contracts entered into by ZSG as principal unless justified by ZSG to the reasonable satisfaction of the Majority Lenders for exceptional reasons (e.g start-up, initial development of new sources of supply etc.). | ||
| Support holding companies employ all employees except management. Support holding companies will enter into leasing agreements for wood harvesting equipment and trucks with a maximum exposure of EUR 17 mn. | |
| Each support holding company enters into a service agreement with its respective operating company pursuant to which it will make available personnel, wood harvesting equipment and trucks against payment of fee covering annual operating / financing costs etc. of such Support Holding Company. |
| Pledge of all bank accounts of Support Holding Companies to secure ZSG debt and of Operating Companies to extent of working capital loans downstreamed to them from time to time from ZSG. | |
| Direct Agreement (substantially in the form annexed hereto) between ZSG lenders and leasing companies providing that leasing companies cannot terminate leases without giving prior notice to ZSG lenders and not at all if the ZSG lenders step-in to the leases making good any existing payment default. | |
| The Borrower to deliver to the Agent: |
(a) | as soon as possible and no later than ninety (90) days after the close of its financial year (i) the balance sheet, the profit and loss account and the cashflow statement for the subsidiaries in respect of that financial year, audited by a recognised independent firm of accountants with a license to practice in the Federal Republic of Germany as well as a reconciliation of the annual financial statements with the annual budgeted accounts made by the Borrower to include an explanation of all material deviations from the budgeted annual financial statements; and (ii) the corresponding auditing report of the firm of accountants; and (iii) a certificate of such firm of accountants certifying that all business contracts of the Borrower with Related Parties in the relevant financial year have been entered into on conditions not less advantageous to the Borrower than achievable with third parties; | ||
(b) | upon request by the Agent semi-annually unaudited management accounts (with a list of sales and outstanding receivables) and a |
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statement of the board of directors in respect of the development of the subsidiaries. |
165
(1) | [LEASING COMPANY] (the Leasing Company ) | |
(2) | ZELLSTOFF STENDAL GmbH ( ZSG ) | |
(3) | ZSG SUPPORT HOLDING COMPANY ( Holding ) and | |
(4) | BAYERISCHE HYPO-UND VEREINSBANK AG (the Agent ) |
A. | ZSG [will build and operate/has built and operates] a bleached softwood kraft pulpmill located at Arneburg, Sachsen-Anhalt, Federal Republic of Germany (the Mill ). | |
B. | The Leasing Company has agreed to lease certain [trucks/harvesters"] (the Equipment ) to Holding (a wholly-owned subsidiary of ZSG) as more particularly identified in that certain Leasing Agreement dated [ ], 200[ ] (the Leasing Agreement ) for use in the operation of the Mill. | |
C. | The Agent is agent for a syndicate of banks who have lent money to ZSG to finance the construction and operation of the Mill. |
1. | The Leasing Company agrees not to take any steps ( Enforcement Steps ) to terminate, rescind or suspend performance of the Leasing Agreement or to repossess or seek to repossess any of the Equipment without first giving not less that 30 days prior written notice thereof to the Agent specifying the amount of any existing payment default under the Leasing Agreement. | |
2. | If during such 30 day period the Agent or its nominee makes good such payment default and undertakes by notice (a Step-in-Notice ) to the Leasing Company that it will assume together with Holding responsibility for compliance with the Leasing Agreement from the date of its notice until the date it serves on the Leasing Company a further notice (a Step-out Notice ) specifying that it will no longer be responsible for such compliance, the Leasing Company undertakes not to take any Enforcement Steps in respect of any default by Holding under the Leasing Agreement which occurred prior to the effective date of the Step-in Notice. | |
3. | During the 30 day period referred to in Clause 1 and thereafter if the Agent makes good the payment default and serves a Step-in Notice the Leasing |
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Company shall continue to perform its obligations under the Leasing Agreement. If the Agent does not make good the payment default and serve a Step-in Notice or if having done so it serves a Step-out Notice the Leasing Company may take such action as it thinks fit to enforce its rights against Holding under the Leasing Agreement with effect from the expiry of such 30 day period or, as the case may be, the effective date of the Step-Out Notice | ||
4. | All notices or other communications required or permitted hereunder shall be in writing addressed to the relevant party at its address identified with its signature below or such other address as any party may, by notice to each of the other parties, specify. All notices shall be deemed delivered upon receipt. | |
5. | This Direct Agreement shall be governed by and construed in accordance with the laws of the Federal Republic of Germany. | |
6. | The exclusive place of jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute which may arise out of or in connection with this Direct Agreement is Munich. Mandatory places of jurisdiction remain unaffected. |
[LEASING COMPANY] | ZELLSTOFF STENDAL GmbH | |||||||
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BAYERISCHE HYPO-UND VEREINSBANK AG | ZSG SUPPORT HOLDING COMPANY | |||||||
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1. | Material Damage All Risks (including Machinery Breakdown) | |
1.1 | The Insured Parties |
(a) | Borrower and any Subsidiary Companies; | ||
(b) | The EPC Contractor and/or Contractors Suppliers in respect of the ÅÐÑ Contract and the Contractor and/or Contractors Suppliers in respect of the non-ÅÐÑ ancillary Contracts for the duration of the relevant Defects Liability Periods only; | ||
(c) | Any consultants and suppliers for their site activities only; | ||
(d) | The Independent Engineer; | ||
(e) | The Agent and the Lenders and their technical adviser, |
Each for their respective rights and interests. | ||
1.2 | The Insured Property | |
All property comprising the entire Project, including but not limited to: the Plant, Machinery, Rail, Gas, Water and Electrical Interconnections, buildings and their contents, stock, fixtures, fittings and all other property being the Insureds own or in their custody or control. | ||
1.3 | Geographical Limits | |
Federal Republic of Germany but in respect of temporary removal, Europe and Scandinavia. | ||
1.4 | Sum Insured | |
An amount of EUR 625,000,000 being an amount not less than equivalent to the full replacement value from time to time of the Project (Including an allowance for professional fees, removal of debris) and Customs Duties. | ||
A sub-limit representing the new replacement value of machinery and plant may apply for Machinery Breakdown. | ||
1.5 | Indemnity | |
All risks of physical loss of or damage to any part of the Insured Property from any cause not excluded in the Policy. |
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1.6 | Period of Insurance | |
From the earlier of the time that: cover expires under Part 1, Paragraph 1 Construction/ Erection All Risks Material Damage insurance of this Minimum Insurance Schedule and the date of Start Up and, to be maintained by renewals of the Period of Insurance, until the full repayment of the loan. | ||
1.7 | Main Exclusions |
(a) | War, Civil War, etc., including Terrorism (until such time as insurance against acts of Terrorism becomes available in the international market on what the Security Agent accepts to be reasonable commercial terms); | ||
(b) | radioactive contamination; | ||
(c) | Costs incurred arising out of wear, tear, wasting or wearing away, gradual deterioration, rust, oxidation, corrosion or erosion but not consequent damage Wear and Tear and gradual deterioration but this shall not exclude consequent loss or damage; | ||
(d) | Date Recognition Clause; | ||
(e) | Loss of cash, banknotes, treasury notes, money orders, cheques or stamps | ||
(f) | Vehicles licensed for road use. |
1.8 | Maximum Deductible | |
Not more than EUR 250,000 each and every loss. | ||
1.9 | Main Extensions/Conditions |
(a) | Including loss or damage arising from acts of Terrorism, strikes, riots, civil commotion and criminal/malicious damage (except that insurance against acts of terrorism will be excluded until such time as that insurance becomes available in the international market on what the Security Agent accepts to be reasonable commercial terms); | ||
(b) | Unlimited Natural Perils cover; | ||
(c) | Debris removal; | ||
(d) | Professional Fees; | ||
(e) | Local Authorities clause; | ||
(f) | Automatic Increase Clause; | ||
(g) | Waiver of Average; | ||
(h) | Escalation Clause; | ||
(i) | Automatic Capital Additions Clause; | ||
(j) | Expediting Expenses; | ||
(k) | Computer Systems, Data Processing and Ancillary Equipment; |
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(l) | Malicious & Accidental Erasure of Data, replacement of computer records; Full Machinery Breakdown, Pressure Explosion/Collapse; and | ||
(m) | Temporary Removal and Inland Transit. |
2. | Business Interruption | |
2.1 | The Insured Parties |
(a) | The Borrower; and | ||
(b) | The Agent and the Lenders, |
2.2 | Indemnity | |
Fixed operating costs and standing charges including loss of debt service (interest -including fees- and Principal) ; plus any minimum take or pay obligations; plus increased cost of working following an interruption to the business as a direct result of physical loss or damage covered under Paragraph 1, Material Damage All Risks Insurance of this Minimum Insurance Schedule including loss or damage, which would be insured but for the application of any deductible, that causes interruption to or interference with the operations of the Project. | ||
2.3 | Period of Insurance | |
From the time that cover expires under Part 1, Paragraph 2 (Delay in Start Up/Advance Loss of Revenue (construction) of this Minimum Insurance Schedule and to be maintained by renewals of the Period of Insurance, until the full repayment of the loan. | ||
2.4 | Sum Insured | |
EUR 160 million for any 12 months period of indemnification being an amount sufficient to cover the Projects fixed operating costs including interest, fees and principal payable plus any minimum take or pay obligations for the duration of the maximum Indemnity Period. | ||
2.5 | Maximum Deductible | |
Not more than 60 days any one occurrence. | ||
2.6 | Indemnity Period | |
Not less than 18 months from the date of the occurrence of loss or damage. |
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2.7 | Main Exclusions | |
The insurance excludes any event not insured under Paragraph 1, Material Damage All Risks Insurance of this Minimum Insurance Schedule. | ||
2.8 | Main Extensions/Conditions |
(a) | Suppliers extension; | ||
(b) | Denial of Access ; | ||
(c) | Failure of utilities extension (Water, Gas, electricity, telecommunications). |
3. | Third Party Liability | |
3.1 | The Insured Parties |
(a) | Borrower and any Subsidiary Companies; | ||
(b) | The EPC Contractor and/or Contractors Suppliers in respect of the ÅÐÑ Contract and the Contractor and/or Contractors Suppliers in respect of the non-EPC ancillary Contracts for the duration of the relevant Defects Liability Periods only; | ||
(c) | Any consultants and suppliers for their site activities only; | ||
(d) | The Independent Engineer; | ||
(e) | The Agent and the Lenders and their technical adviser, |
3.2 | Period of Insurance | |
From the earlier of expiry of cover under Part 1, Paragraph 5 Third Party Liability of this Schedule and the date of Start Up and to be maintained by renewals of the Period of Insurance, until the full repayment of the loan. | ||
3.3 | Indemnity | |
The legal and contractual liability of an Insured to pay damages, costs and expenses as a result of: |
(a) | Death, bodily injury and disease (including mental shock) of any person; | ||
(b) | loss or damage to any property and/or loss of use thereof; | ||
(c) | interference with traffic or property or any easement, right of air, light, water, support or way or enjoyment of use by obstruction, loss of amenities, nuisance, trespass or any like cause; and |
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(d) | libel, slander, defamation, false arrest, invasion of privacy, detention, eviction or any like cause, |
arising out of or in the course of or in connection with the performance, maintenance and operation of the Project. | ||
3.4 | Geographical Limits World-wide. | |
3.5 | Limit of Indemnity | |
Not less than EUR 30,000,000 for any one occurrence, or all occurrences of a series consequent upon or attributable to one source or original source, but with respect to Products Liability in the aggregate. | ||
3.6 | Maximum Deductible | |
Not more than EUR 50,000 in respect of third party property damage only. 3.7 Main Extensions/Conditions |
(a) | Products Liability; | ||
(b) | Cross Liabilities Clause; | ||
(c) | World-wide jurisdiction clause; | ||
(d) | Legal costs and expenses; and | ||
(e) | Contingent Motor Liability. |
3.8 | Main Exclusions |
(a) | Death of, or bodily injury to, or illness or disease contracted by, the employees of the Insured claiming indemnity arising out of or in the course of their employment; | ||
(b) | Property belonging to or in the charge or under the control of the Insured; | ||
(c) | Liability arising out of the use of mechanically propelled vehicles for which compulsory insurance or security is required by legislation, except whilst in use as a tool of trade; | ||
(d) | The cost of making good loss of or damage to property indemnified under the insurance referred to in paragraph 1, Material Damage All Risks Insurance of this Minimum Insurance Schedule; and, | ||
(e) | Liability arising from ownership, possession, use or control of any aircraft or watercraft. |
4. | Environmental Impairment Insurance ( Umwelthaftpflichtversicherung ) | |
4.1 | The Insured Parties |
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(a) | The Borrower and any Subsidiary Companies; | ||
(b) | The Independent Engineer; | ||
(c) | The Agent and the Lenders and their technical adviser, |
Each of their respective assigns, employees, agents, officers, partners and Directors, Each for their respective rights and interests. |
4.2 | Period of Insurance | |
From the date of Start Up and to be maintained by renewals of the `Period of Insurance until the full repayment of the loan. | ||
4.3 | Indemnity | |
All sums for which the Borrower becomes liable to pay in respect of: |
(a) | legal liabilities to third parties arising from contamination of the Project Site, both pre-existing and that which occurs during the Operation of the Project, which results in a pollution event causing third party bodily injury or property damage |
and/or |
(b) | That triggers a statutory requirement to clean up the Project Site ( Bodenkasko ). |
4.4 | Limits of Indemnity |
(a) | EUR 25,000,000 any one occurrence and in the annual aggregate in respect of liabilities to Third Parties. | ||
(b) | EUR 10,000,000 any one occurrence and in the annual aggregate in respect of additional (unbudgeted) clean-up costs incurred to clean up the Project Site. |
4.5 | Main Exclusions | |
Liabilities arising from sudden unintended and unexpected events that are insured under the Third Party Liability insurance required under Paragraph 4, Third Party Liability, of this Minimum Insurance Schedule. | ||
4.6 | Main Extensions/Conditions |
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(a) | Cover Component 2.6 of the Umwelthaftpflicht-Modell des HUK-Verbandes; | ||
(b) | Loss Mitigation/Avoidance Costs; | ||
(c) | Pure Financial Loss following loss of rights to operate. |
4.7 | Maximum Deductible Not exceeding EUR 250,000. | |
5. | Other Required Insurance | |
5.1 | Insurance required by Law | |
Insurance to comply with all statutory requirements including Motor Vehicle Third Party Liability insurance for any vehicle owned, hired, leased or borrowed by the Borrower in connection with the Project. | ||
5.2 | Other Insurance |
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Sample Table of Content Regarding
Quarterly Construction Progress Reports
1.
Inspection Programme
1.1
Visits and Events
1.2
Next Steps
2.
Organisation and Staffing
2.1
Recruitment
2.2
Site Organisation
3.
General Progress and Observations
3.1
Pulp Mill, General
3.2
Pulp Mill, Technical Issues
3.3
Review of Quality of Installations
3.4
Training
3.5
Owners Scope of Work
3.5.1
Works
3.5.2
Infrastructure and Connections
3.5.3
Municipalities
3.5.4
Utilities Supply
3.5.5
Administration
3.5.6
Chemicals and Supplies
4.
Permits
4.1
Review of Permit Situation
4.2
New Permits and Inspections
5.
Commissioning Plan
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5.1 | Departmental Plans | |
5.2 | Start-up of Pulp Production | |
5.3 | Operational budget | |
5.4 | Wood Supply | |
5.5 | Wood Transport | |
6. | Investment Budget Follow-up | |
7. | Main Events Causing Deviations and Change Orders | |
8. | Milestones | |
8.1 | Intermediate Steps | |
8.2 | CMC 4 | |
8.3 | Start-up | |
8.4 | Operational Acceptance | |
8.5 | PAC 4 | |
8.6 | Performance Tests FAC 4 | |
9. | Certificates | |
9.1 | Certificates Issued | |
9.2 | New Certificates |
(A) | Recruitment Plan | |
(B) | Time Schedules | |
(C) | Time Schedule Follow-up |
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1. | Definitions | |
Terms used but not otherwise defined herein shall have the meaning given to them in the Facility Agreement. | ||
2. | Transfer of Assigning Lenders Participation in Advances | |
Subject to the payment to the Agent of a fee in the amount of EUR 1,000 and to the condition precedent that the Assignee pays the transfer price on the date of payment as defined in Clause 6.2, the Assigning Lender herewith assigns and |
178
transfers and the Assignee herewith assumes, the Assigning Lenders legal position related to such Lenders portion of its participation in each outstanding Advance and/or the Commitments (applied rateably across the Tranches and in any particular Tranche rateably between the Assigning Lenders share in each outstanding Advance thereunder and its undrawn Commitment in relation thereto) in the amount set out in Clause 6.2 hereof, including but not limited to all rights, benefits and obligations of the Assigning Lender under the Facility Agreement, the Shareholders Undertaking Agreement, the Security Agreements and the Security Pooling Agreement as against the Borrower (if transferable) and the other parties thereto (the Transferred Position ) effective as of the date of payment as defined in Clause 6.2. Upon the transfer as set forth above becoming effective, the Assigning Lender shall be released from the obligations related to the Transferred Position to the Borrower on the one hand and to the Lenders on the other hand. |
3. | Confirmations | |
3.1 | The Assignee confirms that it has received a copy of the Facility Agreement and all other documentation and information required by it in connection with the transaction contemplated by this Transfer Agreement. | |
3.2 | The Assignee confirms that it has made and will continue to make its own assessment of the validity, enforceability and sufficiency of the Facility Agreement and the Transfer Agreement and has not relied and will not rely on the Assigning Lender, the Original Lender and the Agent or any statements made by any of them in this respect. | |
3.3 | The Assigning Lender hereby confirms that it has fulfilled its obligations arising out of the Facility Agreement with respect to the Transferred Position until the date hereof. The Assigning Lender gives no representation or warranty and assumes no responsibility with respect to the validity or enforceability of the Facility Agreement or any document related thereto and assumes no responsibility for the financial conditions of the Borrower or any other party to the Facility Agreement or for the performance and observance by the Borrower or any other party of any of its obligations under the Facility Agreement and all such representations and warranties, whether expressed or implied by law or otherwise, are hereby excluded. | |
3.4 | The Assignee hereby ratifies and confirms the declarations and acts made by the Security Agent on its behalf pursuant to Clause 4.4 of the Share Pledge Agreement dated 26 August 2002 between the Shareholders as pledgors and the Security Agent as pledgee (as amended from time to time) and Clause 2.6 of the Account Pledge Agreement dated 26 August 2002 between the Borrower as pledgor and the Security Agent as pledgee (as amended from time to time). |
179
4. | Miscellaneous | |
4.1 | The Assigning Lender shall inform the Agent without undue delay of the transfer of the Transferred Position pursuant to Clause 2 by sending an executed copy of this Transfer Agreement to it. | |
4.2 | The Assignee herewith empowers the Agent to exercise such rights, powers of attorney and discretions as set forth in the provisions of the Financing Documents. | |
4.3 | Without prejudice to any future change of address, all correspondence to the Assignee shall be sent to the following address: | |
[ ]
Attn.: Fax: |
5. | Legal Provisions | |
5.1 | Any alteration or amendment to this Transfer Agreement shall be in writing. | |
5.2 | The form and content of this Transfer Agreement shall be subject to and construed in accordance with the laws of the Federal Republic of Germany in every respect. Non-exclusive place of jurisdiction for all disputes arising out of or in connection with this Transfer Agreement shall be Munich. | |
5.3 | Should any provision of this Transfer Agreement be or become wholly or partly invalid, then the remaining provisions shall remain valid. Invalid provisions shall be construed in accordance with the intent of the parties and the purpose of this Transfer Agreement. | |
5.4 | This Transfer Agreement has been executed in the German language in three (3) counterparts. One executed copy shall be provided to the Assigning Lender, the Assignee and the Agent. Each executed copy shall have the effect of an original. | |
6. | Commitments and Advances Subject to Transfer |
6.1
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Assigning Lenders Commitment prior to transfer: | EUR [ ] | ||
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Assigning Lenders participation in Advances prior to transfer: | EUR [ ] | ||
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Position transferred to Assignee: | EUR [ ] | ||
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Assigning Lenders Commitment upon transfer: | EUR [ ] | ||
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6.2
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Date of payment by Assignee to Assigning Lender: | [ ] | ||
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6.3
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Account of Assigning Lender to which payment shall be effected: | [ ] |
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| project management | |
| conceptual pre-planning of the process technology | |
| obtaining of authorisations and approval ( Genehmigungsplanung ) ( Behördenengineering ) | |
| availability/provision of wood and logistics | |
| financing and subsidies, EU notification, state guarantees | |
| ordering/commissioning and legal advice | |
| business management and local operating costs | |
| archeological excavations |
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(a) | to notify you as soon as reasonably practicable prior to the expiry of the Insurances if we have not received instructions from the Borrower and/or any insured parties or the agents of any such party to negotiate renewal, and, in the |
183
event of our receiving instructions to renew, to advise you as soon as reasonably practicable after receipt of the details thereof; |
(b) | to notify you as soon as reasonably practicable after giving or receiving notice of termination of our appointment as brokers in relation to the Insurances; | |
(c) | to pay into the Revenue Account or such other account as you may inform us in writing from time to time, without any set-off or deduction of any kind, for any reason, all payments received by us from the insurers in relation to the Insurances (including refunds of premium) other than as may be permitted in the relevant loss payable clauses in the Endorsements; | |
(d) | to advise you as soon as reasonably practicable after receiving notice of any insurers cancellation or suspension of any of the Insurances or receiving notice of any insurers intention to cancel or suspend any of the Insurances; | |
(e) | in accordance with our duties to our clients, make the Borrower aware of its pre-contractual duties of disclosure to the insurers by advising the Borrower of the type of information which generally needs to be disclosed to the insurers; | |
(f) | subject to the Borrowers consent, to hold the insurance slips or contracts, the policies and any renewals thereof or any new or substitute policies to the extent held by us, to the order of the Security Agent; and | |
(g) | to treat as confidential all information in relation to the Insurances marked as confidential and supplied to us by the Borrower or the Security Agent and not to disclose such information, without the written consent of the supplier, to any third party other than those persons who, in our reasonable opinion, have a need to have access to such information from time to time. Our obligations of confidentiality shall not conflict with our duties owed to the Borrower and shall not apply to disclosure required by an order of a court of competent jurisdiction, or pursuant to any applicable law or regulations having the force of law or to information which is in the public domain. |
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By: | W. Ridder | H. Gatzke | ||||||||||
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Name: | Wolfram Ridder | Name: | Harald Gatzke | ||||||||
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Title: | Managing Director | Title: | Managing Director | ||||||||
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Address: | Goldbecker Strasse 1 | |||||||||||
39596 Arneburg | ||||||||||||
Federal Republic of Germany |
By: | Claudia Schmidt | ppa Christoph Wagner | ||||||||||
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Name: | Claudia Schmidt | Name: | Christoph Wagner | ||||||||
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Title: | Title: | authorised officer | |||||||||
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Address: | Am Tucherpark 16 | |||||||||||
80538 München | ||||||||||||
Federal Republic of Germany |
16
AMENDMENT, RESTATEMENT AND UNDERTAKING AGREEMENT
Zellstoff Stendal GmbH as Borrower
By:
Name:
Name:
Title:
Title:
Bayerische Hypo- und Vereinsbank AG as Arranger, Agent and Security Agent
By:
Name:
Name:
Title:
Title:
Bayerische Hypo- und Vereinsbank AG as Original Lender
By:
Name:
Name:
Title:
Title:
Norddeutsche Landesbank Girozentrale as Lender
By:
Name:
Name:
Title:
Title:
17
Landesbank Baden-Württemberg as Lender
By:
Name:
Name:
Title:
Title:
DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main as Lender
By:
Name:
Name:
Title:
Title:
National Bank of Greece S.A., London Branch as Lender
By:
Name:
Name:
Title:
Title:
Banca Monte dei Paschi di Siena, Frankfurt am Main Branch as Lender
By:
Name:
Name:
Title:
Title:
2
3
a) | An annual base salary of 325,000 which amount is reviewed by the Company in January of each year. The annual base salary shall be paid in twelve (12) equal installments at the end of each calendar month subject to deductions in respect of statutory remittances including deductions for applicable tax and social security. | ||
b) | Subject to the financial performance of the Company, an annual target bonus based on two months salary and the achievement of specific objectives with an opportunity to exceed same in the event of exceptional performance. The bonus is paid in arrears at the beginning of the following year. In case of termination of this Agreement within the year, the bonus is paid pro rata . |
4
5
MERCER INTERNATIONAL INC.
