EXHIBIT 4.5
CONFORMED COPY
AMENDMENT NO. 2
AMENDMENT NO. 2 dated as of August 26, 1998 among SMITHFIELD FOODS,
INC., a corporation duly organized and validly existing under the laws of the
State of Virginia (the "Borrower"); the SUBSIDIARY GUARANTORS party hereto (the
"Subsidiary Guarantors"); the LENDERS party hereto (the "Lenders"); and THE
CHASE MANHATTAN BANK, as agent for the Lenders (in such capacity, the
"Administrative Agent").
The parties hereto are parties to a Credit Agreement dated as of
July 15, 1997 (as amended to and in effect on the date hereof, the "Credit
Agreement"). Capitalized terms used but not otherwise defined herein have the
meanings given them in the Credit Agreement. The parties wish to amend certain
definitions and financial covenants in the Credit Agreement.
Section 1. Amendments. Subject to the execution and delivery hereof
by the Borrower, the Subsidiary Guarantors, the Required Lenders and the
Administrative Agent, but effective as of May 3, 1998, the Credit Agreement is
hereby amended as follows:
A. General. All references in the Credit Agreement to the
Credit Agreement (including indirect references) shall be deemed to be
references to the Credit Agreement as amended hereby.
B. New Definitions. Section 1.01 of the Credit Agreement shall
be amended by adding the following new definitions in the appropriate
alphabetical locations:
"Consolidated EBIT" means, for any period, an amount equal to (a)
the sum for such period of (i) Consolidated Net Income, (ii) to the extent
subtracted in determining such Consolidated Net Income, provisions for (x)
taxes based on income and (y) Consolidated Interest Expense minus (b) any
items of gain (or plus any items of loss) which were included in
determining such Consolidated Net Income and were not realized in the
ordinary course of business.
"Current Inventory" means, as at any date with respect to any
Person, all Inventory (i) that is owned by (and in the possession or under
the control of) such Person as at such date, (ii) that is not subject to
any Lien, (iii) that meets all standards imposed by any governmental
agency or department or division thereof having regulatory authority over
such inventory, its use or sale, (iv) for which such Person has made full
and final payment and (v) that is currently usable in the manufacturing
process or saleable in the normal course of such Person's business without
any notice to, or consent of, any governmental agency or department or
division thereof (excluding however, except to the extent that the
Required Lenders otherwise agree with respect to any specific customer or
third-party processor, any such Inventory that has been shipped to a
customer of such Person, including third-party processors, even if on a
consignment or "sale or return" basis, and excluding repair and
replacement parts for machinery and equipment). Notwithstanding anything
in clause (v) of the foregoing sentence to the contrary (but subject to
clauses (i) through (iv) of the foregoing sentence), Current Inventory
shall include but not be limited to all barrows, gilts, boars, sows,
feeder pigs, suckling pigs, nursery pigs and commercial sows and boars,
multiplier hogs, nucleus hogs and other hogs (collectively, "Hogs") at the
time of determination owned and being raised at facilities owned by such
Person or at facilities subject to an exclusive contract with such Person
(i.e., the operator of such facility has no similar contract with any
other Person) for the feeding and raising of Hogs.
"Current Receivables" means, as at any date with respect to any
Person, the aggregate amount of all accounts (as defined in the Uniform
Commercial Code) of such Person arising from the sale by such Person of
Inventory in the ordinary course of its business and which accounts are
not subject to any Lien, other than the following accounts (determined
without duplication):
(a) any account not payable in a currency freely
convertible into Dollars,
(b) any account that is not paid within 60 days after the date
of the invoice for the related inventory,
(c) any account owing from a subsidiary or Affiliate of such
Person,
(d) any account owing from an account debtor that is insolvent
or the subject of a bankruptcy case,
(e) any account that is more than 28 days past due,
(f) all accounts of any account debtor if more than 20% of the
aggregate amount of the accounts owing from such account debtor are
more than 28 days past due,
(g) all accounts owing from any account debtor if the accounts
owing from such account debtor and its Affiliates at the time exceed
10% of all accounts then payable to the Obligors,
(h) any account as to which there is any unresolved dispute
with the respective account debtor (but only to the extent of the
amount thereof in dispute),
(i) any account representing an obligation for goods sold on
consignment, approval or a sale-or-return basis or subject to any
other repurchase, return or offset arrangement,
(j) any amount as to which there is an offsetting liability
from the Borrower, any Subsidiary or any Affiliate of the Borrower
(but only to the extent of the amount of such offsetting liability),
and
(k) all amounts reserved by any Subsidiary or Affiliate of the
Borrower related to advertising and promotional programs for the
respective account debtor (excluding general promotional reserves
that are not reserved on a specific account basis).
