AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT AND CONSENT
Exhibit 10.27.5
AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT AND CONSENT
THIS AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT AND CONSENT (this
“Amendment”), dated as of February 9, 2005, is entered into by and among PHIBRO ANIMAL
HEALTH CORPORATION, a New York corporation (“Parent”), PHIBRO ANIMAL HEALTH U.S., INC., a
Delaware corporation (“PAHUS”), PHIBRO ANIMAL HEALTH HOLDINGS, INC., a Delaware corporation
(“Holdings”), PRINCE AGRIPRODUCTS, INC., a Delaware corporation (“Prince”),
PHIBRO-TECH, INC. (“PTI”; together with Parent, PAHUS, Holdings, and Prince, the
“Borrowers”), the lenders from time to time party to the Loan and Security Agreement
referenced below (each a “Lender” and collectively, the “Lenders”), XXXXX FARGO
FOOTHILL, INC., a California corporation, as the arranger and administrative agent for the Lenders
(“Agent”; and together with the Lenders, collectively the “Lender Group”), in light
of the following:
W I T N E S S E T H
WHEREAS, Borrowers and the Lender Group are parties to that certain Loan and Security
Agreement, dated as of October 21, 2003 (as amended, restated, supplemented, or otherwise modified
from time to time, the “Loan Agreement”);
WHEREAS, Borrowers have advised the Lender Group that (a) the stockholders of Parent, other
than the holders of Parent’s Series C Preferred Stock, intend to contribute their shares of each
class of Parent’s Stock to PAHC Holdings Corporation, a Delaware corporation (“PAHC
Holdings”) in exchange for a like number of shares of each class of PAHC Holdings’ Stock having
the same designations, relative rights, privileges and limitations as the shares of such class of
Parent’s Stock (except to the extent that PAHC Holdings is a Delaware corporation and Parent is a
New York corporation), and (b)(i)(A) Parent intends to issue to Jefferies & Co., Inc. or one or
more affiliates thereof (“Jefco”) 2,640 shares of Series D Preferred Stock, (B) PAHC
Holdings intends to purchase all of Parent’s Series D Preferred Stock using the proceeds of the
issuance of certain 15% senior secured notes due February 1, 2010 and issued by PAHC Holdings (the
“PAHC Notes”), (C) Parent intends to redeem all of its Series C Preferred Stock using the
proceeds from the sale of its Series D Preferred Stock, and (D) PAHC Holdings intends to contribute
the Series D Preferred Stock of Parent to the capital of Parent, or (ii) without Parent issuing any
shares of Series D Preferred Stock, Parent intends to redeem all of its Series C Preferred Stock by
using the proceeds of the issuance of the PAHC Notes contributed to the capital of Parent by PAHC
Holdings (the foregoing clauses a and b are referred to herein as the
“PAHC Holdings Transaction”);
WHEREAS, Borrowers have requested certain amendments to the Loan Agreement; and
WHEREAS, subject to the terms and conditions herein, Agent and Lenders have agreed to consent
to the PAHC Holdings Transaction and to amend the Loan Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree to amend the Loan Agreement as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Loan Agreement, as amended hereby.
2. AMENDMENT TO LOAN AGREEMENT.
(a) Section 1.1 of the Loan Agreement is hereby amended by deleting the definitions of
““Board of Directors”, “Change of Control”, and “Permitted Distributions”
and replacing them with the following definitions, respectively:
““Board of Directors” means the board of directors (or comparable
managers) of PAHC Holdings or any committee thereof duly authorized to act on behalf
of the board of directors (or comparable managers).”
