EXHIBIT 10.1(c)
October 13, 0000
Xxxxxxxx Xxxxxx Cooperative, Inc.
0000 Xxxx Xxxxx Xxxxxx
P. O. Box 26234
Xxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
In order to facilitate the closing of the Asset Purchase
Agreement dated July 23, 0000, xxxxxxx Xxxxxxxx Xxxxxx Cooperative, Inc.
("Southern States") and Gold Xxxx Inc. ("Gold Xxxx") for the purchase of the
Gold Xxxx Inputs Business, and subject to the terms and conditions set out below
and on the attached Terms Sheet, Gold Xxxx hereby commits to purchase under the
circumstances described below from Southern States and from a trust entity to be
formed by Southern States, $100 million principal (liquidation) amount of
preferred securities (the "Preferred Securities") in the form described in each
of Annex A and Annex B to the attached Terms Sheet.
Approval of Gold Xxxx Lenders. The commitment of Gold Xxxx set
forth herein and on the attached Terms Sheet is expressly
subject to receipt of approvals by (1) CoBank, ACB; (2) the
Prudential Insurance Company of America and (3) Cooperative
Centrale Raiffeisen - BoerenleekBank B.A., "Rabobank
Nederland", New York Branch, as Agent, under the Gold Xxxx
Credit Agreement dated August 4, 1998, with various banks and
lending institutions as lenders.
This obligation of Gold Xxxx to purchase the Preferred
Securities shall be of no force and effect if, prior to the Purchase Date (as
specified in the Terms Sheet), Southern States shall have placed with other
purchasers similar capital and/or equity in a minimum amount of $100 million. To
the extent that, prior to the Purchase Date, Southern States shall have placed
with other purchasers capital and/or equity securities similar to the Preferred
Securities in an amount less than $100 million, then the Gold Xxxx commitment to
purchase Preferred Securities shall be reduced correspondingly on a
dollar-for-dollar basis. For purposes of this letter and the attachments hereto,
any Southern States preferred stock or subordinated debt will be considered
similar securities to the Preferred Securities.
This commitment is a duly authorized, irrevocable obligation
of Gold Xxxx Inc., enforceable in accordance with its terms. If you are in
agreement with the terms and conditions stated above, and as set forth in the
Terms Sheet attached and the annexes thereto, please signify by executing and
returning a copy of this letter to the undersigned.
Sincerely,
________________________
M. A. Xxxxxxxx
Senior Vice President
Agreed to by Southern States Cooperative, Inc.
_____________________________________
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
Attachment to Commitment Letter
Dated October 13, 1998
Terms Sheet for Purchase of Southern States
Preferred Securities by Gold Xxxx
1. Time of Purchase:
The date on which Gold Xxxx will purchase the Preferred Securities (the
"Purchase Date") will be 175 days after October 9, 1998 which is the effective
date of the 180-day senior bridge facility made available to Southern States for
the purchase of the Gold Xxxx Inputs Business (the "Senior Bridge Facility") in
the event Southern States has not placed a minimum of $100 million of similar
securities prior to the Purchase Date. Accordingly the Purchase Date will be
April 2, 1999. The purchase of the Preferred Securities will be made pursuant to
one or more purchase agreements containing customary terms and conditions.
2. Composition of the $100 million of Preferred Securities:
The $100 million of Preferred Securities shall be comprised of (a) $40
million of DRD Preferred (as more specifically described on Annex A), bearing an
initial dividend rate of 7.5% per annum and (b) $60 million of Capital
Securities (as more specifically described on Annex B), bearing an initial
distribution rate of 8.0% per annum. If less than $100 million amount of
Preferred Securities is placed with Gold Xxxx, the amount of each type of
Preferred Securities sold to Gold Xxxx will be as determined by Southern States,
not to exceed, in the case of the DRD Preferred, $40 million liquidation amount,
and in the case of the Capital Securities, $60 million liquidation amount.
Similarly, upon any redemption of less than the entire $100 million of Preferred
Securities, Southern States shall have the right to redeem whichever type of
Preferred Securities (DRD Preferred or Capital Securities) it wishes, in any
amount up to the entire outstanding amount held by Gold Xxxx. For so long as the
Preferred Securities are held by Gold Xxxx, the Preferred Securities will be
subject to mandatory redemption from the net proceeds of all placements of
substantially similar securities by Southern States until the Preferred
Securities held by Gold Xxxx have been redeemed in their entirety.
