EXHIBIT 10.9
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT ("FOURTH AMENDMENT") is made
as of August 6, 2003 ("EFFECTIVE DATE"), by and between U.S. PREMIUM BEEF, LTD.,
a marketing cooperative formed under the laws of the State of Kansas,
("BORROWER"), whose mailing address is 00000 Xxxxx Xxxxxxxxxx Xxxxx, Xxxxxx
Xxxx, Xxxxxxxx 00000, and COBANK, ACB ("COBANK"), as agent for the benefit of
the Syndication Parties (in that capacity, "AGENT"), whose mailing address is
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000.
RECITALS
A. CoBank, as Agent and as a Syndication Party (collectively, the
present and future Syndication Parties shall be referred to herein as the
"Syndication Parties" and, each, a "Syndication Party") and Borrower entered
into that certain Credit Agreement (Term Loan) dated as of November 25, 1997, as
amended by that certain First Amendment to Credit Agreement (Term Loan) dated
effective as of March 21, 2000, as amended by that certain Second Amendment to
Credit Agreement (Term Loan) dated effective as of August 24, 2001, and as
amended by that certain Third Amendment to Credit Agreement dated effective as
of August 29, 2002 (as so amended and as further amended, modified,
supplemented, restated or replaced from time to time, the "Credit Agreement")
pursuant to which the Syndication Parties agreed to make a term loan to Borrower
under the terms and conditions set forth in the Credit Agreement.
B. Borrower has requested that the Syndication Parties amend the Credit
Agreement which the Syndication Parties are willing to do under the terms and
conditions as set forth in this Fourth Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, including the mutual promises and agreements
contained herein, the parties hereto hereby agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is amended as of
the Effective Date as follows:
1.1 Section 1.44 is amended in its entirety to read as follows:
1.44 FIXED RATE MARGIN: shall be the amount determined
from time to time as provided in Section 5.5 hereof; provided that
during any time that the amount on deposit in the Cash Collateral
Account is equal to, or greater than, one-hundred percent (100.0%) of
the Credit Exposure Amount and so long as the amount on deposit is
never less than one-hundred percent (100.0%) of the Credit Exposure
Amount, the Fixed Rate Margin shall be 100 basis points, provided
further that the Fixed Rate Margin once set for a Fixed Rate Loan will
not change during the Fixed Rate Period therefore.
EXHIBIT 10.9
1.2 Section 1.104 is amended in its entirety to read as follows:
1.104 UNIT RETAINS: the portion of the purchase price for
each head of cattle delivered to Borrower by its members which is
retained by Borrower as unit retention capital.
1.3 Section 1.123 is amended in its entirety to read as follows:
1.123 WORKING CAPITAL: means the excess of Current Assets
over Current Liabilities; provided that for all periods commencing on
the day after the last day of Borrower's Fiscal Quarter which ends in
February of 2004, the current portion of Funded Debt attributable to
Debt in respect of Advances, shall be deemed to be $1,040,927.00 for
the purposes of determining the amount of Borrower's Working Capital at
any time during such period. In addition, for the purpose of
determining Working Capital, Current Assets will include (a) cash
distributions reasonably expected to be received from National Beef
during the quarterly reporting period that follows the date of
determination of Working Capital; and (b) to the extent not otherwise
included in Current Assets, the amount on deposit in the Cash
Collateral Account and subject to a first lien security interest in
favor of Agent as of the date of determination.
1.4 Article I is amended by the addition of the following new
Sections reading as follows:
1.124 CASH COLLATERAL ACCOUNT: shall have the meaning set
forth in Section 9.2 hereof.
1.125 CONTROL AGREEMENT: means a control agreement, in form
and substance satisfactory to the Agent, executed and delivered by
Borrower, the Agent, and the applicable securities intermediary with
respect to a Securities Account (as defined in the Colorado Uniform
Commercial Code) or bank with respect to a deposit account.
1.126 CREDIT EXPOSURE AMOUNT: means, on any date, the sum
of (a) the unpaid amount owing under the Loans and the Notes on such
date, including amounts owing for principal, Funding Losses, fees,
costs, interest, and reimbursements; and (b) without duplication.
Borrower's xxxx-to-market exposure under the Swap Agreement.
1.127 CREDIT EXPOSURE NOTICE: shall have the meaning set
forth in Section 9.2 hereof.
1.128 NATIONAL BEEF LOAN: means the loan in the approximate
amount of $265,000,000.00 extended to National Beef by a lending group
led by U.S. Bank National Association, pursuant to that certain Third
Amended and Restated Credit Agreement dated as of August 6, 2003.