C. Amended Definitions. The definition of "Consolidated Fixed
Charges" in Section 1.01 of the Credit Agreement shall be deleted, and Section
1.01 of the Credit Agreement shall be amended by amending the following
definitions to read in their entirety as follows:
"Aggregate Consideration" means, in connection with any Acquisition,
an amount equal to (a) the aggregate consideration, in whatever form
(including, without limitation, cash payments, the principal amount of
promissory notes given by the Borrower or any Subsidiary Guarantor and
Indebtedness assumed by the Borrower or any Subsidiary Guarantor in
connection with such Acquisition or Indebtedness for which the Borrower or
any Subsidiary Guarantor becomes liable, as maker, guarantor or otherwise,
in connection with such Acquisition, the aggregate amount payable to
acquire, extend and exercise any option, the aggregate amount payable
under non-competition agreements and management agreements, and the fair
market value of other property delivered, but excluding consideration in
the form of common stock of the Borrower) paid, delivered or assumed by
the Borrower and its Subsidiaries for such Acquisition minus (b) the sum
of (i) the amount, if any, of any increase in the Consolidated Borrowing
Base resulting from such Acquisition on the date of the Consummation
thereof and (ii) to the extent not included in the foregoing clause (i),
an amount equal to 75% of the aggregate amount of Current Inventory and
Current Receivables acquired by the Borrower and its Subsidiaries in
connection with such Acquisition.
"Capital Expenditures" means, with respect to any Person, for any
period, all expenditures made and liabilities incurred during such period
for the acquisition of assets (including any replacement in the ordinary
course of business without reduction for sales, retirements or
replacements) which are not, in accordance with GAAP, treated as expense
items for such Person in the year made or incurred or as a prepaid expense
applicable to a future year or years, and shall include all Capital Lease
Obligations, but shall not include expenditures made or liabilities
incurred during such period for Acquisitions or (except as provided in the
last sentence of this definition) Investments. The amount of Capital
Expenditures in any period shall be calculated without duplication in
accordance with GAAP. Notwithstanding the foregoing, with respect to the
acquisition of replacement sows by the Borrower or any of its Subsidiaries
in the ordinary course of business, the amount included in Capital
Expenditures shall be the acquisition cost of such sows, reduced by the
proceeds received by the Borrower or any of its Subsidiaries from the sale
of the replaced sows. For purposes of Section 6.12(f) hereof, "Capital
Expenditures" shall also include expenditures for Investments of the type
specified in sections (e) and (f) of the definition of Permitted
Investments.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the
date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date
of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital
and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above
and entered into with a financial institution satisfying the
criteria described in clause (c) above;
(e) subject to the limitations of Section 6.12(f), the common
stock of the Borrower; and
(f) subject to the limitations of Section 6.12(f), capital
stock of corporations in similar or related businesses to that of
the Borrower and listed on the New York Stock Exchange, NASDAQ, and
the American Stock Exchange.
D. Additional Representation. Article III of the Credit Agreement
shall be amended by adding new Section 3.16, to read as follows:
SECTION 3.16 Year 2000. Any reprogramming required to permit the
proper functioning, prior to, in and following the year 2000, of (i) the
Borrower's computer systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others or with
which the Borrower's systems interface) and the testing of all such
systems and equipment, as so reprogrammed, will be completed by September
30, 1999, such that any effect of the year 2000 will not be a Material
Adverse Effect. The cost to the Borrower of such reprogramming and testing
and of the reasonably foreseeable consequences of year 2000 to the
Borrower (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) will not result in a Default or a
Material Adverse Effect.
E. Amended Covenant. Section 6.12(e) of the Credit Agreement shall
be amended to read in its entirety as follows:
(e) The Borrower will not permit the ratio of Consolidated EBIT to
Consolidated Interest Expense for any period of four consecutive fiscal
quarters of the Borrower to be less than 2.5 to 1.
F. Additional Reporting Covenant. Section 5.01 of the Credit
Agreement shall be amended by deleting "and" from the end of subsection (g)
thereof, replacing the period at the end of subsection (h) thereof with "; and"
and adding a new clause, to read as follows:
(i) on or prior to each September 1 and April 1 beginning on or
prior to September 1, 1998, a written report, in form and substance
reasonably acceptable to the Administrative Agent and the Lenders,
describing the status of the Borrower's compliance with Section 6.14.