If Southern States places securities similar to the Preferred
Securities prior to the Purchase Date, Southern States will immediately instruct
the LOC bank described in paragraph 4 below, to issue an amendment to the LOC or
a replacement LOC reflecting a reduction in the amount of the LOC to the extent
that Gold Xxxx'x commitment to purchase Preferred Securities has thereby been
reduced.
3. Purchase price; Fees Associated with the Placement of the Preferred
Securities with Gold Xxxx:
Gold Xxxx shall purchase the Preferred Securities at par. Southern
States shall pay to Gold Xxxx at the time of purchase a placement fee equal to
2% of the liquidation amount of the DRD Preferred and 1% of the liquidation
amount of the Capital Securities. The amount of the placement fee paid to Gold
Xxxx shall be refunded to Southern States on a pro rata basis upon any
redemption, in whole or in part, of the Preferred Securities from Gold Xxxx.
4. Terms and Conditions of the Letter of Credit ("LOC") Supporting the Gold Xxxx
Purchase Agreement:
Gold Xxxx'x obligation to purchase the Preferred Securities shall be
secured by an irrevocable direct pay bank letter of credit ("LOC"). The LOC
shall be in an amount at least equal to the purchase price of the Preferred
Securities which Gold Xxxx is committed to purchase, shall have an initial term
expiring no earlier than 10 days after the Purchase Date and shall be
irrevocable and unconditional. The LOC shall be issued by a financial
institution located in the United States (including, but not limited to,
Rabobank's U.S. branch) with a debt rating of AA/Aa2 or higher. A draft of the
LOC will be provided to Southern States not later than October 9, 1998. Southern
States also shall be furnished with an opinion satisfactory to it from counsel
for the LOC bank, including foreign counsel if appropriate, as to the due
authorization, execution and delivery and binding effect of the LOC.
5. Fees Associated with the LOC and Other Financing Costs:
Southern States will bear the cost, not to exceed 125 basis points per
annum, payable monthly, for the LOC for its initial term and any renewal
thereof. Gold Xxxx will be responsible for the costs of changes, if any, to Gold
Xxxx'x various loan agreements. Southern States will be responsible for all
costs of its Senior Bridge Facility.
6. Provisions Relating to the Transfer of Preferred Securities by Gold Xxxx:
Gold Xxxx shall hold any Preferred Securities purchased by it for a
period of at least nine (9) months from the Purchase Date. Upon the expiration
of that period (contemplated to terminate in January, 2000) Gold Xxxx may, at
its election, give notice to Southern States of its desire to sell the Preferred
Securities, in whole or in part. Delivery of notice shall commence a 120-day
waiting period during which Gold Xxxx may not sell or offer to sell the
Preferred Securities or any portion thereof without the consent of Southern
States. Within 10 business days of Gold Xxxx giving notice of its desire to
sell, Southern States shall advise Gold Xxxx of its intentions with respect to
the placement or sale of the Preferred Securities or similar securities. If,
during the waiting period, Southern States determines not to place the Preferred
Securities or similar securities, then Southern States shall so advise Gold Xxxx
and Southern States shall not unreasonably refuse to waive the remainder of the
waiting period. Upon the later of (1) expiration of the 120-day waiting period
(which could occur as early as April, 2000) and (2) termination of a placement
of the Preferred Securities or similar securities commenced by Southern States
prior to the end of the waiting period, Gold Xxxx will be free to transfer the
Preferred Securities as permitted by law and subject to the transfer
restrictions described in the draft Offering Memorandums proposed by Southern
States, copies of which have been furnished to Gold Xxxx. Southern States will
provide such financial and other information and assistance as may reasonably be
required by Gold Xxxx in its efforts to resell the Preferred Securities.
7. Special Counsel:
Xxxxxxxx & Xxxxxxxx will serve as special counsel in connection with
the purchase of the Preferred Securities. Southern States shall be responsible
for the fees and expenses of special counsel.
8. Southern States Obligation:
Southern States shall be obligated to continue with all good faith
reasonable efforts to place, on terms and conditions reasonably satisfactory to
Southern States, through one or more of the markets referenced below, a minimum
of $50 million of perpetual preferred stock and a minimum of $75 million of
trust preferred securities substantially similar to the Capital Securities
proposed to be sold to Gold Xxxx. Southern States shall pursue its efforts
concurrently on three separate "tracks":
(1) Rule 144A offerings as presently contemplated by Southern
States.
(2) Private placement market.
(3) Registered public offering of trust preferred securities
and/or preferred stock.
