SUBORDINATED LOAN AGREEMENT
DATED JANUARY 3, 1997
AS AMENDED AND RESTATED MAY 14, 1997
BETWEEN
SNAKE RIVER SUGAR COMPANY,
AS BORROWER,
AND
VALHI, INC.,
AS LENDER
SNAKE RIVER SUGAR COMPANY
0000 XXXXXXX XXXXXX
X.X. XXX 0000
XXXXX, XXXX 00000
Senior Subordinated Note due April 30, 2010
May 14, 1997
Valhi, Inc.
Three Lincoln Centre
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Ladies and Gentlemen:
Snake River Sugar Company, an Oregon cooperative (the "COMPANY"),
agrees with you as follows:
1. AUTHORIZATION OF SUBORDINATED NOTES.
The Company will authorize the issue and sale at Closing of
$131,879,229 aggregate principal amount of its Senior Subordinated Notes due
April 30, 2010 (the "SUBORDINATED NOTES", such term to include any such notes
issued in substitution therefor pursuant to Section 13 of this Agreement). A
Subordinated Note in the principal amount of $80,000,000 shall be substantially
in the form set out in Exhibit 1-A (the "$80,000,000 Note"), and a Subordinated
Note in the principal amount of $51,879,229 (the "Collateral Deposit Note")
(representing your obligations to make additional advances to the Company
pursuant to the provisions of Section 8.4(b)) shall be substantially in the form
set out in Exhibit 1-B, in each case with such changes therefrom, if any, as may
be approved by you and the Company. In addition, the Company will authorize the
issue and sale in accordance with the provisions of Section 8.4(a) of one or
more additional Subordinated Notes substantially in form set out in Exhibit 1-B
(the "Contribution Note"). Certain capitalized terms used in this Agreement are
defined in Schedule A; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
2. ISSUANCE OF SUBORDINATED NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue to you and you will receive from the Company, at the Closing provided
for in Section 3, (i) the $80,000,000 Note and the Collateral Deposit Note.
3. CLOSING.
The issuance of the Subordinated Notes shall occur at the offices of
O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, at
10:00 a.m., Los Angeles time, at a closing (the "CLOSING") on May 14, 1997. At
the Closing the Company will deliver to you the Subordinated Notes in the form
of notes dated the date of the Closing and registered in your name, against
delivery by you to the Company for cancellation the Tranche B Note issued to you
on January 3, 1997. Concurrently with the Closing, the Company will repay in
its entirety the Tranche A Note issued to you on January 3, 1997.
4. CONDITIONS TO CLOSING.
Your obligation to accept the Subordinated Notes to be issued to you
at the Closing is subject to the fulfillment to your satisfaction, prior to or
at the Closing, of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
Each of the Company and the LLC shall have performed and complied with
all agreements and conditions contained in this Agreement and the other
Transaction Documents required to be performed or complied with by it prior to
or at the Closing and after giving effect to the issue and sale of the
Subordinated Notes (and the application of the proceeds thereof as contemplated
by Schedule 5.14) no Default or Event of Default shall have occurred and be
continuing. None of the Company, LLC or any Subsidiary of the Company or LLC
shall have entered into any transaction since January 3, 1997 that would have
been prohibited by Section 10 hereof (other than Sections 10.5 (with respect to
the payments disclosed in Schedule 5.14), 10.8 and 10.15) had such Section
applied since such date. Since December 31, 1996 there shall have been no event
or condition which could reasonably be expected to have a Material Adverse
Effect.
4.3. COMPLIANCE CERTIFICATE.
Each of the Company and LLC shall have delivered to you an Officer's
Certificate, dated the date of the Closing, certifying that the conditions
specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing from Jones, Waldo, Xxxxxxxx & XxXxxxxxx,
special counsel for the Company, covering the matters set forth in Exhibit
4.4(a) and covering such other matters incident to the transactions contemplated
hereby as you or your counsel may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to you).
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your acquisition of the Subordinated Notes
shall (i) be permitted by the laws and regulations of each jurisdiction to which
you are subject, without recourse to provisions, (ii) not violate any applicable
law or regulation (including, without limitation, Regulation G, T or X of the
Board of Governors of the Federal Reserve System) and (iii) not subject you to
any tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certificate certifying as
to such matters of fact as you may reasonably specify to enable you to determine
whether such acquisition is so permitted.
4.6. SALE OF SENIOR NOTES.
Contemporaneously with the Closing the Company shall sell $100,000,000
of its Senior Notes, the proceeds of which shall be used to repay the Tranche A
Note issued by the Company to you on January 3, 1997 and related fees and
expenses set forth on Schedule 5.14.
4.7. [SECTION RESERVED].
4.8. [SECTION RESERVED].
4.9. CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.9, neither the Company nor LLC shall
have changed its jurisdiction of organization or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
4.10. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
4.11. DELIVERY OF COMPANY DOCUMENTS.
On or before the date of the Closing, the Company shall have delivered
to you and your special counsel each, unless otherwise noted, dated the date of
the Closing:
(a) Certified copies of the Company's Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
State of Oregon and good standing certificates from each state in which the
Company is required to be qualified to transact business as a foreign
cooperative, each to be dated a recent date prior to the date of the Closing;
(b) Copies of the Company's Bylaws, certified by its corporate
secretary or an assistant secretary;
(c) Resolutions of the Board of Directors of the Company approving
and authorizing the execution, delivery and performance of this Agreement and
the other Transaction Documents to which it is a party and any other documents,
instruments and certificates required to be executed by the Company in
connection herewith or therewith, and approving and authorizing the execution,
issuance, sale, and delivery of the Subordinated Notes, each certified by a
Responsible Officer and its corporate secretary or an assistant secretary as
being in full force and effect without modification or amendment;
(d) Signature and incumbency certificates of the officers of the
Company executing the documents referred to in item (c) above, the other
Transaction Documents to which it is a party, and any other documents,
instruments and certificates required to be executed by the Company in
connection herewith or therewith; and
(e) Such other documents as you or your special counsel may
reasonably request, including, without limitation, documents confirming the
Company's status as a cooperative for purposes of the Code.
4.12. [SECTION RESERVED].
4.13. [SECTION RESERVED].
4.14. [SECTION RESERVED].
4.15. [SECTION RESERVED].
4.16. EXECUTION AND DELIVERY OF DOCUMENTS.
On or prior to the date of the Closing, each of the following
documents shall have been duly executed and delivered by the parties thereto,
each such document shall be in full force and effect and no term or condition
thereof shall have been amended, modified or waived and the Company shall have
delivered, or shall cause to be delivered, to you and your special counsel true,
correct, complete and original copies of each such agreement:
(i) this Agreement and the Subordinated Notes;
(ii) the Note Purchase Agreements dated as of the date of this
Agreement relating to the issuance of the Senior Notes and all related
documents, including the Senior Notes;
(iii) the Subordination Agreement; and
(iv) the Valhi Option Agreement.
4.17. PAYMENT OF TRANCHE A NOTE.
On the date of the Closing, the Company shall have paid to you all
principal, premium, if any, and accrued interest sufficient to prepay the
Tranche A Note issued to you on January 3, 1997 and all accrued interest on the
Tranche B Note issued to you on January 3, 1997. You shall have delivered to
the Company the originally executed copies of the Tranche A Note and the Tranche
B Note for cancellation.
4.18. [SECTION RESERVED].
4.19. [SECTION RESERVED].
4.20. [SECTION RESERVED].
4.21. [SECTION RESERVED].
4.22. [SECTION RESERVED].
4.23. CONSENTS.
All consents and approvals of any Governmental Authority or third
party necessary to permit the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents or to prevent the
cancellation or modification of any agreement necessary in the conduct of the
Company's or LLC's business shall have been obtained and delivered to you.
4.24. [SECTION RESERVED].
4.25. AMENDMENT OF HENRY'S FORK LOAN AGREEMENT.
Prior to the date of Closing, (i) the Henry's Fork Loan Agreement
shall have been amended to extend the maturity of the loans thereunder to
January 2, 2000, (ii) the Midwest Loan Agreement shall have been amended to
extend the maturity of the loans thereunder to December 31, 1999 and (iii) the
Company shall have delivered to you and your special counsel true, correct and
complete copies of each such agreement, as so amended, and the Loan Purchase
Agreement, dated as of December 26, 1996 between the Company and Midwest Agri-
Commodities Company, each of which shall be in full force and effect and no term
or condition thereof shall have been amended, modified or waived.
4.26. SUBSIDIARIES OF COMPANY.
Prior to the date of the Closing, the Company shall have acquired all
of the outstanding ownership interests of Snake River Farms, LLC and Snake River
Farms II, LLC. Concurrently with the Closing, the Company shall have made a
capital contribution to Snake River Farms II, LLC in the amount set forth on
Schedule 5.14, the proceeds of which will be used to prepay the Henry's Fork
Loan Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a cooperative corporation duly organized, validly
existing and in good standing under the laws of the State of Oregon, and is duly
qualified to do business and is in good standing in each jurisdiction in which
such qualification is required by law. The Company has the cooperative
corporate power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement, the other
Transaction Documents to which it is a party and the Subordinated Notes and to
perform the provisions hereof and thereof. The Company is a cooperative for
purposes of the Code and all income tax statutes of all states that may be
applicable to the Company, and the Company has delivered to you copies of all
correspondence to and from the United States Internal Revenue Service in
connection with the status of the Company under the Code.
LLC is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
duly qualified to do business and is in good standing in each jurisdiction in
which such qualification is required by law. LLC has the limited liability
company power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver the Transaction Documents to which
it is a party and to perform the provisions thereof.
5.2. AUTHORIZATION, ETC.
This Agreement, the other Transaction Documents and the Subordinated
Notes have been duly authorized by all necessary action on the part of the
Company and LLC, as applicable, and this Agreement, the other Agreements and the
other Transaction Documents constitute, and upon execution and delivery thereof
the Subordinated Notes will constitute, a legal, valid and binding obligation of
the Company or LLC, as the case may be, enforceable against the Company or LLC,
as the case may be, in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3. DISCLOSURE.
No representation or warranty of the Company contained in this
Agreement, the financial statements, the other Loan Documents, or any other
document, certificate or written statement furnished to you by or on behalf of
the Company for use in connection with the Loan Documents contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. There is
no material fact known to the Company that has had or could reasonably be
expected to have a Material Adverse Effect and that has not been disclosed in
this Agreement or in such other documents, certificates and statements furnished
to you for use in connection with the transactions contemplated by this
Agreement. The financial projections (the "PROJECTIONS") attached hereto as
part of Schedule 5.3 have been prepared in good faith, have a reasonable basis
and represent the good faith opinion of the Company as to the projected results
of operations of the Company, LLC and their respective Subsidiaries after giving
effect to the transactions contemplated hereby. No facts have occurred since
the preparation of the Projections that would cause the Projections not to be
reasonably attainable.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Owned Subsidiaries and LLC's Owned
Subsidiaries, showing, as to each such Owned Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned by
the Company, LLC and each other Owned Subsidiary, (ii) of the Company's
Affiliates, other than its Owned Subsidiaries, and LLC's Affiliates, other than
its Owned Subsidiaries, and (iii) of the Company's directors and senior officers
and LLC's managers and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Owned Subsidiary shown in Schedule 5.4 as being owned by the
Company (including, without limitation, 100% of the voting membership interest
in LLC) and its Owned Subsidiaries, or LLC and its Owned Subsidiaries, have been
validly issued, are fully paid and nonassessable and are owned by the Company,
LLC or another Owned Subsidiary of the Company or LLC free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4 and Liens required by the Note
Purchase Agreements).
(c) Each Owned Subsidiary identified in Schedule 5.4 is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly qualified as a
foreign corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Owned Subsidiary has the corporate or other
power and authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and proposes to
transact.
(d) No Owned Subsidiary identified in Schedule 5.4 is a party to, or
otherwise subject to any legal restriction or any agreement (other than this
Agreement, the Company Agreement, the agreements listed on Schedule 5.4 and
customary limitations imposed by statutes) restricting the ability of such Owned
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Owned Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of such
Owned Subsidiary) or to LLC or any of its Owned Subsidiaries that owns
outstanding shares of capital stock or similar equity interests of such Owned
Subsidiary.