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By: | /s/ David Gandossi | |||
Authorized Signatory | ||||
/s/ Claes-Inge Isacson | ||||
CLAES-INGE ISACSON | ||||
* | CERTAIN NON-PUBLIC INFORMATION HAS BEEN OMITTED FROM THIS AGREEMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 2, 2009 . SUCH NON-PUBLIC INFORMATION HAS BEEN FILED WITH THE SEC ON A CONFIDENTIAL BASIS. THE LOCATION OF THESE OMISSIONS HAS BEEN NOTED BY [*] |
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Page No. | ||||
1. INTERPRETATION
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1 | |||
1.1 Definitions
|
1 | |||
1.2 Appendices
|
1 | |||
1.3 Headings
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2 | |||
1.4 Plurality and Gender
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2 | |||
1.5 Governing Law
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2 | |||
1.6 Industry Terms
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2 | |||
1.7 Statutory References
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2 | |||
1.8 Currency
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2 | |||
1.9 Reference Indices
|
2 | |||
1.10 Conversions
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2 | |||
1.11 Acknowledgement
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3 | |||
1.12 Additional Interpretive Rules
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3 | |||
1.13 General Partner
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3 | |||
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2. TERM
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3 | |||
2.1 Term
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3 | |||
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3. REGULATORY REVIEW
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4 | |||
3.1 Regulatory Review Termination
|
4 | |||
3.2 Regulatory Filing
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4 | |||
3.3 EPA Support
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4 | |||
3.4 Termination
|
4 | |||
3.5 Effect of Termination
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4 | |||
3.6 Exemption
|
4 | |||
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4. DEVELOPMENT
|
5 | |||
4.1 Development and Construction of the Incremental Sellers Plant
|
5 | |||
4.2 Permits
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5 | |||
4.3 Development Reports
|
5 | |||
4.4 Buyer Cost Responsibilities
|
5 | |||
4.5 Changes to Sellers Plant before COD
|
5 | |||
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5. COMMERCIAL OPERATION DATE
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6 | |||
5.1 Guaranteed COD
|
6 | |||
5.2 Requirements for COD
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6 | |||
5.3 Buyer Right to Observe
|
7 | |||
5.4 COD Disputes
|
7 | |||
5.5 Early COD
|
8 | |||
5.6 No Liability for Delay
|
8 | |||
5.7 Early Network Upgrades
|
8 | |||
5.8 Postponement of Guaranteed COD
|
8 | |||
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6. OPERATION OF SELLERS PLANT
|
8 | |||
6.1 Owner and Operator
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8 | |||
6.2 Standard of Operation
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8 |
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Page No. | ||||
6.3 Planned Outages
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9 | |||
6.4 Records
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9 | |||
6.5 Reports to the Buyer
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10 | |||
6.6 Changes to Sellers Plant
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12 | |||
6.7 Exemption from Utility Regulation
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12 | |||
6.8 Disclosure of Information by FortisBC and Transmission Authority
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12 | |||
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7. PURCHASE AND SALE OBLIGATIONS
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13 | |||
7.1 Pre-COD Energy
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13 | |||
7.2 Post-COD Sale of Energy
|
13 | |||
7.3 Post-COD Purchase of Energy
|
13 | |||
7.4 Exclusivity
|
13 | |||
7.5 Custody, Control and Risk of, and Title to, Energy
|
14 | |||
7.6 Price and Payment Obligation
|
14 | |||
7.7 Limitations on Delivery and Acceptance Obligations
|
14 | |||
7.8 Deemed Deliveries
|
15 | |||
7.9 Modification to Seasonally Firm Energy Amount
|
15 | |||
7.10 Modification to Seasonal GBL
|
16 | |||
7.11 Buyer Capacity Right
|
16 | |||
|
||||
8. ENVIRONMENTAL ATTRIBUTES
|
17 | |||
8.1 Transfer of Environmental Attributes
|
17 | |||
8.2 Exclusivity
|
17 | |||
8.3 Representations and Warranties
|
18 | |||
8.4 EcoLogo
M
Certification
|
18 | |||
8.5 Alternate Certification
|
18 | |||
|
||||
9. METERING
|
18 | |||
9.1 Installation of Metering Equipment
|
18 | |||
9.2 Operation of Metering Equipment
|
19 | |||
9.3 Duplicate Metering Equipment
|
19 | |||
9.4 Delivery Verification
|
19 | |||
|
||||
10. STATEMENTS AND PAYMENT
|
20 | |||
10.1 Statements
|
20 | |||
10.2 Payment
|
20 | |||
10.3 Taxes
|
20 | |||
10.4 Billing Guideline
|
20 | |||
10.5 Set-off
|
21 | |||
|
||||
11. INSURANCE/DAMAGE AND DESTRUCTION
|
21 | |||
11.1 Insurance
|
21 | |||
11.2 Damage or Destruction of the Sellers Plant
|
22 | |||
|
||||
12. FORCE MAJEURE
|
22 | |||
12.1 Invoking Force Majeure and Notice
|
22 | |||
12.2 Exclusions
|
23 | |||
|
||||
13. LIQUIDATED DAMAGES
|
24 | |||
13.1 COD Delay
|
24 | |||
13.2 Delivery Shortfalls (Seasonal)
|
24 |
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Page No. | ||||
13.3 Capacity Call Delivery Shortfalls (Hourly)
|
25 | |||
13.4 Hourly Firm Credit Table
|
26 | |||
13.5 Exclusive Remedies for Buyer
|
27 | |||
13.6 Exclusive Remedies for Seller
|
27 | |||
13.7 Limits of Liability
|
27 | |||
13.8 Consequential Damages
|
27 | |||
|
||||
14. PERFORMANCE AND INTERCONNECTION SECURITY
|
28 | |||
14.1 Delivery
|
28 | |||
14.2 Return
|
28 | |||
14.3 Enforcement
|
29 | |||
14.4 Form
|
29 | |||
14.5 Replenishment
|
29 | |||
14.6 Right to Withhold Payment
|
30 | |||
14.7 Letter of Credit Failure
|
30 | |||
|
||||
15. SUSPENSION
|
30 | |||
15.1 Buyer Suspension
|
30 | |||
15.2 Seller Suspension
|
30 | |||
15.3 Resuming Deliveries
|
30 | |||
|
||||
16. TERMINATION
|
30 | |||
16.1 Termination by the Buyer
|
30 | |||
16.2 Termination by the Seller
|
31 | |||
16.3 Effect of Termination
|
32 | |||
16.4 Payment on Termination by the Buyer
|
33 | |||
16.5 Payment on Termination by the Seller
|
33 | |||
16.6 Calculation of Gains, Economic Losses and Costs
|
34 | |||
16.7 Interconnection Costs Payable on Termination
|
35 | |||
16.8 Termination Payment Date
|
35 | |||
16.9 Exclusive Remedies
|
35 | |||
|
||||
17. ASSIGNMENT
|
36 | |||
17.1 Assignment
|
36 | |||
17.2 Preconditions to Assignment
|
36 | |||
17.3 Assignment to Facility Lender
|
37 | |||
17.4 No Implied Consent to Exercise of Rights
|
37 | |||
17.5 Costs
|
37 | |||
17.6 No Assignment Before COD
|
37 | |||
|
||||
18. INSPECTION AND AUDIT
|
37 | |||
18.1 General Inspection and Audit Rights
|
37 | |||
18.2 Inspection and Audit Rights Regarding Environmental Attributes
|
38 | |||
18.3 Consents Regarding Clean or Renewable Electricity
|
38 | |||
|
||||
19. REPRESENTATIONS AND WARRANTIES
|
38 | |||
19.1 By Seller
|
38 | |||
19.2 By Buyer
|
39 | |||
|
||||
20. INDEMNITIES
|
40 | |||
20.1 Seller Indemnity
|
40 |
iii
Page No. | ||||
20.2 Buyer Indemnity
|
40 | |||
20.3 Indemnification Conditions
|
41 | |||
20.4 Third Party Beneficiary Conditions
|
41 | |||
|
||||
21. CONFIDENTIALITY
|
41 | |||
21.1 RFP Confidentiality Agreement
|
41 | |||
21.2 Additional Confidentiality Obligation
|
41 | |||
21.3 Freedom of Information and Protection of Privacy Act
|
42 | |||
21.4 Exemption from Disclosure
|
42 | |||
|
||||
22. GENERAL PROVISIONS
|
43 | |||
22.1 Independence
|
43 | |||
22.2 Enurement
|
43 | |||
22.3 Notices
|
43 | |||
22.4 Entire Agreement and Amendment
|
43 | |||
22.5 No Waiver
|
44 | |||
22.6 Dispute Resolution
|
44 | |||
22.7 Eligible Financial Contract/Forward Contract
|
44 | |||
22.8 Further Assurances
|
45 | |||
22.9 Severability
|
45 | |||
22.10 Counterparts
|
45 |
APPENDIX 1 DEFINITIONS
|
|
APPENDIX 2 ENERGY PROFILE
|
|
APPENDIX 3 ENERGY PRICE SEASONALLY FIRM
|
|
APPENDIX 4 SELLERS PLANT DESCRIPTION
|
|
APPENDIX 5 FUEL PLAN
|
|
APPENDIX 6 COD CERTIFICATE
|
|
APPENDIX 7 SAMPLE FORM PERFORMANCE SECURITY / INTERCONNECTION SECURITY LETTER OF CREDIT
|
|
APPENDIX 8 SAMPLE FORM LENDER CONSENT AGREEMENT
|
|
APPENDIX 9 SAMPLE FORM DEVELOPMENT PROGRESS REPORT
|
|
APPENDIX 10 ADDRESSES FOR DELIVERY OF NOTICES
|
|
APPENDIX 11 RFP CONFIDENTIALITY AGREEMENT
|
iv
1
Appendix 1
|
- | Definitions | ||
Appendix 2
|
- | Energy Profile | ||
Appendix 3
|
- | Energy Price Seasonally Firm | ||
Appendix 4
|
- | Sellers Plant Description | ||
Appendix 5
|
- | Fuel Plan | ||
Appendix 6
|
- | COD Certificate | ||
Appendix 7
|
- | Sample Form Performance Security / Interconnection Security Letter of Credit | ||
Appendix 8
|
- | Sample Form Lender Consent Agreement | ||
Appendix 9
|
- | Sample Form Development Progress Report | ||
Appendix 10
|
- | Addresses for Delivery of Notices | ||
Appendix 11
|
- | RFP Confidentiality Agreement |
2
(a) | this EPA means this EPA as it may from time to time be supplemented or amended and in effect, and includes the Appendices attached to this EPA; | ||
(b) | the words herein, hereof and hereunder and other words of similar import refer to this EPA as a whole and not to any particular section, subsection or other subdivision; | ||
(c) | the word including or includes is not limiting whether or not non-limiting language (such as without limitation or but not limited to or words of similar import) is used with reference thereto; | ||
(d) | the words year, month and day refer to a calendar year, a calendar month and a calendar day respectively; | ||
(e) | any consent, approval or waiver contemplated by this EPA must be in writing and signed by the Party against whom its enforcement is sought, and may be given, withheld, delayed or conditioned in the unfettered discretion of the Party of whom it is requested; | ||
(f) | all rights and remedies of either Party under this EPA are cumulative and not exclusive of any other remedies to which either Party may be lawfully entitled, and either Party may pursue any and all of its remedies concurrently, consecutively and alternatively; | ||
(g) | where a dollar amount in this EPA is to be adjusted for CPI from January 1, 2008 to any date after 2008, such dollar amount is to be multiplied by CPI January 1, N / CPI January 1, 2008 , where N is the year in which that date falls; and | ||
(h) | any notice required or permitted to be given, or other thing required or permitted to be done, under this EPA on or before a day that is not a Business Day, shall be deemed to be given or done when required or permitted hereunder if given or done on or before the next following Business Day. |
3
(a) | the date of issuance of the BCUC Acceptance; | ||
(b) | the date of issuance of an Exemption; and | ||
(c) | the date that is 180 days after the Effective Date. |
(a) | on or before the 30 th day following the date of termination the Buyer shall return the Performance Security to the Seller after deducting any amount to which the Buyer is entitled but which has not been paid pursuant to section 3.3 of this EPA; and | ||
(b) | except as set out in section 16.3, the Parties shall have no further liabilities or obligations under, or in relation to, this EPA. |
4
(a) | design, engineer, construct and commission the Incremental Sellers Plant, perform all additional work required to incorporate the Incremental Sellers Plant into the Sellers Plant, and interconnect the Sellers Plant to the Fortis System, all in compliance with the Project Standards and all other terms and conditions of this EPA; and | ||
(b) | commence the work described in subsection 4.1(a) by the date that is the later of (i) 30 days after BCUC Acceptance or Exemption, as applicable, and (ii) if a right to terminate arises under section 3.1, 30 days after that right to terminate has expired, and shall thereafter diligently and continuously carry out such Project activities. |
5
(a) | any change, and all changes in the aggregate, in the Plant Capacity made prior to COD do not exceed 6 MW; | ||
(b) | the Seller obtain, and deliver to the Buyer, a study report prepared by FortisBC confirming that the change is technically feasible on the Fortis System; | ||
(c) | that the Seller request, and the Buyer obtain, a new study report prepared by the Transmission Authority confirming that the change is technically feasible on the Transmission System, including an estimate of the incremental cost, if any, of completing Interconnection Network Upgrades; | ||
(d) | the Seller provide a legally binding written commitment to pay to the Buyer the amount of all incremental costs incurred, or to be incurred, by the Buyer as a result of the change, including any incremental Network Upgrade Costs; and | ||
(e) | the Seller increase the amount of the Interconnection Security by, or provide alternate security reasonably acceptable to the Buyer in, an amount equal to the sum of the estimate referenced in subsection 4.5(b) above plus the Buyers reasonable estimate of any other incremental costs referenced in subsection 4.5(c) above. |
(a) | the Seller has obtained all Material Permits and all such Material Permits are in full force and effect; | ||
(b) | the Sellers Plant has generated Energy in compliance with all Material Permits for 72 continuous hours in an amount in each hour of not less than 90% of (i) the sum of the Seasonally Firm Energy Amount for that Season and the corresponding Seasonal GBL, divided by (ii) the number of hours in such complete Season; | ||
(c) | the Seller is not: |
(i) | Bankrupt or Insolvent; | ||
(ii) | in default of any payment obligation or requirement to post security under this EPA; | ||
(iii) | in material default of any of its other covenants, representations, warranties or obligations under this EPA, other than those defaults in respect of which the Seller has paid all LDs owing under this EPA; or | ||
(iv) | in material default under any Material Permit, including any tenure agreement for the site on which the Sellers Plant is located, or the Interconnection Agreement; |
6
and | |||
(d) | the Seller has delivered to the Buyer: |
(i) | a Declaration of Compatibility-Generator (Operating), or such other document(s) of similar effect as may be substituted therefor, in respect of the Plant Capacity issued by FortisBC to the Seller under the Interconnection Agreement; | ||
(ii) | copies of all Material Permits in a form sufficient to demonstrate the Sellers compliance with subsection 5.2(a); | ||
(iii) | data from the Metering Equipment sufficient to demonstrate compliance by the Seller with subsection 5.2(b); | ||
(iv) | proof of registration by the Seller with Measurement Canada as an electricity seller with respect to the Sellers Plant; and | ||
(v) | a long-term firm point to point transmission service agreement between the Seller and FortisBC of not less than one year in duration which, subject to renewal from time to time, will provide for firm transmission service to the Point of Interconnection for an amount not less than the Firm Energy to be delivered under this EPA. |
7
(a) | The Seller shall cause the Sellers Plant to be operated and maintained in compliance with the Project Standards. | ||
(b) | Without limiting section 7.2 but subject to subsection 7.7(a), when the Seller is delivering Energy to the Buyer, the Seller shall make commercially reasonable efforts to operate the Sellers Plant in a manner that ensures delivery of Energy at the point at which the Sellers Plant interconnects with the Fortis System at a uniform rate within each hour during which Eligible Energy is delivered. | ||
(c) | The Seller shall, except with the Buyers prior consent, such consent not to be unreasonably withheld, delayed or conditioned, comply in all material respects with the Fuel Plan. The Buyer, in determining whether to grant any such consent, shall review and consider in good faith the Sellers reasonable requirements for any variation from the Fuel Plan. | ||
(d) | The Seller shall maintain during the Term after COD a firm point to point transmission service agreement between the Seller and FortisBC providing firm transmission service to the Point of Interconnection for an amount not less than the Firm Energy to be delivered under this EPA. |
8
(a) | give the Buyer not less than 90 days prior notice of any Planned Outage, or such shorter period to which the Buyer may consent, such consent not to be withheld, delayed or conditioned, and such notice, when reasonably possible, shall state the start date and hour and the end date and hour for the Planned Outage. Notwithstanding the foregoing, at any time prior to 48 hours before the start of a Planned Outage that will be more than 7 days long, the Seller may change the proposed start time for the Planned Outage by not more than 48 hours and at any time prior to 48 hours before the end of the Planned Outage, the Seller may change the proposed end time of the Planned Outage on notice to, and without the consent of, the Buyer, provided that if as a result of such notice from the Seller the Planned Outage starts later than originally scheduled, there will be no deemed Eligible Energy under section 7.8 during the period between the originally scheduled start time and the revised start time, and if as a result of such notice from the Seller the Planned Outage ends earlier than originally scheduled, the Energy produced between the originally scheduled end time and the revised end time shall be purchased by the Buyer pursuant to section 7.3; | ||
(b) | in accordance with the Buyers written instructions, use the Buyers web-based application or other system for communicating Planned Outages to the Buyer; | ||
(c) | make commercially reasonable efforts to coordinate all Planned Outages with the Buyers requirements as notified to the Seller; and | ||
(d) | make commercially reasonable efforts to coordinate all Planned Outages with the maintenance schedules of the Transmission Authority and FortisBC where such schedules are publicly available or otherwise notified to the Seller. |
9
(a) | Fuel Plan - |
(i) | Not less than 60 days prior to the fifth anniversary of COD (the Five-Year Anniversary ), the Seller shall deliver to the Buyer a Fuel Plan for the remainder of the Term containing information of the type and detail set out in the then existing Fuel Plan, any proposed variations from the then existing Fuel Plan, and such other planning data relating to the Fuel as the Buyer may reasonably request. Subject to the Buyers prior consent, which shall not be unreasonably withheld, delayed or conditioned, such replacement Fuel Plan shall replace the then existing Fuel Plan effective as of the Five-Year Anniversary. | ||
(ii) | The Seller may revise the Fuel Plan at any time with the Buyers prior consent, such consent not to be unreasonably withheld, delayed or conditioned. The Seller shall give prompt and due consideration to any revisions to the Fuel Plan that the Buyer may reasonably request. |
(b) | Annual Fuel Report Not less than 60 days following the end of each Contract Year, the Seller shall deliver to the Buyer a report setting out with reference to the Fuel Plan: |
(i) | a description of the source and volume of Fuel consumed in that Contract Year, together with such additional information relating to the Fuel as the Buyer may reasonably require; | ||
(ii) | a report on all material variances in that Contract Year between the Fuel Plan and the Sellers actual procurement and consumption of Fuel; | ||
(iii) | the total Forest-based Biomass, Auxiliary Fuel and Start-up Fuel (all expressed in GJ) used to generate Eligible Energy in that Contract Year; and | ||
(iv) | the Auxiliary Fuel Overage and the Auxiliary Fuel Energy Overage (determined by utilizing the average heat rate applicable to the conversion of Fuel to Eligible Energy) for that Contract Year. |
(c) | Long Term Operating Plan - By the date specified in section 5.2, the Seller shall provide to the Buyer an operating plan for the Sellers Plant for a five-year period commencing at COD and ending on December 31 of the year in which the Five-Year Anniversary occurs, including the long-term major maintenance schedule. On or before September 30 in each year during the Term after the year in which COD occurs, the Seller shall provide the Buyer with an updated plan for the five-year period commencing on the next succeeding January 1 or to the end of the Term, whichever is less. The Seller shall promptly provide the Buyer with copies of any amendments or modifications to the Long Term Operating Plan. The Long Term Operating Plan shall be consistent with Good Utility Practice and is intended to assist the Buyer in planning activities and is not a guarantee of the timing of Planned Outages; | ||
(d) | Annual Operating Plan - On or before September 30 in each year during the Term, the Seller shall provide to the Buyer an operating plan for the Sellers Plant for the 14-month period commencing on the next succeeding November 1, including any necessary update |
10
in respect of the then current Annual Operating Plan, which plan may be included in the Long Term Operating Plan. The plan shall include a schedule of Planned Outages for that 14-month period which shall comply with the provisions of section 6.3 and be consistent with Good Utility Practice. The Seller may, on not less than 90 days prior notice to the Buyer, amend the Annual Operating Plan, subject to the provisions of section 6.3. The Annual Operating Plan shall be consistent with Good Utility Practice and is intended to assist the Buyer in planning activities and is not a guarantee of the timing of Planned Outages; | |||
(e) | Notice of Outages - Other than for a Planned Outage for which notice has been given pursuant to section 6.3, the Seller shall promptly notify the Buyer of any Outage, or any anticipated Outage, of the Sellers Plant. Any notice under this subsection shall include a statement of the cause of the Outage, the proposed corrective action and the Sellers estimate of the expected duration of the Outage, and the Seller shall promptly communicate such information to the Buyer in such manner as the Buyer may instruct the Seller from time to time. The Seller shall, except with the Buyers consent, such consent not to be unreasonably withheld, delayed or conditioned, use best efforts to promptly remove or mitigate any Forced Outage. The Seller shall deliver to the Buyer concurrently with delivery of the statement described in subsection 10.1(a), a report of all Outages during the month for which the statement described in subsection 10.1(a) is issued, including a statement of the cause of each Outage; | ||
(f) | Interconnection Agreement Defaults - The Seller shall give promptly to the Buyer a copy of any notice of a breach of, or default under, the Interconnection Agreement, whether given or received by the Seller; | ||
(g) | Notice of Buyer Termination Event - The Seller shall notify the Buyer promptly of any Buyer Termination Event, or any material risk that a Buyer Termination Event or any default by the Seller under any agreement with a Facility Lender may occur; | ||
(h) | Energy Schedules - After COD: |
(i) | on each Thursday by 12:00 PPT, the Seller shall deliver to the Buyer a schedule of the expected deliveries of Eligible Energy in each hour of each day for the next succeeding week commencing at 00:00 PPT on Monday; and | ||
(ii) | on each day by 12:00 PPT, the Seller shall deliver to the Buyer a schedule of the expected deliveries of Eligible Energy for the next succeeding 24 hour period commencing at 00:00 PPT, |
provided that such schedules are provided for planning purposes only and do not constitute a guarantee by the Seller that Energy shall be delivered in accordance with the schedules and do not limit the amount of Energy the Seller may deliver during the periods covered by the schedules. The Seller shall deliver a revised schedule to the Buyer promptly after becoming aware of any expected material change in a filed Energy schedule; | |||
