EXHIBIT 10.29
SANDERSON FARMS, INC.
FIFTH AMENDMENT TO CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
SunTrust Bank, Atlanta
Atlanta, Georgia
Credit Agricole Indosuez, Chicago Branch
(formerly known as Caisse Nationale de Credit
Agricole, Chicago Branch)
Chicago, Illinois
Trustmark National Bank
Jackson, Mississippi
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
July 31, 1996, as amended (the "Credit Agreement") among the undersigned,
Sanderson Farms, Inc., a Mississippi corporation (the "Company"), you (the
"Banks") and Harris Trust and Savings Bank, as agent for the Banks (the
"Agent"). All defined terms used herein shall have the same meaning as in the
Credit Agreement unless otherwise defined herein.
The Credit Agreement provides for a $100,000,000 Revolving Credit to be
made available to the Company. The Company now applies to the Banks to amend the
Credit Agreement to change the Applicable Margins and amend certain covenants
contained in the Credit Agreement, all in the manner and on the terms and
conditions set forth herein.
1. AMENDMENTS.
Upon satisfaction of all of the conditions precedent set forth in
Section 2 hereof, the Credit Agreement shall be amended as follows:
1.1. Section 1.3 of the Credit Agreement shall be amended to read as
follows:
"Section 1.3. Intentionally Omitted."
1.2. The definition of the term "Applicable Eurodollar Margin" appearing
in Section 4 of the Credit Agreement shall be amended to read as follows:
" "Applicable Eurodollar Margin" with respect to Eurodollar
Loans and "Applicable Commitment Fee Margin" with respect to the
commitment fee payable under Section 2.1 hereof, shall each mean the
rate specified for such obligation below in Levels I, II, III and IV
for the range of Funded Debt Ratio specified for each Level:
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LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
Funded Debt Ratio <35%> 35% and <45%> 45% and <55%> 55% < 65%> 65%
Revolving Credit 1.25% 1.75% 2.25% 2.50% 2.75%
Eurodollar Margin
Commitment Fee .20% .25% .30% .30% .30%
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Not later than ten (10) Business Days after receipt by the Banks of the
Compliance Certificate called for by Section 7.4(c) hereof for the
applicable fiscal quarter, the Agent shall determine the Funded Debt
Ratio for the applicable period and shall promptly notify the Company
of such determination and of any change in the Applicable Eurodollar
Margin and Applicable Commitment Fee Margin (collectively, "Applicable
Margins") resulting therefrom. Any such change in the Applicable
Margins shall be effective as of the date the Agent so notifies the
Company with respect to all Eurodollar Loans and Eurodollar Portions
outstanding, and commitment fees payable, on such date, and such new
Applicable Margins shall continue in effect until the effective date of
the next quarterly redetermination in accordance with this Section.
Each determination of the Funded Debt Ratio and Applicable Margins by
the Agent in accordance with this Section shall be conclusive and
binding on the Company absent manifest error. From the date hereof
until the Applicable Margins are first adjusted pursuant hereto, the
Applicable Margins shall be those set forth in Level II above."
1.3. Section 7.8 of the Credit Agreement shall be amended to read as
follows:
"Section 7.8. Consolidated Net Working Capital. The Company
will maintain at all times Consolidated Net Working Capital in an
amount not less than the amount indicated below during each fiscal year
of the Company indicated below:
FISCAL YEAR ENDING MINIMUM REQUIRED AMOUNT
October 31, 1996 $42,000,000
October 31, 1997 $45,000,000
October 31, 1998 $48,000,000
October 31, 1999 $50,000,000
October 31, 2000 $50,000,000
October 31, 2001 $50,000,000
October 31, 2002 $50,000,000
Thereafter $50,000,000"
1.4. Section 7.9 of the Credit Agreement shall be amended to read as
follows:
"Section 7.9. Consolidated Tangible Net Worth The Company will
maintain at all times Consolidated Tangible Net Worth during each
fiscal year of the Company in an amount not less than:
(a) during each fiscal quarter of the fiscal year ending
October 31, 2000, $95,000,000 plus any Net Proceeds of Stock issued
during any preceding quarter or quarters of such fiscal year plus 50%
of an amount (but not less than zero) equal to (i) the Company's
Consolidated Net Income through the preceding quarter-end in such
fiscal year, minus (ii) $3,000,000; and
(b) during each fiscal quarter of each fiscal year of the
Company thereafter, an amount equal to the sum of the minimum amount
required to be maintained on the last day of the preceding fiscal year
of the Company plus the Net Proceeds of Stock issued in the last
quarter of the preceding fiscal year and any preceding quarter or
quarters of the then current fiscal year plus 50% of an amount (but not
less than zero) equal to (i) the Company's Consolidated Net Income, if
any, through the immediately preceding fiscal quarter end of such
fiscal year minus (ii) $3,000,000."