5.5. FINANCIAL STATEMENTS.
The Company has delivered, or caused to be delivered, to each holder
Subordinated Notes copies of the financial statements of the Company and its
Subsidiaries, and LLC and its Subsidiaries, listed on Schedule 5.5. All of said
financial statements (including in each case the related schedules and notes)
fairly present in all material respects the consolidated financial position of
the Company and its Subsidiaries, or LLC and its Subsidiaries, as the case may
be, as of the respective dates specified in such Schedule and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this
Agreement, the other Transaction Documents to which it is a party and the
Subordinated Notes will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any of its Subsidiaries (other than Liens
required by the Note Purchase Agreements) under, any indenture, mortgage, deed
of trust, loan, purchase or credit agreement, lease, charter or by-laws, or any
other agreement or instrument to which the Company or any of its Subsidiaries is
bound or by which the Company or any of its Subsidiaries or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement, the other
Transaction Documents or the Subordinated Notes.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as set forth on Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company, LLC or any of their respective Subsidiaries or any
property of the Company, LLC or any of their respective Subsidiaries in any
court or before any arbitrator of any kind or before or by any Governmental
Authority that, individually or in the aggregate, if adversely determined could
have a Material Adverse Effect. There are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened against or affecting the
Company, LLC or any of their respective Subsidiaries or any property of the
Company, LLC or any of their respective Subsidiaries in any court or before any
arbitrator of any kind or before or by any Governmental Authority which could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) Neither the Company nor LLC or any of their respective
Subsidiaries is in default under any term of any agreement or instrument to
which it is a party or by which it is bound, or any order, judgment, decree or
ruling of any court, arbitrator or Governmental Authority or is in violation of
any applicable law, ordinance, rule or regulation (including without limitation
Environmental Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, could result in a Material Adverse Effect.
5.9. TAXES.
The Company and its Subsidiaries, and LLC and its Subsidiaries, have
filed all tax returns that are required to have been filed in any jurisdiction,
and have paid all taxes shown to be due and payable on such returns and all
other taxes and assessments levied upon them or their properties, assets, income
or franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (i) the amount of which is not individually or in the aggregate
Material or (ii) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Company, LLC or a Subsidiary, as the case may be, has established
adequate reserves in accordance with GAAP. The Company knows of no basis for
any other tax or assessment that could reasonably be expected to have a Material
Adverse Effect. The charges, accruals and reserves on the books of the Company
and its Subsidiaries, and LLC and its Subsidiaries, in respect of Federal, state
or other taxes for all fiscal periods are adequate.
5.10. TITLE TO PROPERTY; LEASES.
The Company, LLC and their respective Subsidiaries have good and
sufficient title to their respective properties, including all such properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company, LLC or any Subsidiary after said
date (except as sold or otherwise disposed of in the ordinary course of
business), in each case free and clear of Liens prohibited by this Agreement.
All leases to which the Company, LLC and/or their respective Subsidiaries are a
party are valid and subsisting and are in full force and effect in all material
respects.
5.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11,
(a) the Company, LLC and their respective Subsidiaries own or possess
all licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company,
LLC or any of their respective Subsidiaries infringes in any material respect
any license, permit, franchise, authorization, patent, copyright, service xxxx,
trademark, trade name or other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company, LLC or any of their
respective Subsidiaries with respect to any patent, copyright, service xxxx,
trademark, trade name or other right owned or used by the Company, LLC or any of
their respective Subsidiaries.
5.12. COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or
412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans) of the Company, LLC and each of
their respective Subsidiaries, determined as of the end of such Plan's most
recently ended plan year on the basis of the actuarial assumptions specified for
funding purposes in such LLC Plan's most recent actuarial valuation report, did
not exceed the aggregate current value of the assets of such Plan allocable to
such benefit liabilities. The term "BENEFIT LIABILITIES" has the meaning
specified in section 4001 of ERISA and the terms "CURRENT VALUE" and "PRESENT
VALUE" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The aggregate accrued postretirement benefit obligation
(determined in accordance with Financial Accounting Standards Board Statement
No. 106, without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries does
not exceed $20,000,000 as of December 31, 1996.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Subordinated Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.
5.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has offered the
Subordinated Notes or any similar securities for sale to, or solicited any offer
to buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any person other than you. Neither the Company nor anyone acting
on its behalf has taken, or will take, any action that would subject the
issuance or sale of the Subordinated Notes to the registration requirements of
Section 5 of the Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Senior Notes to
repay the Tranche A Note and pay related fees and expenses and as set forth in
Schedule 5.14. No part of the proceeds from the issuance of the Subordinated
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). The Company and its Subsidiaries do not own any margin stock, and the
Company does not have any present intention of acquiring margin stock. As used
in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING"
shall have the meanings assigned to them in said Regulation G.
5.15. EXISTING DEBT; FUTURE LIENS.
(a) Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all outstanding Debt of the Company, LLC and their
respective Subsidiaries as of the date of the Closing. None of the Company, LLC
or any of their respective Subsidiaries is in default and no waiver of default
is currently in effect, in the payment of any principal or interest on any Debt
of the Company, LLC or such Subsidiary and no event or condition exists with
respect to any Debt of the Company, LLC or any of their respective Subsidiaries
that would permit (or that with notice or the lapse of time, or both, would
permit) one or more Persons to cause such Debt to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, none of the Company, LLC or
any of their respective Subsidiaries has agreed or consented to cause or permit
in the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien not
permitted by Section 10.3.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Subordinated Notes by the Company hereunder
nor its use of the proceeds thereof will violate the Trading with the Enemy Act,
as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
None of the Company, LLC or any of their respective Subsidiaries is
subject to regulation under the Investment Company Act of 1940, as amended, the
Public Utility Holding Company Act of 1935, as amended, the Interstate Commerce
Act, as amended, or the Federal Power Act, as amended.
5.18. ENVIRONMENTAL MATTERS.
None of the Company, LLC or any of their respective Subsidiaries has
knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company, LLC, any
of their respective Subsidiaries or Amalgamated or any of their respective real
properties now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any Environmental
Laws. None of the Company, LLC or any of their respective Subsidiaries has
knowledge of any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly owned,
leased or operated by any of them or by Amalgamated or to other assets or their
use which claims could reasonably be expected to result in a Material Adverse
Effect. None of the Company, LLC, any of their respective Subsidiaries has
used, generated or stored any Hazardous Materials on real properties now or
formerly owned, leased or operated by any of them in a manner contrary to any
Environmental Laws and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws which use, generation, storage or disposal
could reasonably be expected to result in a Material Adverse Effect. All
buildings on all real properties now owned, leased or operated by the Company,
LLC or any of their respective Subsidiaries are in material compliance with
applicable Environmental Laws.
5.19. CAPITALIZATION.
As of the date of the Closing, the authorized capital stock of the
Company is as set forth on Schedule 5.19. All issued and outstanding shares of
capital stock of the Company are duly authorized and validly issued, fully paid
and nonassessable, and such shares were issued in compliance with all applicable
state and federal laws concerning the issuance of securities. No such shares of
capital stock are subject to redemption or purchase by the Company at the option
of the holders thereof. As of the date of the Closing, the capital stock of the
Company is owned by the Persons and in the amounts set forth on Schedule 5.19.
As of the date of the Closing, no shares of the capital stock of the Company,
other than those described above, are issued and outstanding. Except as set
forth on Schedule 5.19, as of the date of the Closing, there are no preemptive
or other outstanding rights, options, warrants, conversion rights or similar
agreements or understandings for the purchase or acquisition from the Company of
any shares of capital stock or other securities of the Company.
5.20. BROKER'S FEES.
No broker's or finder's fee or commission will be payable by the
Company with respect to the issuance and sale of the Subordinated Notes or any
of the transactions contemplated by this Agreement (other than the issuance of
the Senior Notes).
5.21. SOLVENCY.
As of and after the date of this Agreement, the Company: (a) owns and
will own assets the fair salable value of which are (i) greater than the total
amount of its liabilities (including contingent liabilities) and (ii) greater
than the amount that will be required to pay probable liabilities as they
mature; (b) has capital that is not unreasonably small in relation to its
business as presently conducted or any contemplated or undertaken transaction;
and (c) does not intend to incur and does not believe that it will incur debts
beyond its ability to pay such debts as they become due.
5.22. EMPLOYEE MATTERS.
Except as set forth on Schedule 5.22 hereto (a) no employee of the
Company or LLC is subject to any collective bargaining agreement, (b) no
petition for certification or union election is pending with respect to the
employees of the Company or LLC and no union or collective bargaining unit has
sought such certification or recognition with respect to the employees of the
Company or LLC, (c) there are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of the Company or LLC after due
inquiry, threatened between the Company or LLC and its employees, other than
employee grievances arising in the ordinary course of business, which could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect and (d) neither the Company nor LLC is a party to any
employment contract.
5.23. AFFILIATE TRANSACTIONS.
Except for the Year-End Transactions and as disclosed on Schedule 5.23
hereto, none of the Company, LLC or any of their respective Subsidiaries has,
directly or indirectly, entered into or permitted to exist any transaction or
group of related transactions (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate (other than
the Company, LLC or any of their respective Subsidiaries), except for (i) the
purchase by the Company of sugarbeets from the Company's shareholders pursuant
to the Grower Contracts and (ii) transactions in the ordinary course and
pursuant to the reasonable requirements of the Company's, LLC's, or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company, LLC or such Subsidiary, as the case may be, than would be
obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.
5.24. INDEBTEDNESS OF COMPANY MEMBERS.
To the best knowledge of the Company, after due inquiry, no
Significant Shareholder of the Company is a debtor in any bankruptcy proceeding
or in payment default on any Debt of such shareholder in aggregate principal
amount greater than $10,000. For purposes of this Section 5.24, a "SIGNIFICANT
SHAREHOLDER" is any one of the 25 largest growers measured by number of acres
devoted primarily to the production or cultivation of sugarbeets which are to be
delivered to the Company.
5.25. LEGISLATION.
To the best knowledge of LLC and its officers, no federal or state law
or regulation is pending or proposed which would materially alter or affect any
relevant provision of the Federal Agriculture Improvement and Reform Act of
1996, or which would materially alter or affect any applicable loan support
programs for sugar processors, except as set forth on Schedule 5.25 hereto.
6. YOUR REPRESENTATIONS.
You represent that you are acquiring the Subordinated Notes for your
own account and not with a view to the distribution thereof, provided that the
disposition of your property shall at all times be within your or their control.
You understand that the Subordinated Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not required to register the
Subordinated Notes.