(i) | Reporting on Clean or Renewable Electricity - The Seller shall within 10 Business Days after a request from the Buyer, provide to the Buyer all information the Buyer |
11
reasonably requires to verify qualification of the output from the Sellers Plant as Clean or Renewable Electricity; | |||
(j) | Reporting on Environmental Certification The Seller shall within 10 Business Days after a request from the Buyer, provide to the Buyer: |
(i) | all information the Buyer requires to verify the quantity of Energy generated by the Sellers Plant, qualification of the Sellers Plant and all or part of the Energy for the Environmental Certification, if any, the status of the Environmental Certification, if any, and the existence, nature and quantity of Environmental Attributes; | ||
(ii) | any information required for the purposes of any Environmental Attribute or energy tracking system as directed by the Buyer; and | ||
(iii) | any other information the Buyer requires to enable the Buyer or its Affiliates to obtain or realize the full benefit of the Environmental Attributes, including sales of the Environmental Attributes to third Persons; and |
(k) | Reporting on Environmental Impacts The Seller shall deliver to the Buyer not later than February 28 in each year after COD, or in accordance with any other periodic reporting requirement prescribed by Laws or terms and conditions of Permits, environmental impact reports that comply with this subsection, and any reasonable written guidelines issued by the Buyer from time to time relative to the form and content of such reports. Environmental impact reports shall provide annual data concerning the impact of the operation of the Sellers Plant on the environment, including GHG emissions, and the air and water quality, land use, biota and habitat impacts. Data relative to GHG emissions may include Fuel use by Fuel type, heat rate, and energy content of fuel and other relevant data. |
12
(a) | all information directly related to Network Upgrades, including any information provided by the Seller to FortisBC or the Transmission Authority that relates to, or affects, Network Upgrades including any interconnection request, studies or reports that contain information reasonably related to Network Upgrades; | ||
(b) | any studies that FortisBC or the Transmission Authority may have and applications that may be filed in respect thereof from time to time with respect to the Sellers Plant; | ||
(c) | all metering data collected by, or provided to, FortisBC or the Transmission Authority with respect to the Sellers Plant; | ||
(d) | copies of any notice of a breach of, or default under, the Interconnection Agreement given or received by FortisBC and particulars of any such breach or default; and | ||
(e) | any other information provided by the Seller to the Transmission Authority or FortisBC, or by the Transmission Authority or FortisBC to the Seller, that is relevant to the administration of this EPA. |
(a) | Pre-COD Energy sold to third Persons in accordance with section 7.1; | ||
(b) | * | ||
(c) | during any period in which the Buyer is in breach of its obligations under section 7.3; and | ||
(d) | during any period in which the Buyer is not accepting deliveries of Eligible Energy from the Seller due to Force Majeure invoked by the Buyer. |
13
(a) | Limitations on Delivery Obligations - The obligations of the Seller under section 7.2 and subsection 7.11(c) are excused during the occurrence of: |
(i) | Force Majeure invoked by the Seller in accordance with Article 12; | ||
(ii) | any Transmission System Outage for reasons that are not attributable to the Seller or the Sellers Plant; | ||
(iii) | disconnection of the Sellers Plant from the Fortis System for reasons that are not attributable to the Seller or the Sellers Plant; | ||
(iv) | disconnection of the Fortis System from the Transmission System or an Outage on the Fortis System, in either case for reasons that are not attributable to the Seller or the Sellers Plant; | ||
(v) | the exercise by the Seller of its right to suspend its performance under this EPA in accordance with Article 15; and | ||
(vi) | Authorized Planned Outages. |
(b) | Limitations on Acceptance Obligations - The obligations of the Buyer under sections 7.1 and 7.3 are excused during the occurrence of: |
(i) | Force Majeure invoked by the Buyer in accordance with Article 12; | ||
(ii) | any Transmission System Outage for reasons not attributable to the Buyer; | ||
(iii) | disconnection of the Sellers Plant from the Fortis System for reasons not attributable to the Buyer; | ||
(iv) | disconnection of the Fortis System from the Transmission System or an Outage on the Fortis System, in either case for reasons not attributable to the Buyer; and | ||
(v) | the exercise by the Buyer of its right to suspend the Sellers performance under this EPA in accordance with Article 15. |
14
(a) | If in any hour after COD the Seller is unable to deliver Eligible Energy at the POI at any time during that hour solely as a result of a Transmission System Outage not caused by (i) the Seller or the Sellers Plant or (ii) events beyond the control of the Buyer or the Transmission Authority (a Delivery Interruption Outage ), then notwithstanding that the Buyer is excused under subsection 7.7(b) from its obligations to purchase under section 7.3, the Eligible Energy that could have been generated and delivered to the POI in each hour as Eligible Energy but for the occurrence of the Delivery Interruption Outage shall be deemed to be Eligible Energy. | ||
(b) | Deemed Eligible Energy shall be determined based on the best available information, including the Sellers Energy schedule for each hour during the Delivery Interruption Outage and readings of the Metering Equipment before and after the occurrence of the Delivery Interruption Outage. | ||
(c) | There shall be no deemed Eligible Energy during any period specified as a Planned Outage in a notice delivered by the Seller under section 6.3. | ||
(d) | For greater certainty, the provisions of this section 7.8 shall not apply during any period when either Party is excused, in accordance with Article 12, from its obligation to deliver, or to accept delivery of, Eligible Energy as a result of Force Majeure. |
(a) | any such increases or decreases in the Seasonally Firm Energy Amounts must not result in: |
(i) | the Annual Firm Energy Amount increasing or decreasing by more than 10%; | ||
(ii) | the Seasonally Firm Energy Amount for the period from May 1 to July 31, inclusive, exceeding one-quarter of the Annual Firm Energy Amount; | ||
(iii) | the sum of the resulting Seasonally Firm Energy Amount and the Seasonal GBL exceeding the Plant Capacity then prevailing multiplied by the number of hours in that Season; or | ||
(iv) | the Seasonally Firm Energy Amount in Season 1 (February 1 to April 30) or Season 4 (November 1 to January 31) decreasing by more than 10%; |
(b) | the Seller may only exercise its election to increase or decrease the Seasonally Firm Energy Amounts by delivering to the Buyer prior to the first anniversary of COD a Firm Energy Table that has been revised only to incorporate the proposed increase or decrease in the Seasonally Firm Energy Amounts in a manner that complies with subsection 7.9(a). The revised Firm Energy Table shall be deemed to replace the then existing Firm Energy Table effective: |
15
(i) | if the revised Firm Energy Table is delivered to the Buyer within 30 days of the end of the Season in which the delivery occurs, on the first day of the second complete Season that immediately follows such delivery; and |
(ii) | if the revised Firm Energy Table is delivered to the Buyer more than 30 days before the end of the Season in which the delivery occurs, on the first day of the first complete Season that immediately follows such delivery; |
(c) | concurrently with the delivery of a revised Firm Energy Table pursuant to subsection 7.9(b), the Seller shall amend or replace the Performance Security to adjust the amount thereof to reflect any change to the Annual Firm Energy Amount that arises as a result of the Sellers election to increase or decrease any Seasonally Firm Energy Amount pursuant to this section 7.9; and | ||
(d) | the Seller may elect to increase or decrease the Seasonally Firm Energy Amounts under this Section 7.9 only once. |
(a) | any such increase or decrease in the Seasonal GBL must reconcile with the Annual GBL, such that the aggregate Seasonal GBL following any such change equals the Annual GBL; | ||
(b) | the Seller may only exercise its election to increase or decrease the Seasonal GBL by delivering to the Buyer in any month other than December a Seasonal GBL Table that has been revised only to incorporate the proposed increase or decrease in the Seasonal GBL in a manner that complies with subsection 7.10(a). The revised Seasonal GBL Table shall be deemed to replace the then existing Seasonal GBL Table effective on the first day of January immediately following the date on which the Buyer provides its consent to such revised Seasonal GBL Table; and | ||
(c) | the Seller may elect to increase or decrease the Seasonal GBL under this section 7.10 only once in any year. |
For greater certainty, the Seller may not modify the Annual GBL without the Buyers consent. |
(a) | upon providing the Seller with at least 24 hours prior notice, the Buyer may require a Capacity Call for a period of not less than one day and not exceeding seven continuous days, provided that: |
(i) | the Capacity Call may only occur in the period from and including November 1 through the last day of February in the following year (the Capacity Call Period ); |
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(ii) | the number of all Capacity Calls in any Capacity Call Period may not exceed four, for a combined total of no greater than 14 days; | ||
(iii) | during a Capacity Call, Hourly Eligible Energy shall be deliverable only during On-Peak Hours; | ||
(iv) | the period between successive Capacity Calls must be not less than the number of days of the previous Capacity Call or two days, whichever is greater; | ||
(v) | the Capacity Call may not occur during an Authorized Planned Outage; and | ||
(vi) | for the sake of clarity, the Energy delivered pursuant to a Capacity Call shall be Eligible Energy and included in the calculation of the Seasonally Firm Energy Amount; |
(b) | the Buyer shall provide notice of a Capacity Call by email (the Capacity Call Notice ), and shall include in its notice: |
(i) | the duration of the Capacity Call; and | ||
(ii) | the Hourly Firm Energy Amount which the Buyer requires the Seller to make available in each hour during the Capacity Call (the Capacity Call Amount ); |
(c) | subject to subsection 7.7(a), for the duration of a Capacity Call, the Seller shall deliver Hourly Eligible Energy in each hour that is equal to or greater than the Capacity Call Amount; and | ||
(d) | the Parties will cooperate with each other in discussing the schedule of expected Capacity Calls in each Capacity Call Period, provided that the terms of this subsection 7.11(d) will not in any way limit or constrain the Capacity Calls that the Buyer may require. |
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(a) | capable of being remotely interrogated; | ||
(b) | sufficient to accurately meter the quantity of Test Energy and Eligible Energy; | ||
(c) | calibrated to measure the quantity of Test Energy and Eligible Energy delivered to the interconnection between the Sellers Plant and the Fortis System, after adjusting for any line losses from the Sellers Plant to that interconnection; and |
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(d) | in compliance with all requirements set out in the Electricity and Gas Inspection Act (Canada) and associated regulations. |
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(a) | Subject to the provisions of Articles 4 and 5 of Appendix 3, in each month after the month in which Pre-COD Energy is first delivered to the Buyer, the Seller shall, by the 15 th day of the month, deliver to the Buyer a statement prepared by the Seller for the preceding month. The statement must comply with Articles 4 and 5 of Appendix 3 and any billing guideline issued by the Buyer pursuant to section 10.4 and must indicate, among other things, (i) the amount of Test Energy and/or Eligible Energy, (ii) the price payable for the Test Energy and/or Eligible Energy, (iii) any LDs payable by the Seller to the Buyer, (iv) any Auxiliary Fuel Overage Credit, (v) any Avoidable Costs, and (vi) any Final Amounts owing by either Party to the other Party, and set out in reasonable detail the manner by which the statement and the amounts shown thereon were computed. To the extent not previously delivered pursuant to the requirements of this EPA, the statement must be accompanied by sufficient data to enable the Buyer, acting reasonably, to satisfy itself as to the accuracy of the statement. | ||
(b) | Either Party may give notice to the other Party of an error, omission or disputed amount on a statement within 36 months after the statement was first issued together with reasonable detail to support its claim. After expiry of that 36 month period, except in the case of wilful misstatement or concealment, amounts on a previously issued statement shall be deemed to be accurate and amounts which were omitted shall be deemed to be nil, other than amounts disputed in accordance with this subsection 10.1(b) within the 36 month period, which shall be resolved in accordance with this EPA. |
(a) | Within 30 days after receipt of a statement delivered pursuant to subsection 10.1(a) and subject to sections 10.5 and 14.6, the Buyer shall pay to the Seller the amount set out in the statement, except to the extent the Buyer in good faith disputes all or part of the statement by notice to the Seller in compliance with subsection 10.1(b). If the Buyer disputes any portion of a statement, the Buyer must nevertheless pay the undisputed net amount payable by the Buyer pursuant to the statement. | ||
(b) | Any amount required to be paid in accordance with this EPA, but not paid by either Party when due, shall accrue interest at an annual rate equal to the Prime Rate plus 2%, compounded monthly. Any disputed amount that is found to be payable shall be deemed to have been due within 30 days after the date of receipt of the statement which included or should have included the disputed amount. |
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(a) | this section 10.5 applies only to: |
(i) | any purchase price for Test Energy and/or Eligible Energy owing by the Buyer to the Seller; | ||
(ii) | any LDs owing by the Seller to the Buyer; | ||
(iii) | any amount owing by the Seller to the Buyer under Article 5 of Appendix 3; | ||
(iv) | any Termination Payment or Final Amount owing by either Party to the other Party; and | ||
(v) | any amount owing by the Seller to the Buyer in respect of any Auxiliary Fuel Overage Credit; and |
(b) | no LD, Termination Payment or Final Amount shall be added to or deducted from the price owing by the Buyer to the Seller for Eligible Energy unless the LD, Termination Payment or Final Amount remains unpaid 15 days after the Party owed the LD, Termination Payment or Final Amount gives notice to the other Party. For greater certainty, this subsection (b) does not apply to any amount owing by the Seller to the Buyer under Article 5 of Appendix 3. |
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(a) | Major Damage - If the Sellers Plant suffers Major Damage caused by Force Majeure in respect of which the Seller has invoked Force Majeure in accordance with Article 12, then the Seller may at its option exercisable by notice to the Buyer within 120 days after the occurrence thereof, either (i) proceed diligently and expeditiously to repair the Major Damage and restore the Sellers Plant to at least the condition in which it was in immediately prior to the Major Damage and resume deliveries of Energy hereunder, or (ii) terminate this EPA, and in that event, the provisions of section 16.3 and subsection 16.5(c) apply. If the Seller fails to give notice exercising its option within such 120-day period, it shall be deemed to have exercised the option described in (i) above. Nothing in this section 11.2 limits the rights of either Party to terminate this EPA under any other section of this EPA. | ||
(b) | Non-Major Damage - If the Sellers Plant is damaged or destroyed, in whole or in part, by any cause or peril, then, except in the case of Major Damage caused by Force Majeure in respect of which the Seller has invoked Force Majeure in accordance with Article 12, the Seller shall within 30 days after the date of the damage or destruction provide notice to the Buyer setting out the date by which the Seller, acting reasonably, can resume delivering Energy to the Buyer which date shall be not more than 365 days after the date of occurrence of the damage or destruction. The Seller shall diligently and expeditiously repair the Sellers Plant and restore the same to at least the condition in which it was immediately prior to the damage or destruction and shall complete such work not later than the date specified in the notice delivered by the Seller to the Buyer under this subsection 11.2(b). | ||
(c) | Extension of Term - Provided the Seller complies with its obligations under this section 11.2, the Term shall be extended by the number of days from the date of the event of damage or destruction to the date on which the Seller resumes delivering Energy to the Buyer. |
(a) | Neither Party shall be in breach or default as to any obligation under this EPA if that Party is unable to perform that obligation due to an event or circumstance of Force Majeure, of which notice is given as required in this section 12.1. Subject to any limitations expressly set out in this EPA, the time for performance of such obligation shall be extended by the number of days that Party is unable to perform such obligation as a result of the event or circumstance of Force Majeure of which notice is so given. | ||
(b) | If there is a Force Majeure preventing a Party from performing an obligation under this EPA, that Party shall promptly notify the other Party of the Force Majeure. The notice must identify the nature of the Force Majeure, its expected duration and the particular obligations affected by the Force Majeure. The affected Party shall provide reports to the other Party with respect to the Force Majeure at such intervals as the other Party may reasonably request while the Force Majeure continues. A Party shall be deemed to have invoked Force Majeure from the later of: |
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(i) | the date when that Party gives notice of the Force Majeure in accordance with this subsection 12.1(b); and | ||
(ii) | if such date is not a Business Day, the next following Business Day; |
provided that if such notice is given by 17:00 PPT on the first Business Day following the later of: |
(iii) | the day on which the Force Majeure occurs; and | ||
(iv) | the day when the Party knew, or reasonably ought to have known, of the occurrence of the Force Majeure; |
the Party shall be deemed to have invoked Force Majeure from the date on which the event of Force Majeure occurred. The Party invoking Force Majeure shall promptly respond to any inquiry from the other Party regarding the efforts being undertaken to remove the Force Majeure. The Party invoking Force Majeure shall give prompt notice of the end of the Force Majeure. |
(a) | for any economic hardship, or for lack of money, credit or markets; | ||
(b) | if the Force Majeure is the result of a breach by the Party seeking to invoke Force Majeure of a Permit or of any applicable Laws; | ||
(c) | for a mechanical breakdown or control system hardware or software failure, unless the Party seeking to invoke Force Majeure can demonstrate that the breakdown or failure was caused by a latent defect in the design or manufacture of the equipment, hardware or software, which could not reasonably have been identified by normal inspection or testing of the equipment, hardware or software; | ||
(d) | if the Force Majeure was caused by a breach of, or default under, this EPA or a wilful or negligent act or omission by the Party seeking to invoke Force Majeure; | ||
(e) | for any acts or omissions of third Persons, including any Affiliate of the Seller, or any vendor, supplier, contractor or customer of a Party, but excluding Governmental Authorities, unless such acts or omissions are themselves excused by reason of Force Majeure as defined in this EPA; | ||
(f) | for any disconnection of the Sellers Plant from the Fortis System, or the Fortis System from the Transmission System, or any outage on the Fortis System, or any Transmission System Outage; or | ||
(g) | based on the cost or unavailability of Fuel for any reason, including natural causes, unless transport of the Fuel to the Sellers Plant is prevented by an event or circumstance that constitutes Force Majeure as defined in this EPA. |
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LD Amount = (LD Factor * (Designated SFE Amount Delivered Eligible Energy) * (1-L)) Capacity LD Factor | ||
where: |
(a) | Capacity LD Factor means the lesser of: |
(i) | LDs owing and paid by the Seller to the Buyer pursuant to section 13.3, where the delivery shortfall associated with such LDs occurs in the relevant Season; and | ||
(ii) | LD Factor * (Designated SFE Amount Delivered Eligible (Energy) * (I-L); |
(b) | Designated SFE Amount means (i) the Seasonally Firm Energy Amount for the relevant Season minus (ii) an amount equal to the Seasonally Firm Energy Amount for the relevant Season, divided by the number of minutes in that Season, multiplied by the number of minutes in the Season for which the Seller is excused under subsection 7.7(a) from the obligation to deliver Energy; | ||
(c) | Delivered Eligible Energy means in each Season the amount of Eligible Energy determined pursuant to subsection (i) of the definition of Eligible Energy for that Season, but excluding any Energy delivered after the start time and prior to the end time for an Authorized Planned Outage as set out in the notice with respect to the Authorized Planned Outage under section 6.3; | ||
(d) | L or Losses has the meaning given in Appendix 3; | ||
(e) | LD Factor = the greater of: (i) A and (ii) Mid-C Price [(EFEP * STDF)/(1-L)] |
where: | |||
A = $5.00/MWh * (CPI Jan 1, N /CPI Jan 1, 2008 ); | |||
N = the year for which A is being calculated; |
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EFEP or Escalated Firm Energy Price has the meaning given in Appendix 3; | |||
STDF or Seasonal Time of Delivery Factor means the time-weighted average of the TDFs based on Peak Hours, Super-Peak Hours and Off-Peak Hours for each month in the Season; | |||
TDF or Time of Delivery Factor has the meaning given in Appendix 3; and | |||
Mid-C Price = [(the number of On-Peak Hours in the Season * the simple average of the Dow Jones Mid-C Daily Firm On-Peak Index in the Season) + (the number of Off-Peak Hours in the Season * the simple average of the Dow Jones Mid-C Daily Firm Off-Peak Index in the Season)] / the total number of hours in the Season; |
where: | |||
each of the Dow Jones Mid-C Daily Firm On-Peak Index and the Dow Jones Mid-C Daily Firm Off-Peak Index shall be expressed in US$/MWh and converted to Canadian dollars using the average Bank of Canada Daily noon rate for the Season in which the delivery shortfall occurred. |
Capacity LD Amount = LD Factor * (Designated CC Amount Delivered Hourly Eligible Energy) * (1-L) | ||
where: |
(a) | Designated CC Amount means (i) the Capacity Call Amount for the relevant hour minus (ii) an amount equal to the Capacity Call Amount for the relevant hour, divided by 60 minutes multiplied by the number of minutes in the hour for which the Seller is excused under subsection 7.7(a) from the obligation to deliver Energy; | ||
