EXHIBIT 10.26
SANDERSON FARMS, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
SunTrust Bank, Atlanta
Atlanta, Georgia
Deposit Guaranty National Bank
Jackson, Mississippi
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 $125,000,000 Revolving Credit to be
made available to the Company for the period up to and including July 31, 2000
and the Company now applies to the Banks to increase the amount of the Revolving
Credit to $130,000,000 and extend the availability of the Revolving Credit up to
and including July 31, 2001 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. The date "July 31, 2000" appearing in the last sentence of Section
1.1(a) of the Credit Agreement shall be replaced with the date "July 31, 2001",
and the Revolving Credit Termination Date under the Credit Agreement shall be
July 31, 2001.
1.2. Section 1.1(c) of the Credit Agreement shall be amended to read as
follows:
"(c) The respective maximum aggregate principal amounts of the
Revolving Credit at any one time outstanding and the percentage of the
Revolving Credit available at any time which each Bank by its
acceptance hereof severally agrees to make available to the Company are
as follows (collectively, the "Revolving Credit Commitments" and
individually, a "Revolving Credit Commitment"):
Harris Trust and Savings Bank $36,400,000 28%
SunTrust Bank, Atlanta $33,280,000 25.60000000%
Deposit Guaranty National Bank $20,800,000 16%
Credit Agricole Indosuez, Chicago Branch $20,800,000 16%
Trustmark National Bank $18,720,000 14.40000000%
Total $130,000,000 100%"
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
October 31, 2003 $50,000,000
October 31, 2004 $50,000,000
October 31, 2005 $50,000,000"
1.4. 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 50%
October 31, 2002 45%
October 31, 2003 40%
October 31, 2004 40%
October 31, 2005 40%"
1.5. 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
October 31, 2003 Prior Year's $ 7,500,000
Depreciation
October 31, 2004 Prior Year's $ 7,500,000
Depreciation
October 31, 2005 Prior Year's $7,500,000
Depreciation
For purposes of this Section, any capital expenditures made in any fiscal year
shall be applied first to the Carryover Amount, if any, available during such
fiscal year."
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 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.
4.3. The Company hereby requests that Harris extend the Stated
Expiration Date of its Letter of Credit Number SPL 34947 dated November 16, 1995
which Harris has issued for the Company's account to First Trust National
Association, as trustee (the "Trustee") under the Indenture of Trust dated as of
November 1, 1995 between Robertson County Industrial Development Corporation and
the Trustee from July 31, 1999, to July 31, 2000. The Banks hereby consent and
agree to such extension.
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 July 23, 1998.
SANDERSON FARMS, INC.
By /s/D. Michael Cockrell
Its Treasurer & 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/Carl A. Blackham
Its Vice President
SUNTRUST BANK, ATLANTA
By /s/Gregory L. Cannon
Its Vice President
By /s/F. Steven Parrish
Its Vice President
DEPOSIT GUARANTY NATIONAL BANK
By /s/Stanley A. Herren
Its Senior Vice President
CREDIT AGRICOLE INDOSUEZ, CHICAGO BRANCH (formerly known
as Caisse Nationale de Credit Agricole, Chicago
Branch)
BY /s/David Bouhl, F.V.P.
Its Head of Corporate Banking, Chicago
By /s/Katherine L. Abbott
Its First Vice President______________________________
TRUSTMARK NATIONAL BANK
By /s/W. H. Edward
Its Vice President___________________________________
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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 July 23, 1998.
SANDERSON FARMS, INC. (FOODS DIVISION)
By /s/D. Michael Cockrell
Its Treasurer & Chief Financial Officer
SANDERSON FARMS, INC. (PRODUCTION DIVISION)
By /s/D. Michael Cockrell
Its Treasurer & Chief Financial Officer
SANDERSON FARMS, INC. (PROCESSING DIVISION)
By /s/D. Michael Cockrell
Its Treasurer & Chief Financial Officer
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EXHIBIT A
FORM OF OPINION OF COUNSEL