1.5. Section 7.10 of the Credit Agreement shall be amended to read as
follows:
"Section 7.10. Consolidated Indebtedness for Borrowed Money to
Total Capitalization. The Company will not permit the ratio of its
Consolidated Indebtedness for Borrowed Money to its Total
Capitalization (the "Funded Debt Ratio") at any time to exceed the
percentage indicated below during each fiscal year of the Company
specified below:
FISCAL YEAR ENDING MAXIMUM PERCENTAGE
October 31, 1996 55%
October 31, 1997 65%
October 31, 1998 65%
October 31, 1999 55%
October 31, 2000 55%
October 31, 2001 60%
October 31, 2002 55%
Thereafter 55%."
1.6. Section 7.12 of the Credit Agreement shall be amended to read as
follows:
"Section 7.12. Capital Expenditures. The Company will not, and
will not permit any Subsidiary to, be obligated to spend during any
fiscal year for capital expenditures (as defined and classified in
accordance with generally accepted accounting principles consistently
applied, including without limitation any such capital expenditures in
respect of Capitalized Leases but excluding any acquisition permitted
by Section 7.14(d) which might constitute such a capital expenditure)
an aggregate amount for the Company and its Subsidiaries in excess of
the amount indicated below for each fiscal year of the Company plus an
amount (the "Carryover Amount") permitted to be spent in the preceding
fiscal year but not actually spent therein (the "Maximum Carryover
Amount to the Next Fiscal Year"):
MAXIMUM MAXIMUM CARRYOVER AMOUNT
FISCAL YEAR ENDING LIMITATION AMOUNT TO THE NEXT FISCAL YEAR
October 31, 1996 $65,000,000 Unlimited
October 31, 1997 $45,000,000 Unlimited
October 31, 1998 $25,000,000 $ 7,500,000
October 31, 1999 Prior Year's $ 7,500,000
Depreciation
October 31, 2000 Prior Year's $ 7,500,000
Depreciation
October 31, 2001 Prior Year's $ 7,500,000
Depreciation
October 31, 2002 Prior Year's $ 7,500,000
Depreciation
Thereafter Prior Year's $ 7,500,000
Depreciation
2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
2.1. The Company and each of the Banks shall have executed this
Amendment.
2.2. Each Guarantor Subsidiary shall have executed the Guarantors'
Acknowledgment attached hereto.
2.3. The Agent shall have received the favorable written opinion of
counsel for the Company and the Guarantor Subsidiaries in the form of Exhibit A
attached hereto.
2.4. The Agent shall have received a Certificate of the Treasurer of the
Company and each of the Guarantor Subsidiaries with respect to (a) resolutions
of their respective Board of Directors authorizing the transactions contemplated
hereby, and (b) incumbency and signature of the President, Treasurer and
Secretary of the Company and each Guarantor Subsidiary.
3. REPRESENTATIONS AND WARRANTIES.
3.1. Each of the representations and warranties set forth in Section
5 of the Credit Agreement are true and correct.
3.2. The Company is in full compliance with all of the terms and
conditions of the Credit Agreement and no Event of Default or Potential Default
has occurred and is continuing thereunder or shall result after giving effect to
this Amendment.
4. MISCELLANEOUS.
4.1. Reference to this specific Amendment need not be made in any note,
document, letter, certificate, the Credit Agreement itself, the Revolving Notes,
or any communication issued or made pursuant to or with respect to the Credit
Agreement or the Revolving Notes, any reference to the Credit Agreement being
sufficient to refer to the Credit Agreement as amended hereby.