(b) | Delivered Hourly Eligible Energy means in each hour the amount of Hourly Eligible Energy determined pursuant to subsection (i) of the definition of Hourly Eligible Energy for that hour, but excluding any Energy delivered after the start time and prior to the end time for an Authorized Planned Outage as set out in the notice with respect to the Authorized Planned Outage under section 6.3; | ||
(c) | L or Losses has the meaning given in Appendix 3; | ||
(d) | LD Factor = the greater of: (i) A and (ii) Mid-C Price [(EFEP * TDF)/(1-L) HFC * (CPI Jan 1, N /CPI Jan 1, 2008 )] | ||
where: |
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A = $5.00/MWh * (CPI Jan 1, N /CPI Jan 1, 2008 ); | |||
N = the year for which A is being calculated; | |||
EFEP or Escalated Firm Energy Price has the meaning given in Appendix 3; | |||
TDF or Time of Delivery Factor has the meaning given in Appendix 3; | |||
HFC or Hourly Firm Credit means the applicable $/MWh from the Hourly Firm Credit Table set forth in section 13.4; and | |||
Mid-C Price means: |
(i) | For Off-Peak Hours, the Dow Jones Mid-C Daily Firm Off-Peak Index; | ||
(ii) | For Peak Hours, the Dow Jones Mid-C Daily Firm On-Peak Index multiplied by the quotient of the Peak TDF for the relevant month divided by the On-Peak TDF for the same month; and | ||
(iii) | For Super-Peak Hours, the Dow Jones Mid-C Daily Firm On-Peak Index multiplied by the quotient of the Super-Peak TDF for the relevant month divided by the On-Peak TDF for the same month. | ||
where: | |||
each of Peak TDF , Super-Peak TDF and On-Peak TDF has the meaning given in Appendix 3; and | |||
each of the Dow Jones Mid-C Daily Firm On-Peak Index and the Dow Jones Mid-C Daily Firm Off-Peak Index shall be expressed in US$/MWh and converted to Canadian dollars using the Bank of Canada Daily noon rate for the day in which the delivery shortfall occurred. |
Jan. | Feb. | Mar. | Apr. | May | Jun. | Jul. | Aug. | Sep. | Oct. | Nov. | Dec. | |||||||||||||||||||||||||||||||||||||
Super-Peak
|
20.0 | 13.3 | 4.0 | 2.1 | 0.0 | 0.0 | 2.0 | 4.0 | 4.1 | 4.0 | 8.3 | 20.0 | ||||||||||||||||||||||||||||||||||||
Peak
|
20.0 | 13.3 | 4.0 | 2.1 | 0.0 | 0.0 | 2.0 | 4.0 | 4.1 | 4.0 | 8.3 | 20.0 | ||||||||||||||||||||||||||||||||||||
Off-Peak
|
0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
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(a) | the Sellers failure to achieve COD by the Guaranteed COD; | ||
(b) | the Sellers failure to deliver the Seasonally Firm Energy Amount; | ||
(c) | the Sellers failure, during the duration of a Capacity Call, to deliver Hourly Eligible Energy in each hour in an amount equal to the Capacity Call Amount; and | ||
(d) | any other failure to comply with section 7.2, subsection 7.11(c) or subsection 6.2(b); |
(a) | any invoice credit owing by the Seller under Appendix 3; | ||
(b) | any liability under section 20.1; | ||
(c) | interest on any amount owing under this EPA; | ||
(d) | any payment commitment of the Seller for incremental costs pursuant to section 4.5, 5.7 or 6.6; | ||
(e) | any right to receive a Termination Payment expressly set out in this EPA; and | ||
(f) | any other provision in this EPA that is expressly excluded from the limit of liability in this section 13.7. |
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(a) | The Parties acknowledge that the Seller has delivered the Performance Security to the Buyer concurrently with execution and delivery of this EPA. The Seller shall maintain the Performance Security until the time provided in subsection 14.2(a), and shall amend or replace the Performance Security to ensure that the Performance Security at all times complies with (i) the requirements set forth in the definition of Performance Security in Appendix 1, and (ii) the requirement set forth in subsection 7.9(c). | ||
(b) | The Seller shall deliver the Interconnection Security to the Buyer by not later than 15 days after written request from the Buyer. The Seller shall maintain such Interconnection Security until the time provided in subsection 14.2(b), and shall amend or replace the Interconnection Security to ensure that the Interconnection Security complies at all times with (i) the requirements set forth in the definition of Interconnection Security in Appendix 1, and (ii) the requirements of any conditional consent given under sections 4.5, 5.7 and 6.6. | ||
(c) | The Performance Security and the Interconnection Security do not limit the Sellers liability in respect of any breach of, or default under, this EPA. |
(a) | The Buyer shall return or release the Performance Security to the Seller, without deduction, other than prior deductions, if any, properly made hereunder on the earlier of: |
(i) | in the case of termination of this EPA under section 3.1, by the date specified in subsection 3.5(a); or | ||
(ii) | 30 Business Days after the later of (I) termination of this EPA under subsection 11.2(a), section 16.1 or section 16.2, and (II) discharge of all obligations and liabilities of the Seller to the Buyer under this EPA. |
(b) | The Buyer shall return or release the Interconnection Security to the Seller, without deduction, other than prior deductions, if any, properly made hereunder on the earlier of: |
(i) | the Five-Year Anniversary; | ||
(ii) | the end of any four consecutive complete Seasons following COD in which the Seller has delivered an amount of Firm Energy not less than 95% of the Annual Firm Energy Amount for that four Season period, provided that for the purposes of this subsection 14.2(b)(ii), Firm Energy in any applicable period shall be deemed to include: |
(I) | deemed Eligible Energy pursuant to section 7.8 that would have constituted Firm Energy if actually delivered; and |
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(II) | all other amounts of Firm Energy that could have been generated and delivered to the Buyer during that period but for the Seller being excused under subsection 7.7(a) from its obligations under section 7.2; and |
(iii) | 30 Business Days after the later of (I) termination of this EPA under subsection 11.2(a), section 16.1 or section 16.2, and (II) discharge of all obligations and liabilities of the Seller to the Buyer under subsection 14.3(b). |
(a) | In the case of Performance Security, if: |
(i) | the Seller fails to pay any Final Amount owing by the Seller to the Buyer; or | ||
(ii) | the Seller fails to pay any LDs owing by the Seller to the Buyer; or | ||
(iii) | the Seller fails to pay any Termination Payment owing by the Seller to the Buyer, |
and, in each case, the Seller fails to cure such failure to pay within 15 days after notice from the Buyer to the Seller, then the Buyer may enforce the Performance Security and apply the proceeds thereof on account of amounts owing to the Buyer in respect of any or all of the foregoing. | |||
(b) | In the case of Interconnection Security, if the Seller fails to pay any amounts owing by the Seller under commitments given pursuant to section 4.5, 5.7 or 6.6, or under section 16.7, and, in each case, the Seller fails to cure such failure to pay within 15 days after notice from the Buyer to the Seller, then the Buyer may enforce the Interconnection Security and apply the proceeds thereof on account of the amounts owing to the Buyer in respect of any or all of the foregoing. |
(a) | issued or advised by a branch in Canada of a financial institution having a credit rating not less than Standard & Poors A-, Moodys A3 or Dominion Bond Rating Service A (low) and if such credit rating agencies publish differing credit ratings for the same financial institution, the lowest credit rating of any of the credit rating agencies shall apply for purposes of this section 14.4; | ||
(b) | in the form set out in Appendix 7, or in such other form to which the Buyer may consent; and | ||
(c) | for a term of not less than one year and providing that it is renewed automatically, unless the issuing or confirming financial institution advises otherwise by the date specified in Appendix 7. |
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(a) | the suspension may not continue for longer than 90 days; | ||
(b) | the suspension shall not affect the obligations of the Buyer or the Seller to pay any amount owing by it to the other in respect of performance of, or failure to perform, obligations under this EPA prior to the date of suspension by the Buyer; and | ||
(c) | the suspension shall not limit any right the Buyer may have under this EPA to terminate this EPA as a result of the occurrence of the Buyer Termination Event. |
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(a) | the Seller has failed to obtain all Material Permits on or before the date that is the earlier of: |
(i) | Guaranteed COD; and | ||
(ii) | the third anniversary of the Effective Date; |
provided that the Buyer may terminate this EPA under this provision only if the Buyer delivers a termination notice before the date on which the Seller has secured all Material Permits, and if the Seller has not already delivered a notice of termination under subsection 16.2(a); | |||
(b) | COD does not occur by Guaranteed COD plus 365 days plus all Force Majeure Days (not exceeding 180 Force Majeure Days), provided that if the Seller can demonstrate on or before such date by clear and convincing evidence acceptable to the Buyer, acting reasonably, that construction of the Incremental Sellers Plant and the integration of the Incremental Sellers Plant into the Sellers Plant is 80% complete by such date, the Buyer may terminate this EPA under this provision, by notice to the Seller, only if the Seller fails to achieve COD within a further 180 days plus any further Force Majeure Days (not exceeding 180 Force Majeure Days) after such date, and provided further that the Buyer shall be entitled to terminate this EPA under this provision only if the Buyer delivers a termination notice before COD; | ||
(c) | either Party has received a notice from the other Party invoking Force Majeure and the Force Majeure has not been terminated by the date that is 730 days after the date of notice invoking Force Majeure, provided that the Buyer may terminate this EPA under this provision only if the Buyer delivers a termination notice before the end of the Force Majeure; | ||
(d) | a Transmission System Outage that is directly caused by a Force Majeure has persisted continuously for 730 or more days after the commencement of Force Majeure, provided that the Buyer may terminate this EPA under this provision only if the Buyer delivers a termination notice before the end of such Transmission System Outage; or | ||
(e) | a Buyer Termination Event occurs. |
(a) | the Seller, after using commercially reasonable efforts, has failed to obtain all Material Permits on terms satisfactory to the Seller, acting reasonably, on or before the date that is the earlier of: |
(i) | 180 days before the Guaranteed COD; and | ||
(ii) | the second anniversary of the Effective Date; |
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provided that if the Seller has not given notice of termination pursuant to this subsection 16.2(a) by the date that is 15 days after the Sellers right to terminate arises under this subsection 16.2(a), the Seller shall be deemed to have elected not to terminate this EPA and may not thereafter terminate this EPA under this subsection 16.2(a); | |||
(b) | either Party has received a notice from the other Party invoking Force Majeure and the Force Majeure has not been terminated by the date that is 730 days after the date of notice invoking Force Majeure, provided that the Seller shall be entitled to terminate this EPA under this provision only if the Seller delivers a termination notice before the end of the Force Majeure; | ||
(c) | a Transmission System Outage that is directly caused by a Force Majeure has persisted continuously for 730 or more days after the commencement of Force Majeure, provided that the Seller may terminate this EPA under this provision only if the Seller delivers a termination notice before the end of such Transmission System Outage; or | ||
(d) | a Seller Termination Event occurs. |
(a) | the Parties may pursue and enforce any rights and remedies permitted by law or equity in respect of any prior breach or breaches of this EPA, and may enforce any liabilities and obligations that have accrued under this EPA prior to the expiry of the Term or the date of termination, including any claims by the Buyer for amounts that would have been payable by the Seller under commitments given pursuant to any of section 4.5, 5.7 or 6.6 but for the expiry or termination of this EPA, subject to any express restrictions on remedies and limitations or exclusions of liability set out in this EPA; and | ||
(b) | (i) with respect to a termination under section 3.1 only, both Parties shall remain bound by (I) Article 20, Article 21 and section 22.6, and (II) sections 3.3 (if applicable), 3.5, 14.2 and 14.3, in respect of the satisfaction of residual obligations specified to arise on termination only; |
(i) | upon expiry of the Term or upon any termination other than a termination under section 3.1: |
(A) | both Parties shall remain bound by: (I) Article 10 in respect of any final billing and resolution of disputed amounts only; (II) Article 14 and Article 16, in respect of the satisfaction of residual obligations specified to arise on termination only; (III) Article 20, Article 21 and section 22.6; and (IV) Article 8 with respect only to Environmental Attributes associated with Eligible Energy delivered prior to termination of this EPA; and |
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(B) | the Seller shall remain bound by: (I) section 6.4; and (II) for a period of 36 months following expiry of the Term or termination of this EPA, Article 18, with respect to Records only, |
and, in all such cases, both Parties shall remain bound by any other provisions necessary for the interpretation and enforcement of the foregoing provisions. |
(a) | If the Buyer terminates this EPA under subsection 16.1(a), 16.1(b) or 16.1(e), the Seller shall pay to the Buyer an amount equal to the lesser of: |
(i) | the then required amount of the Performance Security; and | ||
(ii) | an amount equal to the positive amount, if any, by which the Buyers Economic Losses and Costs exceed the aggregate of the Buyers Gains. |
(b) | If the Buyer terminates this EPA under subsection 16.1(c) or 16.1(d), no Termination Payment is payable by either Party to the other, except as set out in section 16.7. |
(a) | If the Seller terminates this EPA under subsection 16.2(a), the Seller shall pay to the Buyer an amount equal to $2.50/MWh multiplied by the Annual Firm Energy Amount and any amount payable under section 16.7. | ||
(b) | If the Seller terminates this EPA under subsection 16.2(b) or 16.2(c), no Termination Payment is payable by either Party to the other, except as set out in section 16.7. | ||
(c) | If the Seller terminates this EPA under subsection 11.2(a), no Termination Payment is payable by the Seller to the Buyer, except as set out in section 16.7. | ||
(d) | If the Seller terminates this EPA under subsection 16.2(d) prior to COD, the Buyer shall pay to the Seller an amount equal to: |
(i) | 115% of the Development Costs; less | ||
(ii) | the Net Realizable Value of the Project Assets that comprise the Incremental Sellers Plant (the Incremental Project Assets ), where Net Realizable Value means the amount that the Seller receives, or could reasonably be expected to receive, after the exercise of commercially reasonable efforts, from a disposition of the Incremental Project Assets, net of transaction costs, as of the date of termination. |
(e) | If the Seller terminates this EPA under subsection 16.2(d) on or after COD, the Buyer shall pay to the Seller an amount equal to the positive amount, if any, by which the Sellers Economic Losses and Costs exceed the Sellers aggregate Gains. |
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(a) | The Terminating Partys Gains, Economic Losses and Costs shall be determined by comparing the value of the remaining Term, contract quantities and price payable under this EPA had it not been terminated to the relevant market prices for equivalent quantities for the remaining Term either quoted by a bona fide arms length third Person or which are reasonably expected to be available in the market under a replacement contract for this EPA. Market prices shall be adjusted for differences between the product subject to the market prices and a product, inclusive of Environmental Attributes, equivalent to that specified under this EPA available from a generator meeting the eligibility requirements set forth in section 14 of the RFP, including with respect to quantity, place of delivery and length of term and each element of those eligibility requirements. | ||
(b) | The Terminating Party shall not be required to enter into a replacement transaction in order to determine the amount payable by the other Party. | ||
(c) | The Terminating Party shall determine the amount of any Termination Payment owed by the other Party, and shall notify the other Party of such amount and provide reasonable particulars with respect to its determination within 120 days after the effective date of termination of this EPA, failing which the Terminating Party shall not be entitled to any Termination Payment under such section. | ||
(d) | If the Terminating Partys aggregate Gains exceed its aggregate Economic Losses and Costs, if any, resulting from the termination of this EPA, the amount of the Termination Payment shall be zero. | ||
(e) | The Terminating Partys Gains, Economic Losses and Costs shall be discounted to the date of termination of this EPA using the Present Value Rate applicable at the date of termination of this EPA. | ||
(f) | In this Article 16: |
(i) | Costs means brokerage fees, commissions and other similar transaction costs and expenses reasonably incurred, or that would reasonably be expected to be incurred, by the Terminating Party in entering into new arrangements which replace this EPA, and legal fees, if any, incurred in connection with enforcing the Terminating Partys rights under this EPA; | ||
(ii) | Economic Losses means an amount equal to the present value of the economic loss, exclusive of Costs, if any, to the Terminating Party resulting from the termination of this EPA, determined in a commercially reasonable manner; and | ||
(iii) | Gains means an amount equal to the present value of the economic benefit, exclusive of Costs, if any, to the Terminating Party resulting from the termination of this EPA, determined in a commercially reasonable manner. |
34
(a) | if notice of termination is given before the Five-Year Anniversary, an amount equal to: |
INU Costs * [1 (X/60)] |
where: |
INU Costs means all reasonable costs incurred or committed by the Transmission Authority and/or the Buyer for design, engineering, construction and commissioning of Interconnection Network Upgrades; | |||
X means the number of months, prorated for any portion of a month, from COD to the date on which notice of termination of this EPA is given; and |
(b) | all reasonable incremental costs payable by the Seller pursuant to any commitment given pursuant to section 4.5, 5.7 or 6.6, less any such costs paid by the Seller. |
(a) | Termination under Section 3.1 - Subject to section 16.3, the payments and actions contemplated by sections 3.3 and 3.5 are the exclusive remedies to which the Parties are entitled for termination of this EPA pursuant to section 3.1. | ||
(b) | Termination under Section 16.1 - Except in the case of Deliberate Breach or as otherwise expressly set out in this EPA, and subject to section 16.3: |
(i) | payment by the Seller of the Termination Payment and any payment payable under section 16.7 is the exclusive remedy to which the Buyer is entitled for termination of this EPA pursuant to subsection 16.1(a), (b) or (e); and | ||
(ii) | payment by the Seller of any amount payable pursuant to section 16.7 is the exclusive remedy to which the Buyer is entitled for termination of this EPA pursuant to subsection 16.1(c) or 16.1(d). |
(c) | Termination under Subsection 16. 2(a) Subject to section 16.3, payment by the Seller of the Termination Payment and any amount payable under section 16.7 is the exclusive |
35
remedy to which the Buyer is entitled for termination of this EPA pursuant to subsection 16.2(a). |
(d) | Termination under Section 11.2, or Subsection 16. 2(b) or 16. 2(c) Subject to section 16.3, payment by the Seller of any amount payable under section 16.7 is the exclusive remedy to which the Buyer is entitled for termination of this EPA pursuant to section 11.2, or subsection 16.2(b) or 16.2(c). | ||
(e) | Termination under Subsection 16. 2(d) Subject to section 16.3, payment by the Buyer of the Termination Payment is the exclusive remedy to which the Seller is entitled for termination of this EPA pursuant to subsection 16.2(d). |
(a) | with the consent of the other Party, such consent not to be unreasonably withheld, delayed or conditioned; or | ||
(b) | to an Affiliate, on notice to, but without the consent of, the other Party, provided that the assignor shall remain liable for the obligations of the assignee under this EPA, unless otherwise agreed in writing by the other Party. |
(a) | the assignee entering into and becoming bound by this EPA, assuming all the obligations and liabilities of the assignor under this EPA arising both before and after the assignment of this EPA, providing any Performance Security, Interconnection Security, or other security then required under any conditional consent given under section 4.5, 5.7 or 6.6, |
36
as applicable at the time of assignment and providing the representations and warranties set out in section 19.1 effective as at the time of assignment; and |
(b) | except for an assignment under subsection 17.1(b), the assignee demonstrating to the reasonable satisfaction of the other Party its capability (financial, technical and otherwise) to fulfil the obligations of the assignor under this EPA or, in the case of a change of Control, merger, amalgamation or reorganization of the Seller or the General Partner, the parties to that transaction demonstrating to the reasonable satisfaction of the Buyer, the continued ability of the Seller to perform its obligations under this EPA and, in the case only of an assignment of 100% of the assignors interest in the Project Assets, the Sellers Plant, or this EPA or revenue derived from this EPA, upon such demonstration and concurrently with the agreement providing for the assumption of liabilities and obligations and the provision of Performance Security and Interconnection Security and any other security required under subsection 17.2(a), the assignor shall be released from all future obligations and liabilities under this EPA and the Performance Security and Interconnection Security and any other security provided by it shall be returned or released. |
(a) | compliance with this EPA, including verifying (i) the Sellers compliance with the Fuel Plan, and (ii) that Eligible Energy, excluding Energy generated from Auxiliary Fuel to the extent the use of which is permitted hereunder, qualifies as Clean or Renewable Electricity; | ||
(b) | the portion, if any, of Energy delivered to the Buyer in any Season during the Term that is equal to or less than the Seasonal GBL applicable in that Season; |
37
(c) | the accuracy of invoices and other statements or calculations delivered by the Seller to the Buyer under this EPA; | ||
(d) | the Sellers right to rely on any relief claimed by the Seller under this EPA; and | ||
(e) | the Development Costs; |
(a) | make enquiries with Governmental Authorities concerning the status of compliance by the Seller and the Sellers Plant with applicable Laws and Permits; | ||
(b) | make enquiries of TerraChoice Environmental Marketing or any other third Person regarding the status of the Environmental Certification; and | ||