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall, or shall cause LLC to, deliver to each holder of
Subordinated Notes:
(a) Monthly Statements -- within 30 days after the end of each
monthly period in each fiscal year of the Company and LLC, as applicable (other
than the last month of each of the first three quarterly fiscal periods in each
fiscal year), duplicate copies of,
(i) a consolidated and consolidating balance sheet of the
Company and its Subsidiaries, and LLC and its Subsidiaries, as applicable, as at
the end of such month, and
(ii) consolidated and consolidating statements of income, changes
in shareholders' equity and cash flows of the Company and its Subsidiaries and
LLC and its Subsidiaries, as applicable, for such month,
all in reasonable detail, prepared in accordance with GAAP applicable to monthly
financial statements generally, and certified by a Senior Financial Officer of
the Company or LLC, as applicable, as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from normal
year-end adjustments;
(b) Quarterly Statements -- within 45 days after the end of each
quarterly fiscal period in each fiscal year of the Company and LLC, as
applicable (other than the last quarterly fiscal period of each such fiscal
year), duplicate copies of,
(i) a consolidated and consolidating balance sheet of the
Company and its Subsidiaries, and LLC and its Subsidiaries, as applicable, as at
the end of such quarter, and
(ii) consolidated and consolidating statements of income, changes
in shareholders' equity and cash flows of the Company and its Subsidiaries, and
LLC and its Subsidiaries, as applicable, for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year ending with
such quarter,
setting forth in each case in comparative form the figures for (1) the
corresponding periods in the previous fiscal year and (2) if available, the
Budget for the corresponding fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from normal
year-end adjustments;
(c) Annual Statements -- within 90 days after the end of each fiscal
year of the Company and LLC, duplicate copies of:
(i) a consolidated and consolidating balance sheet of the
Company and its Subsidiaries, and LLC and its Subsidiaries, as applicable, as at
the end of such year, and
(ii) consolidated and consolidating statements of income, changes
in shareholders' or members' equity, as applicable, and cash flows of the
Company and its Subsidiaries and LLC and its Subsidiaries, as applicable, for
such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied in each case by:
(A) in the case of the consolidated statements, an opinion
thereon of independent certified public accountants of recognized national
standing (i.e., a "big six" accounting firm) or other independent certified
public accountants acceptable to the Required Holders, which opinion shall state
that such financial statements present fairly, in all material respects, the
financial position of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity with GAAP, and
that the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for such opinion in
the circumstances, and
(B) a certificate of such accountants addressed to the
holders of the Subordinated Notes stating that they have reviewed this Agreement
and stating further whether, in making their audit, they have become aware of
any condition or event that then constitutes a Default or an Event of Default,
and, if they are aware that any such condition or event then exists, specifying
the nature and period of the existence thereof, and
(d) Notice of Default or Event of Default -- promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;
(e) Accountants' Reports -- promptly after delivery by any
independent accountants of the Company or LLC or any of their respective
Subsidiaries, copies of all significant reports submitted to the Company, LLC or
any such Subsidiary in connection with each annual, interim or special audit of
the books or financial statements of the Company, LLC or such Subsidiary,
including a copy of each comment letter submitted to management in connection
therewith;
(f) Annual Budget -- promptly, but in no event later than (i) 30 days
after the date such projections or budgets have been finalized and (ii) December
15 of each year, the budget used by management of the Company and LLC, as
applicable, for planning purposes for the next fiscal year of the Company and
LLC;
(g) ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the Company
or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if
such liability or Lien, taken together with any other such liabilities or Liens
then existing, could reasonably be expected to have a Material Adverse Effect;
(h) Notices from Governmental Authority -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company, LLC or
any of their respective Subsidiaries from any Federal or state or local
Governmental Authority (including, without limitation, the United States
Department of the Treasury and the United States Internal Revenue Service)
relating to any proceeding, claim, order, ruling, statute or other law or
regulation that could have a Material Adverse Effect or asserts any other
related non-compliance with tax statutes, laws, decrees, court or administrative
orders or regulations;
(i) Reports to Other Creditors -- concurrently with the delivery
thereof to other creditors of the Company or LLC, each other report, statement
or information regularly provided to other creditors of the Company and LLC, as
well as any notice of default provided to any such creditor;
(j) Minutes of Company and LLC -- promptly, copies of the minutes of
all meetings of (i) members of LLC, (ii) the management committee of LLC, (iii)
the Board of Directors of the Company and (iv) the shareholders of the Company
(including all written consents of such shareholders);
(k) Material Adverse Effect; Changes -- promptly, notice of (i) any
change of the name, principal place of business or the location of the books and
records of the Company or LLC, (ii) any other event or condition (including,
without limitation, disputes and litigation but excluding economic conditions
and other events or conditions generally applicable to businesses) that has more
than a remote likelihood of occurrence and could have a Material Adverse Effect,
and (iii) any changes in GAAP or the accounting policies, practices or
procedures of the Company or LLC, and the effect, if any, of such changes on the
Company's or LLC's results of operations, financial condition or compliance with
this Agreement);
(l) Amendments to Bank Agreement; Transaction Documents -- promptly,
and in no event later than three Business Days after its effectiveness, any
waiver, modification or other amendment to the Bank Agreement or any Transaction
Document;
(m) LLC Distributions -- concurrently with the delivery of each set
of financial statements delivered to a holder of Subordinated Notes pursuant to
Section 7.1(a), 7.1(b) or 7.1(c), a report prepared by a Senior Financial
Officer of the Company showing the amount of distributions made by LLC to (or
for the account of) each member of LLC for the related period;
(n) Reports to Members -- concurrently with the delivery thereof to
its members, each report, statement, notice or other information provided by LLC
to its members (provided that this covenant shall not require delivery of any
such report, statement, notice or other information provided by the LLC to ASC
Holdings, Inc.); and
(o) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company, LLC or any of their respective
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Subordinated Notes as from time to time may
be reasonably requested by any such holder of Subordinated Notes.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Subordinated
Notes pursuant to Section (b) or Section (c) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company and LLC were in
compliance with the requirements of Section 10.5, 10.6, 10.7, 10.8 and 10.10
hereof, during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or percentage, as the
case may be, permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company, LLC and
their respective Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of the
Company, LLC or any of their respective Subsidiaries to comply with any
Environmental Law), specifying the nature and period of existence thereof and
what action the Company or LLC, as applicable, shall have taken or proposes to
take with respect thereto.
7.3. INSPECTION.
The Company shall permit the representatives of each holder of
Subordinated Notes:
(a) No Default -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the Company, LLC,
or any Subsidiary of the Company or LLC, as applicable, to visit and inspect any
of their respective offices or properties, to examine all their respective books
of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers, managers and independent public accountants (and by
this provision the Company authorizes, and will cause LLC to authorize, said
accountants to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such reasonable times and as often as may be reasonably
requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or properties of
the Company, LLC or any Subsidiary of the Company or LLC, to examine all their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers, managers and independent public
accountants (and by this provision the Company authorizes, and will cause LLC to
authorize, said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PREPAYMENT OF THE SUBORDINATED NOTES AND FUTURE ADVANCES.
8.1. REQUIRED PAYMENTS.
(a) Maturity -- Subject to mandatory prepayments as provided below,
the Company shall make one scheduled installment of principal of and interest on
the Subordinated Notes on April 30, 2010, on which date all Obligations shall
become due and payable without notice or demand.
(b) Excess Cash Flow -- On or prior to the end of any month
immediately following a month in which the Company has Excess Cash Flow, the
Company shall prepay the Obligations in an amount equal to the lesser of (i)
Excess Cash Flow for such preceding month or (ii) $400,000. Promptly following
the receipt of the annual audited financial statements of the Company and the
LLC for the preceding fiscal year, the Company shall prepay the Obligations in
an amount equal to Excess Cash Flow for such preceding fiscal year less the
amount of payments during such preceding year made pursuant to the first
sentence of this Section 8.1(b). Following payment of an aggregate of
$30,000,000 pursuant to this Section 8.1(b), the Company's obligation to make
payments pursuant to this Section 8.1(b) shall be suspended until such time as
the Payment Escrow is fully funded. The Company agrees to use best efforts to
fund the portion of the Payment Escrow described in clause (i) of the definition
of the Payment Escrow as soon as practicable following payment of an aggregate
of $30,000,000 pursuant to this Section 8.1(b). Concurrently with the making of
any such payment, the Company shall deliver to you a certificate of a Senior
Financial Officer demonstrating its calculation of the amount required to be
paid.
(c) Equity Contributions -- Promptly following the receipt of the
annual audited financial statements of the Company and the LLC for the preceding
fiscal year, the Company shall prepay the Obligations in an amount equal to any
cash equity distributions which the Company has received from Snake River Farms
LLC and Snake River Farms II, LLC, provided, however, that the maximum amount
which the Company shall be obligated to prepay pursuant to this Section 8.1(c)
shall be an aggregate of $5,000,000. The Company agrees to cause each of Snake
River Farms LLC and Snake River Farms II, LLC to make equity distributions to
the Company as soon as possible for the purposes of enabling the Company to make
such prepayments.
(d) Payment Escrow and Voting Rights Escrow -- Promptly following
termination of the Payment Escrow or the Voting Rights Escrow, the Company shall
prepay the Obligations in an amount equal to all amounts received by the Company
from such Payment Escrow or the Voting Rights Escrow.
(e) Optional Prepayments -- The Company may, at any time upon not
less than five Business Days' prior notice, prepay all or part of the
Obligations, provided any partial payments shall be in an amount of at least
$50,000. The Obligations may be prepaid or repaid in full or part without any
penalty or premium.
(f) Manner and Time of Payment -- All payments made by the Company
with respect to the Obligations shall be made without any deduction, defense,
setoff, offset or counterclaim. All payments with respect to the Obligations
shall, unless otherwise directed by you, be made in accordance with the terms
and conditions of this Agreement by delivery of such payment to your Account
("LENDER'S ACCOUNT"), ABA No. 071 000 039, Account No. 78-27296, at Bank of
America, Illinois, Chicago, Illinois, Reference: Valhi, Inc. for the benefit of
Snake River Sugar Company. Proceeds remitted to Lender's Account shall be
credited to the Obligations on the Business Day on which received in Lender's
Account in immediately available funds; provided, however, for the purpose of
calculating interest on the Obligations, such funds shall be deemed received on
the first Business Day thereafter.
(g) Application of Payments -- Any prepayments shall be applied,
FIRST, to all fees, costs and expenses incurred by you with respect to this
Agreement and the other Loan Documents; SECOND, to accrued and unpaid interest
on the Obligations; THIRD, to the principal amounts of the Subordinated Notes;
and FOURTH, to any other indebtedness or obligations of the Company owing to
you.
8.2. INTEREST.
(a) Rate -- Prior to January 1, 1999, the outstanding principal
balance of the $80,000,000 Note shall bear interest at a rate per annum (meaning
360 days) equal to 10.99 percent, and commencing January 1, 1999, the
outstanding principal balance of the Subordinated Notes shall bear interest at a
rate per annum (meaning 360 days) equal to 12.99 percent. The outstanding
principal balance, if any, of the Collateral Deposit Note and the Contribution
Note shall bear interest at a rate per annum (meaning 360 days) equal to 10.145
percent. After the occurrence and during the continuance of an Event of
Default, each Subordinated Note and all other Obligations shall, at your option,
bear interest at a rate per annum (meaning 360 days) equal to the Default Rate.
(b) Computation and Payment of Interest -- Interest on the
Subordinated Notes and all other Obligations shall be computed on the daily
principal balance on the basis of a 360-day year consisting of twelve 30-day
months and shall be payable monthly in arrears on the last day of each month,
provided, however, that interest shall only be payable to the extent of
available Excess Cash Flow as provided in Section 8.1(b). Interest not paid on
a monthly basis will be compounded annually from the applicable monthly date.
Whenever any payment to be made hereunder shall be stated to be due on a day
that is not a Business Day, the payment may be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the amount of interest or fees due hereunder.
(c) Interest Laws -- Notwithstanding any provision to the contrary
contained in this Agreement or the other Loan Documents, the Company shall not
be required to pay, and you shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by law ("EXCESS
INTEREST"). If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Agreement or in any of
the other Loan Documents, then in such event: (i) the provisions of this
subsection shall govern and control; (ii) the Company shall not be obligated to
pay any Excess Interest; (iii) any Excess Interest that you may have received
hereunder shall be, at your option, (a) applied as a credit against the
outstanding principal balance of the Obligations or accrued and unpaid interest
(not to exceed the maximum amount permitted by law), (b) refunded to the payor
thereof, or (c) any combination of the foregoing; (iv) the interest rate(s)
provided for in this Agreement shall be automatically reduced to the maximum
lawful rate allowed from time to time under applicable law (the "MAXIMUM RATE"),
and this Agreement and the other Loan Documents shall be deemed to have been and
shall be, reformed and modified to reflect such reduction; and (v) the Company
shall not have any action against you for any damages arising out of the payment
or collection of any Excess Interest. Notwithstanding the foregoing, if for any
period of time interest on any Obligations is calculated at the Maximum Rate
rather than the applicable rate under this Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate, the rate of interest payable
on such Obligations shall remain at the Maximum Rate until you shall have
received the amount of interest which you would have received during such period
on such Obligations had the rate of interest not been limited to the Maximum
Rate during such period.
8.3 FEES.
You shall repay to the Company, from amounts paid to you in connection
with the initial closing under this Agreement, an amount equal to $2,000,000
(provided at least $100,000,000 of the original principal amount of the
Subordinated Notes is repaid in full on the Closing). The Company shall pay to
you, for your own account, all charges for returned items and all other bank
charges incurred by you.
8.4. YOUR OBLIGATIONS TO MAKE FUTURE ADVANCES.
(a) Sections 8.2.3 and 9.3.1(b) of the Company Agreement -- Upon
notice from the Company, the LLC, holders of the Senior Notes, any Member of the
LLC or the lenders pursuant to the Bank Loans, that the Company is obligated to
make a capital contribution to the LLC pursuant to the terms of Section 8.2.3 of
the Company Agreement or to return amounts to the Company pursuant to the terms
of Section 9.3.1(b) of the Company Agreement, you agree to advance the Company
an amount equal to any required capital contribution or amount to be returned,
subject to the Company issuing to you a duly executed Contribution Note in the
principal amount of such advance. Such advances will be paid directly to the
LLC on behalf of the Company. The Company agrees that this obligation shall
replace your obligation, as set forth in the letter dated January 3, 1997, to
make such advances, and such letter agreement is hereby terminated. This
obligation shall terminate upon the repayment in full of the Senior Notes.
(b) Voting Rights Escrow -- Upon notice from the Company or
Amalgamated (in its capacity as Company Trustee under the SPT) that the
Amalgamated as the Company Trustee desires that the Company fund the Voting
Rights Escrow pursuant to the terms of the Voting Rights Agreement, you agree to
advance the Company, in one or more advances, cash, cash equivalents or one or
more letters of credit representing all amounts required to be placed in the
Voting Rights Escrow pursuant to the Voting Rights Agreement and the Voting
Rights Collateral Deposit Agreement. Such advances will be paid on behalf of
the Company directly to the Collateral Agent pursuant to the Voting Rights
Collateral Deposit Agreement. This obligation shall terminate upon the
repayment in full of the Senior Notes.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Subordinated Notes
are outstanding:
9.1 COMPLIANCE WITH LAW.
The Company will and will cause LLC and each Subsidiary of the Company
and LLC to comply with all laws, ordinances or governmental rules or regulations
to which each of them is subject, including, without limitation, Environmental
Laws, and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such licenses, certificates, permits, franchises
and other governmental authorizations could not, individually or in the
aggregate, have a Material Adverse Effect.