4.2. This Amendment may be executed in any number of counterparts, and
by the different parties on different counterparts, all of which taken together
shall constitute one and the same agreement. Any of the parties hereto may
execute this Amendment by signing any such counterpart and each of such
counterparts shall for all purposes be deemed to be an original. This Amendment
shall be governed by the internal laws of the State of Illinois.
Upon acceptance hereof by the Agent and the Banks in the manner
hereinafter set forth, this Amendment shall be a contract between us for the
purposes hereinabove set forth.
Dated as of February 16, 2001.
SANDERSON FARMS, INC.
By /s/D. Michael Cockrell
Its Treasurer and Chief Financial Officer
Accepted and agreed to as of the day and year last above written.
HARRIS TRUST AND SAVINGS BANK
individually and as Agent
By /s/Curtis Flammini
Its Vice President
SUNTRUST BANK, ATLANTA
By /s/Hugh Brown
Its AVP
By /s/Gregory L. Cannon
Its Director
CREDIT AGRICOLE INDOSUEZ, CHICAGO BRANCH (formerly known
as Caisse Nationale de Credit Agricole, Chicago
Branch)
By
Its___________________________________________________
By
Its___________________________________________________
TRUSTMARK NATIONAL BANK
By /s/William H. Edward
Its Vice President
GUARANTORS' ACKNOWLEDGMENT
The undersigned, each of which has executed and delivered to the Banks
a Guaranty Agreement dated as of July 31, 1996 (the "Guaranty Agreement"),
hereby acknowledges the amendment of the Credit Agreement as set forth above and
agrees that all of the Company's indebtedness, obligations and liabilities to
the Banks and the Agent under the Credit Agreement and the Notes as amended by
the foregoing Amendment shall continue to be entitled to the benefits of said
Guaranty Agreement. The undersigned further agree that the Acknowledgment or
consent of the undersigned to any further amendments of the Credit Agreement
shall not be required as a result of this Acknowledgment having been obtained,
except to the extent, if any, required by the Guaranty Agreement.
Dated as of February 16, 2001.
SANDERSON FARMS, INC. (FOODS DIVISION)
By /s/D. Michael Cockrell
Its Treasurer and Chief Financial Officer _
SANDERSON FARMS, INC. (PRODUCTION DIVISION)
By /s/D. Michael Cockrell
Its Treasurer and Chief Financial Officer _
SANDERSON FARMS, INC. (PROCESSING DIVISION)
B /s/D. Michael Cockrell
Its Treasurer and Chief Financial Officer
EXHIBIT A
LAW OFFICES
Wise Carter Child & Caraway
PROFESSIONAL ASSOCIATION
600 HERITAGE BUILDING
401 EAST CAPITOL STREET
POST OFFICE BOX 651
JACKSON, MISSISSIPPI 39205-0651
601-968-5500
HENRY E. CHATHAM, JR. DIRECT DIAL: 601-968-5520
hec@wisecarter.com FACSIMILE: 601-968-5593
February 16, 2001
Harris Trust and Savings Bank
Chicago, Illinois
SunTrust Bank, Atlanta
Atlanta, Georgia
Credit Agricole Indosuez,
Chicago Branch (formerly known as
Caisse Nationale de Credit Agricole, Chicago Branch)
Chicago, Illinois
Trustmark National Bank
Jackson, Mississippi
Ladies and Gentlemen:
We have served as counsel to Sanderson Farms, Inc., a Mississippi
corporation (the "Borrower"), in connection with the amendment of the Credit
Agreement dated as of July 31, 1996, as previously amended (the "Credit
Agreement") among the Borrower and you pursuant to a Fifth Amendment to Credit
Agreement of even date herewith (the "Amendment") and that certain Second
Amendment to the Reimbursement Agreement of even date herewith by and between
Borrower and Harris Trust and Savings Bank ("Second Amendment to Reimbursement
Agreement"). We have also served as counsel to (a) Sanderson Farms, Inc. (Foods
Division), a Mississippi corporation, (b) Sanderson Farms, Inc. (Production
Division), a Mississippi corporation, and (c) Sanderson Farms, Inc. (Processing
Division), a Mississippi corporation (individually a "Subsidiary" and
collectively the "Subsidiaries") in connection with the acknowledgment, pursuant
to a Guarantors' Acknowledgment of even date herewith, of each such Subsidiary's
guaranty of the Borrower's obligations under the Credit Agreement pursuant to a
Guaranty Agreement dated July 31, 1996 (the "Guaranty Agreement"). As such
counsel, we have reviewed the records of the corporate proceedings necessary to
authorize the execution and
Harris Trust and Savings Bank, et al.
February 16, 2001
Page 2
delivery of the Amendment and the Second Amendment to Reimbursement Agreement
and related documents by the Borrower and of the Guarantors' Acknowledgment by
each of the Subsidiaries and have examined the original executed Amendment,
Second Amendment to Reimbursement Agreement and the Guarantors' Acknowledgment
(collectively, the "Loan Documents") or copies or facsimiles thereof certified
or otherwise identified to our satisfaction. Capitalized terms used but not
defined in this opinion have the meanings ascribed to them by the Credit
Agreement.
As counsel to the Borrower and the Subsidiaries, we have reviewed a
copy of the Certificate of Existence/Authority for each of the Borrower and the
Subsidiaries issued by the Secretary of State of Mississippi as of a recent date
and the certificate of incorporation, articles of incorporation and bylaws under
which the Borrower and the Subsidiaries are organized. We have also examined
such other instruments and records and inquired into such other factual matters
and matters of law as we deem necessary or pertinent to the formulation of the
opinions hereinafter expressed. As to various questions of fact material to the
opinions hereinafter expressed, we have relied without independent investigation
upon statements or certificates of officers, assistant officers or
representatives of the Borrower and the Subsidiaries, including the certificate
attached hereto as Exhibit A, and the correctness of the representations made in
the Loan Documents by the Borrower or any one of the Subsidiaries.
With your permission and without independent investigation, we have
assumed, except to the extent specifically opined below, for purposes of this
opinion the following:
a. The genuineness of all signatures other than those of the Borrower
and the Subsidiaries;
b. The authenticity of all documents submitted to us as originals and
the conformity to authentic original documents of all documents submitted to us
as certified, conformed or photostatic copies or submitted to us by facsimile;
c. The due authorization, execution and delivery by each party other
than the Borrower and the Subsidiaries and, where appropriate, recordation of
each of the Loan Documents, and all other documents referred to herein;
d. That all documents submitted to us are accurate and complete;
e. That each of the Borrower and the Subsidiaries has complied with all
applicable federal and state securities laws in connection with the transactions
contemplated by the Loan Documents;
Harris Trust and Savings Bank, et al.
February 16, 2001
Page 3
f. That, except as stated in the Loan Documents, there are no documents
or agreements between any one or more of you, on the one hand, and any one or
more of the Borrower and the Subsidiaries, on the other hand, that would have an
effect on the opinions expressed in this opinion letter; and
g. That Certificates of Existence/Authority issued on the date hereof
for the Borrower and the Subsidiaries would be substantially identical to the
ones referred to above.
Based on the foregoing and upon our examination of the Certificate of
Existence/Authority, certificate of incorporation, articles of incorporation and
bylaws of each of the Borrower and each Subsidiary, in reliance thereon and
subject to the assumptions, qualifications, exceptions and limitations set forth
in this opinion, we are of the opinion that:
2. Each of the Borrower and the Subsidiaries is a valid and subsisting
corporation duly organized and existing under the laws of the State of
Mississippi with corporate power and authority to carry on its business as now
conducted and is duly licensed or qualified in each jurisdiction wherein the
failure to be so licensed or qualified would have a material adverse effect on
the condition, financial or otherwise, of the Borrower and its Subsidiaries
taken as a whole.
3. The Borrower has full corporate right, power and authority to borrow
from you, to execute and deliver the Loan Documents to which it is a party, and
to perform its obligations under the Loan Documents to which it is a party.
Except as specified in the Credit Agreement, the execution and delivery of such
Loan Documents by the Borrower do not, nor will the observance or performance of
any of the matters or things therein provided for, contravene any provision of
law or of the certificate of incorporation, articles of incorporation or bylaws
of the Borrower (there being no other agreements under which the Borrower is
organized) or, to the best of our knowledge, of any covenant, indenture or
agreement binding upon or affecting the Borrower or any of its properties or
assets.
4. The Amendment and the Second Amendment to Reimbursement Agreement
executed by the Borrower have been duly authorized by all necessary corporate
action (no stockholder approvals being required), have been executed and
delivered by the proper officers of the Borrower, and, if the internal law of
Mississippi, without regard to choice of law principles, were to apply, the
Credit Agreement, as amended by the Amendment and the Second Amendment to
Reimbursement Agreement, constitute the valid and binding agreements of the
Borrower and are enforceable against the Borrower in accordance with their
respective terms.
5. Each Subsidiary has full corporate right, power and authority to
guarantee all indebtedness, obligations and liabilities, whether now existing or
hereafter arising, of the
Harris Trust and Savings Bank, et al.
February 16, 2001
Page 4
Borrower to you under the Credit Agreement, to execute and deliver the
Guarantors' Acknowledgment and to perform its obligations thereunder. Except as
specified in the Credit Agreement, the execution and delivery of the Guarantors'
Acknowledgment by the Subsidiaries do not, nor will the observance or
performance of any of the matters or things therein provided for, contravene any
provision of law or of the certificate of incorporation, articles of
incorporation or bylaws of any Subsidiary (there being no other agreements under
which any Subsidiary is organized) or, to the best of our knowledge, of any
covenant, indenture or agreement binding upon or affecting any Subsidiary or any
of their respective properties or assets.
6. The Guarantors' Acknowledgment has been duly authorized by all
necessary corporate action, has been executed and delivered by the proper
officers of each Subsidiary, and the Guaranty Agreement as supplemented by the
Guarantors' Acknowledgment constitutes the valid and binding agreement of each
Subsidiary and, if the internal law of Mississippi, without regard to choice of
law principles, were to apply, is enforceable against each Subsidiary in
accordance with its terms.
7. The rates of interest applicable under the Credit Agreement as
amended by the Amendment would not violate the usury laws of the State of
Mississippi should such laws apply to the loans outstanding under the Credit
Agreement.
8. Except as specified in the Credit Agreement, no order,
authorization, consent, license or exemption of, or filing or registration with,
any court or governmental department, agency, instrumentality or regulatory
body, whether local, state or federal, is or will be required in connection with
the lawful execution and delivery by Borrower of the Loan Documents to which it
is a party or by any Subsidiary of the Guarantors' Acknowledgment or the
observance and performance by the Borrower and the Subsidiaries of any of the
respective terms thereof.
9. Except as may be disclosed in the Certificate of the Treasurer of
the Company attached hereto, we have not been engaged to give substantive
attention to any litigation pending or threatened against or involving the
Borrower, any Subsidiary or any of their respective assets and properties, which
if adversely determined would reasonably be expected to result in a material
adverse change in the properties, business, operations, or financial condition
of the Borrower and its Subsidiaries taken as a whole.
Notwithstanding anything stated herein to the contrary, we express no
opinion as to any of the following with respect to any of the Loan Documents.
(i) Enforceability of any powers of attorney whether or not designated
as irrevocable;
Harris Trust and Savings Bank, et al.