(c) | obtain copies of all audits, reviews or inspections conducted by the Seller, TerraChoice Environmental Marketing or any other third Person in connection with the application by the Seller to obtain and maintain the Environmental Certification. |
(a) | Corporate Status - The General Partner is duly incorporated, organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, is registered or otherwise lawfully authorized to carry on business in British Columbia, and has full |
38
power, capacity and authority to own its assets and to carry on its business as now conducted and to enter into and to perform its obligations under this EPA; |
(b) | Bankruptcy - No actions are threatened, or have been taken or authorized by the General Partner or any other Person to initiate proceedings for, or in respect of, the bankruptcy, insolvency, liquidation, dissolution or winding-up of the Seller or the General Partner or to appoint a receiver, liquidator, trustee or assignee in bankruptcy in respect of the Seller or the General Partner; | ||
(c) | Assets - No appropriation, expropriation or seizure of all or any portion of the Sellers Plant, or any of its material properties or assets, is pending or threatened; | ||
(d) | No Conflict - Neither the signing of this EPA, nor the carrying out of the Sellers obligations under this EPA shall (i) constitute or cause a breach of, default under, or violation of, the constating documents or bylaws of the General Partner, any permit, franchise, lease, license, approval or agreement to which the General Partner is a party, or any other covenant or obligation binding on the Seller of the General Partner or affecting any of their properties, (ii) cause a lien or encumbrance to attach to the Sellers Plant, other than a security interest granted in respect of financing the design, construction or operation of the Sellers Plant, or (iii) result in the acceleration, or the right to accelerate, any obligation under, or the termination of, or the right to terminate, any permit, franchise, lease, license, approval or agreement related to the Sellers Plant; | ||
(e) | Binding Obligation - This EPA constitutes a valid and binding obligation of the Seller and the General Partner enforceable against the Seller and the General Partner in accordance with its terms; | ||
(f) | Authorization, Execution and Delivery - This EPA has been duly authorized, executed and delivered by the General Partner; | ||
(g) | Proposal Documents - All material information in the Proposal Documents is true and correct in all material respects and there is no material information omitted from the Proposal Documents which makes the information in the Proposal Documents misleading or inaccurate in any material respect; | ||
(h) | Appendix 4 There is no material inconsistency between the description of the Sellers Plant on which the Seller Optional Study Report was based and the information contained in Appendix 4; and | ||
(i) | Exemption From Regulation - The Seller and the General Partner are exempt from regulation as a public utility, as defined in the UCA, with respect to the Sellers Plant, the sale of Energy and the performance by the Seller of its obligations under this EPA. |
(a) | Corporate Status - The Buyer is a corporation continued under the Hydro and Power Authority Act , R.S.B.C. 1996, c. 212, is validly existing and is in good standing under the laws of British Columbia, is lawfully authorized to carry on business in British Columbia, |
39
and has full corporate power and capacity to own its assets and to carry on its business as now conducted and to enter into and to perform its obligations under this EPA; |
(b) | Bankruptcy - No actions are threatened, or have been taken or authorized by the Buyer or any other Person to initiate proceedings for, or in respect of, the bankruptcy, insolvency, liquidation, dissolution or winding-up of the Buyer or to appoint a receiver, liquidator, trustee or assignee in bankruptcy in respect of the Buyer; | ||
(c) | Assets - There is no appropriation, expropriation or seizure of any of the material assets of the Buyer pending or threatened; | ||
(d) | No Conflict - Neither the signing of this EPA nor the carrying out of the Buyers obligations under this EPA shall constitute or cause a breach of, default under, or violation of, the Hydro and Power Authority Act (British Columbia), any permit, franchise, lease, license, approval or agreement to which the Buyer is a party, or any other covenant binding on the Buyer or affecting any of its properties; | ||
(e) | Binding Obligation - This EPA constitutes a valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms; and | ||
(f) | Authorization, Execution and Delivery - This EPA has been duly authorized, executed and delivered by the Buyer. |
(a) | with respect to any emissions from the Sellers Plant; or | ||
(b) | for personal injury, including death, to third Persons and for damage to property of third Persons, to the extent caused or contributed to by the wilful act or omission or negligence of the Seller or the General Partner, any contractor or subcontractor or supplier to the Seller or the General Partner or any director, officer, employee or agent of the Seller or the General Partner or any other Person for whom the Seller or the General Partner is responsible at law where such wilful act or omission or negligence is in connection with the Project or the performance of, or the failure to perform, any of the Sellers obligations, or the exercise of any of the Sellers rights, under this EPA. |
40
(a) | the Indemnitee gives the Indemnitor prompt notice of such claim, the right to select and instruct counsel, and all reasonable cooperation and assistance, including the availability of documents and witnesses within the control of the Indemnitee, in the defence or settlement of the claim; and | ||
(b) | the Indemnitee does not compromise or settle the claim without the prior consent of the Indemnitor. |
(a) | disclosures that are expressly authorized under any section of this EPA, or as otherwise set out in this EPA; | ||
(b) | disclosures that are necessary to enable either Party to fulfill its obligations under this EPA, including under section 3.3; | ||
(c) | in the case of the Buyer, disclosure of Seller Confidential Information: |
(i) | to any ministers, deputy ministers or servants or employees of the Province of British Columbia; and | ||
(ii) | to its directors, officers, employees and Affiliates, consultants and advisors; |
41
provided that each of the foregoing to whom Seller Confidential Information is disclosed is advised of the confidential nature thereof; | |||
(d) | in the case of the Buyer, disclosure of Seller Confidential Information in any regulatory proceeding, whether in respect of this EPA or in respect of other matters, to the extent that the Buyer considers disclosure necessary or desirable to support its position in any such proceeding, provided that, to the extent reasonably practicable, the Buyer gives reasonable notice to the Seller before making the disclosure, and, to the extent requested by the Seller, requests the relevant tribunal to treat all or any part of the disclosure as confidential or to limit its further disclosure; | ||
(e) | in the case of the Buyer, disclosure to any Person or any Governmental Authority of any Seller Confidential Information with respect to: |
(i) | the Sellers Plant that the Buyer is required to disclose to verify qualification of the output of the Sellers Plant as Clean or Renewable Electricity or to provide confirmation to any such Person or Governmental Authority that the output from the Sellers Plant qualifies as Clean or Renewable Electricity; or | ||
(ii) | the Energy and/or the Sellers Plant that the Buyer is required to disclose to enable the Buyer to obtain or realize the full benefit to the Buyer of the Environmental Attributes, including sales of Environmental Attributes to third Persons; |
(f) | in the case of the Seller, disclosure of the Buyer Confidential Information to its directors, officers, employees and Affiliates, consultants and advisors, provided that each of the foregoing to whom Buyer Confidential Information is disclosed is advised of the confidential nature thereof; | ||
(g) | without limiting the Buyers disclosure rights under subsection 21.2(d) above, disclosures required to be made by a Party by an order of a court or tribunal or under any law, regulatory requirement or requirement of any stock exchange that is binding upon it, provided that (i) to the extent reasonably practicable, the Party making such disclosure gives reasonable notice to the other Party before making the disclosure, and (ii) limits the disclosure to that required by the applicable order, law, or regulatory or stock exchange requirement; | ||
(h) | disclosures in any legal proceedings for the enforcement of this EPA or other agreement entered into by the Seller pursuant to the RFP process; or | ||
(i) | disclosures of the Seller Confidential Information or the Buyer Confidential Information, as the case may be, by written agreement or consent of both Parties. |
42
(a) | may be delivered by hand or by a courier service during normal business hours on a Business Day, in which case the notice shall be deemed to have been delivered on that Business Day; | ||
(b) | notices, other than notices under section 3.4, 7.9 or any of Articles 12, 14, 15, 16 or 17, may be sent by email or fax during normal business hours on a Business Day, in which case provided that the Party delivering the notice obtains a confirmation of delivery, the notice shall be deemed to have been delivered on that Business Day; | ||
(c) | subject to subsection 22.3(e), the address of the Buyer for notices is as set out in Appendix 10; | ||
(d) | subject to subsection 22.3(e), the address of the Seller for notices is as set out in Appendix 10 and the Buyer may, but is not required to (except as otherwise provided in a Lender Consent Agreement, if any), provide a copy of any such notice to the Facility Lender; and | ||
(e) | either Party may change its address or fax number for notices under this EPA by notice to the other Party. |
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44
/s/ David Gandossi | ||||
Name:
|
David M. Gandossi | |||
Title:
|
Secretary | |||
|
||||
January 27, 2009 | ||||
Date
|
||||
|
||||
For BRITISH COLUMBIA HYDRO AND POWER AUTHORITY: | ||||
|
||||
/s/ Robert Elton | ||||
Name:
|
Robert G. Elton | |||
Title:
|
President and Chief Executive Officer | |||
|
||||
January 27, 2009 | ||||
Date
|
45
1. | Affiliate means, with respect to the Seller or the General Partner, any Person directly or indirectly Controlled by, Controlling, or under common Control with, the Seller or the General Partner and with respect to the Buyer, any Person directly or indirectly Controlled by the Buyer and, if at any time the Buyer is not Controlled, directly or indirectly, by the Province of British Columbia, shall include any Person directly or indirectly Controlling, or under common Control with, the Buyer. | |
2. | Annual Firm Energy Amount means, at any time, whether before or after COD, the aggregate of all Seasonally Firm Energy Amounts the Seller is required to deliver in any four consecutive complete Seasons after COD as set out in the Firm Energy Table. | |
3. | Annual GBL means the generator baseline for the Project in each year during the Term, and is * GWh/year. | |
4. | Annual Operating Plan means each plan delivered by the Seller to the Buyer under subsection 6.5(d) and all amendments to such plan in accordance with subsection 6.5(d). | |
5. | Authorized Planned Outage means a Planned Outage that is scheduled in accordance with Good Utility Practice, complies with the requirements of section 6.3 and includes only the duration of the Planned Outage set out in the notice of the Planned Outage delivered by the Seller under section 6.3. | |
6. | Auxiliary Fuel means any combustible fuel other than Forest-based Biomass. | |
7. | Auxiliary Fuel Annual Baseline has the meaning given in Appendix 3. | |
8. | Auxiliary Fuel Energy Overage has the meaning given in Appendix 3. | |
9. | Auxiliary Fuel Overage has the meaning given in Appendix 3. | |
10. | Auxiliary Fuel Overage Credit has the meaning given in Appendix 3. | |
11. | Avoidable Costs has the meaning given in Appendix 3. | |
12. | Bankrupt or Insolvent means, with respect to a Person (which in the case of the Seller includes either or both of the Seller or the General Partner): |
(a) | the Person has started proceedings to be adjudicated a voluntary bankrupt or consented to the filing of a bankruptcy proceeding against it; or | ||
(b) | the Person has filed a petition or similar proceeding seeking reorganization, arrangement or similar relief under any bankruptcy or insolvency law; or |
Appendix 1- 1
(c) | a receiver, liquidator, trustee or assignee in bankruptcy has been appointed for the Person or the Person has consented to the appointment of a receiver, liquidator, trustee or assignee in bankruptcy; or | ||
(d) | the Person has voluntarily suspended the transaction of its usual business; or | ||
(e) | a court has issued an order declaring the Person bankrupt or insolvent. |
13. | BCICAC has the meaning given in section 22.6. | |
14. | BCUC means the British Columbia Utilities Commission or any successor thereto. | |
15. | BCUC Acceptance has the meaning given in section 3.1. | |
16. | Breaching Party has the meaning given in section 3.3. | |
17. | Business Day means any calendar day which is not a Saturday, Sunday or other day recognized as a statutory holiday in British Columbia. | |
18. | Buyer means British Columbia Hydro and Power Authority and its successors and permitted assigns. | |
19. | Buyer Confidential Information means technical or commercial information disclosed by the Buyer to the Seller that the Buyer directs, and clearly marks, as confidential, including this EPA whether or not so directed and marked, but excluding information that (i) is or becomes in the public domain, other than as a result of a breach of this EPA by the Seller, or (ii) is known to the Seller before disclosure to it by the Buyer, or becomes known to the Seller, thereafter by way of disclosure to the Seller by any other person who is not under an obligation of confidentiality with respect thereto. | |
20. | Buyer Indemnified Party has the meaning given in section 20.1. | |
21. | Buyer Termination Event means any one of the following: |
(a) | any one of the Seller or the General Partner is Bankrupt or Insolvent; | ||
(b) | a Letter of Credit Failure has occurred and the Seller has failed to cure that failure within 5 Business Days after the Letter of Credit Failure occurred; | ||
(c) | an amount due and payable by the Seller to the Buyer under this EPA remains unpaid for 15 days after its due date and such default has not been cured within 15 days after the Buyer has given notice of the default to the Seller; | ||
(d) | any one of the Seller or the General Partner is in material default of any of its covenants, representations, warranties or other obligations under the RFP Confidentiality Agreement; or | ||
(e) | any one of the Seller or the General Partner is in material default of any of its covenants, representations and warranties or other obligations under this EPA, other than as set out above, unless within 30 days after the date of notice by the Buyer to the Seller of the default, the Seller has cured the default or, if the default cannot be cured within that 30 day period, the Seller demonstrates to the reasonable satisfaction of the Buyer that the |
Appendix 1- 2
Seller is working diligently and expeditiously to cure the default and the default is cured within a further reasonable period of time. A material default includes any of the following: |
(i) | any Deliberate Breach by the Seller of its obligations under section 7.2; | ||
(ii) | any failure by the Seller to comply with (I) subsection 4.1(a) or 6.2(a) in respect of subsection (e) or (f) of the Project Standards definition, (II) section 7.4, (III) section 8.4 or (IV) section 8.5, and | ||
(iii) | any purported assignment of this EPA without the consent of the Buyer if such consent is required under Article 17. |
A material default does not include any failure to deliver either the Seasonally Firm Energy Amount in respect of which the Seller has paid any LDs owing under section 13.2 or the Capacity Call Amount in respect of which the Seller has paid any LDs owing under section 13.3, other than a failure resulting from a Deliberate Breach. |
22. | Capacity Call has the meaning given in section 7.11. | |
23. | Capacity Call Amount has the meaning given in subsection 7.11(b)(ii). | |
24. | Capacity Call Notice has the meaning given in subsection 7.11(b). | |
25. | Capacity Call Period has the meaning given in subsection 7.11(a)(i). | |
26. | Clean or Renewable Electricity means electricity that meets the requirements for clean or renewable electricity set out in the guidelines issued by the British Columbia Ministry of Energy, Mines and Petroleum Resources in June 2008, including any amendments thereto from time to time. | |
27. | COD or Commercial Operation Date means the time when the Sellers Plant achieves COD pursuant to section 5.2. | |
28. | COD Certificate means a certificate in the form set out in Appendix 6, completed and accompanied by attachments reasonably satisfactory to the Buyer and signed by a senior officer of each of the General Partner and the Seller. | |
29. | COD Delay LDs means the LDs specified in section 13.1. | |
30. | Construction Insurance means all insurance customarily maintained by prudent owners in connection with the construction of a facility similar to the Incremental Sellers Plant, including course of construction insurance. | |
31. | Contract Year means the full year period initially measured from COD to the first anniversary of COD, and to and from successive anniversaries thereafter until the termination or expiry of this EPA, provided that a Contract Year shall also mean the partial year following any such anniversary during which this EPA expires or is terminated. |
Appendix 1- 3
32. | Control of any Person means: |
(a) | with respect to any corporation or other Person having voting shares or the equivalent, the ownership or power to vote, directly or indirectly, shares, or the equivalent, representing 50% or more of the power to vote in the election of directors, managers or persons performing similar functions; | ||
(b) | ownership of 50% or more of the equity or beneficial interest in that Person; or | ||
(c) | the ability to direct the business and affairs of any Person by acting as a general partner, manager or otherwise. |
33. | CPI has the meaning given in Appendix 3. | |
34. | Deliberate Breach means: |
(a) | any failure by the Seller to achieve COD by Guaranteed COD plus 365 days plus all Force Majeure Days (not exceeding 180 Force Majeure Days) resulting from any wilful or grossly negligent act or omission of the Seller; | ||
(b) | any breach of or default under any provision of this EPA by the Seller resulting from any wilful or grossly negligent act or omission by the Seller; | ||
(c) | a Buyer Termination Event constituting a repudiation of this EPA by the Seller; or | ||
(d) | any sale or transfer by the Seller of Energy to any Person, other than the Buyer, except where such sale or transfer is expressly permitted under this EPA. |
35. | Delivery Interruption Outage has the meaning given in subsection 7.8(a). | |
36. | Development Costs means all costs reasonably incurred or committed by the Seller after the date of issuance of the RFP for the Project and all costs reasonably incurred, or that are reasonably likely to be incurred by the Seller, after taking reasonable mitigation measures, to terminate all contractual commitments with respect to the Project and to otherwise cease development of the Project, but excluding any lost profits, loss of opportunity costs or damages and all other special, incidental, indirect or consequential losses. | |
37. | EcoLogo M Certification means certification pursuant to Environment Canadas Environmental Choice M program confirming that the Sellers Plant and all or part of the Energy complies with the certification criteria document Electricity Renewable Low-Impact, as amended from time to time and is therefore entitled to the EcoLogo M designation. | |
38. | EFEP , or Escalated Firm Energy Price , has the meaning given in Appendix 3. | |
39. | Effective Date means the date set out on page one hereof. | |
40. | Eligible Energy means in any Season after COD, the total of (i) the amount of Metered Energy delivered by the Seller at the POI in that Season, and (ii) Energy that is deemed to be Eligible Energy in that Season pursuant to section 7.8, but subject to the following limitations: |
(a) | if such total Energy is less than or equal to the Seasonal GBL applicable in that Season (the Applicable Seasonal GBL ), Eligible Energy is zero; |
Appendix 1- 4
(b) | if such total Energy is greater than the Applicable Seasonal GBL, but less than or equal to the Total Allowable Energy, then Eligible Energy is equal to such total Energy minus the Applicable Seasonal GBL; | ||
(c) | if such total Energy is greater than the Total Allowable Energy, then Eligible Energy is equal to the Total Allowable Energy minus the Applicable Seasonal GBL; and | ||
(d) | in the case of any Season which is not a complete Season, the Applicable Seasonal GBL and Seasonally Firm Energy Amount for the purposes of the foregoing calculations shall be prorated on a daily basis. |
41. | Energy means electric energy expressed in MWh generated by the Sellers Plant, excluding Station Service. | |
42. | Energy Supply Contract means an energy supply contract under section 71 of the UCA. | |
43. | Environmental Attributes means: |
(a) | all attributes directly associated with, or that may be derived from, the Eligible Energy having decreased environmental impacts relative to energy generated by certain other generation facilities or technologies, including any existing or future credit, allowance, green tag, ticket, certificate or other green marketing attribute or proprietary or contractual right, whether or not tradeable; | ||
(b) | any credit, reduction right, off-set, allowance, allocated pollution right, certificate or other unit of any kind whatsoever, whether or not tradeable, and any other proprietary or contractual right, whether or not tradeable, resulting from, or otherwise related to the actual or assumed reduction, displacement or offset of emissions at any location other than the Sellers Plant as a result of the generation, purchase or sale of the Eligible Energy, but excluding one half of: (i) any divisible portion of; and (ii) the benefits or proceeds from any indivisible portion of, any of the foregoing that are demonstrated by the Seller to the Buyers satisfaction, acting reasonably, to directly result from or relate to incremental costs incurred by the Seller after COD, whether those costs are capital expenditures, operational expenses, or otherwise; | ||
(c) | On-Site Emission Reduction Rights related to the generation of Eligible Energy, which for clarity do not include attributes related to pulp mill process steam or black liquor process inputs, but excluding one half of: (i) any divisible portion of; and (ii) the benefits or proceeds from any indivisible portion of, any of the foregoing that are demonstrated by the Seller to the Buyers satisfaction, acting reasonably, to directly result from or relate to incremental costs incurred by the Seller after COD, whether those costs are capital expenditures, operational expenses, or otherwise; and | ||
(d) | all revenues, entitlements, benefits and other proceeds arising from or related to the foregoing, but for certainty not including: |
(i) | benefits or proceeds from environmental incentive programs offered by Governmental Authorities that do not require a transfer of the attributes in subsections (a) to (c) above; or |
Appendix 1- 5