9.2. INSURANCE.
The Company will and will cause LLC and each Subsidiary of the Company
and LLC to maintain, with financially sound and reputable insurers, insurance
with respect to their respective properties and businesses against such
casualties and contingencies, of such types, on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if adequate reserves
are maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated. Schedule 9.2 lists such insurance policies of Company, LLC and each
Subsidiary of Company and LLC in effect as of the date of Closing.
9.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause LLC and each Subsidiary of the Company
and LLC to maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times, provided that this Section shall not
prevent the Company, LLC or any of their respective Subsidiaries from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company or
LLC, as the case may be, has concluded that such discontinuance could not,
individually or in the aggregate, have a Material Adverse Effect.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause LLC and each Subsidiary of the Company
and LLC to file all tax returns required to be filed in any jurisdiction and to
pay and discharge all taxes shown to be due and payable on such returns and all
other taxes, assessments, governmental charges, or levies imposed on them or any
of their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company, LLC or any of their
respective Subsidiaries, provided that neither the Company nor LLC or any of
their respective Subsidiaries need pay any such tax or assessment or claims if
the amount, applicability or validity thereof is contested by the Company, LLC
or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of the Company, LLC or such
Subsidiary.
9.5 EXISTENCE; TAX STATUS; ETC.
The Company will at all times preserve and keep in full force and
effect its cooperative existence as an Oregon cooperative and shall maintain its
tax status as a tax-exempt agricultural cooperative at all times. The Company
will at all times preserve and keep in full force and effect the limited
liability company existence of LLC and all rights and franchises (including,
without limitation, licenses and permits) of LLC. Subject to Section 10.2, the
Company will at all times preserve and keep in full force and effect the
existence of each of its Subsidiaries and all rights and franchises (including,
without limitation, licenses and permits) of the Company and its Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such existence, right or franchise
could not, individually or in the aggregate, have a Material Adverse Effect.
Subject to Section 10.2, the Company will cause LLC to at all times preserve and
keep in full force and effect the corporate existence of each Subsidiary of LLC
and all rights and franchises (including, without limitation, licenses and
permits) of LLC and its Subsidiaries unless, in the good faith judgment of LLC,
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
9.6. MAINTENANCE OF REVOLVING CREDIT FACILITY.
The Company will cause LLC to at all times keep in full force and
effect a revolving credit facility with a minimum aggregate availability
(including outstanding amounts) of $50,000,000 with terms substantially similar
or more favorable to LLC than those in existence at the date of the Closing
under the Bank Agreement, with a remaining term to scheduled facility
termination of at least six months as of any date of determination.
9.7. [SECTION RESERVED].
9.8. [SECTION RESERVED].
9.9. [SECTION RESERVED].
9.10. TAX STATUS OF LLC.
The Company will cause LLC at all times to be treated for federal
income tax purposes as a partnership.
9.11. PAYMENTS BY DUAL PAYMENT CHECK.
The Company will, and will cause LLC to make all payments to a grower
by means of a dual payment check if any lender has given legally effective
notice from any lender to such grower that such lender has a Lien on the sugar
beets sold by such grower to the Company.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Subordinated Notes
are outstanding or any amount remains owing hereunder:
10.1. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit LLC or any Subsidiary of the
Company or LLC to enter into directly or indirectly any transaction or Material
group of related transactions (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service) with
any Affiliate, except (i) the purchase by the Company of sugarbeets from the
Company's shareholders pursuant to the Grower Contracts, (ii) as set forth on
Schedule 10.1, (iii) the Year-End Transactions, (iv) in the ordinary course and
pursuant to the reasonable requirements of the Company's, LLC's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company, LLC or such Subsidiary, as the case may be, than would be
obtainable in a comparable arm's-length transaction with a Person not an
Affiliate, (v) transactions between the Company and any Subsidiary of the
Company (other than LLC and its Subsidiaries) and (vi) transactions between LLC
and any Subsidiary of LLC.
10.2. MERGER, CONSOLIDATION, ETC.
The Company shall not, and shall not permit LLC or any Subsidiary of
the Company or LLC to, consolidate with or merge with any other corporation or
otherwise effect a recapitalization or restructuring or convey, transfer or
lease (a "TRANSFER") any of its assets in a single transaction or series of
transactions to any Person or Persons except that:
(a) the Company, LLC or any of their respective Subsidiaries may
Transfer assets in the ordinary course of their business;
(b) any Subsidiary of the Company may merge with the Company or with
a Wholly-Owned Subsidiary of the Company (other than LLC or a Subsidiary of
LLC), provided that the Company or such Wholly-Owned Subsidiary shall be the
survivor of such merger;
(c) any Subsidiary of LLC may merge with LLC or the Company or with a
Wholly-Owned Subsidiary of LLC or the Company, provided that LLC, the Company or
such Wholly-Owned Subsidiary shall be the survivor of such merger;
(d) any Subsidiary of the Company may Transfer its assets to the
Company or any Wholly-Owned Subsidiary of the Company (other than to LLC or a
Subsidiary of LLC);
(e) any Subsidiary of LLC may Transfer its assets to LLC, the Company
or any Wholly-Owned Subsidiary of LLC or the Company;
(f) the Company may consolidate or merge with another corporation if
(i) the Company is the continuing or surviving company and (ii) immediately
before and after giving effect to such transaction, no Default or Event of De-
fault exists or would exist; and
(g) the Company, LLC and any of their respective Subsidiaries may
Transfer assets of the Company, LLC or such Subsidiary, as the case may be, if
all of the following conditions shall have been satisfied with respect thereto:
(i) such Transfer does not involve a Substantial Part of the assets of the
Company, LLC and their respective Subsidiaries, (ii) in the good faith opinion
of the Company, the Transfer is in exchange for consideration with a Fair Market
Value at least equal to that of the property Transferred, and is in the best
interests of the Company and (iii) immediately before and after giving effect to
such Transfer no Default or Event of Default exists or would exist.
No such Transfer of assets of the Company, LLC or any of their respective
Subsidiaries shall have the effect of releasing the Company, LLC or any of their
respective Subsidiaries or any successor corporation that shall theretofore have
become such a successor corporation in the manner prescribed in this
Section 10.2 from its liability under this Agreement, any other Transaction
Document or the Subordinated Notes.
10.3. LIENS.
The Company will not, and will not permit LLC or any Subsidiary of the
Company or LLC to, directly or indirectly create, incur, assume or permit to
exist (upon the happening of a contingency or otherwise) any Lien on or with
respect to any property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of the Company, LLC or
any such Subsidiary, whether now owned or held or hereafter acquired, or any
income or profits therefrom (whether or not provision is made for the equal and
ratable securing of the Subordinated Notes in accordance with the last paragraph
of this Section 10.3), or assign or otherwise convey any right to receive income
or profits, except:
(a) Liens securing the Senior Notes;
(b) Liens for taxes, assessments or other governmental levies or
charges not yet due or which are subject to a Good Faith Contest;
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business that do
not secure Debt and are for sums not yet due or subject to a Good Faith Contest;
(d) Liens on property or assets of a Subsidiary of the Company to
secure obligations of such Subsidiary to the Company;
(e) Liens on property or assets of a Subsidiary of LLC to secure
obligations of such Subsidiary to the Company or LLC, as the case may be;
(f) Liens (other than any Lien imposed by ERISA) incurred, or
deposits made, in the ordinary course of business such as workers' compensation
Liens or statutory or legal obligation Liens; provided, however, that such Liens
were not incurred or made in connection with the borrowing of money, or the
obtaining of advances or credit;
(g) Liens on accounts, inventory, the sugar processing factory of
Nampa, Idaho and related assets of LLC that on the Closing Date secure the Bank
Loans in an amount not to exceed at any time $120,000,000;
(h) Liens on inventory of LLC to secure the obligations of LLC under
CCC Loans permitted by Section 10.7;
(i) minor survey exceptions or minor encumbrances, easements or
reservations and related Liens, that are necessary for the conduct of the
operations of the Company, LLC and their respective Subsidiaries and that do not
secure Debt; and
(j) purchase money Liens provided such Liens (i) secure only the
asset so purchased and (ii) the obligations secured by such Lien do not exceed,
at any time, $2,000,000.
10.4. SUBSIDIARY DEBT.
The Company will not at any time permit any Subsidiary of the Company
or LLC to, directly, or indirectly, create, incur, assume, guarantee, have
outstanding, or otherwise become or remain directly or indirectly liable with
respect to, any Debt except (a) Debt existing on the date of the Closing and set
forth in Schedule 10.4, (b) Debt owed by Subsidiaries of the Company to the
Company, (c) Debt owed by Subsidiaries of LLC to LLC or the Company, (d) to the
extent not referenced above, Debt of the LLC permitted by Section 10.7 hereof,
and (e) additional Debt not to exceed $1,000,000 in the aggregate.
10.5. RESTRICTED PAYMENTS.
The Company will not, and will not permit LLC or any Subsidiary of the
Company or LLC to, at any time, make, pay, or declare any Restricted Payments,
except:
(a) LLC may make payments to the Company and in accordance with
Section 9.3.1 of the Company Agreement as amended at Closing and to the holder
of the AGM Interest in accordance with Section 9.3.1(a) and Section 9.3.1(b)(i)
of the Company Agreement as amended at Closing;
(b) so long as no Event of Default referred to in Section 11(a) shall
have occurred and be continuing and the Subordinated Notes have not been
accelerated, the Company may make distributions to its shareholders each year in
the minimum amount necessary to preserve the Company's cooperative status for
federal tax purposes;
(c) the Company may make distributions to its shareholders each year
which, together with amounts described in clause (b) above, do not exceed 30% of
the Company's taxable income that is imputed to such shareholders, if prior to
and after giving effect to such distributions no Default or Event of Default
exists or would result therefrom;
(d) LLC and the Company may make payments required pursuant to the
Indemnification and Post-Closing Agreement; and
(e) the Company and LLC may perform their respective obligations
under Section 18.1 and Section 17.2 of the Company Agreement.
10.6. DEBT.
The Company will not, and will not permit LLC to, directly or
indirectly, create, incur, assume, guarantee, have outstanding or otherwise
become or remain directly or indirectly liable with respect to, Debt during the
period commencing on the date of Closing and ending on the third anniversary of
such date, except for:
(a) the Senior Notes, Debt in existence on the date of the Closing
and set forth on Schedule 10.6 and any extensions or renewals thereof;
(b) Debt of LLC permitted by Section 10.7; and
(c) additional Debt not to exceed $2,000,000 in the aggregate.
10.7. DEBT OF LLC.
The Company will not permit LLC or any Subsidiary of LLC to, directly
or indirectly, create, incur, assume, guarantee, have outstanding, or otherwise
become or remain directly or indirectly liable with respect to, (i) any
Consolidated Funded Debt or (ii) any Consolidated Current Debt, except for (A)
the CCC Loans (provided that at any time that the CCC Loans are recourse to LLC,
LLC will not have any CCC Loans outstanding unless there shall have been during
the immediately preceding twelve months a period of at least 60 consecutive days
on each day of which there shall have been no CCC Loans outstanding in excess of
$25,000,000) and (B) the Bank Loans, provided that there shall have been during
the immediately preceding twelve months a period of at least 60 consecutive days
on each day of which there shall have been no Bank Loans outstanding in excess
of $65,000,000.
10.8. FINANCIAL COVENANTS.
(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 (provided, however, that for the quarter of LLC ended March 31, 1997, such
ratio shall be determined on an annualized basis based solely on such quarter)
to exceed (i) 5.50:1.00 from the date of the Closing to and including
November 30, 2000; (ii) 5.00:1.00 from December 1, 2001 to and including
November 30, 2003; (iii) 4.50:1.00 from December 1, 2004 to and including
November 30, 2006; and (iv) 3.50:1.00 thereafter.
(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 (provided, however, that for the quarter of LLC ended March 31, 1997, such
ratio shall be determined on an annualized basis based solely on such quarter)
to exceed (i) 7.50:1.00 from the date of the Closing to and including August 31,
1997; (ii) 7.25:1.00 from September 1, 1997 to and including November 30, 2000;
(iii) 6.75:1.00 from December 1, 2001 to and including November 30, 2003;
(iv) 6.00:1.00 from December 1, 2004 to and including November 30, 2006; and
(v) 5.00:1.00 thereafter.
