FOURTH AMENDMENT TO SUBORDINATED LOAN AGREEMENT
This Fourth Amendment to the Subordinated Loan Agreement (this "Fourth
Amendment") is dated March 31, 2003 and is made by and between Snake River Sugar
Company, an Oregon cooperative corporation, as Borrower (the "Company"), and
Valhi, Inc., a Delaware corporation, as Lender ("Valhi"), and is acknowledged by
the holders of those certain Senior Notes issued by the Company due April 30,
2009.
Preliminary Statements
The Company and Valhi are parties to a Subordinated Loan Agreement dated
January 3, 1997, as amended and restated May 14, 1997 (the "Existing
Agreement"), as further amended by the Second Amendment to the Subordinated Loan
Agreement dated as of November 30, 1998 (the "Second Amendment") and the Third
Amendment to the Subordinated Loan Agreement dated as of October 19, 2000 (the
"Third Amendment"), and as further amended by this Fourth Amendment
(collectively this Fourth Amendment, together with the Third Amendment, the
Second Amendment and the Existing Agreement, the "Subordinated Loan Agreement").
All capitalized terms defined in the Subordinated Loan Agreement not otherwise
defined in this Fourth Amendment shall have the same meanings herein as in the
Subordinated Loan Agreement.
The Company and Valhi have agreed to amend the Subordinated Loan Agreement
as set forth herein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, subject to satisfaction of the conditions noted
below, the Company and Valhi hereby agree as follows:
Section 1. Amendments
1.1 The first sentence of Section 9.5 of the Subordinated Loan
Agreement shall be and is hereby amended in its entirety to read as follows:
"The Company will at all times preserve and keep in full force and
effect its cooperative existence as an Oregon cooperative and shall
maintain at all times its status as an organization subject to taxation
under part I of subchapter T of the Code."
1.2 Section 9.6 of the Subordinated Loan Agreement shall be and is
hereby amended in its entirety to read as follows:
"The Company will cause LLC to at all times (i) maintain the ability
to obtain CCC Loans on in-process sugar at a loan rate of not less than
$0.17 per pound and (ii) keep in full force and effect a revolving credit
facility (a) with a monthly minimum aggregate availability (including
outstanding amounts) at all times during each month as set forth on Exhibit
A hereto, (b) with terms substantially similar or more favorable to LLC
than those in existence at the date of the Closing under the Bank
Agreement, (c) with a remaining term to scheduled facility termination of
at least six months as of any date of determination and (d) which on each
year at September 30 has a minimum aggregate availability (excluding
outstanding amounts) sufficient to pay to CCC all principal, premium, if
any, and accrued interest on all outstanding CCC Loans (other than Sugar
Storage Facility Loans)."
1.3 Section 10.3(h) of the Subordinated Loan Agreement shall be and is
hereby amended in its entirety to read as follows:
"(h) (i) Liens on inventory of LLC to secure the obligations of LLC
under CCC Loans permitted by Section 10.7, other than Sugar Storage
Facility Loans and (ii) purchase money Liens of CCC on storage facilities,
related equipment and underlying real estate assets securing the
obligations of LLC under Sugar Storage Facility Loans permitted by Section
10.7, the proceeds of which were used to acquire such facilities, equipment
and assets;"
1.4 Section 10.8(a) of the Subordinated Loan Agreement shall be and
hereby is amended in its entirety to read as follows:
"(a) The Company will not permit, as at the end of each fiscal quarter
of the Company, the ratio of Consolidated Senior Debt to Distributable
Cash for the period of four LLC fiscal quarters ending on or closest
(but prior) to such date to exceed (i) 11.25:1.00 from the date of the
Closing to and including November 30, 1997; (ii) 12.00:1.00 from
December 1, 1997 to and including May 30, 1999; (iii) 10.50:1.00 from
June 1, 1999 to and including November 30, 1999; (iv) 7.75:1.00 from
December 1, 1999 to and including February 29, 2000; (v) 8.00:1.00
from March 1, 2000 to and including May 31, 2000; (vi) 7.50:1.00 from
June 1, 2000 to and including May 31, 2001; (vii) 8.50:1.00 from June
1, 2001 to and including August 31, 2001; (viii) 7.00:1.00 from
September 1, 2001 to and including February 28, 2002; (ix) 6.50:1.00
from March 1, 2002 to and including August 31, 2002; (x) 6.00:1.00
from September 1, 2002 to and including February 28, 2003; (xi)
5.50:1.00 from March 1, 2003 to and including February 29, 2004; (xii)
5.00:1.00 from March 1, 2004 to and including February 28, 2005;
(xiii) 4.75:1.00 from March 1, 2005 to and including February 28,
2006; (xiv) 4.25:1.00 from March 1, 2006 to and including February 28,
2007, and (xv) 3.75:1.00 thereafter; provided, however, that following
the date upon which Valhi purchases all of the Senior Notes upon
exercise of its rights under all of those certain Option Agreements
between Valhi, the Company and the holders of the Senior Notes, the
ratios contained in this Section 10.8(a) shall be such ratios during
such time periods as described in Section 10.8(a) of the Note Purchase
Agreements and Senior Notes as in effect immediately prior to such
exercise by Valhi."