(ii) | benefits or proceeds from social programs, including programs relating to northern or rural development, employment or skills training, or First Nations, that do not require a transfer of the attributes in subsections (a) to (c) above. |
44. | Environmental Certification means: |
(a) | EcoLogo M Certification; or | ||
(b) | any alternate certification the Buyer requires the Seller to obtain under section 8.5. |
45. | EPA means this Electricity Purchase Agreement, including all Appendices attached hereto, all as amended, supplemented or otherwise modified from time to time. | |
46. | Estimated Interconnection Facilities Completion Date means the Transmission Authoritys most recent estimated date for completing the Interconnection Network Upgrades. | |
47. | Exemption means a lawful exemption from the requirement under section 71 of the UCA that this EPA be filed thereunder as an Energy Supply Contract. | |
48. | Facility Lender means any lender(s) providing any debt financing for the Project and any successors or assigns thereto. | |
49. | Final Amount means an amount owing by either Party to the other Party pursuant to this EPA, including as a result of a breach of this EPA, where such amount is (i) undisputed by the Party owing such amount; or (ii) has been finally determined by an arbitration award pursuant to section 22.6 or by a court order and all rights of appeal in respect of such award or order have been exhausted or have expired. | |
50. | Firm Energy means, in each Season after COD, all Eligible Energy in that Season not exceeding the Seasonally Firm Energy Amount for that Season, but excluding any Eligible Energy delivered after the start time and prior to the end time for an Authorized Planned Outage as set out in the notice with respect to the Authorized Planned Outage under section 6.3 and all such excluded Eligible Energy shall be considered Non-Firm Energy. | |
51. | Firm Energy Table means the table in Appendix 2 that sets out the Seasonally Firm Energy Amount, or as revised under section 7.9. | |
52. | Five-Year Anniversary has the meaning given in subsection 6.5(a). | |
53. | Force Majeure means, subject to the exclusions in section 12.2, (i) in the case of Force Majeure invoked by the Buyer, any event or circumstance not within the control of the Buyer, or (ii) as to Force Majeure invoked by the Seller, any event or circumstance not within control of either the Seller or FortisBC, and, to the extent not within that Persons control, includes: |
(a) | acts of God, including wind, ice and other storms, lightning, floods, earthquakes, volcanic eruptions and landslides; | ||
(b) | strikes, lockouts and other industrial disturbances, provided that settlement of strikes, lockouts and other labour disturbances shall be wholly within the discretion of the Person involved; |
Appendix 1- 6
(c) | epidemics, war (whether or not declared), blockades, acts of public enemies, acts of sabotage, civil insurrection, riots and civil disobedience; | ||
(d) | acts or omissions of Governmental Authorities, including delays in regulatory process and orders of a regulatory authority or court of competent jurisdiction; | ||
(e) | explosions and fires; and | ||
(f) | notwithstanding subsection 12.2(f), an inability of the Seller to achieve COD solely as a result of a delay by the Transmission Authority in completion of Network Upgrades, if and to the extent such delay is not attributable to the Seller or the Sellers Plant; | ||
but does not include: | |||
(g) | any refusal, failure or delay of any Governmental Authority in granting any Material Permit to the Seller, whether or not on terms and conditions that permit the Seller to perform its obligations under this EPA, except where such failure or delay is a result of an event described in subsection (a), (b), (c) or (e) above. |
54. | Force Majeure Days means the number of days the Seller is delayed in achieving COD as a result of Force Majeure invoked by the Seller in accordance with Article 12. | |
55. | Forced Outage means a partial or total interruption in the delivery of, or ability to deliver, Energy that is not a result of an Authorized Planned Outage or a Force Majeure invoked in accordance with this EPA. | |
56. | Forest-based Biomass means mill solid wood residues (hog fuel, sawdust, chips and/or chunks), pulp mill residues (hog fuel and black liquor), roadside and landing residues, and biomass derived from standing timber, without access to new timber harvesting tenure. | |
57. | Fortis Interconnection Report means the report(s), if any, issued to the Seller by FortisBC related to the interconnection of the Project with the Fortis System. | |
58. | Fortis System means the transmission, substation, protection, control and communication facilities owned and operated by FortisBC in British Columbia, and includes all additions and modifications thereto and repairs or replacements thereof. | |
59. | FortisBC means FortisBC Inc., and its successors and assigns. | |
60. | Fuel means Forest-based Biomass, and any Auxiliary Fuel, used to generate Energy at the Sellers Plant. | |
61. | Fuel Plan means the Sellers five-year plan for the supply and consumption of Fuel, as specified in Appendix 5, and each subsequent plan approved by the Buyer in accordance with this EPA, provided that for any period after the expiry of the five-year plan and before the Buyers approval of a replacement plan, the Fuel Plan means a plan for the supply and consumption of Fuel applicable to the last year of the Sellers immediately preceding five-year plan. | |
62. | GHG or Greenhouse Gas(es) means: (i) one or more of the following gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride; and (ii) any other gas that is identified as having significant global warming potential and is |
Appendix 1- 7
added, at any time before the expiry of the Term, to Schedule 1 to the Canadian Environmental Protection Act, 1999 , or to the Greenhouse Gas Reduction Targets Act (British Columbia), or to any other regulation(s) governing the emission of the gases noted in (i) from the Sellers Plant. | ||
63. | GJ means gigajoule. | |
64. | Good Utility Practice means any of the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry in the WECC region during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgement in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be acceptable practices, methods or acts generally accepted in the WECC region. | |
65. | Governmental Authorities means any federal, provincial, local or foreign governments or any of their boards or agencies, or any regulatory authority, other than the Buyer and entities controlled by the Buyer. | |
66. | GST means the goods and services tax imposed under the Excise Tax Act (Canada) as that Act may be amended or replaced from time to time. | |
67. | Guaranteed COD means May 1, 2010, or as revised pursuant to section 5.8. | |
68. | GWh means gigawatt-hour. | |
69. | Hourly Eligible Energy means in any hour after COD, the total of (i) the amount of Metered Energy delivered by the Seller at the POI in that hour, and (ii) Energy that is deemed to be Eligible Energy in that hour pursuant to section 7.8, but subject to the following limitations: |
(a) | if such total Energy is less than or equal to the Hourly GBL applicable in that Season (the Applicable Hourly GBL ), Hourly Eligible Energy in that hour is zero; | ||
(b) | if such total Energy is greater than the Applicable Hourly GBL, but less than or equal to the Plant Capacity multiplied by one hour, then Hourly Eligible Energy in that hour is equal to such total Energy minus the Applicable Hourly GBL; and | ||
(c) | if such total Energy is greater than the Plant Capacity multiplied by one hour, then Hourly Eligible Energy is equal to the Plant Capacity multiplied by one hour minus the Applicable Hourly GBL. |
70. | Hourly Firm Energy Amount means for each hour after COD, the amount of Energy the Seller is required to deliver in the applicable Season as set out in the Firm Energy Table divided by the number of the hours in that Season. | |
71. | Hourly GBL means the generator baseline for the Project in each hour during the Term, and for each hour is the amount determined by dividing the Seasonal GBL applicable to the Season in which that hour occurs by the number of hours in that Season. | |
72. | Incremental Project Assets has the meaning given in subsection 16.5(d)(ii). |
Appendix 1- 8
73. | Incremental Sellers Plant has the meaning given in Appendix 4. | |
74. | Indemnitee has the meaning given in section 20.3. | |
75. | Indemnitor has the meaning given in section 20.3. | |
76. | Interconnection Agreement means the agreement between the Seller and FortisBC relative to the Sellers Plant, as amended or replaced from time to time. | |
77. | Interconnection Network Upgrades means those additions, modifications and upgrades to the Transmission System identified in the Seller Optional Study Report, and as further refined in subsequent optional studies, as determined by the Transmission Authority (for Transmission System impacts related to the interconnection of the Project). | |
78. | Interconnection Security means a letter of credit in the form specified in section 14.4 in an amount equal to the costs that the Transmission Authority, as set out in the Seller Optional Study Report, estimates are required to design, construct and commission the Interconnection Network Upgrades, as such letter of credit is amended or replaced from time to time. | |
79. | Laws means any and all statutes, laws (including common law), ordinances, rules, regulations, codes, orders, bylaws, policies, directions, standards, guidelines, protocols and other lawful requirements of any Governmental Authority in effect from time to time. | |
80. | LDs means liquidated damages payable by the Seller to the Buyer under Article 13. | |
81. | Lender Consent Agreement means an agreement referred to in section 17.3. | |
82. | Letter of Credit Failure means: |
(a) | the Seller fails to renew or replace the Performance Security or Interconnection Security by no later than 30 days prior to the expiry thereof; | ||
(b) | the Seller fails to amend or replace the Performance Security or Interconnection Security as required under section 14.1 by no later than 30 days prior to the requirement to amend or replace such Performance Security or Interconnection Security arises; | ||
(c) | the issuer of the Performance Security or Interconnection Security: |
(i) | fails to maintain a credit rating of at least the minimum rating specified in subsection 14.4(a); | ||
(ii) | fails to comply with or perform its obligations under the Performance Security or Interconnection Security; or | ||
(iii) | disaffirms, disclaims, repudiates, terminates, rejects, in whole or in part, or challenges the validity of, the Performance Security or Interconnection Security; or |
(d) | the Performance Security or Interconnection Security ceases to be in full force and effect for purposes of this EPA, whether or not in accordance with its terms, prior to the date specified in Article 14 for return of the Performance Security or Interconnection Security, as applicable, to the Seller. |
Appendix 1- 9
83. | Line Losses means FortisBC transmission losses as determined from time to time in accordance with FortisBC Rate Schedule 109 for Large General Service Transmission. | |
84. | Long Term Operating Plan means the plan referred to in subsection 6.5(c) as amended by the Seller from time to time. | |
85. | Major Damage means damage having a reasonably estimated repair and/or restoration cost exceeding the present value, using the Present Value Rate effective as of the date on which the damage occurs, of the projected revenues under this EPA from the projected Energy deliveries from the Sellers Plant for the remainder of the Term, less a present value amount, using the aforesaid Present Value Rate, representing the projected operating and maintenance costs for the Sellers Plant, including Fuel costs. | |
86. | Material Permits means the following if and as required for the Sellers Plant: |
(a) | environmental assessment certificate; | ||
(b) | any forest license or other right to harvest timber; | ||
(c) | air emissions permit; | ||
(d) | any permit, license or approval required with respect to the discharge of any type of waste from the Sellers Plant; | ||
(e) | water license; | ||
(f) | zoning appropriate for the Sellers Plant; | ||
(g) | any subdivision approval required to create separate legal title to the site on which the Sellers Plant is or shall be located; | ||
(h) | any permits or approval required with respect to the storage of the Fuel at the Sellers Plant; and | ||
(i) | any lease, license of occupation, certificate of title, or similar agreement or instrument required with respect to the Sellers Plant, including all access roads to the Sellers Plant; |
on terms and conditions that permit the Seller to comply with its obligations under this EPA. | ||
87. |
Material Permits Expiry Date
means the date that is 15 days after the Sellers right to
terminate this EPA arises under subsection
16.2(a). |
|
88. | Metered Energy means Energy recorded by the Metering Equipment, less an amount equal to Line Losses. | |
89. | Metering Equipment means the metering equipment described in section 9.1. | |
90. | Mill means the Sellers pulp mill and other industrial facilities at which the Sellers Plant is located. | |
91. | Mill Load means the electric energy consumed by the Mill. |
Appendix 1- 10
92. | MW means megawatt. | |
93. | MWh means megawatt-hour. | |
94. | Network Upgrade Costs means the costs associated with the design, engineering, construction and commissioning of Network Upgrades. | |
95. | Network Upgrades means the Interconnection Network Upgrades and the Transmission Network Upgrades. | |
96. | Non-Firm Energy means in each Season after COD all Eligible Energy in that Season in excess of the Seasonally Firm Energy Amount for that Season, and all Eligible Energy deemed to be Non-Firm Energy pursuant to the definition of Firm Energy in this Appendix 1, expressed in MWh. | |
97. | OATT means the Transmission Authoritys Open Access Transmission Tariff, as filed with and accepted by the BCUC, as amended and refiled from time to time. | |
98. | Off-Peak Hours has the meaning given in Appendix 3. | |
99. | On-Peak Hours has the meaning given in Appendix 3. | |
100. | On-Site Emission Reduction Rights means any credit, reduction right, off-set, allowance, allocated pollution right, certificate or other unit of any kind whatsoever whether or not tradeable resulting from or otherwise related to the reduction, removal, or sequestration of emissions at or from the Sellers Plant. | |
101. | Outage means: |
(a) | in the case of the Sellers Plant, a partial or total interruption in the delivery of, or ability to deliver, Energy; and | ||
(b) | in the case of the Fortis System or Transmission System, a partial or total interruption in the transmission of, or ability to transmit, Energy from the Sellers Plant. |
102. | Party means (i) the Buyer and its successors and permitted assigns; or (ii) the Seller and its successors and permitted assigns, and Parties means both the Buyer and the Seller and their respective successors and permitted assigns. | |
103. | Peak Hours has the meaning given in Appendix 3. | |
104. | Performance Security means a letter of credit in the form specified in section 14.4 in an amount at any particular time equal to: |
(a) | prior to the Material Permits Expiry Date, $2.50/MWh multiplied by the Annual Firm Energy Amount; | ||
(b) | from and after the Material Permit Expiry Date, and prior to the first anniversary of COD, $8.00/MWh multiplied by the Annual Firm Energy Amount; |
Appendix 1- 11
(c) | from and after the first anniversary of COD, and prior to the first Performance Security Anniversary, $6.00/MWh (adjusted for CPI from January 1, 2008 to the first anniversary of COD) multiplied by the Annual Firm Energy Amount; and | ||
(d) | from and after each Performance Security Anniversary, and prior to the next occurring Performance Security Anniversary: |
(i) | if the average annual Firm Energy delivered in the five-year period immediately preceding the date that is 30 days prior to the most recent Performance Security Anniversary is less than 95% of the Annual Firm Energy Amount, $6.00/MWh (adjusted for CPI from January 1, 2008 to the just attained Performance Security Anniversary) multiplied by the Annual Firm Energy Amount; or | ||
(ii) | if the average annual Firm Energy delivered in the five-year period immediately preceding the date that is 30 days prior to the most recent Performance Security Anniversary is at least 95% of the Annual Firm Energy Amount, $4.00/MWh (adjusted for CPI from January 1, 2008 to the just attained Performance Security Anniversary) multiplied by the Annual Firm Energy Amount; |
provided that for the purposes of this subsection (d), Firm Energy delivered to the Buyer in any period described in subsection (i) or (ii) above shall include: |
(iii) | deemed Eligible Energy pursuant to section 7.8 that would have constituted Firm Energy if actually delivered to the Buyer in that period; and | ||
(iv) | all other amounts of Firm Energy that could have been generated and delivered to the Buyer during that period but for (I) Force Majeure in respect of which either Party has invoked Force Majeure in accordance with section 12.1, (II) Authorized Planned Outages or (III) other events specified in this EPA that expressly excuse the Seller from its obligations to deliver Firm Energy to the Buyer, in each case calculated in the same manner as deemed Eligible Energy in section 7.8. |
105. | Performance Security Anniversary means the date that is 30 days after the fifth anniversary of the end of the first four complete Seasons after COD and the anniversary of such date that occurs at the end of each five year period thereafter. | |
106. | Permits means permits, certificates, licences, and other approvals required for the design, construction, ownership, operation and maintenance of the Sellers Plant and the delivery of Eligible Energy at the POI, including all Material Permits. | |
107. | Person means an individual, body corporate, firm, partnership, joint venture, trust, legal representative or other legal entity. | |
108. | Planned Outage means an Outage for purposes of scheduled inspection, repair and/or maintenance in the Sellers Plant. | |
109. | Plant Capacity means the electrical capacity of the Sellers Plant expressed in MW, determined as the nameplate capacity if expressed in MW, or as the nameplate capacity if expressed in MVA multiplied by a power factor of 0.95, as set out in Appendix 4, as amended in accordance with section 4.5 or 6.6. |
Appendix 1- 12
110. | POI or Point of Interconnection means the following interconnections, which are deemed for the purposes of this EPA to be a single point of interconnection between the Fortis System and the Transmission System: |
(a) | the Buyers Kootenay Canal Plant as follows: |
(i) | the point where the Buyer-owned 63 kV Line 60L225 interconnects with the 69 kV Line 13 at the first structure outside South Slocan substation fence (60L225 Line 13 interconnection); | ||
(ii) | the point where the Buyer-owned 63 kV Line 60L227 interconnects with the FortisBC-owned 69 kV Line 12 at the first structure outside Kootenay Canal Plant G.S. switchyard fence (60L227 Line 12 interconnection); and | ||
(iii) | the point where the Buyer-owned 230 kV Line 2L288 interconnects with the FortisBC-owned 230 kV Line 79 at the first structure outside Kootenay Canal Plant G.S. switchyard fence (2L288 Line 79 interconnection); |
(b) | the point where the transmission line owned by Arrow Lakes Power Corporation (Line 2L289) interconnects with the Buyer-owned Selkirk substation; | ||
(c) | the point where the Teck Cominco Metals Ltd. ( Teck )-owned 230 kV Line 71 (referred to by the Buyer as Line 2L277) from Tecks Waneta Plant enters into the Buyer-owned Nelway substation, and since the Buyer has authority from Teck to configure the path of Line 71 at the Nelway substation, such point at the Nelway substation is part of the POI regardless of how Line 71 is configured; and | ||
(d) | such other point of interconnection between the Transmission System and the Fortis System as may be agreed between the Buyer and FortisBC or as specified from time to time as the Kootenay Interconnection under the terms of the Canal Plant Agreement dated July 1, 2005 among the Buyer, FortisBC and others, and notified to the Seller. |
111. | PPT means Pacific Prevailing Time, being Pacific Daylight Time or Pacific Standard Time, as applicable. |
112. | Pre-COD Energy means the amount of Metered Energy delivered by the Seller at the POI in each hour before COD, including Test Energy, but excluding: |
(a) | that portion of the Metered Energy delivered in any hour (a Delivery Hour ) that is less than the amount equal to the Hourly GBL applicable to that hour; | ||
(b) | any portion of the Metered Energy that at any time exceeds the Plant Capacity multiplied by one hour; and | ||
(c) | that portion of the Metered Energy that is sold to third Persons in accordance with section 7.1. |
113. | Present Value Rate means the annual yield on a Government of Canada Bond having a maturity date that most closely matches the date on which the Term would have expired but for the termination of this EPA, plus 3%. |
Appendix 1- 13
114. | Prime Rate means the floating prime interest rate announced from time to time by the main branch of Bank of Montreal in Vancouver, British Columbia, or any successor thereto, expressed as an annual rate, as the reference rate it shall use to determine rates of interest payable on Canadian dollar commercial loans made in Canada. | |
115. | Proceeding has the meaning given in section 1.5. | |
116. | Project means the financing, design, engineering, procurement, construction and commissioning of the Incremental Sellers Plant, and the operation and maintenance of the Sellers Plant for the purpose of supplying Eligible Energy to the Buyer. | |
117. | Project Assets means the Sellers Plant and all rights, property, assets, equipment, materials and contracts required to design, engineer, procure, construct, commission, operate and maintain the Sellers Plant, whether real or personal and whether tangible or intangible, including equipment and other warranties, Permits, supply and other contracts, the goodwill in and right to use the name by which the Sellers Plant is commonly known, the books, records and accounts with respect to the Sellers Plant, and all land tenure and land tenure agreements with respect to the Sellers Plant. | |
118. | Project Standards mean: |
(a) | all applicable Laws; | ||
(b) | the terms and conditions of all Permits, including land tenure agreements, issued in connection with the Sellers Plant; | ||
(c) | Good Utility Practice; | ||
(d) | the Sellers Plant Description; | ||
(e) | the requirement that Energy, excluding Energy generated from Auxiliary Fuel, must qualify as Clean or Renewable Electricity; | ||
(f) | the requirement that Auxiliary Fuel, excluding Start-up Fuel and determined in GJ, used in any year must not exceed the Auxiliary Fuel Annual Baseline for that year; | ||
(g) | the terms and conditions of this EPA and the Interconnection Agreement; and | ||
(h) | the Code of Conduct Guidelines Applicable to BC Hydro Contracts in effect as of the date specified for submission of Proposals under the RFP. |
119. | Proposal means the Proposal submitted by the Seller pursuant to the RFP. | |
120. | Proposal Documents means the Proposal and all documents and information provided by the Seller to the Buyer in connection with such Proposal, whether concurrently with or after the date of submission of the Proposal to the Buyer. | |
121. | PST means British Columbia provincial social service or sales tax. | |
122. | Records means all records and logs required to properly administer this EPA, including: |
(a) | Energy generation records and operating logs; |
Appendix 1- 14