(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
(provided, however, that for the quarter of LLC ended March 31, 1997, such ratio
shall be determined on an annualized basis based solely on such quarter) 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, 2001; (ii) 1.60:1.00 from December 1, 2002
to and including November 30, 2005; (iii) 1.75:1.00 at all times thereafter.
(d) The Company will not permit LLC to have at any time a ratio of
(i) accounts receivable plus inventory on a FIFO basis (excluding sugar that is
collateral for CCC Loans), to (ii) the aggregate outstanding amount of the Bank
Loans, of less than 1.60:1.00.
(e) The Company will not permit LLC to have at any time a ratio of
Consolidated current assets to Consolidated current liabilities of less than
0.70:1.00.
(f) The Company will not permit Consolidated Tangible Net Worth at
any time to be less than the sum of (i) $70,000,000 plus (ii) 50% of positive
Consolidated Net Income for each fiscal year from and after the date of the
Closing.
(g) The Company will not permit Consolidated operating expenses of
the Company and its Subsidiaries (other than LLC and its Subsidiaries) in any
calendar month to exceed $35,000 plus the amount of fees and expenses for such
month of the Collateral Agent, the SPT and the Resident Trustee of the SPT in
connection with the transactions contemplated in the Transaction Documents and
the fees and expenses of counsel incurred in such month in connection with the
opinion referred to in Section 9.9.
10.9. INVESTMENTS.
The Company will not, and will not permit LLC or any Subsidiary of the
Company or LLC to, declare, make or authorize any Investment except the
following:
(a) Investments existing on the date of the Closing and set forth in
Schedule 10.9.
(b) Investments in direct obligations of the United States of America
or obligations fully guaranteed by the United States of America, provided that
such obligations mature within one year from the date acquired;
(c) Investments in certificates of deposit maturing within one year
from the date acquired and issued by a bank or trust company organized under the
laws of the United States or any or its states, rated AA or better by Standard
and Poor's Ratings Group, a division of McGraw Hill, Inc. or Aa2 or better by
Xxxxx'x Investors Service, Inc., and having capital, surplus and undivided
profits aggregating at least $750,000,000;
(d) Investments in commercial paper rated A1 by Standard and Poor's
Ratings Group, a division of McGraw Hill, Inc. or P1 by Xxxxx'x Investors
Service, Inc. and maturing not more than 270 days from the date acquired;
(e) loans and advances (i) by the Company to its Subsidiaries (other
than LLC and Subsidiaries of LLC) and (ii) by the LLC to its Subsidiaries;
(f) loans and advances (i) by Subsidiaries of the Company (other than
LLC and subsidiaries of LLC) to the Company (provided that the obligations with
respect to such loans and advances are subordinated to the Subordinated Notes in
form and substance satisfactory to the Required Holders), (ii) by Subsidiaries
of LLC to LLC, (iii) between Subsidiaries of the Company (other than LLC and
Subsidiaries of LLC) and (iv) between Subsidiaries of LLC;
(g) travel and other business advances to officers and employees of
the Company, LLC or any Subsidiary of the Company or LLC in the ordinary course
of business;
(h) capital contributions to LLC required by Section 8.2.3 of the
Company Agreement;
(i) capital contributions by the Company to LLC for the purpose of
permitting LLC to pay the Bank Loans, provided such capital contributions are
funded by the imposition of a Unit Retain (excluding any Unit Retain referred to
in Section 9.8 of the Note Purchase Agreements) and provided further that the
Company prepays the Subordinated Notes in an amount equal to any such capital
contribution;
(j) other Investments not to exceed an aggregate amount of
$1,500,000.
10.10. CAPITAL EXPENDITURES.
The Company, LLC and their respective Subsidiaries shall not make or
commit to make capital expenditures in an aggregate amount exceeding $35,000,000
on a consolidated basis during any fiscal year and the two previous fiscal
years; provided, however, that (A) to the extent such limit has been reached
during any fiscal year, the Company, LLC and their respective Subsidiaries may
make capital expenditures reasonably required to be made in such fiscal year by
legal or regulatory requirements, (B) commencing with LLC's fiscal year
beginning on January 1, 1998 and on each January 1 thereafter, the $35 million
aggregate threshold shall be adjusted by an amount equal to the change since
January 1, 1997 in the U.S. producer price index for refined beet sugar (as
shown on the most currently available publication) (or, if such index is no
longer available, the closest comparable U.S. producer price index available, as
reasonably determined by LLC), (C) the limitation set forth in this Section
10.10 shall not apply to capital expenditures which are financed with Debt
incurred by LLC specifically for the purpose of making such capital
expenditures, so long as such Debt is permitted to be incurred under Section
10.7, (D) for purposes of this Section 10.10, capital expenditures for each
fiscal year prior to January 1, 1997 shall be deemed to be an amount equal to
$10,000,000; provided further that if, pursuant to the Company Agreement,
Amalgamated or SPT shall have consented to the making of capital expenditures by
LLC in excess of the foregoing amounts, the Company, LLC and their respective
Subsidiaries may make capital expenditures in an aggregate amount not exceeding
(i) $18,000,000 in any rolling twelve month period and (ii) $44,000,000 in any
rolling 36 month period.
10.11 RESTRICTIONS ON SUBSIDIARIES.
The Company will not at any time permit any Subsidiary of the Company
or LLC to incur or permit to exist any restriction on such Subsidiary's ability
to make payments or other distributions to the Company, LLC or their respective
Subsidiaries, to repay intra-company Debt or to otherwise transfer earnings or
assets to the Company, LLC or their respective Subsidiaries, except, in the case
of LLC, limitations set forth in the Company Agreement and the Bank Agreement,
in each case as in effect on the date of Closing and, in the case of Snake River
Farms, LLC and Snake River Farms II, LLC, limitations set forth in the Henry's
Fork Loan Agreement and the Midwest Loan Agreement, in each case as in effect of
the date of the Closing.
10.12. SALE-AND-LEASEBACKS.
The Company will not, and will not permit LLC or any Subsidiary of the
Company or LLC to, enter into or otherwise engage in any Sale-and-Leaseback
Transaction.
10.13. SALE OF STOCK OF SUBSIDIARY, ETC.
The Company, LLC and their Subsidiaries will not Transfer, or part
with control of, any shares of stock (or other equity interests) or Debt of any
Subsidiary thereof, except (i) the Company, LLC or any of their respective
Subsidiaries may Transfer shares of stock (or other equity interests) or Debt of
any Subsidiary of the Company or LLC to the Company or a Wholly-Owned Subsidiary
of the Company (and, if the Subsidiary in question is a Subsidiary of LLC, to
LLC or a Wholly-Owned Subsidiary thereof) and (ii) the Company, LLC or any of
their respective Subsidiaries may Transfer all shares of stock (or other equity
interests) and all Debt of such a Subsidiary if (a) the Transfer is in exchange
for cash consideration with a Fair Market Value at least equal to that of the
property transferred (determined in good faith by the Board of Directors of the
Company), (b) such Transfer is otherwise permitted under Section 10.2 and (c) at
the time of such Transfer, such Subsidiary shall not own, directly or
indirectly, any shares of stock (or other equity interests) or Debt of any other
Subsidiary (unless all of the shares of stock (or other equity interests) and
Debt of such other Subsidiary owned, directly or indirectly, by the Company, LLC
and all Subsidiaries are simultaneously being sold). The Company will not
permit LLC, after the date of the Closing, to issue any membership interests
other than the SR Interest and the AGM Interest (each as defined on the Company
Agreement) outstanding on the date of Closing.
10.14. [SECTION RESERVED].
10.15. [SECTION RESERVED].
10.16. LINE OF BUSINESS.
The Company will not, and will not permit any Subsidiary of LLC or the
Company (other than LLC) to, engage in any business which is not substantially
the same as or directly related to the business in which the Company and such
Subsidiaries, taken as a whole, are engaged on the date of this Agreement.
LLC's business shall be the production and sale of sugar and by-products and the
Company will not permit the LLC to otherwise violate Article III of the Company
Agreement.
10.17. RECEIVABLES.
The Company will not, and will not permit LLC or any Subsidiary of the
Company or LLC to, enter into any agreement, understanding, commitment or other
transaction, the effect of which is or otherwise would be to sell, pledge,
encumber or in any way transfer, or subject to any security interest, such
Person's accounts receivable except for Liens on accounts receivable of LLC
securing Debt outstanding under the Bank Agreement.
10.18. [SECTION RESERVED].
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or interest
on any Subordinated Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise and
such default continues for a period of five days or the Company defaults in the
payment when due of any other amount payable hereunder or under any of the
Transaction Documents to the holder of any Subordinated Note and such default
continues for a period of five days; provided that (i) after the occurrence of
any Delayed Payment in any calendar year, an Event of Default shall exist if
during such calendar year the Company defaults in the payment of any principal
or interest on any Subordinated Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise or the Company defaults in the payment when due of any other amount
payable hereunder or under any of the Transaction Documents to the holder of any
Subordinated Note and (ii) after the occurrence of six Delayed Payments an Event
of Default shall exist if the Company defaults in the payment of any principal
or interest on any Subordinated Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise or the Company defaults in the payment when due of any other amount
payable hereunder or under any of the Transaction Documents to the holder of any
Subordinated Note; or
(b) the Company defaults in the performance of or compliance with any
term contained in Section 7.1(d), Section 9.10 or Section 10; or
(c) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a) and (b) of
this Section 11) and such default is not remedied within 30 days after the
earlier of (i) a Responsible Officer obtaining actual knowledge of such default
and (ii) the Company receiving written notice of such default from any holder of
a Subordinated Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (c) of Section 11); or
(d) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company or LLC in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby proves
to have been false or incorrect in any material respect on the date as of which
made; or
(e) (i) the payment of any principal of or premium or make-whole
amount or interest on the Senior Debt, the Bank Loans, any CCC Loan or any other
Debt that is outstanding is accelerated according to its terms and declared due
and payable before its stated maturity or before its regularly scheduled dates
of payment, or (ii) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the holder of
Debt to convert such Debt into equity interests), the Company, LLC or any
Subsidiary of the Company or LLC has become obligated to purchase or repay the
Senior Notes, the Bank Loans, such CCC Loan or such other Debt before its
regular maturity or before its regularly scheduled dates of payment; provided
that in the case of Debt other than the Senior Notes, the Bank Loans or any CCC
Loan, the aggregate outstanding principal amount thereof subject to clauses (i)
and/or (ii) above is $1,000,000 or more; or
(f) the Company, LLC, or any Subsidiary of the Company or LLC (i) is
generally not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement or any
other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, (vi) consents to any other marshalling of its assets, (vii) takes
corporate action for the purpose of any of the foregoing; or
(g) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company, LLC, or any
Subsidiary of the Company or LLC (as applicable), a custodian, receiver, trustee
or other officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company, LLC, or any Subsidiary of the Company or LLC or the
marshalling of its assets, or any such petition shall be filed against the
Company, LLC, or any Subsidiary of the Company or LLC and such petition shall
not be dismissed within 60 days; or
(h) a final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 are rendered against one or more of the
Company, LLC and their Subsidiaries and which judgments are not, within 60 days
after entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay; or
(i) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company, LLC or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of section 4001(a)(18) of ERISA) under all Plans of the
Company, LLC and any of their respective Subsidiaries, determined in accordance
with Title IV of ERISA, shall exceed $2,500,000, (iv) the Company, LLC or any
ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) the Company, LLC
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
Company, LLC or any Subsidiary of either establishes or amends any employee
welfare benefit plan that provides post-employment welfare benefits in a manner
that would increase the liability of the Company, LLC or any Subsidiary
thereunder; and any such event or events described in clauses (i) through (vi)
above, either individually or together with any other such event or events,
could reasonably be expected to have a Material Adverse Effect; or
(j) a Change in Control Event occurs; or
(k) any Governmental Authority takes any action that results in a
Material Adverse Effect on the Company or LLC.
As used in Section 11(i), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA; provided that for purposes of Section 11(i)(iv), the term
Plan shall exclude any excess benefit plan as defined in Section 3(36) of ERISA
and any plan maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company or LLC
described in paragraph (f) or (g) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (f) or described in clause (vi) of
paragraph (f) by virtue of the fact that such clause encompasses clause (i) of
paragraph (f)) has occurred, all the Subordinated Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 66 2/3% in principal amount of the Subordinated
Notes at the time outstanding may at any time at its or their option, by notice
or notices to the Company, declare all the Subordinated Notes then outstanding
to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) of Section 11
has occurred and is continuing, any holder or holders of Subordinated Notes at
the time outstanding affected by such Event of Default may at any time, at its
or their option, by notice or notices to the Company, declare all the
Subordinated Notes held by it or them to be immediately due and payable.