G. Amended Reporting Covenant. Section 5.01(g) of the Credit
Agreement shall be amended to read in its entirety as follows:
(g) as soon as available after the end of each fiscal year of the
Borrower, a report (prepared at the expense of the Borrower) of an
independent collateral auditor (which may be, or be affiliated with, one
of the Lenders) approved by the Administrative Agent with respect to the
Receivables and Inventory components included in the Consolidated
Borrowing Base which report shall indicate that, based upon a review by
such auditors of the Receivables (including, without limitation,
verification with respect to the amount, aging, identity and credit of the
respective account debtors and the billing practices of the Borrower and
its Subsidiaries) and Inventory (including, without limitation,
verification as to the value, location and respective types), the
information set forth in the Borrowing Base Certificate then most recently
received by the Administrative Agent hereunder is accurate and complete in
all material respects;
H. Additional Negative Covenant. Article VI of the Credit Agreement
shall be amended by adding new Section 6.14, to read as follows:
6.14 Year 2000 Compliance. The Borrower will assure that (a) any
reprogramming required to permit the property functioning, prior to, in
and following the year 2000, of (i) the Borrower's computer systems and
(ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Borrower's systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed by September 30, 1999, such that any
effect of the year 2000 will not be a Material Adverse Effect.
Section 2. Representations and Warranties. The Borrower hereby
represents and warrants to the Lenders and the Administrative Agent that the
representations and warranties set forth in Article III of the Credit
Agreement (as amended by this Amendment No. 2) are on the date hereof true
and complete as if made on and as of such date and as if each reference in
such representations and warranties to the Credit Agreement included
reference to such agreement as amended by this Amendment No. 2.
Section 3. Miscellaneous. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. This
Amendment No. 2 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and
any of the parties hereto may execute this Amendment No. 2 by signing any
such counterpart and sending the same by telecopier, mail messenger or
courier to the Administrative Agent or counsel to the Administrative Agent.
This Amendment No. 2 shall be governed by, and construed in accordance with,
the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 2 to be duly executed as of the day and year first above written.
SMITHFIELD FOODS, INC.
By /s/Aaron D. Trub
-----------------------------
Name: Aaron D. Trub
Title: Vice President
Chief Financial Officer
Secretary
THE SMITHFIELD PACKING COMPANY,
INCORPORATED
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
GWALTNEY OF SMITHFIELD, LTD.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
PATRICK CUDAHY INCORPORATED
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
JOHN MORRELL & CO.
By/s/Aaron D. Trub
-------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
LYKES MEAT GROUP, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
BROWN'S OF CAROLINA, INC.
By/s/Aaron D. Trub
-----------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
HANCOCK'S OLD FASHIONED COUNTRY
HAMS, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
VALLEYDALE FOODS, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
COPAZ PACKING CORPORATION
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
SUNNYLAND, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
SMITHFIELD PACKING-LANDOVER, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent
By/s/Gary L. Spevak
------------------------------
Name: Gary L. Spevak
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
By/s/Dana W. Hemenway
-----------------------------
Name: Dana W. Hemenway
Title: Vice President
By/s/W. Pieter C. Kodde
-----------------------------
Name: W. Pieter C. Kodde
Title: Vice President
AGRIBANK, FCB
By/s/J. Hathaway
-----------------------------
Name: J. Hathaway
Title: Director
CREDIT AGRICOLE INDOSUEZ
By/s/David Bouhl
-----------------------------
Name: David Bouhl
Title: First Vice President
By/s/W. Leroy Startz
-----------------------------
Name: W. Leroy Startz
Title: First Vice President
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK,
CAYMAN ISLANDS BRANCH
By/s/Kurt A. Morris
-----------------------------
Name: Kurt A. Morris
Title: Vice President
By/s/Bobby Ryan Oliver, Jr.
-----------------------------
Name: Bobby Ryan Oliver, Jr.
Title: Vice President
NATIONSBANK, N.A.
By/s/Barry P. Sullivan
-----------------------------
Name: Barry P. Sullivan
Title: Vice President
U.S. Bancorp Ag Credit, Inc.
(f/k/a FBS AG CREDIT, INC.)
By/s/Stephan A. McWilliams
-----------------------------
Name: Stephan A. McWilliams
Title: Vice President
SUNTRUST BANK, ATLANTA
By/s/Robert V. Honeycutt
-----------------------------
Name: Robert V. Honeycutt
Title: Vice President
By/s/Gregory L. Cannon
-----------------------------
Name: Gregory L. Cannon
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.
By
Name:
Title:
DRESDNER BANK AG
By/s/Thomas A. Esposito
------------------------------
` Name: Thomas A. Esposito
Title: Assistant Treasurer
By/s/A.R. Morris
------------------------------
Name: A. Richard Morris
Title: First Vice President
FARM CREDIT SERVICES OF THE MIDLANDS, PCA
By/s/James R. Knuth
------------------------------
Name: James R. Knuth
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By/s/Greg Hennenfent
------------------------------
Name: Greg Hennenfent
Title: Vice President
SANWA BANK LIMITED
By/s/Dominic J. Sorresso
------------------------------
Name: Dominic J. Sorresso
Title: Vice President
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By/s/Suresh S. Tata
------------------------------
Name: Suresh S. Tata
Title: Senior Vice President