(b) | a log book of all Outages and other reductions in Energy output, specifying the date, time, duration and reasons for each Outage and each reduction in Energy output; | ||
(c) | meter readings, | ||
(d) | maintenance reports; | ||
(e) | invoice support records; | ||
(f) | documents concerning compliance with Permits and applicable Laws; | ||
(g) | records related to Development Costs; | ||
(h) | all information the Buyer requires to verify qualification of the output from the Sellers Plant as Clean or Renewable Electricity; and | ||
(i) | records of the total Energy generated in each Contract Year from each of Auxiliary Fuel, Start-up Fuel and Forest-based Biomass, and records of any Auxiliary Fuel Overage, Auxiliary Fuel Energy Overage and Auxiliary Fuel Overage Credit in any Contract Year; |
all consistent with Good Utility Practice. | ||
123. | RFP means the Bioenergy Call for Power Phase I Request for Proposals issued by the Buyer on 6 February 2008, together with all Addenda thereto, and all other documents and forms referenced therein as forming part of the RFP. | |
124. | RFP Confidentiality Agreement means the confidentiality agreement entered into between the Seller and the Buyer as part of the RFP process, a copy of which is attached as Appendix 11 to this EPA. | |
125. | Season means any one of the following four periods in any Contract Year or part thereof: |
(a) | Season 1 February 1 through April 30; | ||
(b) | Season 2 System Freshet Season May 1 through July 31; | ||
(c) | Season 3 August through October 31; and | ||
(d) | Season 4 November 1 through January 31; |
126. | Seasonal GBL means the generator baseline for the Project in each Season during the Term, and is the amount for each Season set out in the Seasonal GBL Table, which amount will be prorated in the case of a partial Season by the ratio equal to the number of days in such partial Season divided by the number of days in a complete Season. | |
127. | Seasonal GBL Table means the table in Appendix 2 that sets out the Seasonal GBL, or as revised under section 7.10. | |
128. | Seasonal Weighting Ratio has the meaning given in Appendix 3. | |
129. | Seasonally Firm Energy Amount means in any Season after COD, the amount of Energy the Seller is required to deliver in that Season as set out in the Firm Energy Table, which amount will |
Appendix 1- 15
be prorated in the case of a partial Season by the ratio equal to the number of days in such partial Season divided by the number of days in a complete Season. | ||
130. | Seller means the Party so identified on page one of this EPA, and its successors and permitted assigns. | |
131. | Seller Confidential Information means technical or commercial information disclosed by the Seller to the Buyer that the Seller treats, and clearly marks, as confidential prior to its disclosure to the Buyer, but excluding: |
(a) | this EPA; and | ||
(b) | information that (i) is or becomes in the public domain, other than as a result of a breach of this EPA by the Buyer, or (ii) is known to the Buyer before disclosure to it by the Seller, or becomes known to the Buyer thereafter by way of disclosure to the Buyer by any other Person who is not under an obligation of confidentiality with respect thereto. |
132. | Seller Indemnified Party has the meaning given in section 20.2. | |
133. | Seller Optional Study Report means the report titled Optional Study for Zelstoff Celgar Limited Partnership prepared by the Transmission Authority for the Buyer in respect of the Project describing the interconnection upgrade requirement on the Transmission System related to the Project and associated interconnection costs. | |
134. | Seller Termination Event means: |
(a) | the Buyer is Bankrupt or Insolvent; | ||
(b) | except where an amount has been disputed in the manner specified in subsection 10.2, an amount due and payable by the Buyer to the Seller under this EPA remains unpaid for 15 days after its due date and such default has not been cured within 15 days after the Seller has given notice of the default to the Buyer; or | ||
(c) | the Buyer is in material default of any of its covenants, representations and warranties or other obligations under this EPA, other than as set out above, and such default has not been cured within 30 days after the Seller has given notice of the default to the Buyer or, if the default cannot be cured within that 30 day period, the Buyer fails to demonstrate to the reasonable satisfaction of the Seller that the Buyer is working diligently and expeditiously to cure the default or the default is not cured within a further reasonable period of time. |
135. | Sellers Plant means: |
(a) | before COD, the electrical generators as described in Appendix 4 and in any applicable study data, and all of the Sellers facilities and equipment meeting the description on which the Seller Optional Study Report was based that support (i) the generation and transmission of electrical energy from such generators, and (ii) the delivery of Eligible Energy at the POI; | ||
(b) | after COD, the electrical generators as described in Appendix 4 and all of the Sellers facilities and equipment that support (i) the generation and transmission of electrical |
Appendix 1- 16
energy from such generators, and (ii) the delivery of Eligible Energy at the POI, all as built; |
in each case as may be modified in accordance with this EPA. | ||
136. | Sellers Plant Description means the specifications in Appendix 4, as revised from time to time with the prior consent of the Buyer. | |
137. | Start-up Fuel means that quantity of Auxiliary Fuel, expressed in GJ, that is used in a black start or cold start of generation facilities, from the time when Fuel is first combusted until the time when generation is stabilized. | |
138. | Station Service means electrical energy required to service the Sellers Plant, including electrical energy required for fuel preparation. | |
139. | Super-Peak Hours has the meaning given in Appendix 3. | |
140. | Term has the meaning given in section 2.1. | |
141. | Terminating Party has the meaning given in section 16.6. | |
142. | Termination Payment means the amount payable by the Seller to the Buyer or the amount payable by the Buyer to the Seller pursuant to section 16.4 or 16.5, as the case may be. | |
143. | Test Energy means Metered Energy delivered at the POI (i) during any successful test pursuant to subsection 5.2(b), and (ii) if COD is achieved at 24:00 PPT on the day on which such test is concluded, during the period after the test and before COD, but excluding: |
(a) | all Metered Energy that at any time exceeds the Plant Capacity multiplied by one hour; and | ||
(b) | that portion of Metered Energy delivered in any Season that is less than the Applicable Seasonal GBL, provided that in the case of any Season which is not a complete Season, the Applicable Seasonal GBL shall be prorated on a daily basis. |
144. | Time of Delivery Table has the meaning given in Appendix 3. |
145. | Tracking System has the meaning given in section 9.4. | |
146. | Total Allowable Energy means in each Season, the product of the Plant Capacity and the number of hours in that Season. | |
147. | Transmission Authority means the British Columbia Transmission Corporation or any successor thereto. | |
148. | Transmission Network Upgrades means those additions, modifications and upgrades that are integrated with and support the Transmission System for the general benefit of all users of the Transmission System identified in the Network Integration Transmission Service study, initiated by the Buyer and as determined by the Transmission Authority. | |
149. | Transmission System means the transmission, substation, protection, control and communication facilities (i) owned by the Buyer or by the Transmission Authority, and (ii) |
Appendix 1- 17
operated by the Transmission Authority in British Columbia, and includes all additions and modifications thereto and repairs or replacements thereof. | ||
150. | Transmission System Outage means any Outage, suspension, constraint or curtailment in the operation of the Transmission System preventing or limiting physical deliveries of Eligible Energy at the POI. | |
151. | UCA means the Utilities Commission Act (British Columbia) . | |
152. | WECC means the Western Electricity Coordinating Council or any successor organization of which the Buyer is a member. |
Appendix 1- 18
Seasonally Firm Energy | ||
(MWh) | ||
Season 1
|
* | |
(February 1 to April 30)
|
||
Season 2 System Freshet
|
* | |
(May 1 to July 31)
|
||
Season 3
|
* | |
(August 1 to October 31)
|
||
Season 4
|
* | |
(November 1 to January 31)
|
Seasonal GBL | ||
(MWh) | ||
Season 1
|
* | |
(February 1 to April 30)
|
||
Season 2 System Freshet
|
* | |
(May 1 to July 31)
|
||
Season 3
|
* | |
(August 1 to October 31)
|
||
Season 4
|
* | |
(November 1 to January 31)
|
Appendix 2- 1
1. | Definitions and Interpretation | |
1.1 | Definitions - In this Appendix 3 or elsewhere in this EPA, the following words and phrases have the following meanings: |
(a) | Auxiliary Fuel Annual Baseline means *GJ. | ||
(b) | Auxiliary Fuel Energy Overage means Eligible Energy generated in any Contract Year from any Auxiliary Fuel Overage for that Contract Year. | ||
(c) | Auxiliary Fuel Overage means that portion, if any, of Auxiliary Fuel, excluding Start-up Fuel, and determined in GJ per Contract Year, that is used in any Contract Year to generate Eligible Energy and that exceeds the Auxiliary Fuel Annual Baseline for that Contract Year. | ||
(d) | Auxiliary Fuel Overage Credit means, with respect to any Contract Year, the amount (in dollars) equal to: |
(i) | the Auxiliary Fuel Energy Overage for that Contract Year, if any; multiplied by | ||
(ii) | the EFEP for that Contract Year (or EFEP CY ) calculated as follows: |
where: |
P 1 = EFEP in the period of the Contract Year preceding January 1 in that Contract Year; | |||
P 2 = EFEP in the period of the Contract Year following January 1 in that Contract Year; | |||
M = the number of months or portion thereof of the Contract Year preceding January 1 in that Contract Year. |
(e) | Avoidable Costs means, where the Seller is deemed to have generated Eligible Energy in any month pursuant to section 7.8: |
(i) | the dollar amount equal to (A) the average heat rate applicable to the conversion of Fuel to Energy in that month (in GJ/MWh), multiplied by (B) the average unit cost of the Fuel in that month (in $/GJ), multiplied by (C) the amount of such deemed Eligible Energy; plus | ||
(ii) | the dollar amount of any other costs the Seller avoided, or could have avoided through commercially reasonable efforts, as a result of not generating Eligible Energy equal to such deemed Eligible Energy. |
Appendix 3- 1
(f) | CPI means the Consumer Price Index for British Columbia, All Items (Not Seasonally Adjusted) as published by Statistics Canada, adjusted or replaced in accordance with subsection 1.2(f) of this Appendix. | ||
(g) | EFEP , or Escalated Firm Energy Price , has the meaning given in section 3.1 of this Appendix. | ||
(h) | Interim Monthly Firm Energy Amount means either: |
(i) | in any month where the number of hours during which the Sellers Plant was subject to an Outage does not exceed 24, the lesser of (A) the Eligible Energy in that month, and (B) one-third of the Seasonally Firm Energy Amount for the Season in which the month occurs; or | ||
(ii) | in any month where the number of hours during which the Sellers Plant was subject to an Outage exceeds 24, the lesser of (A) the Eligible Energy in that month, and (B) an amount equal to one-third of the Seasonally Firm Energy Amount for the Season in which the month occurs divided by the number of hours in that month multiplied by the number of hours in that month during which the Sellers Plant was not subject to an Outage. |
(i) | Interim Monthly Non-Firm Energy Amount means the total Eligible Energy in the month less the Interim Monthly Firm Energy Amount. | ||
(j) | Monthly Firm Energy Weighting Ratio means, in any month, the ratio of the Interim Monthly Firm Energy Amount to the total Eligible Energy in that month. | ||
(k) | NFEP A Table means the table set forth at Part II of Schedule A to this Appendix. | ||
(l) | NFEP B , or Option B Non-Firm Energy Price , means, in any month: |
(i) | for Non-Firm Energy delivered during Off-Peak Hours in that month, the lesser of: |
(A) | the average Dow Jones Mid-C Daily Non-Firm Off-Peak Index for the month and converted to Canadian dollars using the monthly average Bank of Canada Daily noon rate for the month; and | ||
(B) | US$250/MWh escalating at CPI from January 1, 2008; |
(ii) | for Non-Firm Energy delivered during Peak Hours in that month, the lesser of: |
(A) | the average Dow Jones Mid-C Daily Non-Firm On-Peak Index for the month and converted to Canadian dollars using the monthly average Bank of Canada Daily noon rate for the month multiplied by the quotient of the Peak TDF (as defined in section 3.1 of this Appendix) for the month divided by the On-Peak TDF (as defined in section 3.1 of this Appendix) for the month; and | ||
(B) | US$250/MWh escalating at CPI from January 1, 2008; |
Appendix 3- 2
(iii) | for Non-Firm Energy delivered during Super-Peak Hours in that month, the lesser of: |
(A) | the average Dow Jones Mid-C Daily Non-Firm On-Peak Index for the month and converted to Canadian dollars using the monthly average Bank of Canada Daily noon rate for the month multiplied by the quotient of the Super-Peak TDF (as defined in section 3.1 of this Appendix) for the month divided by the On-Peak TDF (as defined in section 3.1 of this Appendix) for the month; and | ||
(B) | US$250/MWh escalating at CPI from January 1, 2008; |
provided that if, in any month, the applicable average Dow Jones Index is less than zero, the NFEP B in that month shall be deemed to be zero. | |||
(m) | Off-Peak Hours means all hours other than Super-Peak Hours and Peak Hours. | ||
(n) | On-Peak Hours means all Peak Hours and Super-Peak Hours. | ||
(o) | Peak Hours means the hours commencing at 06:00 PPT and ending at 16:00 PPT, and commencing at 20:00 PPT and ending at 22:00 PPT, Monday through Saturday inclusive, but excluding British Columbia statutory holidays. | ||
(p) | Seasonal Firm Energy Weighting Ratio means, in any Season, the ratio of the Seasonally Firm Energy Amount for that Season to the total Eligible Energy in the Season. | ||
(q) | Super-Peak Hours means the hours commencing at 16:00 PPT and ending at 20:00 PPT Monday through Saturday inclusive, but excluding British Columbia statutory holidays. | ||
(r) | Time of Delivery Table means the table set forth in Part I of Schedule A to this Appendix. |
1.2 | Interpretation - All payments shall be calculated applying the following principles: |
(a) | all payment calculations shall be rounded to the nearest cent; | ||
(b) | all prices shall be expressed in $/MWh rounded to two decimal places; | ||
(c) | Eligible Energy shall be expressed in MWh rounded to two decimal places; | ||
(d) | any escalators or percentages shall be expressed as a percentage and shall be rounded to one decimal place (i.e., 0.0%); | ||
(e) | each of the average Dow Jones Mid-C Daily Non-Firm On-Peak Index and average Dow Jones Mid-C Daily Non-Firm Off-Peak Index shall be expressed in US$/MWh; and | ||
(f) | if Statistics Canada, or the then recognized statistical branch of the Canadian Government: |
(i) | computes, at any time after the Effective Date, the CPI on a basis different to that employed at the Effective Date, then the CPI shall be converted using the appropriate formula recommended by Statistics Canada, or the then recognized statistical branch of the Canadian Government; |
Appendix 3- 3
(ii) | at any time ceases to publish or provide the CPI, then the provisions of section 1.9 shall apply; | ||
(iii) | has not published the CPI for a relevant period at the time the Seller is required to provide the Buyer with an invoice, the Seller shall prepare the invoice based on the CPI in effect at the time the invoice is issued and when the CPI for the relevant period is published, the Seller shall recalculate the invoice amounts in the next succeeding invoice and shall include a credit or debit, without interest, in the next succeeding invoice based on the results of the recalculation; or | ||
(iv) | recalculates the CPI within 36 months after an invoice affected by that CPI calculation has been issued, then the Seller shall recalculate the invoice amounts for the relevant period in the next succeeding invoice and shall include a credit or debit, without interest, in the next succeeding invoice based on the results of the recalculation. |
2. | Pre - COD Energy | |
2.1 | No price is payable by the Buyer for Energy, if any, delivered to the Buyer before COD, except as set out in section 2.2 of this Appendix. | |
2.2 | The price payable by the Buyer for Test Energy in respect of which the Seller has not given a notice under section 7.1 is $50.00/MWh . If the Sellers Plant does not satisfy the requirements of section 5.2, no price is payable by the Buyer for any Energy generated during the test period specified in subsection 5.2(b). | |
3. | Post - COD Energy | |
3.1 | Firm Energy - The price payable by the Buyer, for each MWh of Firm Energy in each hour during any year N of the Term is the EFEP N (or Escalated Firm Energy Price for year N) multiplied by the applicable TDF, calculated as follows: |
EFEP N = EFEP 0 , adjusted pursuant to section 3.2 of this Appendix; |
where: |
EFEP 0 = FEP + (CIS * ISA / $1,000,000) expressed in $/MWh; | |||
TDF (or Time of Delivery Factor ) means, for each hour, the applicable % from the Time of Delivery Table in Part I of Schedule A to this Appendix, and provided further that: |
(a) | Off-Peak TDF means the applicable % from the Time of Delivery Table for all Off-Peak Hours of the month; | ||
(b) | Peak TDF means the applicable % from the Time of Delivery Table for all Peak Hours of the month; | ||
(c) | Super-Peak TDF means the applicable % from the Time of Delivery Table for all Super-Peak Hours of the month; and |
Appendix 3- 4
(d) | On-Peak TDF means the applicable % from the Time of Delivery Table for all On-Peak Hours of the month; |
FEP (or Firm Energy Price ) = */MWh; | |||
CIS (or Cost of Interconnection Security ) =*/MWh; | |||
ISA (or Interconnection Security Amount ) = (a) the amount of the cost estimate of Interconnection Network Upgrades that is set out in the Seller Optional Study Report, minus (b) the amount of all incremental costs incurred by the Buyer as a result of any change to the Sellers Plant, as described in section 4.5 and including any incremental Network Upgrade Costs. |
3.2 | CPI Adjustment for EFEP EFEP 0 shall be adjusted effective as of January 1 in each year N after the Effective Date in accordance with the following applicable formula: |
EFEP N (or EFEP for year N) = EFEP 0 * {[FEPP PRE * (CPI Y / CPI Jan 1, 2008 1)] + 1} | |||
* {[FEPP POST * (CPI Jan 1, N / CPI Y 1)] + 1} |
where: |
Y = first day of the month in which the earlier of COD and Guaranteed COD occurs; | |||
N = all years after the year in which date Y occurs; | |||
FEPP PRE (or Firm Energy Price Percentage Pre-COD ) = *, being the % of EFEP that is subject to escalation from January 1, 2008 to date Y; | |||
FEPP POST (or Firm Energy Price Percentage Post-COD ) = *, being the % of the EFEP that is subject to escalation from date Y; | |||
CPI Jan 1, N = CPI applicable on January 1 of year N; | |||
CPI Y = CPI applicable on date Y. |
3.3 | Non-Firm Energy - The price payable by the Buyer, for each MWh of Non-Firm Energy in each hour of the month during any year of the Term shall be calculated as follows: |
(1 L) * [(NFEPP A * ENFEP A * TDF) + (NFEPP B * NFEP B )], expressed in $/MWh. |
where: |
L (or Losses ) = *; | |||
NFEPP A (or Option A Non-Firm Energy Price Percentage ) = *, being the % of Non-Firm Energy that is paid the NFEP A ; | |||
ENFEP A (or Option A Escalated Non-Firm Energy Price ) means, for each year of the Term, the NFEP A , as adjusted pursuant to section 3.4 of this Appendix; |
Appendix 3- 5
NFEP A means the price from the NFEP A Table in Part II, Schedule A to this Appendix for the applicable year, expressed in $/MWh; | |||
TDF has the meaning given in section 3.1 of this Appendix; | |||
NFEPP B (or Option B Non-Firm Energy Price Percentage ) = *, being the % of Non-Firm Energy that is paid the NFEP B ; | |||
NFEP B has the meaning given in section 1.1 of this Appendix. |
3.4 | CPI Adjustment for NFEP A NFEP A shall be adjusted effective as of January 1 in each year after the Effective Date in accordance with the following applicable formula: |
(ENFEP A ) N = (NFEP A ) N * CPI Jan 1, N / CPI Jan 1, 2008 |
where: |
(NFEP A ) N = NFEP A for year N from the NFEP A Table in Part II, Schedule A to this Appendix; | |||
N = all years after 2008; | |||
CPI Jan 1, N = the CPI applicable on January 1 of year N. |
3.5 | Auxiliary Fuel Overage Credit - The Seller shall pay to the Buyer the Auxiliary Fuel Overage Credit arising in any Contract Year not later than the 15 th day of the second month following the end of such Contract Year. The Seller may satisfy any Auxiliary Fuel Overage Credit that arises in any Contract Year by showing such Auxiliary Fuel Overage Credit as a credit owing to the Buyer in the statement delivered to the Buyer pursuant to section 10.1 in the second month following the end of such Contract Year. | |
3.6 | Avoidable Costs - There shall be deducted from the price payable for deemed Eligible Energy under section 7.8 in each month an amount equal to Avoidable Costs in respect of such deemed Eligible Energy. On each monthly statement delivered to the Buyer pursuant to section 10.1, which includes an amount for such deemed Eligible Energy, the Seller shall show as a credit owing to the Buyer the Avoidable Costs for the month to which that statement relates. | |
4. | Interim Monthly Volume Allocation for Billing | |
4.1 | Volume Allocation For the first two months of each Season the Seller shall prepare the monthly invoice described in section 10.1 in accordance with the following provisions: |
(a) | the amount of Firm Energy in the Peak Hours, Super-Peak Hours, and Off-Peak Hours in each of the first two months of each Season will be calculated by multiplying the Monthly Firm Energy Weighting Ratio by the Eligible Energy in each time of delivery period in the month (Peak Hours, Super-Peak Hours and Off-Peak Hours). The amount of Non-Firm Energy in the Peak Hours, Super-Peak Hours, and Off-Peak Hours in each of the first two months of each Season is the total Eligible Energy in the month minus the amount of Firm Energy in that month determined in accordance with the immediately preceding sentence; |
Appendix 3- 6
(b) | the Buyer shall pay the amount determined in accordance with section 3.1 of this Appendix 3 for the Interim Monthly Firm Energy Amount in each of the first two months of each Season; and | ||
(c) | for the Interim Monthly Non-Firm Energy Amount in each of the first two months of each Season, the Buyer shall pay the amount that would be payable for that Energy pursuant to section 3.3 of this Appendix 3 if NFEPP A were equal to 100%. |
4.2 | Partial Seasons The interim monthly volume allocation and payment provisions set out in this Article 4 will apply only to full months during the Term. Energy deliveries during a partial month in the Term will not be calculated or paid for until the end of the applicable Season and will be included in the final statement for the Season prepared in accordance with Article 5 of this Appendix. | |
5. | Seasonal Reconciliation |
5.1 | Following the end of the third month in each Season the Seller shall prepare an invoice for the Season in accordance with the provisions of section 10.1 and in accordance with the following: |
(a) | The amount of Firm Energy in the Peak Hours, Super-Peak Hours, and Off-Peak Hours in each month of the Season will be calculated by applying the Seasonal Firm Energy Weighting Ratio to the Eligible Energy in each time of delivery period (Peak Hours, Super-Peak Hours, and Off-Peak Hours) in each month in that Season. The amount of Non-Firm Energy in the Peak Hours, Super-Peak Hours, and Off-Peak Hours in each month of each Season is the total Eligible Energy in the month minus the amount of Firm Energy in that month determined in accordance with the immediately preceding sentence; | ||