Upon any Subordinated Notes becoming due and payable under this
Section 12.1, whether automatically or by declaration, such Subordinated Notes
will forthwith mature and the entire unpaid principal amount of such
Subordinated Notes, plus all accrued and unpaid interest thereon shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Subordinated Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Subordinated
Note at the time outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Subordinated Note, or for an injunction against a violation of any of the terms
hereof or thereof, or in aid of the exercise of any power granted hereby or
thereby or by law or otherwise.
12.3. RESCISSION.
At any time after any Subordinated Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 12.1, the holders of not less
than 66 2/3% in principal amount of the Subordinated Notes then outstanding, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the
Subordinated Notes and all principal on any Subordinated Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and (to the extent permitted by applicable
law) any overdue interest in respect of the Subordinated Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Subordinated
Notes. No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right consequent
thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Subordinated Note in exercising any right, power or remedy shall operate as a
waiver thereof or otherwise prejudice such holder's rights, powers or remedies.
No right, power or remedy conferred by this Agreement or by any Subordinated
Note upon any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise. Without limiting the obligations of the
Company under Section 15, the Company will pay to the holder of each
Subordinated Note on demand such further amount as shall be sufficient to cover
all costs and expenses of such holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys'
fees, expenses and disbursements.
12.5. SET OFF.
Subject to the terms and conditions of the Subordination Agreement and
in addition to any rights now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon the occurrence of any Event of
Default, you, each assignee of your interest, and each participant is hereby
authorized by the Company at any time or from time to time, without notice to
the Company or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all balances held by
it at any of its offices for the account of the Company or any of its
Subsidiaries (regardless of whether such balances are then due to the Company or
its Subsidiaries) and any other property at any time held or owing by you or
such assignee or participant to or for the credit or for the account of the
Company against and on account of any of the Obligations then outstanding;
provided, that no participant shall exercise such right without your the prior
written consent.
The Company hereby agrees, to the fullest extent permitted by law,
that you, any assignee or participant may exercise your or its right of setoff
with respect to amounts in excess of your or its pro rata share of the
Obligations (or, in the case of a participant, in excess of its pro rata
participation interest in the Obligations) and that you or such assignee or
participant, as the case may be, shall be deemed to have purchased for cash in
the amount of such excess, participations in each other holder's share of the
Obligations.
12.6. SUBORDINATION AGREEMENT.
The Subordinated Notes are subordinate to the Senior Notes to the
extent set forth in the Subordination Agreement, which contains certain limits
on the ability of the holders of the Subordinated Notes to exercise remedies and
receive payments and contains certain other terms and conditions.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF SUBORDINATED NOTES.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Subordinated Notes. The
name and address of each holder of one or more Subordinated Notes, each transfer
thereof and the name and address of each transferee of one or more Subordinated
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Subordinated Note shall
be registered shall be deemed and treated as the owner and holder thereof for
all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary. The Company shall give to any holder of a
Subordinated Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Subordinated Notes.
13.2. TRANSFER AND EXCHANGE OF SUBORDINATED NOTES.
Upon surrender of any Subordinated Note at the principal executive
office of the Company for registration of transfer or exchange (and in the case
of a surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Subordinated Note or his attorney duly authorized in writing and accompanied by
the address for notices of each transferee of such Subordinated Note or part
thereof), the Company shall execute and deliver, at the Company's expense
(except as provided below), one or more new Subordinated Notes (as requested by
the holder thereof) in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Subordinated Note. Each such
new Subordinated Note shall be payable to such Person as such holder may request
and shall be substantially in the form of Exhibit 1. Each such new Subordinated
Note shall be dated and bear interest from the date to which interest shall have
been paid on the surrendered Subordinated Note or dated the date of the
surrendered Subordinated Note if no interest shall have been paid thereon. The
Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Subordinated
Notes. Subordinated Notes shall not be transferred in denominations of less
than $100,000, provided that if necessary to enable the registration of transfer
by a holder of its entire holding of Subordinated Notes, one Subordinated Note
may be in a denomination of less than $100,000. Any transferee, by its
acceptance of a Subordinated Note registered in its name (or the name of its
nominee), shall be deemed to have made the representation set forth in Section
6.2.
13.3. REPLACEMENT OF SUBORDINATED NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any
Subordinated Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Subordinated
Note is, or is a nominee for, you or another holder of a Subordinated Note with
a minimum net worth of at least $100,000,000, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Subordinated Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Subordinated
Note or dated the date of such lost, stolen, destroyed or mutilated Subordinated
Note if no interest shall have been paid thereon.
14. [SECTION RESERVED].
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
The Company will pay all costs and expenses (including reasonable
attorneys' fees of a special counsel and, if reasonably required, local or other
counsel) incurred by you and each other holder of a Subordinated Note incurred
after the Closing in connection with any amendments, waivers or consents under
or in respect of this Agreement, the Transaction Documents or the Subordinated
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement, the Transaction Documents or the Subordinated Notes or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the Subordinated Notes, or by
reason of being a holder of any Subordinated Note, and (b) the costs and
expenses, including financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company, LLC, any Subsidiary of the Company or
LLC or in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Subordinated Notes. The Company will pay, and
will save you and each other holder of a Subordinated Note harmless from, all
claims in respect of any fees, costs or expenses if any, of brokers and finders
(other than those retained by you).
15.2. SURVIVAL.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Subordinated Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Subordinated Notes, and the
termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Subordinated Notes, the
purchase or transfer by you of any Subordinated Note or portion thereof or
interest therein and the payment of any Subordinated Note, and may be relied
upon by any subsequent holder of a Subordinated Note, regardless of any
investigation made at any time by or on behalf of you or any other holder of a
Subordinated Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company or LLC pursuant to this
Agreement shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, this Agreement and the
Subordinated Notes embody the entire agreement and understanding between you and
the Company and supersede all prior agreements and understandings relating to
the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement and the Subordinated Notes may be amended, and the
observance of any term hereof or thereof may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders and, if required pursuant to the Subordination Agreement, the
holders of Senior Notes, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Subordinated Note at the time outstanding affected thereby,
(i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest on, the Subordinated Notes, (ii) change the percentage of the principal
amount of the Subordinated Notes the holders of which are required to consent to
any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b),
12, 17 or 20.
17.2. SOLICITATION OF HOLDERS OF SUBORDINATED NOTES.
(a) Solicitation. The Company will provide each holder of the
Subordinated Notes (irrespective of the amount of Subordinated Notes then owned
by it) with sufficient information, sufficiently far in advance of the date a
decision is required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in respect of
any of the provisions hereof or of the Subordinated Notes. The Company will
deliver executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 17 to each holder of
outstanding Subordinated Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the requisite
holders of Subordinated Notes.
(b) Payment. Except for payment of those amounts set forth in
Sections 4.7 and 15.1 hereof, the Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Subordinated
Notes as consideration for or as an inducement to the entering into by any
holder of Subordinated Notes or any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Subordinated
Notes then outstanding even if such holder did not consent to such waiver or
amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Subordinated Notes and is binding upon them
and upon each future holder of any Subordinated Note and upon the Company
without regard to whether such Subordinated Note has been marked to indicate
such amendment or waiver. No such amendment or waiver will extend to or affect
any obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon. No course of dealing
between the Company and the holder of any Subordinated Note nor any delay in
exercising any rights hereunder or under any Subordinated Note shall operate as
a waiver of any rights of any holder of such Subordinated Note. As used herein,
the term "THIS AGREEMENT" and references thereto shall mean this Agreement as it
may from time to time be amended or supplemented.
17.4. SUBORDINATED NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Subordinated Notes
then outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Subordinated Notes, or have directed the
taking of any action provided herein or in the Subordinated Notes to be taken
upon the direction of the holders of a specified percentage of the aggregate
principal amount of Subordinated Notes then outstanding, Subordinated Notes
directly or indirectly owned by the Company or any of its Affiliates shall be
deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(a) if to you or your nominee, at your address set forth at the
beginning hereof to the attention of your General Counsel, or at such other
address as you or it shall have specified to the Company in writing,
(b) if to any other holder of any Subordinated Note, to such holder
at such address as such other holder shall have specified to the Company in
writing, or
(c) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Chairman, or at such other address as the
Company shall have specified to the holder of each Subordinated Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement, the other Transaction Documents and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications that may hereafter be executed, (b) documents received by you at
the Closing (except the Subordinated Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and you may destroy
any original document so reproduced. The Company agrees and stipulates that, to
the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Subordinated Notes from contesting any such
reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. [SECTION RESERVED].
21. [SECTION RESERVED].
22. MISCELLANEOUS.
22.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Subordinated Note) whether so expressed or not.
22.2. [SECTION RESERVED].
22.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of Utah
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
22.7. INDEMNITY.
In addition to the payment of expenses pursuant to this Agreement,
whether or not the transactions contemplated hereby shall be consummated, the
Company agrees to indemnify, pay and hold you, your officers, directors,
employees, agents, consultants, auditors, affiliates and your attorneys
(collectively called the "INDEMNITEES") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for such Indemnities
in connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Agreement or the
other Loan Documents, the consummation of the transactions contemplated by this
Agreement, your agreement to issue the Subordinated Notes hereunder, the use or
intended use of the proceeds of any of the Subordinated Notes or the exercise of
any right or remedy hereunder or under the other Loan Documents (the
"INDEMNIFIED LIABILITIES"); provided that the Company shall have no obligation
to an Indemnitee hereunder with respect to Indemnified Liabilities arising from
the gross negligence or willful misconduct of that Indemnitee as determined by a
court of competent jurisdiction, and provided further that the Company shall
have no obligation to an Indemnitee hereunder with respect to any federal or
state income tax liabilities.
22.8. CONSENT TO JURISDICTION.
THE COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF DALLAS, STATE OF TEXAS AND
IRREVOCABLY AGREES THAT, SUBJECT TO YOUR ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SUBORDINATED NOTES OR THE
OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. THE COMPANY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE SUBORDINATED NOTES, THE
OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
22.9. WAIVER OF JURY TRIAL.
THE COMPANY AND YOU HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE SUBORDINATED NOTES OR THE OTHER LOAN DOCUMENTS. THE COMPANY AND
YOU ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING
INTO THIS AGREEMENT, THE SUBORDINATED NOTES AND THE OTHER LOAN DOCUMENTS AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
THE COMPANY AND YOU FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
22.10. NO FIDUCIARY RELATIONSHIP; LIMITATION OF LIABILITIES.
No provision in this Agreement or in any of the other Loan Documents
and no course of dealing between the parties shall be deemed to create any
fiduciary duty by you to the Company. Neither you, nor any affiliate, officer,
director, shareholder, employee, attorney, or agent of you shall have any
liability with respect to, and the Company hereby waives, releases, and agrees
not to xxx any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by the Company in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or any
of the other Loan Documents. The Company hereby waives, releases, and agrees
not to xxx you or any of your affiliates, officers, directors, employees,
attorneys, or agents for punitive damages in respect of any claim in connection
with, arising out of, or in any way related to, this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this Agreement
or any of the transactions contemplated hereby.
22.11. NO DUTY.
All attorneys, accountants, appraisers, and other professional Persons
and consultants retained by you shall have the right to act exclusively in your
interest and shall have no duty of disclosure, duty of loyalty, duty of care, or
other duty or obligation of any type or nature whatsoever to the Company or any
other Person.
* * * * *
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
SNAKE RIVER SUGAR COMPANY
By
Xxxxx X. Xxxxxx, Xx.
The foregoing is hereby
agreed to as of May 14, 1997
VALHI, INC.
By_____________________________________
Xxxxxx X. Xxxxxx, Vice President
24268
SCHEDULE A
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and certificates and
reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with GAAP (without provision of footnotes in the case of
unaudited financial statements), applied on a basis consistent with the most
recent audited consolidated financial statements of the Company and its
Subsidiaries delivered pursuant to Section 7.1(c) or, if no such statements have
been so delivered, the most recent audited financial statements referred to in
Section 5.5.
"AFFILIATE" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"AGGREGATE CONSOLIDATED NET INCOME" means, as at any date of
determination, the aggregate Consolidated Net Income of the Company and its
Subsidiaries during the thirty-six (36) month period then most recently ended.
"AGM INTEREST" has the meaning assigned to it in the Company
Agreement.
"AGREEMENT" means this Subordinated Loan Agreement, as it may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"AMALGAMATED" means ASC Holdings, Inc., a Utah corporation.