1.5 Section 10.8(b) of the Subordinated Loan Agreement shall be and is
hereby amended in its entirety to read as follows:
"(b) The Company will not permit, as at the end of each fiscal quarter
of the Company, the ratio of Consolidated Total Debt to Distributable
Cash for the period of four LLC fiscal quarters ending on or closest
(but prior) to such date to exceed (i) 8.00:1.00 from the date of the
Closing to and including November 30, 1997; (ii) 18.00:1.00 from
December 1, 1997 to and including May 30, 1999; (iii) 16.00:1.00 from
June 1, 1999 to and including November 30, 1999; (iv) 12.00:1.00 from
December 1, 1999 to and including February 29, 2000; (v) 14.00:1.00
from March 1, 2000 to and including May 31, 2000; (vi) 12.00:1.00 from
June 1, 2000 to and including May 31, 2001; (vii) 13.75:1.00 from June
1, 2001 to and including August 31, 2001; (viii) 11.75:1.00 from
September 1, 2001 to and including February 28, 2002; (ix) 10.00:1.00
from March 1, 2002 to and including August 31, 2002; (x) 9.50:1.00
from September 1, 2002 to and including February 29, 2004; (xi)
9.00:1.00 from March 1, 2004 to and including February 28, 2005; (xii)
8.50:1.00 from March 1, 2005 to and including February 28, 2006;
(xiii) 8.25:1.00 from March 1, 2006 to and including February 28,
2007; and (xiv) 7.75:1.00 thereafter; provided, however, that
following the date upon which Valhi purchases all of the Senior Notes
upon exercise of its rights under all of those certain Option
Agreements between Valhi, the Company and the holders of the Senior
Notes, the ratios contained in this Section 10.8(b) shall be such
ratios during such time periods as described in Section 10.8(b) of the
Note Purchase Agreements and Senior Notes as in effect immediately
prior to such exercise by Valhi."
1.6 Section 10.8(c) of the Subordinated Loan Agreement shall be and is
hereby amended in its entirety to read as follows:
"(c) The Company will not permit, as at the end of any fiscal quarter
of the Company, the ratio of (x) the sum of Distributable Cash for the
period of four LLC fiscal quarters ending on or closest (but prior) to
such date and Consolidated operating lease and rent payments of the
Company and its Subsidiaries for the period of four fiscal quarters
ending on such date to (y) Consolidated Fixed Charges to be less than
(i) 1.50:1.00 from the date of the Closing to and including November
30, 1997; (ii) 0.50:1.00 from December 1, 1997 to and including May
30, 1999; (iii) 0.60:1.00 from June 1, 1999 to and including November
30, 1999; (iv) 0.85:1.00 from December 1, 1999 to and including
February 29, 2000; (v) 0.80:1.00 from March 1, 2000 to and including
May 31, 2000; (vi) 0.90:1.00 from June 1, 2000 to and including
February 28, 2002; (vii) 1.00:1.00 from March 1, 2002 to and including
February 28, 2003; (viii) 1.25:1.00 from March 1, 2003 to and
including February 28, 2005; (ix) 1.50:1.00 from March 1, 2005 to and
including February 28, 2007; and (x) 1.75:1.00 thereafter; provided,
however, that following the date upon which Valhi purchases all of the
Senior Notes upon exercise of its rights under all of those certain
Option Agreements between Valhi, the Company and the holders of the
Senior Notes, the ratios contained in this Section 10.8(c) shall be
such ratios during such time periods as described in Section 10.8(c)
of the Note Purchase Agreements and Senior Notes as in effect
immediately prior to such exercise by Valhi."