(b) | The price payable by the Buyer for each MWh of Firm Energy and Non-Firm Energy in each time of delivery period as determined in accordance with this Article 5 shall be as set out in Article 3 of this Appendix 3. | ||
(c) | The statement shall set out the total amount owing for the Eligible Energy in the Season calculated in accordance with subsections 5.1(a), (b) and (d) of this Appendix 3 less the interim amounts paid by the Buyer for the previous two months of the Season calculated in accordance with section 4 of this Appendix 3. If the interim amounts paid by the Buyer for the previous two months of the Season exceed the final amount owing for the Eligible Energy in the Season calculated in accordance with this Article 5, the Seller shall refund the excess payments to the Buyer by the 30 th day of the first month of the Season immediately following the Season in which the overpayments occurred. If the interim amounts paid by the Buyer for the previous two months of the Season are less than the final amount owing for the Eligible Energy in the Season calculated in accordance with this Article 5, the Buyer shall pay the Seller the difference in accordance with the provisions of section 10.2. | ||
(d) | The statement shall set out the amount of Eligible Energy to be purchased by the Buyer in the Season ( Net Purchase Amount S ) determined in accordance with the following formula: |
Net Purchase Amount S = Total Metered Energy S [Seasonal GBL * (1 Line Losses] |
Appendix 3- 7
where: |
S = the applicable Season; and | |||
Total Metered Energy S = the total Metered Energy in the Season, as measured by the Metering Equipment. |
If the Net Purchase Amount S is negative, no amount is payable by the Buyer to the Seller. |
6. | No Further Payment |
6.1 | The amounts payable by the Buyer as specified in this Appendix 3 are the full and complete payment and consideration payable by the Buyer for all Eligible Energy under this EPA. |
Appendix 3- 8
Month | Time of Delivery Factor (TDF) | |||||||||||||||
Super-Peak | Peak | Off-Peak | On-Peak | |||||||||||||
January
|
141 | % | 122 | % | 105 | % | 127 | % | ||||||||
February
|
124 | % | 113 | % | 101 | % | 116 | % | ||||||||
March
|
124 | % | 112 | % | 99 | % | 115 | % | ||||||||
April
|
104 | % | 95 | % | 85 | % | 97 | % | ||||||||
May
|
90 | % | 82 | % | 70 | % | 84 | % | ||||||||
June
|
87 | % | 81 | % | 69 | % | 83 | % | ||||||||
July
|
105 | % | 96 | % | 79 | % | 98 | % | ||||||||
August
|
110 | % | 101 | % | 86 | % | 103 | % | ||||||||
September
|
116 | % | 107 | % | 91 | % | 109 | % | ||||||||
October
|
127 | % | 112 | % | 93 | % | 116 | % | ||||||||
November
|
129 | % | 112 | % | 99 | % | 116 | % | ||||||||
December
|
142 | % | 120 | % | 104 | % | 126 | % |
NTH YEAR OF THE DECADE | ||||||||||||||||||||||||||||||||||||||||
Decade | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | ||||||||||||||||||||||||||||||
200N
|
n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | 49.6 | 49.9 | ||||||||||||||||||||||||||||||
201N
|
43.5 | 40.2 | 43.0 | 45.4 | 48.5 | 48.5 | 45.6 | 47.8 | 49.7 | 53.6 | ||||||||||||||||||||||||||||||
202N
|
59.1 | 59.2 | 59.5 | 60.2 | 60.3 | 61.7 | 62.6 | 63.8 | 64.6 | 65.6 | ||||||||||||||||||||||||||||||
203N
|
66.6 | 67.6 | 68.6 | 69.3 | 70.0 | 70.7 | 71.4 | 72.1 | 72.8 | 73.6 |
Appendix 3- 9
Description of | ||||
Type of Equipment | Function/Location | Key Technical Parameters | ||
*
|
* | * | ||
* | * | * | ||
* | * | * | ||
* | * | * |
Structure | Location | Description of Structure | ||
* | * | * | ||
* | * | * |
| The POI (of the Transmission System/Fortis System) has the meaning given to it in Appendix 1 of the EPA; | ||
| A description of the infrastructure between the Sellers Plant and the FortisBC point of Interconnection and a copy of the wheeling agreement between the Seller and FortisBC for delivery of energy to the POI. The point of Interconnection between the Seller and the Fortis System will be the FortisBC side of the load disconnect switch near the Celgar substation which is located near the Mill. The point of Interconnection with FortisBC and the Transmission System is the POI. Please see the Interconnection Study and FortisBC letter for further details; and |
Appendix 4- 1
| Description of metering facilities and configuration: A revenue quality metering installation at each of the generator breakers of the existing and the proposed new turbo-generators. | ||
| There are two existing revenue quality metering installations at the 63 kV Point of Interconnection with the Fortis System, one owned by FortisBC and one owned by the Seller. The Buyer will consult with the Seller in order to verify that the installation is adequate and acquire the necessary access to remotely interrogate that metering installation. The Seller will pay for any improvements that may be required to achieve the desired functionality. Alternatively if the Buyer determines the Sellers metering installation to be inadequate the Buyer will coordinate and consult with FortisBC in order to assure that the installation is adequate and acquire the necessary access to remotely interrogate such metering installation. The Seller will facilitate such coordination and consultation, and pay for any improvements that may reasonably be required to achieve the desired functionality. |
6. | Plant Capacity : * MW. | |
7. | Incremental Sellers Plant : A description of the alterations that the Seller is proposing to make to the Sellers Plant to enable the generation of Firm Energy (the Incremental Sellers Plant ) is attached as Schedule 1 hereto. | |
8. | Site Layout : A depiction of the layout of the key facilities in the Sellers Plant is attached as Schedule 2 hereto. | |
9. | Seller Interconnection Reports : The data and assumptions set forth in the Seller Optional Study Report, the Fortis Interconnection Report and the Fortis BC letter are attached as Schedule 3 hereto. | |
10. | Electricity Distribution and Generation System : A depiction of the electricity distribution and generation system at the Sellers Plant, including all metering points, is attached as Schedule 4 hereto. |
Appendix 4- 2
Appendix 4- 3
Appendix 4- 4
Appendix 4- 5
Appendix 4- 6
1. | Definitions - In this Appendix 5, the following words and phrases have the following meanings: |
(a) | Category A means Forest-based Biomass that is comprised of mill solid wood residues (hog fuel, sawdust, chips and/or chunks) and pulp mill residues (hog fuel and black liquor); | ||
(b) | Category B means Forest-based Biomass that is comprised of roadside and landing residues; | ||
(c) | Category C means Forest-based Biomass that is comprised of biomass derived from standing timber; | ||
(d) | X indicates the approximate volume of the relevant category of Forest-based Biomass that is expected to be consumed in Energy generation up to the Annual GBL; and | ||
(e) | Y indicates the approximate volume of the relevant category of Forest-based Biomass that is expected to be consumed in Energy generation in excess of the Annual GBL. |
Category A | Category B | Category C | ||||||||||
Year | (metric tonnes) | (metric tonnes) | (metric tonnes) | |||||||||
X | Y | X | Y | X | Y | |||||||
2010
|
* | * | * | * | * | * | ||||||
2011
|
* | * | * | * | * | * | ||||||
2012
|
* | * | * | * | * | * | ||||||
2013
|
* | * | * | * | * | * | ||||||
2014
|
* | * | * | * | * | * | ||||||
2015
|
* | * | * | * | * | * |
Year | Forest-based Biomass | Auxiliary Fuel | ||
(GJs) | (GJs) | |||
2010
|
* | * | ||
2011
|
* | * | ||
2012
|
* | * | ||
2013
|
* | * | ||
2014
|
* | * | ||
2015
|
* | * |
Appendix 5- 1
|
||
|
||
|
[ name of senior officer ] | |
|
||
|
[ title of senior officer ] |
Appendix 6- 1
|
Irrevocable Standby Letter of Credit | |
|
||
|
[ Number ] | |
|
||
Applicant:
|
Beneficiary: | |
|
||
[
Seller Name and Address]
|
British Columbia Hydro and Power Authority |
(1) | your signed written demand specifying the amount claimed (not exceeding [ Dollar Amount ]), and certifying that such amount is due to you by the Applicant under the terms of an Electricity Purchase Agreement between you and the Applicant made as of [ Date ]; and | |
(2) | this original Letter of Credit must be presented with your demand for payment for endorsement purposes. |
Appendix 7- 1
|
||
|
||
Authorized Signing Officer
|
Authorized Signing Officer | |
|
||
[
Financial Institution Name
]
|
[ Financial Institution Name ] |
Appendix 7- 2
Appendix 8- 1
(a) | Assumption Notice means a notice given by the Lender to the Buyer pursuant to subsection 6.1(a) of this Agreement; | ||
(b) | Default or Termination Notice means a notice given to the Company by the Buyer under the EPA that, with or without the lapse of time, entitles, or shall entitle, the Buyer to terminate the EPA, subject to rights, if any, of the Company to cure the default or other circumstance in respect of which the notice is given; | ||
(c) | Receiver means a receiver, manager or receiver-manager appointed or designated by, or on the initiative of, the Lender; and | ||
(d) | words and phrases defined in the EPA, and not otherwise defined herein, when used herein have the meanings given in the EPA. |
(a) | the EPA has been duly authorized, executed and delivered by the Buyer; | ||
(b) | the Buyer has not received any notice of assignment by the Company of all or any part of their right, title and interest in and to the EPA, except to the Lender; | ||
(c) | the Buyer has not given any Default or Termination Notice; | ||
(d) | the Buyer is not aware of any default or other circumstance that would entitle the Buyer to give a Default or Termination Notice, provided however that the Buyer has not undertaken any investigation or due diligence in respect of this confirmation; and | ||
(e) | the Buyer shall not enter into any agreement with the Company to materially amend the EPA, or enter into any agreement with the Company to terminate the EPA, without giving the Lender not less than 30 days prior written notice. |
(a) | it has received a copy of the EPA; and |
Appendix 8- 2
(b) | the assignment by the Company to the Lender of the EPA pursuant to the Lender Security is subject in all respects to the terms and conditions of the EPA and this Agreement. |
(a) | shall give the Lender a copy of any Default or Termination Notice concurrently with, or promptly after, any such notice is given to the Company; | ||
(b) | shall not exercise any right it may have to terminate the EPA or any right pursuant to Article 15 of the EPA until the later of: (i) the date that is 45 days after the date on which the Buyer delivered to the Lender a copy of the Default or Termination Notice entitling the Buyer to terminate or exercise any right pursuant to Article 15 of the EPA; and (ii) the date on which the Buyer is entitled to terminate or exercise any right pursuant to Article 15 of the EPA; | ||
(c) | shall not, provided that there is no other Buyer Termination Event under the EPA, terminate the EPA based on the Bankruptcy or Insolvency of the Seller if the Lender is promptly and diligently prosecuting to completion enforcement proceedings under the Lender Security until 30 days after the expiry of any court ordered period restricting the termination of the EPA; and | ||
(d) | shall not exercise any right it may have under section 10.5 of the EPA to deduct any amounts owing by the Seller to the Buyer under the EPA from amounts owing by the Buyer to the Seller under the EPA until the date that is 15 days after the date the Buyer provides the Lender with a copy of the notice delivered by the Buyer to the Seller under section 10.5 of the EPA. |
(a) | give the Buyer written notice (an Assumption Notice ) stating that the Lender is assuming the EPA, whereupon: |
(i) | the Lender shall be entitled to all the rights and benefits, and shall have assumed, and shall perform and discharge, all the obligations and liabilities, of the |
Appendix 8- 3
Company under the EPA, and the Lender shall be a party to, and bound by, the EPA as if an original signatory thereto in the place and stead of the Company; | |||
(ii) | notwithstanding subparagraph (i), the Lender shall not be liable to the Buyer for defaults of the Company occurring before the Assumption Notice is given, except to the extent that such defaults continue thereafter; provided however that the Buyer may at any time before or after such notice is given exercise any rights of set-off in respect of any such prior default under or in relation to the EPA which the Buyer would otherwise be entitled to exercise; or |
(b) | give written notice to the Buyer that the Lender wishes to cause the Company to assign all of the Companys right, title and interest in and to the EPA and the Sellers Plant to a third person or persons, subject however to the Company and the assignee complying with all provisions of the EPA relative to such assignment. |
|
(a) | Buyer at: | ||||||
|
||||||||
British Columbia Hydro and Power Authority | ||||||||
|
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|
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|
Attention: | |||||||
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|
Facsimile No.: | |||||||
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(b) | [Company] at: | |||||||
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Attention: | |||||||
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|
Facsimile No.: | |||||||
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Appendix 8- 4
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(c) | [Lender] at: | ||||||
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|
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|
Attention: | |||||||
|
|
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|
Facsimile No.: | |||||||
|
|
BRITISH COLUMBIA HYDRO AND
POWER AUTHORITY |
[COMPANY] | |||||
|
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By:
|
By: | |||||
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|
(Signature) | (Signature) | ||||
|
||||||
Name:
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Name: | |||||
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||||||
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Title:
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Title: | |||||
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Appendix 8- 5
[LENDER] | ||||
|
||||
By:
|
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|
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|
||||
Name:
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|
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|
||||
Title:
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Appendix 8- 6
Tasks: | Percentage of Completion | Comments | ||||||||||||||||||||||
5% | 25% | 50% | 75% | 100% | ||||||||||||||||||||
Permitting:
|
||||||||||||||||||||||||
Air Permit
|
||||||||||||||||||||||||
Effluent Permit
|
||||||||||||||||||||||||
Refuse Permit
|
||||||||||||||||||||||||
Water Licence
|
||||||||||||||||||||||||
Zoning Approval
|
||||||||||||||||||||||||
Subdivision Approval
|
||||||||||||||||||||||||
Leave to Construct
|
||||||||||||||||||||||||
Other Permits
|
||||||||||||||||||||||||
Financing:
|
||||||||||||||||||||||||
Construction
|
||||||||||||||||||||||||
Project Equity
|
||||||||||||||||||||||||
Long Term Financing
|
||||||||||||||||||||||||
Project Design:
|
||||||||||||||||||||||||
Preliminary
|
||||||||||||||||||||||||
Final
|
||||||||||||||||||||||||
Interconnection:
|
||||||||||||||||||||||||
Studies (Please
describe the status
of each
interconnection
study)
|
||||||||||||||||||||||||
Construction
|
||||||||||||||||||||||||
Major Equipment:
|
||||||||||||||||||||||||
Ordering
|
||||||||||||||||||||||||
Delivery
|
||||||||||||||||||||||||
Installation
|
Appendix 9- 1
Tasks: | Percentage of Completion | Comments | ||||||||||||||||||||||
5% | 25% | 50% | 75% | 100% | ||||||||||||||||||||
Construction:
|
||||||||||||||||||||||||
Road
|
||||||||||||||||||||||||
Powerhouse
|
||||||||||||||||||||||||
Other
|
Key Project Tasks: | Original Estimate | Current Estimate | Actual | |||||||||
Permitting Complete
|
||||||||||||
Financing Complete
|
||||||||||||
Interconnection
Agreement Signed
|
||||||||||||
Major Equipment Ordered
|
||||||||||||
Commence Construction
|
||||||||||||
Begin Commissioning
|
||||||||||||
COD
|
Prepared by:
|
||||
|
|
|||
Submitted by:
|
||||
|
|
Appendix 9- 2
Appendix 10- 1
Buyer: BC Hydro
|
Seller: Zellstoff Celgar Limited Partnership | |
|
||
Invoices and Statements
|
||
|
||
To: IPP Invoicing
|
To: | |
Address:
|
Address: | |
333 Dunsmuir Street, 16
th
floor
|
1921 Arrow Lakes Drive | |
Vancouver, B.C.
|
P.O. Box 1000, Castlegar, BC | |
V6B 5R3
|
V1N 3H9 | |
|
||
Fax: 604-623-4203
|
Attention: Controller / Assistant Controller
Fax: 250-365-4211 |
|
|
||
Email: IPP.invoicing@bchydro.com
|
||
|
Email: lornea@celgar.com susanb@celgar.com | |
|
||
Performance Security and Interconnection Security
|
||
|
||
To: Customer Care & Conservation, Finance &
Business Services |
To:
Address: |
|
Address:
|
Suite 2840, PO Box 11576 | |
333 Dunsmuir Street
|
650 West Georgia Street | |
9
th
floor
|
Vancouver, B.C. | |
Vancouver, B.C.
|
V6B 4N8 | |
V6B 5R3
Attention: Alvin Tse |
Attention: Treasurer
|
|
|
Fax: 604-684-1094 | |
|
||
Fax: 604-623-4224
|
Email: gstannus@mercerint.com | |
|
||
Email: alvin.tse@bchydro.com
|
||
|
||
Copy to: Contract Management, as per all Notices
address |
||
|
||
Insurance
|
||
|
||
To: Manager, Contract Management
Address: |
To:
Address: |
|
333 Dunsmuir Street, 10
th
floor
|
Suite 2840, PO Box 11576 | |
Vancouver, B.C.
|
650 West Georgia Street | |
V6B 5R3
|
Vancouver, B.C.
V6B 4N8 |
|
Fax: 604-623-4335
|
Attention: Controller | |
Email: IPP.contract@bchydro.com
|
Fax: 604-684-1094 | |
|
||
|
Email: dure@mercerint.com |
Appendix 10- 2
Zellstoff Celgar Limited Partnership , of P.O. Box 1000, Castlegar, BC, V1N 3H9 | |||
( Proponent ) |
BRITISH COLUMBIA HYDRO AND POWER AUTHORITY , a British Columbia Crown Corporation, having an office at 333 Dunsmuir Street, Vancouver, British Columbia, V6B 5R3 | |||
( BC Hydro ) |
Issue April 22, 2008 | 1 |
(a) | is or becomes in the public domain, other than as a result of a breach of this Agreement by BC Hydro; or | ||
(b) | is known to BC Hydro before disclosure to it by the Proponent, or becomes known to BC Hydro thereafter by way of disclosure to BC Hydro by any other person who is not under an obligation of confidentiality with respect thereto. |
(a) | disclosure of the fact that Discussions, if any, are occurring, or have occurred, and/or the fact that this Agreement exists and the general nature hereof; | ||
(b) | in the case of BC Hydro, disclosure of the Discussions and/or Confidential Information: |
(i) | to any ministers, deputy ministers or servants or employees of the Province of British Columbia; and | ||
(ii) | to its directors, officers, employees and subsidiaries, consultants and advisors; |
provided that each of the foregoing to whom Discussions and/or Confidential Information is disclosed is advised of the confidential nature thereof; | |||
(c) | in the case of BC Hydro, disclosure of Discussions and/or Confidential Information in any regulatory proceeding, whether in respect of an EPA entered into with the Proponent pursuant to the RFP Process or in respect of other matters, to the extent that BC Hydro considers disclosure necessary or desirable to support its position in any such proceeding, provided that, to the extent reasonably practicable, BC Hydro gives reasonable notice to the Proponent before making the disclosure, and, to the extent requested by the Proponent, requests the relevant tribunal to treat all or any part of the disclosure as confidential or to limit its further disclosure; | ||
(d) | in the case of BC Hydro, disclosure of: |
(i) | the Proponents questions in the Q&A process under the RFP; and | ||
(ii) | the Proponents participation in the RFP Process, or the location of any Project proposed by the Proponent; |
Issue April 22, 2008 | 2 |
(e) | in the case of the Proponent, disclosure of Discussions to its directors, officers, employees and Affiliates, consultants and advisors, provided that each of the foregoing to whom Discussions are disclosed is advised of the confidential nature thereof; | ||
(f) | without limiting BC Hydros disclosure rights under section 2.1(c) above, disclosures required to be made by BC Hydro or the Proponent by an order of a court or tribunal or under any law, regulatory requirement or requirement of any stock exchange that is binding upon it, provided that, (i) to the extent reasonably practicable, the Party making such disclosure gives reasonable notice to the other Party before making the disclosure, and (ii) limits the disclosure to that required by the applicable order, law, or regulatory or stock exchange requirement; | ||
(g) | disclosures in any legal proceedings for the enforcement of any agreement referenced in section 2.2; or | ||
(h) | disclosures of the Discussions and/or Confidential Information by agreement or consent of both Parties, including pursuant to the consents contained in the Registration Form. |
Issue April 22, 2008 | 3 |
(a) | preclude in any way either Party from pursuing any business opportunities; | ||
(b) | establish any relationship between BC Hydro and the Proponent with respect to such business opportunities; or | ||
(c) | establish any other relationship between BC Hydro and the Proponent with respect to the Project. |
Issue April 22, 2008 | 4 |
By: | ||
Name: | ||
Title: |
Signature | ||
Name: | David M. Gandossi | |
Title: | EVP, CFO & Secretary |
Issue April 22, 2008 | 5 |
Jurisdiction
|
Shareholding at Year End | |||||||||
Name of Subsidiary(1)
|
of Incorporation | Direct | Indirect | |||||||
Zellstoff-und Papierfabrik Rosenthal GmbH & Co. KG
|
Germany | | 100 | % | ||||||
Zellstoff Stendal GmbH
|
Germany | | 70.6 | % | ||||||
Zellstoff Celgar Limited
|
Canada | 100 | % | | ||||||
Zellstoff Celgar Limited Partnership
|
Canada | 100 | % | |
(1) | All the subsidiaries are conducting business under their own names. |
1. | I have reviewed this annual report on Form 10-K of Mercer International Inc. (the Registrant); |
2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report; |
4. | The Registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others with those entities, particularly during the period in which this annual report is being prepared; | |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) | Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and | |
d) | Disclosed in this annual report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of this annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and | |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
1. | I have reviewed this annual report on Form 10-K of Mercer International Inc. (the Registrant); |
2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report; |
4. | The Registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d 15(f)) for the Registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others with those entities, particularly during the period in which this annual report is being prepared; | |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) | Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and | |
d) | Disclosed in this annual report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of this annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and | |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
(1) | the Annual Report on Form 10-K of the Company for the period ended December 31, 2008 (the Report) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and | |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
(1) | the Annual Report on Form 10-K of the Company for the period ended December 31, 2008 (the Report) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and | |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |