EXHIBIT 10(nn)
PROMISSORY NOTE
U.S.$10,000,000.00 New York, New York
APRIL 15, 2002
[Date]
FOR VALUE RECEIVED, QUAKER CHEMICAL CORPORATION (the "Borrower"), a
corporation duly organized and validly existing under the laws of the
Commonwealth of Pennsylvania, hereby promises to pay to the order of ABN AMRO
BANK N.V. (the "Bank"), at its office located at 55 East 52nd Street, New York,
New York 10055 for the account of the Bank's New York Branch (or at such other
place of payment and for such other account as shall be designated by the holder
hereof to the Borrower), when due the principal sum of:
TEN MILLION DOLLARS
($10,000,000.00), or if less, the unpaid principal amount of all loans (the
"Loans") made hereunder by the Bank to the Borrower or at its request, in lawful
money of The United States of America. Each Loan shall be payable on a specified
maturity date (a "Time Loan") or on demand (a "Demand Loan"), as agreed to by
the Bank and the Borrower at the time the Loan is made. In no event, however,
shall any Time Loan have a maturity of greater than six months.
The Borrower hereby further promises to pay to the order of the Bank, at
the place of payment, interest on the unpaid principal amount of all Loans
evidenced hereby from the date thereof until the maturity thereof (whether by
acceleration or otherwise), at such rates of interest as shall be agreed upon
from time to time between the Borrower and the Bank at the time each Loan is
made (or prior thereto), such interest to be payable at maturity (whether by
acceleration or otherwise), at such regular monthly, quarterly or semi-annual
intervals prior to maturity as shall be specified by the Bank, and on the date
of any payment hereon on the amount paid. All interest payable hereunder shall
be calculated on the basis of a year of 360 days and actual days elapsed.
The rate of interest agreed to with respect to any Loan shall be a fixed
rate (expressed as a percentage per annum) or a specified margin (expressed as a
percentage per annum) in excess of an agreed upon index, which shall be one of
the following: (i) the Bank's "Prime Rate", (ii) the Bank's "Cost of Funds", or
(iii) "LIBOR". A Demand Loan may only bear interest based on the Prime Rate.
"Prime Rate" shall mean the rate of interest equal to the higher (redetermined
daily) of (i) the per annum rate of interest announced by the Bank from time to
time at its principal office in New York City as its prime rate for U.S. dollar
loans (with any change in such Prime Rate to become effective as and when such
prime rate change shall become effective) or (ii) the Federal Funds Rate, plus
one half of one per cent (0.50 %) per annum. "Federal Funds Rate" shall mean the
average daily Federal Funds Rate as published by the Federal Reserve Bank of New
York in Publication H.15 (or any successor thereto), or, if no such rate is
published, the per annum rate of interest at which overnight federal funds are
from time to time offered to the Bank by any bank in the interbank market in an
amount equal to the principal amount of the respective Loan, as determined in
good faith by the Bank. "Cost of Funds" shall mean the rate, as determined by
the Bank as of the date on which the respective Loan is made (which
determination shall be conclusive and binding on the Borrower, absent manifest
error) at which
funds of a comparable term and amount generally are available to the Bank.
"LIBOR" shall mean the per annum rate of interest at which U.S. dollar deposits
of an amount comparable to the amount of the respective Loan and for a period
equal to the relevant Interest Period (as hereinafter defined) are offered
generally to the Bank (rounded upward if necessary, to the nearest 1/16 of 1%)
in the London interbank Eurodollar market at 11:00 a.m. (London time) two
Business Days prior to the commencement of each Interest Period, such rate to
remain in effect for the entire Interest Period. "Interest Period" shall mean
(i) with regard to Time Loans bearing interest based on LIBOR, successive
one-month, three-month or six-month periods (as selected from time to time by
the Borrower not less than two Business Days prior to the commencement of the
respective Interest Period); and (ii) with regard to Time Loans bearing interest
based on the Bank's Cost of Funds, successive periods of six months or less (but
not less than one Business Day) (as selected from time to time by the Borrower
not later than 3:00 p.m. on the first Business Day of the respective Interest
Period); provided, however, that: (x) each such period occurring after the
initial such period shall commence on the day on which the next preceding period
expires; (y) the final Interest Period shall be such that its expiration occurs
on the maturity date of the Loan; and (z) if for any reason the Borrower shall
fail to timely select a period, then it shall be deemed to have selected a
one-month period or such shorter period as provided in clause (y). "Business
Day" shall mean any day other than a Saturday, a Sunday or a day on which banks
in New York City or Philadelphia, Pennsylvania (or, in the case of a Loan
bearing interest based on LIBOR, London, England) are required or permitted by
law to close.
The Borrower hereby further promises to pay to the order of the Bank, on
demand, at the place of payment, interest on the unpaid principal amount of all
Loans evidenced hereby after the maturity thereof (whether by acceleration or
otherwise), at a rate per annum equal to two and fifty five one hundredths
percent (2.55%) per annum in excess of the Bank's Cost of Funds for successive
one day Interest Periods.
The Bank shall record on its books or records or on the schedule to this
Promissory Note which is a part hereof, the principal amount and date of each
Loan made hereunder, the interest rate applicable thereto, the maturity date
thereof and all payments of principal made thereon; provided, however, that
prior to a transfer of this Note, if any, all such information shall be recorded
on the schedule attached to this Promissory Note. The record thereof, whether
shown on such books or records or on the schedule to this Promissory Note, shall
be conclusive and binding upon the Borrower, absent manifest error; provided,
however, that the failure of the Bank to record any of the foregoing shall not
limit or otherwise affect the obligation of the Borrower to repay all Loans made
hereunder, together with all accrued interest thereon and all other amounts
payable hereunder. Without limiting the foregoing, the Borrower acknowledges
that interest rates and maturity dates are ordinarily negotiated between the
Borrower and the Bank by telephone and the Borrower agrees that in the event of
any dispute as to any applicable interest rate and/or maturity date, the
determination of the Bank and its respective entry on the schedule hereinafter
referred to shall, absent manifest error, be conclusive and binding upon the
Borrower.
All payments due hereunder shall be made by the Borrower to the holder
hereof no later than 3 p.m. local time at the place of payment, in lawful money
of the United States of America and in funds immediately available and freely
transferable at the place of payment, free and clear of, and without deduction
for, any present or future taxes, levies, offsets, counterclaims or deductions
of any nature whatsoever ("Deductions"). Payments received after such local time
shall be deemed received by the holder hereof on the next succeeding Business
Day at such place of payment. In the event that the Borrower is compelled for
any reason to make any Deductions, it shall pay to the holder hereof such
amounts (after giving effect to all Deductions on all additional payments to be
made hereunder) as will result in the receipt by the holder hereof of the amount
such holder would have received had no such Deductions been required to be made.
If any payment shall fall due hereunder or on any Loan evidenced hereby on a day
that is not a
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Business Day for the holder hereof at the place of payment, payment shall be
made on the next succeeding Business Day at such place of payment and interest
thereon shall be payable for such extended time.
The Time Loans evidenced by this Promissory Note, other than Time Loans
bearing interest based on the Bank's Prime Rate, may not be prepaid in whole or
in part without the prior written consent of the holder hereof.
In the event that if an Event of Default (as defined in the Credit
Agreement dated as of April 12, 2002 between the Borrower and the Bank as in
effect from time to time or, if such Credit Agreement is no longer in effect,
than as in effect most recently) shall have occurred and be continuing; or if
the Borrower shall be in default in the payment when and as due of any amounts
due hereunder; or if the Borrower shall fail to comply in all material respects
with the terms of any Financial Covenant or any other covenant or other
provision contained in any agreement entered into with the Bank and such failure
to comply continues uncured for a period of 30 days after notice of such
noncompliance from the Bank; then the holder may, by notice to the Borrower,
declare all amounts which otherwise would not be payable on demand or until a
future date to be forthwith due and payable and thereupon this Promissory Note
and all such amounts shall be and become immediately due and payable all without
further demand, presentment, protest or notice of any kind, all of which are
hereby waived by the Borrower; provided, however, that upon any federal
bankruptcy proceedings being commenced by or against the Borrower all amounts
due hereunder shall be automatically due and payable all without demand,
presentment, protest or notice of any kind, all of which are hereby waived by
the Borrower.