““Change of Control” means that (a) any “person” or “group” (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 10%, or more, of the Stock of PAHC Holdings having
the general voting power under ordinary circumstances to vote for the election of a
majority of the members of the Board of Directors, or (b) a majority of the members
of the Board of Directors do not constitute Continuing Directors, (c) PAHC Holdings
ceases to own, directly or indirectly, and control 100% of the outstanding Stock of
Parent, or (d) Parent ceases to own, directly or indirectly, and control 100% of the
outstanding Stock of Borrowers (other than Parent), or (e) except for the
consummation of the PMC Sale Transactions or Permitted Reorganization Transactions,
any Borrower or Guarantor ceases to own, directly or indirectly, and control 100% of
the outstanding Stock of each of its Subsidiaries, or such lesser percentage
ownership of each of the Foreign Subsidiaries owned and extant as of the Closing
Date, or (f) the occurrence of an Indenture Change of Control.”
““Continuing Director” means (a) any member of the Board of Directors
who was a director (or comparable manager) of Parent on the Closing Date, and (b)
any individual who becomes a member of the Board of Directors after the Closing Date
if such individual was appointed or nominated for election to the Board of Directors
by a majority of the Continuing Directors, by the Noteholders Representative, by
Permitted Holders, or by Palladium, but excluding any such individual originally
proposed for election in opposition to the directors of Parent in office at the
Closing Date in an actual or threatened election contest relating to the election of
the directors (or comparable managers) of Parent and whose initial assumption of
office resulted from such contest or the settlement thereof.”
““Permitted Distributions” means the payment, in cash, of dividends or
distributions of capital stock (a) made by any Borrower to any other Borrower, (b)
made by any Guarantor to a Borrower, (c) made by any Borrower to a Guarantor, (d)
made to a Borrower or a Guarantor by a Non-Obligor, (e) made by Non-Obligor to any
other Non-Obligor, (f) made to Palladium as set forth in the PMC Sale Transactions;
provided that such PMC Sale Transactions occur on or before December 31, 2003, (g)
made by Parent to repurchase the capital stock of PAHC Holdings (including options,
warrants or other rights to acquire such capital stock) from departing or deceased
directors, officers and employees of the PAHC Holdings and its Subsidiaries pursuant
to the terms of an employee benefit plan, employee agreement or shareholders
agreement by utilizing the cash proceeds of those insurance policies listed on
Exhibit P-1 plus an amount not to exceed $500,000 in the aggregate for all
such repurchases, (h) so long as no Event of Default shall have occurred and is
continuing, or would result therefrom, and Excess Availability is greater than
$5,000,000 immediately prior to such payment and immediately after giving effect to
such payment, made by Parent to PAHC Holdings in an aggregate amount not exceed
$4,513,000 in any fiscal year solely for PAHC Holdings to make the regularly
scheduled interest payments on the PAHC Holdings Notes, and (i) so long as no Event
of Default shall have occurred and is continuing, or would result therefrom, made by
Parent to PAHC Holdings in an aggregate amount not exceed $500,000 in any fiscal
year.”
(b) Section 1.1 of the Loan Agreement is hereby amended by adding the
following definitions in alphabetical order:
““PAHC Holdings” means PAHC Holdings Corporation, a Delaware
corporation.”
““PAHC Holdings Notes” means those certain 15% senior secured notes due
February 1, 2010 issued by PAHC Holdings in the aggregate principal amount of
$29,000,000.”
(c) Schedule 5.8(b) to the Loan Agreement is hereby deleted in its entirety
and replaced with the attached Exhibit B.
3. CONSENT. Subject to the satisfaction of each of the conditions and
covenants set forth herein, the Lender Group consents to the PAHC Holdings Transaction.