1.129 NEW ENTITY: shall have the meaning set forth in
Section 17.20 hereof.
1.5 New Sections 9.2 and 9.3 are added to read as follows:
9.2 CASH COLLATERAL; CASH COLLATERAL ACCOUNT. Borrower
shall (a) on or before August 8, 2003 (i) establish an account with the
Agent, or with such other
EXHIBIT 10.9
financial institution as shall be approved by the Majority Lenders
("Cash Collateral Account"), (ii) deposit by wire transfer funds into
such Cash Collateral Account in an amount equal to not less than
seventy-five percent (75.0%) of the Credit Exposure Amount on such
date, and (iii) take such action, including the execution and delivery
(and, where requested, obtaining the execution thereof by third
parties) of security agreements, Control Agreements, financing
statements, and/or such other documents as the Agent may require, in
order to grant to the Agent, on behalf of the Syndication Parties, a
first priority lien security interest on such Cash Collateral Account
and the funds and other assets on deposit therein as security for the
payment and performance of all obligations of Borrower to Agent, to
CoBank (including but not limited to all obligations of Borrower under
Article 8 hereof and under any agreement entered into by and between
Borrower and CoBank pursuant to, or in furtherance of the purposes and
requirements of, Section 5.4 hereof) and to the Syndication Parties,
including but not limited to principal and interest under the Notes,
purchases of CoBank Equity Interests, fees, Funding Losses,
reimbursements, and all other Bank Debt or obligations under any of the
Loan Documents; and (b) no later than August 31, 2004, either (i)
deposit by wire transfer funds into the Cash Collateral Account in an
amount sufficient so that the amount on deposit therein will equal
one-hundred percent (100.0%) of the Credit Exposure Amount on such
date, or (ii) commence either or both of the following actions: (A)
decrease the amount of its patronage payments to its Members in an
amount sufficient so that when such amount is deposited into the Cash
Collateral Account, the amount on deposit therein will equal
one-hundred percent (100.0%) of the Credit Exposure Amount on February
28, 2005, and/or (B) assess and collect or retain Unit Retains for
cattle delivered or required to be delivered pursuant to the Delivery
Agreements such that the aggregate of all such Unit Retains during the
period from August 31, 2004 to, but excluding, February 28, 2005 is an
amount sufficient so that when such amount is deposited into the Cash
Collateral Account, the amount on deposit therein will equal
one-hundred percent (100.0%) of the Credit Exposure Amount on such
date; provided that without regard to the amount of decrease in
patronage payments pursuant to the requirements of this clause
(b)(ii)(A), or the amount of Unit Retains assessed and collected or
retained pursuant to the requirements of this clause (b)(ii)(B), or
otherwise, Borrower shall, on February 28, 2005, deposit by wire
transfer funds into the Cash Collateral Account sufficient so that the
amount on deposit therein equals one-hundred percent (100.0%) of the
Credit Exposure Amount on such date. As soon as it is reasonably able
following the last day of each month, the Agent shall calculate the
Credit Exposure Amount as of such month end and shall send Borrower
written notice ("Credit Exposure Notice") showing as of such date (x)
the Credit Exposure Amount, (y) the amount on deposit in the Cash
Collateral Account, and (z) (i) the amount by which the Credit Exposure
Amount exceeds the amount required to be on deposit in the Cash
Collateral Account ("shortfall") based on the requirement that the
amount on deposit in the Cash Collateral Account shall be (A)
seventy-five percent (75.0%) of the Credit Exposure Amount from August
8, 2003 until August 31, 2004, or until February 28, 2005 if Borrower
has elected to take, and does in fact take, the action described above
in clause (b)(ii) of this Section, and (B) on and after August 8, 2003
or February 28, 2005, as applicable (depending upon whether Borrower
has elected to take the action described above in clause (b)(ii) of
this Section), one hundred percent (1 00.0%) of the Credit
EXHIBIT 10.9
Exposure Amount, or (ii) the amount by which the amount on deposit in
the Cash Collateral Account exceeds ("excess") one hundred percent
(100.0%) of the Credit Exposure Amount. In the event that the Credit
Exposure Notice states that there is a shortfall, then Borrower shall,
within three (3) Banking Days of receipt of the Credit Exposure Notice,
remit by wire transfer funds to the Agent for deposit into the Cash
Collateral Account in the amount of such shortfall. In the event that
the Credit Exposure Notice states that there is an excess, and so long
as there is no Potential Default or an Event of Default which is
continuing, Borrower may make a written request to the Agent to remit
to Borrower from the Cash Collateral Account the amount of such excess,
and the Agent shall make such remittance within a reasonable time after
the receipt of such written request; provided that Borrower shall not
be entitled to make such a request any more frequently than once each
month nor based on any Credit Exposure Notice after the date that a
subsequent Credit Exposure Notice has been sent by the Agent.