1.7 The following definition contained in Schedule A of the
Subordinated Loan Agreement shall be and is hereby amended in its entirety to
read as follows:
"CCC Loans" means loans made by CCC to LLC, including up to $10
million of Sugar Storage Facility Loans."
1.8 The following definition shall be and is hereby added to Schedule
A of the Subordinated Loan Agreement as follows:
"Sugar Storage Facility Loans" means non-recourse loans made by CCC to
LLC under the sugar storage facility loan program to be established by
CCC pursuant to the "Farm Security and Rural Investment Act of 2002"
for the sole purpose of funding construction of new or upgraded sugar
storage and handling facilities."
Section 2. Conditions Precedent.
The following shall be considered a condition precedent to the
effectiveness of this Fourth Amendment: The Company will obtain modifications to
the Note Purchase Agreements and the Senior Notes, which modifications must be
satisfactory to Valhi in all material respects.
Section 3. Conditions to Continuing Effectiveness.
The parties hereto agree and acknowledge that if at any time following the
execution of this Fourth Amendment, either (i) the Company shall fail to approve
by January 15th of any year the SRSC Annual Irrevocable Cash Plan (as defined in
the Company Agreement) for such fiscal year of the LLC or (ii) the unpaid
Accrual exceeds the Accrual Threshold (as both are defined in the Company
Agreement), then both this Fourth Amendment and the Third Amendment shall
immediately become retroactively null and void and the terms of the Subordinated
Loan Agreement shall retroactively be as in effect immediately prior to the
execution of the Third Amendment. No lapse of time or delay resulting from the
retroactive application of the provisions of this Section will impair the rights
of Valhi to assert any violation or default under the Subordinated Loan
Agreement.
Section 4. Prepayment of Senior Notes.
Valhi hereby acknowledges and consents to the Company's withdrawal from the
Distributable Cash Collateral Account (as such term is defined in the Note
Purchase Agreements), on or before March 31, 2003, the amount of $8,333,333 plus
any required Make-Whole Amount (as such term is defined in the Note Purchase
Agreements) for the sole purpose of prepaying the Senior Notes pursuant to
Section 8.2 of the Note Purchase Agreements, provided, however, that for
purposes of such prepayment, (i) the percentage "1.00%" in the definition of
"Reinvestment Yield" in Section 8.6 of the Note Purchase Agreements shall be
deemed changed to "4.00%" and (ii) such prepayment shall be applied to the last
scheduled principal payment on the Senior Notes.
Section 5. Representations and Warranties.
(a) Valhi Representations and Warranties. Valhi hereby represents and warrants
as follows:
(i) Organization and Authority. Valhi is an organization duly and validly
incorporated and existing and in good standing under the laws of the
State of Delaware and has full corporate power to enter into and
perform its obligations under this Fourth Amendment.
(ii) Authorization; Enforceability. The execution, delivery, and
performance of this Fourth Amendment by Valhi are within the corporate
power of Valhi and have been duly authorized by all necessary
corporate action on the part of Valhi. This Fourth Amendment is the
legally binding agreement of Valhi, enforceable against Valhi in
accordance with its terms.
(iii)No Violation or Conflict. The execution, delivery and performance of
this Fourth Amendment by Valhi do not and will not violate any law or
the Certificate of Incorporation or Bylaws of Valhi, or result in a
breach of the terms, conditions or provisions of, or constitute a
default under, any contract, agreement, instrument, order, judgment or
decree to which Valhi is a party or by which Valhi is bound, which
violation, conflict, breach or default would have a material adverse
effect on Valhi's ability to consummate the transactions contemplated
hereby.
(b) Company Representations and Warranties. The Company hereby represents and
warrants as follows:
(i) Organization and Authority. The Company is a cooperative corporation
duly and validly organized and existing and in good standing under the laws
of the State of Oregon and has full power to enter into and perform its
obligations under this Fourth Amendment.