"BANK AGREEMENT" means the Working Capital Agreement dated as of
January 3, 1997 among LLC, United States National Bank of Oregon, First Security
Bank, National Association and the lenders party thereto, as amended from time
to time in accordance with the terms thereof and hereof.
"BANK LOANS" means loans and contingent obligations in respect to
Letters of Credit to LLC outstanding from time to time under the Bank Agreement
or a replacement agreement meeting the requirements of Section 9.6.
"BUDGET" means the projections and/or annual budget delivered by the
Company or LLC pursuant to Section 7.1(f).
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in Ogden, Utah, Chicago, Illinois or New York, New
York are required or authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"CCC" means the Commodity Credit Corporation or any successor entity.
"CCC LOANS" means loans made by CCC to LLC.
"CHANGE IN CONTROL EVENT" means the termination of full-time
employment with LLC or the Company as a result of resignation or removal (for
any reason) of any five of the following nine individuals prior to January 1,
2002: Xxxxx X. Xxxxxx, Xx., Xxxxxxxx X. Xxxxx, Xxxxx X. Xxxxxx, K. Xxxx
Xxxxxxxx, Xxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxx and
Xxxxxx X. Xxxxx.
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"COLLATERAL AGENT" means First Security Bank, National Association, or
any successor Collateral Agent under the Collateral Agency Agreement dated as of
the date of this Agreement among such Collateral Agent and the Company.
"COMPANY" means Snake River Sugar Company, an Oregon cooperative.
"COMPANY AGREEMENT" means the Company Agreement of LLC dated as of
January 3, 1997, as amended to the date of the Closing.
"CONSOLIDATED" means, with respect to the accounting item with respect
to any Person, such item on a consolidated basis for such Person and its
Subsidiaries.
"CONSOLIDATED FIXED CHARGES" means the sum of (i) Consolidated
Interest Expense, (ii) scheduled payments of principal in respect of Senior Debt
(excluding (x) Debt of LLC and (y) an amount equal to 80% of the principal
amount of the loans guaranteed by the Company under the Henry's Fork Loan
Agreement and the Midwest Loan Agreement outstanding on the date of
determination, and (iii) Consolidated operating lease and rent payments, of the
Company and its Subsidiaries in each case as projected for the four consecutive
fiscal quarter period immediately succeeding the date of determination.
"CONSOLIDATED INTEREST EXPENSE" means all interest expense on Debt
described in clause (i) of the definition of Senior Debt, including, without
limitation, all commissions, discounts or related amortization and other fees
and charges with respect to letters of credit and bankers' acceptance financing
and the net costs associated with interest swap obligations, amortization of
debt expense and original issue discount and the interest portion of any
deferred payment obligation (including leases of all types), calculated in
accordance with the effective interest method.
"CONSOLIDATED NET INCOME" means with respect to any Person,
Consolidated gross revenues less all operating and non-operating expenses and
other proper charges determined in accordance with GAAP; provided that there
shall be excluded from the calculation of Consolidated Net Income:
(a) extraordinary gains;
(b) gains or losses resulting from the sale or other disposition of
capital assets;
(c) undistributed earnings of non-Subsidiary Investments;
(d) gains arising from changes in accounting principles;
(e) gains arising from the write-up of assets;
(f) any earnings of a Person acquired by the Company or any
Subsidiary of the Company prior to the date such acquisition occurs; and
(g) any gains or losses resulting from the retirement or
extinguishment of Debt.
"CONSOLIDATED TANGIBLE ASSETS" means the total net book value of all
assets of the Company and its Subsidiaries (excluding goodwill, trade names,
copyrights, trademarks, other intangible assets, and write-ups of assets after
the date of the Closing) determined on a Consolidated basis as of the last day
of the Company's most recently ended fiscal year.
"CONSOLIDATED TANGIBLE NET WORTH" means Consolidated shareholders'
equity of the Company and its Subsidiaries excluding goodwill, trade names,
copyrights, trademarks, other intangible assets and write-ups of assets after
the date of the Closing.
"CONSOLIDATED TOTAL DEBT" means the sum of Senior Debt and
Subordinated Debt.
"CURRENT DEBT" means any Debt that is payable on demand or that
matures within one year, without any option on the part of the borrower or
issuer thereunder to extend or renew such Debt for a period of more than one
year from the date of original issuance or borrowing. Notwithstanding the
foregoing, Current Debt shall include the Bank Loans and the CCC Loans.
"DEBT" means, with respect to any Person:
(a) any indebtedness for borrowed money, (including commercial paper
and revolving credit line borrowings), or which is evidenced by bonds,
debentures or notes, or otherwise representing the deferred purchase price of
property or extensions of credit, whether or not representing obligations for
borrowed money (other than trade, payroll and taxes payable),
(b) indebtedness of a third party secured by Liens on the assets of
such Person or a Subsidiary of such Person,
(c) Capital Lease Obligations,
(d) Guarantees,
(e) with the exception of the AGM Interest, capital stock (or similar
equity interests) that provides for mandatory redemption or repurchase or
repurchase at the option of the holder thereof (and, if such Person is a
Subsidiary of the Company, all capital stock (or similar equity interests) which
is preferred as to liquidation and is held by Persons other than the Company or
a Wholly-Owned Subsidiary of the Company);
(f) obligations with respect to Swaps, letters or credit and similar
obligations; and
(g) modifications, renewals and extensions of the above.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater of
(i) 2% per annum above the rate of interest stated in clause (a) of the first
sentence of Section 8.2(a) or (ii) 2% over the rate of interest publicly
announced by The Bank of New York in New York, New York as its "base" or "prime"
rate.
"DELAYED PAYMENT" means payment by the Company of any principal or
interest on any Subordinated Note after the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise or payment by the Company of any other amount payable hereunder or
under any of the Transaction Documents to the holder of any Subordinated Note.
"DISTRIBUTABLE CASH" means, with respect to any period, Consolidated
Net Income of LLC for such period (or for periods prior to January 1, 1997, of
Amalgamated) plus (i) actual book depreciation, depletion, amortization and LLC
Consolidated Interest Expense included in computing such net income and (ii) the
LIFO Adjustment, if any, used in computing such net income, less (iii) actual
capital expenditures and actual LLC Consolidated Interest Expense paid (net of
interest capitalized) for such period (or for periods prior to January 1, 1997,
of Amalgamated) and (iv) $1,800,000 if the relevant period is a year and a pro
rata portion thereof if the relevant period is less than a year.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means LLC and any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company or
LLC under section 414 of the Code, and which is controlled by the Company or
LLC.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCESS CASH FLOW" means, with respect to any period, Distributable
Cash for the comparable period of LLC ending on or closest (but prior) to the
last day of such period, less (i) actual debt service in respect of Senior Debt
described in clause (i) of the definition of "Senior Debt" (including, without
limitation any Debt of Persons other than the Company guaranteed by the Company)
of the Company, including without limitation, the Senior Notes, (ii) patronage
dividends actually paid to the Company's shareholders, and (iii) Permitted
Operating Expenses.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an arm's-
length sale at such time between an informed and willing buyer and an informed
and willing seller (neither being under a compulsion to buy or sell).
"FUNDED DEBT" means all Debt other than Current Debt.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"GOOD FAITH CONTEST" means an active challenge or contest initiated in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or other political
subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts jurisdiction over any
properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GROWER CONTRACTS" means the Grower Agreements between each of the
members of the Company and the Company.
"GUARANTEE" means, with respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any Debt,
lease, dividend or other obligation of another, including, without limitation,
any such obligation directly or indirectly guaranteed, endorsed (otherwise than
for collection or deposit in the ordinary course of business) or discounted or
sold with recourse by such Person, or in respect of which such Person is
otherwise directly or indirectly liable, including, without limitation, any such
obligation in effect guaranteed by such Person through any agreement (contingent
or otherwise) to (i) maintain the solvency or any balance sheet or other
financial condition of another Person or (ii) make payment for any products,
materials or supplies or for any transportation or services regardless of the
non-delivery or non-furnishing thereof, in any such case if the purpose or
effect of such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected against loss in
respect thereof. Guarantees shall include obligations of partnerships and joint
ventures of which such Person or any Subsidiary is a general partner or
co-venturer that is not expressly non-recourse to such Person or such
Subsidiary.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"HENRY'S FORK LOAN AGREEMENT" means the Loan and Security Agreement,
dated as of January 3, 1997, between Snake River Farms II, LLC and Henry's Fork
Financial, Inc., and any refinancing of such loan thereunder provided that such
refinancing is on terms no more onerous to Snake River Farms II, LLC than those
existing on the Closing as it may be amended, supplemented or otherwise modified
from time to time.
"HOLDER" means, with respect to any Subordinated Note, the Person in
whose name such Subordinated Note is registered in the register maintained by
the Company pursuant to Section 13.1.
"INDEMNIFICATION AND POST-CLOSING AGREEMENT" means the Indemnification
and Post-Closing Agreement, dated as of January 3, 1997, among Amalgamated, the
Company and LLC, as it may be amended, supplemented or otherwise modified from
time to time.
"INSTITUTIONAL INVESTOR" means (a) any original holder of a
Subordinated Note or Senior Note and (b) any bank, trust company, savings and
loan association or other financial institution, any pension plan, any
investment company, any fund managed by an investment adviser, any mutual fund,
any insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.
"INTERCREDITOR AGREEMENT" is defined in Section 4.21.
"INVESTMENT" means any investment, made in cash or by delivery of
property, by the Company, LLC or any of their respective Subsidiaries in any
Person, whether by acquisition of stock, Debt or other obligation or Security,
or by loan, Guarantee, advance, capital contribution or otherwise.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, set-off, bankers' lien or similar arrangement, charge or other lien
of any kind, any agreement to give the same, any conditional sale or other title
retention agreement, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"LIFO ADJUSTMENT" means the adjustment made to net income of LLC (with
inventory accounting done on a first-in, first-out basis) to derive net income
of LLC on a last-in, first-out basis.
"LLC" means The Amalgamated Sugar Company LLC, a limited liability
company organized under the laws of the State of Delaware.
"LLC CONSOLIDATED INTEREST EXPENSE" means all interest expense of LLC
and its Subsidiaries, including, without limitation, all commissions, discounts
or related amortization and other fees and charges with respect to letters of
credit and bankers' acceptance financing and the net costs associated with
interest swap obligations, amortization of debt expenses and original issue
discount and the interest portion of any deferred payment obligation (including
leases of all types), calculated in accordance with the effective interest
method, all as determined on a consolidated basis for LLC and its Subsidiaries.
"LOAN DOCUMENTS" means this Agreement, the Subordinated Notes and all
other instruments, documents and agreements executed by or on behalf of the
Company and delivered concurrently herewith or at any time hereafter to or for
the benefit of you in connection with the Subordinated Notes and other
transactions contemplated by this Agreement, all as amended, restated,
supplemented or otherwise modified from time to time.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or LLC and its Subsidiaries,
taken as a whole, or (b) the ability of the Company to perform its obligations
under this Agreement and the Subordinated Notes, or (c) the validity or
enforceability of this Agreement, any Transaction Document or the Subordinated
Notes.
"MIDWEST LOAN AGREEMENT" means the Loan Agreement, dated December 26,
1996 between Snake River Farms, LLC and Midwest Agri-Commodities Company, and
any refinancing of such loan thereunder provided that such refinancing is on
terms no more onerous to Snake River Farms, LLC than those existing on the
Closing as it may be amended, supplemented or otherwise modified from time to
time.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NOTE PURCHASE AGREEMENTS" means the Note Purchase Agreements dated as
of the date of Closing between the Company and each of the purchasers of Senior
Notes pursuant to such agreements.
"OBLIGATIONS" means all obligations, liabilities and indebtedness of
every nature of the Company from time to time owed to you under the Loan
Documents including the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company or LLC, as applicable whose
responsibilities extend to the subject matter of such certificate.
"OWNED SUBSIDIARY" means as to any Person (a), any corporation(s),
partnership(s) or other entities organized under the laws of any state of the
United States in which such Person or another Owned Subsidiary of such Person,
as the case may be, beneficially owns or controls, either directly or
indirectly, 50% or more of the outstanding capital stock or equity interest.
"PAYMENT ESCROW" means the sum of (i) $5,000,000 in cash and (ii)
marketable securities with a value of $5,000,000 (marked to market on a
quarterly basis), both deposited with and pledged to the Collateral Agent for
the benefit of the holders of the Senior Notes. No Payment Escrow shall be
required after more than 50% of the original principal amount of the Senior
Notes has been repaid.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERCENTAGE OF EARNINGS CAPACITY" means, with respect to assets of the
Company, LLC and/or their respective Subsidiaries Transferred or proposed to be
Transferred, the ratio (expressed as a percentage) of (i) Consolidated Net
Income produced by or attributable to such assets during the thirty-six (36)
month period most recently ended prior to the date of their Transfer or proposed
Transfer to (ii) Aggregate Consolidated Net Income.