9.3 RELEASE OF LIEN ON CERTAIN OF THE COLLATERAL. Within
a reasonable time after the expiration of ninety-three (93) days from
the date on which Borrower has complied with all of the requirements of
Section 9.2 hereof, and the amount of collected funds in the Cash
Collateral Account are no less than one-hundred percent (100.0%) of the
Credit Exposure Amount on such date, the Agent will take such action
and execute and/or file such documents as may be necessary in order to
release the lien in favor of the Agent, on behalf of CoBank, the Agent,
and the Syndication Parties, on the Collateral, provided that the Agent
shall not be required to take any action which would or might release
or jeopardize the lien on (a) the CoBank Equity Interests; or (b) the
Cash Collateral Account or the funds or other assets on deposit
therein.
1.6 Section 12.18 is amended in its entirety to read as follows:
12.18 UNIT RETAINS; DECREASE MEMBER PATRONAGE PAYMENTS.
Borrower shall, under the Delivery Agreements or otherwise, obtain the
contractual right to, and shall in fact, assess and collect or retain
Unit Retains for cattle delivered or required to be delivered pursuant
to the Delivery Agreements such that Borrower will be in compliance
with Section 9.2(b) hereof, and, further, Borrower shall take such
action as is necessary to ensure that such Unit Retains (a) are
"qualified" under the Internal Revenue Code of 1986 so as to not be
taxable to Borrower under federal law; and (b) are available as unit
retention capital for Borrower's general business purposes including
debt service and the funding of the Cash Collateral Account.
1.7 Clause (e) of Section 13.8 is amended in its entirety to read
as follows:
(e) a general and/or limited partnership interest, up to,
in either case, a one hundred percent (100%) interest, in
National Beef or, in lieu thereof, an equity interest in New
Entity; and
1.8 Clause (a) of Section 13.11 is amended in its entirety to read
as follows:
(a) refund any Unit Retains and/or pay interest on Unit
Retains so long as (i) such interest payments are treated as
expenses to be deducted from income in the
EXHIBIT 10.9
calculation of the Debt Service Coverage Ratio, and (ii) with
respect to any such refunds or payments after August 31, 2004,
the amount on deposit in the Cash Collateral Account is not
less than one-hundred percent (100.0%) of the Credit Exposure
Amount;
1.9 Section 15.1 is amended by deletion of the reference to
"Farmland" in clauses (c), (d), (f), (g). and (j) thereof, and by the addition
of a new clause (k) reading as follows:
(k) Any default by National Beef under the National Beef
Loan or the documents executed in connection therewith.
1.10 Clause (h) of Section 15.1 is amended in its entirety to read
"Intentionally omitted", and each reference in the Credit Agreement to the "Note
Purchase Agreement" or to specific Sections thereof, is deleted.
1.11 A new Section 17.19 is added reading as follows:
17.19 SUSPENSION OF CERTAIN PROVISIONS. Notwithstanding any
other provision in this Credit Agreement to the contrary, effective
upon the date which is ninety-three (93) days after the date when the
amount on deposit in the Cash Collateral Account equals or exceeds
one-hundred percent (100.0%) of the Credit Exposure Amount, and so long
as the amount on deposit in the Cash Collateral Account is never less
than one-hundred percent (100.0%) of the Credit Exposure Amount, the
following Sections and Subsections of the Credit Agreement shall be
treated as having been amended in their entirety to read, as
applicable, "This Subsection Intentionally Omitted" or "This Section
Intentionally Omitted": 1.26, 1.123, 12.2.10, 12.11, 12.19, 12.20,
13.14, 15.1(j), and 15.4.