(ii) Authorization; Enforceability. The execution, delivery and performance
of this Fourth Amendment by the Company are within the power of the Company
and have been duly authorized by all necessary action on the part of the
Company. This Fourth Amendment is the legally valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms.
(iii) No Violation or Conflict. The execution, delivery and performance of
this Fourth Amendment by the Company do not and will not violate any law or
the organizational documents of the Company, or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
contract, agreement, instrument, order, judgment or decree to which the
Company is a party or by which the Company is bound, which violation,
conflict, breach or default would have a material adverse effect on the
Company's ability to consummate the transactions contemplated hereby.
Section 6. Miscellaneous.
(a) Enforceability; Validity. Each party hereto expressly agrees that this
Fourth Amendment shall be specifically enforceable in any court of competent
jurisdiction in accordance with its terms and against each of the parties
hereto.
(b) Successors and Assigns. All of the covenants and agreements contained in
this Fourth Amendment shall be binding upon, and inure to the benefit of, the
respective parties and their successors, assigns, heirs, executors,
administrators and other legal representatives, as the case may be.
(c) Governing Law. This Fourth Amendment, and the rights of the parties hereto,
shall be governed by and construed in accordance with the laws of the State of
Utah.
(d) Counterparts. This Fourth Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(e) Amendment; Waiver. No amendment, modification, termination or waiver of any
provision of this Fourth Amendment, and no consent to any departure by any party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the parties hereto. Any such amendment, modification, termination,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
(f) Severability. If any provision of this Fourth Amendment shall be declared
void or unenforceable by any court or administrative board of competent
jurisdiction, such provision shall be deemed to have been severed from the
remainder of this Fourth Amendment, and this Fourth Amendment shall continue in
all other respects to be valid and enforceable.
IN WITNESS WHEREOF, the parties hereby have caused this Fourth Amendment to
be duly executed and delivered by their respective officers thereunder duly
authorized as of the date first written above.
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SNAKE RIVER SUGAR COMPANY
By: /s/ David L. Budge
----------------------------------
Name: David L. Budge
----------------------------------
Title: Vice President and Treasurer
----------------------------------
VALHI, INC.
By: /s/ Gregory M. Swalwell
----------------------------------
Name: Gregory M. Swalwell
----------------------------------
Title: Vice President and Controller
----------------------------------
ACKNOWLEDGED:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Stephen J. DeMartini
----------------------------------
Name: Stephen J. DeMartini
----------------------------------
Title: Vice President
----------------------------------
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: Cigna Investments, Inc.
By: /s/ David M. Cass
-----------------------------------
Name: David M. Cass
-----------------------------------
Title: Managing Director
-----------------------------------
LIFE INSURANCE COMPANY OF NORTH AMERICA
By: Cigna Investments, Inc.
By: /s/ David M. Cass
------------------------------------
Name: David M. Cass
------------------------------------
Title: Managing Director
------------------------------------
MINNESOTA LIFE INSURANCE COMPANY
By: Advantus Capital Management, Inc.
By: /s/ Rose A. Lambros
------------------------------------
Name: Rose A. Lambros
------------------------------------
Title:Vice President
------------------------------------
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Delaware Investment Advisers, a series of Delaware Management Business
Trust, its Attorney-in-Fact
By: /s/ Edward J. Brennan
-------------------------------------
Name:Edward J. Brennan
-------------------------------------
Title: Assistant Vice President
-----------------------------------
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: Delaware Investment Advisers, a series of Delaware Management Business
Trust, its Attorney-in-Fact
By: /s/ Edward J. Brennan
------------------------------------
Name:Edward J. Brennan
------------------------------------
Title:Assistant Vice President
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WELLS FARGO BANK
NORTHWEST,NATIONAL ASSOCIATION,
as Collateral Agent under the
Distributable Cash Collateral
Account Agreement
By: /s/ Val T. Orton
------------------------------------
Name:Val T. Orton
------------------------------------
Title:Vice President
-----------------------------------
EXHIBIT A
MONTHLY MINIMUM AGGREGATE AVAILABILITY
Minimum
Month Aggregate Availability
----- ----------------------
January $65 million
February $25 million
March $15 million
April $25 million
May $45 million
June $55 million
July $65 million
August $65 million
September $75 million
October $75 million
November $55 million
December $65 million