4. CONDITIONS PRECEDENT TO THIS AMENDMENT. The satisfaction of each of
the following shall constitute conditions precedent to the effectiveness of this Amendment and each
and every provision hereof:
(a) Agent shall have received this Amendment, duly executed by the parties hereto,
and the same shall be in full force and effect;
(b) Agent shall have received the reaffirmation and consent of each Guarantor, attached hereto
as Exhibit A, duly executed and delivered by an authorized official of such Guarantor;
(c) Agent shall have received a copy of the indenture and each of the other material
agreements entered into in connection with the issuance of the PAHC Notes, each of which shall be
in form and substance satisfactory to Agent;
(d) The representations and warranties in the Loan Agreement and the other Loan Documents
shall be true and correct in all material respects on and as of the date hereof, as though made on
such date (except to the extent that such representations and warranties relate solely to an
earlier date), and except for changes permitted by the Loan Documents;
(e) No Default or Event of Default shall have occurred and be continuing on the date hereof or
as of the date of the effectiveness of this Amendment; and
(f) No injunction, writ, restraining order, or other order of any nature prohibiting, directly
or indirectly, the consummation of the transactions contemplated herein shall have been issued and
remain in force by any Governmental Authority against Borrowers, Guarantors, or the Lender Group.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW
YORK.
7. ENTIRE AMENDMENT; EFFECT OF AMENDMENT. This Amendment, and the terms
and provisions hereof, constitute the entire agreement among the parties pertaining to the subject
matter hereof and supersedes any and all prior or contemporaneous amendments relating to the
subject matter hereof. Except for the amendments to the Loan Agreement expressly set forth in
Section 2 hereof and the consent set forth in Section 3 hereof, the Loan Agreement
and other Loan Documents shall remain unchanged and in full force and effect. To the extent any
terms or provisions of this Amendment conflict with those of the Loan Agreement or other Loan
Documents, the terms and provisions of this Amendment shall control. This Amendment is a Loan
Document. Except as expressly set forth herein, the execution, delivery, and performance of this
Amendment shall not operate as a waiver of or as an amendment of, any right, power, or remedy of
the Lender Group as in effect prior to the date hereof. The agreements set forth herein are
limited to the specifics hereof, shall not apply with respect to any facts or occurrences other
than those on which the same are based, shall not excuse future non-compliance under the Loan
Agreement, and shall not operate as a consent to any further or other matter, under the Loan
Documents.
8. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Amendment may be executed
in any number of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Amendment by signing any such
counterpart. Delivery of an executed counterpart of this Amendment by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this Amendment. Any
party delivering an executed counterpart of this Amendment by telefacsimile also shall deliver
an original executed counterpart of this Amendment, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.
9. MISCELLANEOUS.
(a) Upon the effectiveness of this Amendment, each reference in the Loan Agreement
to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Loan
Agreement shall mean and refer to the Loan Agreement as amended by this Amendment.
(b) Upon the effectiveness of this Amendment, each reference in the Loan Documents
to the “Loan Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to
the Loan Agreement shall mean and refer to the Loan Agreement as amended by this Amendment.
[Signature page follows.]
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of
the date first written above.
| PHIBRO ANIMAL HEALTH CORPORATION, | ||||
| a New York corporation | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| PHIBRO ANIMAL HEALTH U.S., INC., | ||||
| a Delaware corporation | ||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
| PHIBRO ANIMAL HEALTH HOLDINGS, INC., | ||||
| a Delaware corporation | ||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
| PRINCE AGRIPRODUCTS, INC., | ||||
| a Delaware corporation | ||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
| PHIBRO-TECH, INC., | ||||
| a Delaware corporation | ||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
| XXXXX FARGO FOOTHILL, INC., | ||||
| a California corporation, as Agent and a Lender | ||||
| By: | /s/ Xxxxxxx X. Xxxx | |||
| Title: | Vice President | |||
Exhibit A
REAFFIRMATION AND CONSENT
All capitalized terms used herein but not otherwise defined herein shall have the meanings
ascribed to them in that certain AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT AND CONSENT
(the “Amendment”), dated as of February ___, 2005. The undersigned each hereby (a)
represents and warrants to the Lender Group that the execution, delivery, and performance of this
Reaffirmation and Consent are within its corporate powers, have been duly authorized by all
necessary corporate action, and are not in contravention of any law, rule, or regulation, or any
order, judgment, decree, writ, injunction, or award of any arbitrator, court, or governmental
authority, or of the terms of its charter or bylaws, or of any material contract or undertaking to
which it is a party or by which any of its properties may be bound or affected; (b) consents to the
execution, delivery, and performance of the Amendment; (c) acknowledges and reaffirms its
obligations owing to the Lender Group under the Loan Documents to which it is a party; and (d)
agrees that each of the Loan Documents to which it is a party is and shall remain in full force and
effect in accordance with the terms thereof. Although the undersigned has been informed of the
matters set forth herein and has acknowledged and agreed to same, it understands that the Lender
Group has no obligations to inform it of such matters in the future or to seek its acknowledgement
or agreement to future consents or amendments, and nothing herein shall create such a duty.
Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this Reaffirmation and
Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by
telefacsimile also shall deliver an original executed counterpart of this Reaffirmation and Consent
but the failure to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Reaffirmation and Consent. This Reaffirmation and
Consent shall be governed by the laws of the State of New York.
[Signature page follows.]
IN WITNESS WHEREOF, the parties hereto have caused this Reaffirmation and Consent Agreement to
be executed by their respective officers thereunto duly authorized, as of the date first above
written.
| PHIBROCHEM, INC., a New Jersey corporation | ||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
| WESTERN MAGNESIUM CORP., a California corporation | ||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
| CP CHEMICALS, INC., a New Jersey corporation | ||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
| PHIBRO CHEMICALS, INC., a New York corporation | ||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
S-1
EXHIBIT B
Schedule 5.8(b)
Capitalization of Borrowers
| Issued and Outstanding Shares of | ||||||
| Capital Stock | ||||||
| Name of Borrower | Title of Class | Number of Shares | ||||
Phibro Animal Health Corporation |
Class A Common | 12,600 | ||||
| Class B Common | 11,888.5 | |||||
| A Preferred | 5,207 | |||||
Subsidiaries of Phibro Animal Health
Corporation |
||||||
Domestic |
||||||
Prince Agriproducts, Inc. |
Common | 1 | ||||
Phibrochem, Inc. |
Common | 1 | ||||
Phibro Animal Health Holdings, Inc. |
Common | 100 | ||||
Phibro Chemicals, Inc. |
Common | 100 | ||||
Western Magnesium Corp. |
Common | 1 | ||||
C P Chemicals, Inc. |
Common | 2,500 | ||||
Prince MFG, LLC* |
LLC Interests | |||||
Foreign |
||||||
Ferro Metal and Chemical Corporation Limited |
Ordinary | 572,500 | ||||
Koffolk (1949), Ltd. |
Voting Shares | 375,395,340 | ||||
| Non-Voting Shares | 60,000 | |||||
Odda Holdings AS (in bankruptcy)** |
||||||
Subsidiaries of C P Chemicals, Inc. |
||||||
Domestic |
||||||
Phibro-Tech, Inc. |
Class A Common | 3,200 | ||||
| Class B Common | 71.67 | |||||
Subsidiaries of Phibro Animal Health
Holdings, Inc. |
||||||
Domestic |
||||||
Phibro Animal Health U.S., Inc. |
Common | 100 | ||||
| Issued and Outstanding Shares of | ||||||
| Capital Stock | ||||||
| Name of Borrower | Title of Class | Number of Shares | ||||
Foreign |
||||||
Philibro Animal Health de Argentina S.R.L. |
Quotas | 100 | ||||
Phibro Animal Health Pty Limited (Australia) |
Ordinary Shares | 2 | ||||
Phibro Animal Health Ltd. (Canada) |
Shares | 100 | ||||
Phibro Animal Health Holdings, Inc. Chile
Limitada |
Quotas | 10,100 | ||||
Phibro Animal Health de Costa Rica Ltda |
Quotas | 10 | ||||
Phibro Corporation Limited (Hong Kong) |
Shares | 10,000 | ||||
Phibro Japan Company Limited |
Shares | 200 | ||||
Phibro Corporation (M) Sdn Bhd |
Ordinary Shares | 1,000 | ||||
PB Animal Health de Mexico S. de X.X. de C.V. |
Quotas | 2 | ||||
Phibro Animal Health (Proprietary) Limited
(South Africa) |
Shares | 1,000 | ||||