The following are the "Financial Covenants" referred to above:
(a) The Borrower will not at any time allow the ratio of (i) Consolidated
Total Indebtedness to (ii) the sum of (A) Consolidated Net Worth plus (B)
Consolidated Total Indebtedness to exceed 0.50 to 1.
(b) The Borrower will not permit the aggregate amount of all Indebtedness
of Subsidiaries (exclusive of Indebtedness owing to the Borrower or to a
Wholly-Owned Subsidiary) outstanding at any time to exceed $40,000,000.
(c) The Borrower will not at any time allow Consolidated Net Worth to be
less than the sum of (i) $50,000,000, plus (ii) 33% of Consolidated Net Income
(without deduction for losses sustained) accrued from December 31, 1991, to and
including the most recent fiscal quarter prior to the date of determination
thereof, plus (iii) the net proceeds of any common stock issue or conversion of
Convertible Securities occurring after December 31, 2001.
As used herein,
"Capital Lease" as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of that Person.
"Consolidated Net Income" shall mean, with respect to any period,
the net income of the Borrower and its Subsidiaries for such period after
eliminating intercompany items, all as consolidated and determined in
accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any particular time, the
amount which would be set forth under the caption "Stockholder's Equity"
(or any like
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caption) on a consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such period, less the amount which would be
set forth under the caption "Equity Adjustment from Foreign Currency
Translation" (or any like caption) on such consolidated balance sheet, all
as prepared in accordance with GAAP.
"Consolidated Total Indebtedness" shall mean, as of any particular
time and after eliminating inter-company items, all Indebtedness of the
Borrower and its Subsidiaries, all as consolidated and determined in
accordance with GAAP.
"Convertible Securities" shall mean any evidences of indebtedness,
shares of stock (other than common stock), or other securities directly or
indirectly convertible into or exchangeable for shares of common stock.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"Indebtedness" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed money, (ii)
all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property, except accounts payable arising in the
ordinary course of business, (iv) all obligations of such Person as lessee
under Capital Leases, (v) all Indebtedness of others secured by a Lien on
any asset of such person, whether or not such Indebtedness is assumed by
such Person, (vi) all Indebtedness of others guaranteed by such Person and
(vii) all non-contingent obligations of such Person to reimburse or prepay
any bank or other Person in respect of amounts paid under a letter of
credit, banker's acceptance or similar instrument.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Subsidiary" shall mean any corporation or other entity of which
the Borrower owns, directly or indirectly, such number of outstanding
shares as have more than 50% of the ordinary voting power for the election
of directors.
"Wholly Owned Subsidiary" shall mean any Subsidiary in respect of
which all shares (other than directors' qualifying shares required by law)
of the capital stock of each class, or other such ownership interests,
outstanding at the time as of which any determination is being made, are
owned, beneficially and of record by the Borrower.
The Borrower hereby agrees to indemnify the holder hereof against any loss
(including any loss on redeployment of funds repaid prior to maturity), cost or
expense incurred by such holder in connection with this Promissory Note and any
Loans evidenced hereby and the exercise of any and all rights pertaining
thereto, including, without limitation, all court costs, reasonable attorney's
fees and other costs of collection. No delay on the part of the holder hereof in
exercising any of its options, powers or rights, or partial or single exercise
thereof shall constitute a waiver thereof. The options, powers and rights of the
holder hereof specified herein are in addition to those otherwise created.
Demand of payment of this Note shall be sufficiently made upon the Borrower by
written, telex, telegraphic or telephonic notice given by or on behalf of the
holder to the Borrower at its last known address.
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This Promissory Note and the Loans evidenced hereby shall be governed
by and construed in accordance with the laws of the State of New York, without
giving effect to choice of law or conflicts of laws principles.
QUAKER CHEMICAL CORPORATION
By /s/ Michael F. Barry
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Its Vice President and Chief
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Financial Officer
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By /s/ D. Jeffry Benoliel
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Its Vice President and General Counsel
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