"PERMITTED OPERATING EXPENSES" means miscellaneous operating expenses
of the Company.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company, LLC or any ERISA
Affiliate or with respect to which the Company, LLC or any ERISA Affiliate may
have any liability.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, xxxxxx
or inchoate.
"REQUIRED HOLDER(S)" means the holder(s) of at least 66 2/3% of the
aggregate principal amount of Subordinated Notes from time to time outstanding.
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company or LLC, as applicable, with responsibility for the
administration of the relevant portion of this agreement.
"RESTRICTED PAYMENTS" means any: (a) dividend payments or other
distributions of cash, assets, properties, obligations or securities on account
of any class of equity interest (other than stock dividends or their equivalent)
in the Company or LLC, including the AGM Interest (including, without
limitation, repayment of Unit Retains), and (b) repurchases or redemptions of
equity interests in the Company or LLC.
"SALE-AND-LEASEBACK TRANSACTION" means a transaction or series of
transactions pursuant to which the Company, LLC or any Subsidiary of the Company
or LLC shall sell or transfer to any Person any property, whether now owned or
hereafter acquired, and, as part of the same transaction or series of
transactions, the Company, LLC or any Subsidiary of the Company or LLC shall
rent or lease as lessee, or similarly acquire the right to possession or use of,
such property or one or more properties which it intends to use for the same
purpose or purposes as such property.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SECURITY" has the meaning set forth in Section 2(1) of the Securities
Act.
"SENIOR DEBT" means (i) all Debt of the Company other than the
Subordinated Debt and (ii) up to $50,000,000 of Debt of LLC.
"SENIOR NOTES" means the Company's 10.8% Senior Notes due April 30,
2009.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company or LLC, as
applicable.
"SPT" means the Amalgamated Collateral Trust, a Delaware business
trust, formed pursuant to the SPT Trust Agreement.
"SUBORDINATED DEBT" shall mean the Debt evidenced by the Subordinated
Notes.
"SUBORDINATED NOTES" is defined in Section 1.
"SUBORDINATION AGREEMENT" means the Subordination Agreement,
substantially in the form of Exhibit B-1, as it may be amended, supplemented or
otherwise modified from time to time.
"SUBSIDIARY" or "SUBSIDIARIES" means as to any Person (a) any
corporation(s) organized under the laws of any state of the United States of
which such Person or another Subsidiary of such Person, as the case may be,
beneficially owns or controls, either directly or indirectly, 100% of the
outstanding capital stock, and (b) any partnership(s) or other entities
organized under the laws of any state of the United States in which such Person
or another Subsidiary of such Person, as the case may be, holds a 100% equity
interest and controls the management of such entity, and (c) in the context of a
Subsidiary of the Company, LLC.
"SUBSTANTIAL PART" means, as of any date of determination and with
respect to assets of the Company, LLC and/or their respective Subsidiaries, any
of the following:
(a) assets having, when taken together with all other assets
Transferred by the Company, LLC and/or their respective Subsidiaries during the
twelve month period immediately preceding the date of determination, an
aggregate net book value or an aggregate Fair Market Value (whichever is
greater) equal to or greater than 10% of Consolidated Tangible Assets;
(b) assets having, when taken together with all other assets
Transferred by the Company, LLC and/or their respective Subsidiaries from and
after the date of Closing, an aggregate net book value or an aggregate Fair
Market Value (whichever is greater) equal to or greater than 25% of Consolidated
Tangible Assets;
(c) assets having, when taken together with all other assets
Transferred by the Company, LLC and/or their respective Subsidiaries during the
twelve month period immediately preceding the date of determination, an
aggregate Percentage of Earnings Capacity equal to or greater than 10%; or
(d) assets having, when taken together with all other assets
Transferred by the Company, LLC and/or their respective Subsidiaries from and
after the date of Closing, an aggregate Percentage of Earnings Capacity equal to
or greater than 25%.
"SWAPS" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"TRANSACTION DOCUMENTS" means this Agreement, the Subordinated Notes,
the Valhi Option Agreement, and the Subordination Agreement.
"TRANSFER" or "TRANSFERRED" is defined in Section 10.2.
"UNIT RETAINS" means withholdings of beet crop payments due to the
grower shareholders of the Company as imposed by the Company's board of
directors.
"VALHI OPTION AGREEMENT" means the Option Agreement in substantially
the form of Exhibit B-2 attached hereto, as it may be amended, supplemented or
otherwise modified from time to time.
"VOTING RIGHTS COLLATERAL DEPOSIT AGREEMENT" means the Collateral
Deposit Agreement, substantially in the form of Exhibit B-3 hereto, as it may be
amended, supplemented or otherwise modified from time to time.
"VOTING RIGHTS ESCROW" means the cash, securities and/or letter of
credit deposited with the Collateral Agent under the Voting Rights Collateral
Deposit Agreement.
"WHOLLY-OWNED SUBSIDIARY" means with respect to any Person, at any
time, any Subsidiary of such Person one hundred percent (100%) of all of the
equity interests (except directors' qualifying shares) and voting interests of
which are owned by any one or more of such Person and such Person's other
Wholly-Owned Subsidiaries at such time.
"YEAR-END TRANSACTIONS" means the transactions among the Company, you,
Amalgamated and LLC that, among other things, resulted in (i) the formation of
LLC, (ii) the contribution by Amalgamated of the assets and liabilities of
Amalgamated to LLC, (iii) this Agreement and the Company's loan to Valhi, Inc.,
and (iv) the closing of and financing by Henry's Fork Financial, Inc. of the
equity offering for the Company.
TABLE OF CONTENTS
Section Page
1. AUTHORIZATION OF SUBORDINATED NOTES. . . . . . . . . . . . . . . . 1
2. ISSUANCE OF SUBORDINATED NOTES . . . . . . . . . . . . . . . . . . . . . .
. 1
3. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 2
4. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . 2
4.1. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 2
4.2. Performance; No Default . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 2
4.3. Compliance Certificate. . . . . . . . . . . .. . . . . . . . . . . . . . .
. . . . . . . . . . . . . 2
4.4. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 2
4.5. Purchase Permitted By Applicable Law, etc. . . . . . . . . . . . . . . . .
. . . . . . . 3
4.6. Sale of Senior Notes. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 3
4.7. [Section Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 3
4.8. [Section Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 3
4.9. Changes in Corporate Structure. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 3
4.10. Proceedings and Documents. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . 3
4.11. Delivery of Company Documents . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 3
4.12. [Section Reserved]. . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.13. [Section Reserved] . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.14. [Section Reserved] . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.15. [Section Reserved] . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.16. Execution and Delivery of Documents. . . . . . . . . . . . .
. . . . . . . . . . . . . . 4
4.17. Payment of Tranche A Note. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . 5
4.18. [Section Reserved]. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.19. [Section Reserved]. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.20. [Section Reserved]. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.21. [Section Reserved]. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.22. [Section Reserved]. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.23. Consents . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.24. [Section Reserved] . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.25. Amendment of Henry's Fork Loan Agreement. . . . . . . . . . . . .
. . . . . . . . 5
4.26. Subsidiaries of Company. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . 6
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . 6
5.1. Organization; Power and Authority . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 6
5.2. Authorization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 6
5.3. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 7
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates . . . . .
. . 7
5.5. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 8
5.6. Compliance with Laws, Other Instruments, etc.. . . . . . . . . . . . . . .
. . . . . . 8
5.7. Governmental Authorizations, etc.. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 9
5.8. Litigation; Observance of Agreements, Statutes and Orders . . . . . . . .
. . . 9
5.9. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 9
5.10. Title to Property; Leases . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . 10
5.11. Licenses, Permits, etc. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .10
5.12. Compliance with ERISA. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . 10
5.13. Private Offering by the Company . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 11
5.14. Use of Proceeds; Margin Regulations. . . . . . . . . . . . .
. . . . . . . . . . . . . . . 11
5.15. Existing Debt; Future Liens. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . 12
5.16. Foreign Assets Control Regulations, etc.. . . . . . . . . . . . .
. . . . . . . . . . . . 12
5.17. Status under Certain Statute . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . 12
5.18. Environmental Matters. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.19. Capitalization. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.20. Broker's Fees. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.21. Solvency. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.22. Employee Matters. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.23. Affiliate Transactions. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .14
5.24. Indebtedness of Company Members.. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 14
5.25. Legislation.. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6. YOUR REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . 14
7. INFORMATION AS TO COMPANY. . . . . . . . . . . . . . . . . . . . . . . . .
. . 15
7.1. Financial and Business Information. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 15
7.2. Officer's Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 19
7.3. Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 19
8. PREPAYMENT OF THE SUBORDINATED NOTES AND FUTURE
ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 20
8.1. Required Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 20
8.2. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 21
8.3. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 22
8.4. Your Obligations to make Future Advances.. . . . . . . . . . . . . . . . .
. . . . . . 22
9. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 23
9.1. Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 23
9.2. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 23
9.3. Maintenance of Properties. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 24
9.4. Payment of Taxes and Claims. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 24
9.5. Existence; Tax Status; etc.. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 24
9.6. Maintenance of Revolving Credit Facility. . . . . . . . . . . . . . . . . .
. . . . . . . 25
9.7. [Section Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 25
9.8. [Section Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 25
9.9. [Section Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 25
9.10. Tax Status of LLC. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.11. Payments by Dual Payment Check. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 25
10. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . 25
10.1. Transactions with Affiliates. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . 25
10.2. Merger, Consolidation, etc.. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . 26
10.3. Liens. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
10.4. Subsidiary Debt. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
10.5. Restricted Payments. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .28
10.6. Debt. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
10.7. Debt of LLC. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.8. Financial Covenants. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.9. Investments. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.10. Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 31
10.11. Restrictions on Subsidiaries. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 32
10.12. Sale-and-Leasebacks. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 32
10.13. Sale of Stock of Subsidiary, etc. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 32
10.14. [Section Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 33
10.15. [Section Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 33
10.16. Line of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 33
10.17. Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 33
10.18. [Section Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 33
11. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 33
12. REMEDIES ON DEFAULT, ETC. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 36
12.1. Acceleration. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.2. Other Remedies. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
12.3. Rescission. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
00.0.Xx Waivers or Election of Remedies, Expenses, etc. . . . . . . . . . . . .
. . . . 37
12.5. Set Off. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
12.6. Subordination Agreement. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . 38
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. . . . . . . 38
13.1. Registration of Subordinated Notes. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 38
13.2. Transfer and Exchange of Subordinated Notes. . . . . . . . . . . . .
. . . . . . . . 38
13.3. Replacement of Subordinated Notes. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 39
14. [SECTION RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 39
15. EXPENSES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 39
15.1. Transaction Expenses. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .39
15.2. Survival. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 40
17. AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 40
17.1. Requirements. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
17.2. Solicitation of Holders of Subordinated Notes. . . . . . . . . . . . .
. . . . . . . . 41
17.3. Binding Effect, etc. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
17.4. Subordinated Notes held by Company, etc. . . . . . . . . . . . .
. . . . . . . . . . . 41
18. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 42
19. REPRODUCTION OF DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . .
. . 42
20. [SECTION RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 43
21. [SECTION RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 43
22. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 43
22.1. Successors and Assigns. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . 43
22.2. [Section Reserved] . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
22.3. Severability. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
22.4. Construction. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
22.5. Counterparts. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
22.6. Governing Law. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
22.7. Indemnity. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
22.8. CONSENT TO JURISDICTION. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 44
22.9. WAIVER OF JURY TRIAL. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . 45
00.00.Xx Fiduciary Relationship; Limitation of Liabilities. . . . . . . . . . .
. . . . . . 45
22.11. No Duty. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SCHEDULE A -- DEFINED TERMS
SCHEDULE 3 -- Funds Flow Information
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials; Projections
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Debt
SCHEDULE 5.19 -- Capitalization
SCHEDULE 5.23 -- Affiliate Transactions
SCHEDULE 9.2 -- Insurance
EXHIBIT 1-A -- Form of Senior Subordinated Note due April 30, 2010
EXHIBIT 1-B -- Form of Senior Subordinated Note due April 30, 2010
EXHIBIT 4.4(a) -- Form of Opinion of Special Counsel for the Company
EXHIBIT B-1 -- Form of Subordination Agreement
EXHIBIT B-2 -- Form of Valhi Option Agreement
EXHIBIT B-3 -- Form of Voting Rights Collateral Deposit
Agreement