Philibro Animal Health de Venezuela S.R.L. |
Quotas | 690 | ||||
PAH Management Company Limited |
Ordinary Shares | 1 | ||||
Philipp Brothers Netherlands I B.V. |
Registered Shares | 182 | ||||
Subsidiaries of Prince MFG, LLC |
||||||
The Prince Manufacturing Company* |
Common | 900 | ||||
| Preferred | 1,900 | |||||
Subsidiaries of Phibro-Tech, Inc. |
||||||
L.C. Holdings S.A. |
Shares | 15,619 | ||||
Subsidiaries of Phibrochem, Inc. |
||||||
Phibro Animal Health (Belgium) SPRL |
Shares | 1 | ||||
Subsidiaries of Philipp Brothers Netherlands
I B.V. |
||||||
Philipp Brothers Netherlands II B.V. |
Registered Shares | 182 | ||||
Subsidiaries of Philipp Brothers Netherlands
II B.V. |
||||||
Philipp Brothers Netherlands III B.V. |
Registered Shares | 180 | ||||
Phibro Saude Animal International Ltda |
Quotas | 1,000 | ||||
Subsidiaries of Philipp Brothers Netherlands
III B.V. |
||||||
Phibro Animal Health (Belgium) SPRL |
Shares | 749 | ||||
| Issued and Outstanding Shares of | ||||||
| Capital Stock | ||||||
| Name of Borrower | Title of Class | Number of Shares | ||||
Subsidiaries of L.C. Holdings S.A. |
||||||
La Cornubia S.A. |
Shares | 69,994 | ||||
Subsidiaries of Koffolk (1949) Ltd. |
||||||
Kofimex Ltd. |
Shares | 829,903 | ||||
Planalquimica Industrial Ltda. |
Shares | 5,328,589 | ||||
Wychem Limited |
Shares | 800,000 | ||||
Agrozan, Ltd. |
Shares | 30,867,405 | ||||
Subsidiaries of Ferro Metal and Chemical
Corporation Limited |
||||||
Ferro Metal and Chemical Company Limited |
Ordinary Shares | 100 | ||||
X.X. Xxxxxxx Chemicals Limited |
Ordinary Shares | 10,020 | ||||
Subsidiaries of Odda Holdings AS |
||||||
Odda Smelteverk AS (in bankruptcy)** |
Shares | 35,000 | ||||
| * | Subject to the Liens of Agent in accordance with Sections 3.2(e) and 3.2(f) of the Loan Agreement. | |
| ** | In bankruptcy and not subject to Liens of Agent. |
Schedule 5.8(b) (continued)
A Shareholders Agreement initially entered into by Phibro-Tech, Inc. (“Phibro-Tech”) and three
executives of Phibro-Tech, including Xxxxx X. Xxxxxxxx (the “Executives”) provides, among other
things, for restrictions on their shares as to voting, dividends, liquidation and transfer rights.
The Shareholders Agreement also provides that upon the death of an Executive or termination of an
Executive’s employment, Phibro-Tech must purchase the Executive’s shares at their fair market
value, as determined by a qualified appraiser. In the event of a Change of Control (as defined),
the Executive has the option to sell his shares to Phibro-Tech at such value. The Shareholders
Agreement, as amended in connection with the sale by PAHC Holdings Corporation (“PAHC”) of $29.0
million of its 15% Senior Secured Notes due 2010, provides, that, upon the consent of Phibro-Tech,
the Executives and the Company, the Executives’ shares of Phibro-Tech Common Stock may be exchanged
for a number of shares of the PAHC’s Common Stock, which may be non-voting Common Stock, having an
equivalent value, and upon any such exchange such shares of PAHC’s Common Stock will become subject
to the Shareholders Agreement.