Annex A
Description of Preferred Stock to be Issued
to Gold Xxxx Inc. by Southern States Cooperative, Inc.
(Supplements Description of Series A Preferred Stock
in Draft Offering Memorandum)
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1. Purchase Amount. $40 million principal (liquidation) amount.
2. Designation and Rank. Series B Cumulative Redeemable Preferred Stock.
Ranks pari passu with other Southern States preferred stock.
3. Dividend Rate. 7.5% per annum initial rate; subject to increase to 8.0%
per annum nine months after the Purchase Date; and to 8.25% twenty-one
months after the Purchase Date. Dividends payable quarterly.
4. Mandatory Redemption. Mandatorily redeemable while held by Gold Xxxx
as described in the Terms Sheet.
5. Transferability. Preferred Stock to be transferable in minimum
principal amounts of $100,000 to QIBs or Institutional Accredited
Investors pursuant to Rule 144A or Rule 501(a)(1), (2), (3) or (7),
subject to the conditions and restrictions on transfer set out in the
draft Offering Memorandum for the Preferred Stock.
6. Form of Certificate. Preferred Stock to be delivered as a single
physical certificate; $100,000 block limitation on transfers.
Application will be made to DTC for book-entry transfer and trading in
PORTAL if requested by Gold Xxxx.
7. Other Information. Except as otherwise provided above, the Preferred
Stock will be similar in its terms and conditions to, and subject to
restrictions on transfer similar to those applicable to, the proposed
issue of ___% Series A Preferred Stock described in the draft Offering
Memorandum prepared by Southern States with respect thereto, a copy of
which has been furnished to Gold Xxxx.
Annex B
Description of Capital Securities to be Issued to
Gold Xxxx Inc. by Southern States Capital Trust II and
Guaranteed by Southern States Cooperative, Inc.
(Supplements Description of Series A Capital Securities
in Draft Offering Memorandum)
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1. Purchase Amount. $60 million liquidation amount of Series B Capital
Securities issued by Southern States Capital Trust [ II ], a Delaware
business trust (the "Trust").
2. Payment Source. Capital Securities payable solely from payments made on
8% Adjustable Rate Junior Subordinated Deferrable Interest Debentures
of Southern States (ranking senior to Southern States' preferred stock,
common stock and all patrons' equities; subordinated to Senior Debt -
virtually all of the Company's indebtedness is Senior Debt). The Junior
Subordinated Debentures will have a thirty (30) year maturity. The
interest rate payable on the Junior Subordinated Debentures will be
adjustable in the same manner described in paragraph 5 below for the
Capital Securities.
3. Guarantee. Capital Securities guaranteed by Southern States to the
extent of funds held by the Trust (same as provided for in the
contemplated 144A Offering).
4. Documentation. Issue to be fully documented as a Rule 144A issue of
Capital Securities, substantially similar to documentation for the
Capital Securities presently contemplated by Southern States,
including:
(1) Trust Agreement (for organizational purposes).
(2) Amended and Restated Trust Agreement.
(3) Indenture.
(4) Guarantee.
(5) Purchase Agreement.
(6) Delaware Trustee - First Union Trust Company, N.A.
(7) Property Trustee, Guarantee Trustee and Debenture Trustee -
First Union National Bank.
5. Interest Rate. The initial rate of distributions on the Capital
Securities shall be 8% per annum; subject to increase to 8.5% nine
months after the Purchase Date; and to 8.75% per annum twenty-one
months after the Purchase Date. Distributions payable semi-annually.
6. Mandatory Redemption. Mandatorily redeemable while held by Gold
Xxxx as described in the Terms Sheet.
7. Transferability. Capital Securities to be transferable in minimum
principal amounts of $100,000 to QIBs or Institutional Accredited
Investors pursuant to Rule 144A or Rule 501(a)(1), (2), (3) or (7),
subject to the conditions and restrictions on transfer set out in the
draft Offering Memorandum for the Capital Securities.
8. Form of Security. Capital Securities to be delivered as a single
physical certificate; $100,000 block limitation on transfers.
Application will be made to DTC for book-entry transfer and trading in
PORTAL if requested by Gold Xxxx.
9. Other Information. Except as otherwise provided above, the Capital
Securities will be similar in its terms and conditions, and subject to
restrictions on transfer similar to those applicable, to the proposed
issue of the Capital Securities described in the draft Offering
Memorandum prepared by Southern States with respect thereto, a copy of
which has been furnished to Gold Xxxx.