1.12 A new Section 17.20 is added reading as follows:
17.20 CONVERSION OF NATIONAL BEEF AND ACTIONS REGARDING
COLLATERAL. In the event that National Beef is converted from a limited
partnership form of entity to a limited liability company form of
entity, or to any other form of entity, or is merged into another
entity (in any such case, the "NEW ENTITY"), Borrower shall take such
action, execute or caused to be executed such documents, and deliver
such forms of ownership, as the Agent shall reasonably require so that
the Agent, as security for the payment and performance of all
obligations of Borrower to Agent, to CoBank (including but not limited
to all obligations of Borrower under Article 8 hereof and under any
agreement entered into by and between Borrower and CoBank pursuant to,
or in furtherance of the purposes and requirements of, Section 5.4
hereof) and to the Syndication Parties, including but not limited to
principal and interest under the Notes, purchases of CoBank Equity
Interests, fees, Funding Losses, reimbursements, and all other Bank
Debt or obligations under any of the Loan Documents, will have a first
priority lien on and security interest in, Borrower's equity interest
in the New Entity, which interest shall be equal to no less than
twenty-nine percent (29.0%) of the total equity interests therein, and
in all distributions therefrom on account of such equity interest, and
which equity interest and distributions shall be considered a part of
the "Collateral" as defined herein. Any lien
EXHIBIT 10.9
and security interest arising out of the provisions of this Section
will be subject to the release provisions of Section 9.3 hereof.
2. CONDITIONS TO EFFECTIVENESS OF THIS FOURTH AMENDMENT. The effectiveness
of this Fourth Amendment is subject to satisfaction, in Agent's sole discretion,
of each of the following conditions precedent:
2.1 SECURITY DOCUMENTS. Execution of such Control Agreement,
security agreement, financing statement, or other document as the Agent shall
require in connection with perfection of the Agent's lien on the Cash Collateral
Account and the funds and other assets on deposit therein, as required pursuant
to Section 9.2 of the Credit Agreement, and all such documents shall be deemed
to be "Security Documents" as that term is used in the Credit Agreement or any
other Loan Document.
2.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Borrower shall be true and correct in all material respects on and
as of the Effective Date as though made on and as of such date.
2.3 NO EVENT OF DEFAULT. No Event of Default shall have occurred
and be continuing under the Credit Agreement as of the Effective Date of this
Fourth Amendment.
2.4 AMENDMENT FEE AND COSTS AND EXPENSES. Borrower shall have paid
to Agent an amendment fee in the amount of $5,000.00, and shall have reimbursed
Agent for all of its costs and expenses incurred in connection with this Fourth
Amendment, including attorney's fees to Agent's counsel.
3. GENERAL PROVISIONS.
3.1 NO OTHER MODIFICATIONS. The Credit Agreement, as expressly
modified herein, shall continue in full force and effect and be binding upon the
parties thereto.
3.2 SUCCESSORS AND ASSIGNS. This Fourth Amendment shall be binding
upon and inure to the benefit of Borrower and Agent, and their respective
successors and assigns, except that Borrower may not assign or transfer its
rights or obligations hereunder.
3.3 DEFINITIONS. Capitalized terms used, but not defined, in this
Fourth Amendment shall have the meaning set forth in the Credit Agreement.
3.4 SEVERABILITY. Should any provision of this Fourth Amendment be
deemed unlawful or unenforceable, said provision shall be deemed several and
apart from all other provisions of this Fourth Amendment and all remaining
provisions of this Fourth Amendment shall be fully enforceable.
3.5 GOVERNING LAW. To the extent not governed by federal law, this
Fourth Amendment and the rights and obligations of the parties hereto shall be
governed by, interpreted and enforced in accordance with the laws of the State
of Colorado.
EXHIBIT 10.9
3.6 HEADINGS. The captions or headings in this Fourth Amendment
are for convenience only and in no way define, limit or describe the scope or
intent of any provision of this Fourth Amendment.
3.7 COUNTERPARTS. This Fourth Amendment may be executed by the
parties hereto in separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute one and the same 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. Telefax copies of documents or signature pages bearing
original signatures, and executed documents or signature pages delivered by
telefax, shall, in each such instance, be deemed to be, and shall constitute and
be treated as, an original signed document or counterpart, as applicable. Any
party delivering an executed counterpart of this Fourth Amendment by
telefacsimile also shall deliver an original executed counterpart of this Fourth
Amendment but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Fourth
Amendment.
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EXHIBIT 10.9
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be executed as of the Effective Date.
BORROWER:
U.S. PREMIUM BEEF, LTD., a marketing
cooperative formed under the laws of the
State of Kansas
By: /s/ Xxxxxx X. Xxxx
----------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
AGENT:
COBANK, ACB
By: /s/ Xxx Xxxxxxxx
----------------------------------
Name: Xxx Xxxxxxxx
Title: Vice President, Corporate Finance
Division
SYNDICATION PARTY:
COBANK, ACB
By: /s/ Xxx Xxxxxxxx
----------------------------------
Name: Xxx Xxxxxxxx
Title: Vice President, Corporate Finance
Division