February 16, 2001
Page 5
(ii) (a) The availability of injunctive relief, specific performance or
any other recourse or remedy normally dependent upon the exercise of judicial
discretion; (b) the availability of self- help remedies; and (c) the
enforceability of waivers or relinquishment of procedural or other protections
(such as, but without limitation, notices, delays, rights to appraisement and/or
redemptions) afforded by applicable laws and judicial decisions;
(iii) The effect of the Agent's and/or the Banks' compliance or
noncompliance with any state or federal laws or regulations applicable because
of their legal or regulatory status or the nature of their business or their
participation in the transactions contemplated by the Loan Documents;
(iv) The enforceability of any provision in which a party attempts to
contract out of liability for its own negligence, fault, gross fault,
intentional wrongful acts, gross negligence, strict liability or other conduct;
(v) The enforceability of any provision in which a party is indemnified
or held harmless for its own negligence, fault, gross fault, gross negligence,
intentional misconduct, strict liability or other conduct or for the acts or
omissions of third parties;
(vi) The enforceability of any provision for attorneys' fees other than
reasonable attorneys' fees;
(vii) The enforceability of any provision stipulating for the
imputation or application of payments in any manner other than that provided by
Mississippi law;
(viii) The enforceability of any provision by which an assignee
succeeds to the rights and benefits of the assignor but disclaims responsibility
for any obligations of the assignor;
(ix) The strict enforceability of each and every remedy and provision
in accordance with the terms thereof under all facts and circumstances; or the
compliance of each and every such remedy and provision with Mississippi statutes
or regulatory orders;
(x) The enforceability of any provision entitling any party to the
appointment of a receiver;
(xi) The enforceability of any provision (a) waiving any statutes of
limitation or prescriptive periods; (b) submitting to the jurisdiction of any
court; (c) waiving rights to assert counterclaims or defenses; (d) constituting
a forum selection clause; (e) in the Guaranty Agreement purporting to make the
obligation of any of the Subsidiaries absolute, notwithstanding any defect,
invalidity, irregularity or unenforceability of the instruments giving rise to
the Borrower's
Harris Trust and Savings Bank, et al.
February 16, 2001
Page 6
obligation under the Loan Documents; (f) waiving liability of any other party;
or (g) waiving the right to trial by jury; and
(xii) The enforceability of any choice of law provision.
The opinions expressed in this letter are qualified to the extent that
the validity, binding nature, and enforceability of any of the terms of the Loan
Documents may be limited or otherwise affected by (1) general principles of
equity, including without limitation concepts of materiality, reasonableness,
good faith and fair dealing (regardless of whether enforceability is considered
in a proceeding in equity or at law); (2) applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent transfer, receivership or
other similar laws generally affecting the enforcement of creditors' rights at
the time in effect; (3) limitations based on Mississippi statutes or on
Mississippi public policy limiting a person's right to waive the benefits of
statutory provisions or common law rights; or (4) limitations imposed by
Mississippi law on the right of a lender to exercise rights and remedies under
the Loan Documents for default by the borrower if it is determined that the
defaults are not material. As used herein, the phrases "to our knowledge" or "to
the best of our knowledge" or any phrase of like import refers to the conscious
awareness of information, without special investigation, of the lawyer or
lawyers within this firm who devote substantive legal attention to the affairs
of the Borrower or the Subsidiaries.
Notwithstanding the foregoing, it is our opinion that the remedies and
provisions contained in the Loan Documents that would (assuming the
enforceability of the Loan Documents under Mississippi law) be enforceable and
that do not violate Mississippi statutes or regulatory orders or public policy
are sufficient as a whole, subject to the qualifications, limitations and
exceptions stated elsewhere herein, for the practical realization of the
essential benefits intended to be provided thereby.
The opinions expressed herein are based upon an interpretation of, and
are limited to, existing laws, ordinances and regulations of the State of
Mississippi, which laws are subject to change at any time by legislation,
administrative action or judicial decision. We undertake no obligation and
hereby disclaim any obligation to update or supplement this opinion in response
to subsequent changes in the law or future events affecting the transactions
contemplated by the Loan Documents.
We are admitted to the practice of law in the State of Mississippi. We
are opining herein only with respect to the laws of Mississippi, and we assume
no responsibility and render no opinion as to the applicability to, or the
effect on, the matters addressed herein of the laws of any other jurisdiction.
We do not express any opinion, either implicitly or otherwise, on any issue not
expressly set forth herein.
Harris Trust and Savings Bank, et al.
February 16, 2001
Page 7
Please be advised that this opinion letter is rendered solely for your
information and assistance in connection with the above transaction and may not
be otherwise used, relied upon, quoted or referred to by any other person or for
any other purpose without our prior written consent.
Very truly yours,
WISE CARTER CHILD & CARAWAY,
Professional Association
By:/s/Henry E. Chatham, Jr.
---------------------------
Henry E. Chatham, Jr.
HEC:loh
Attachment