UNCONDITIONAL GUARANTY
DATED: MAY 7, 1999
BORROWERS: CARROLL'S FOODS, INC., CARROLL'S REALTY, INC.,
AND CARROLL'S REALTY PARTNERSHIP
GUARANTOR: SMITHFIELD FOODS, INC.
LENDER: CAPE FEAR FARM CREDIT, ACA, FAYETTEVILLE, CUMBERLAND
COUNTY, NC 28302
PRELIMINARY STATEMENT
A. Lender previously has made, pursuant to that certain Consolidating Loan
Agreement dated as of August 28, 1998 by and among Lender, Borrowers and others
(the "Loan Agreement"), loans to Borrowers as follows:
(i) A revolving line of credit in the original principal amount of
up to $65,000,000 (the "Operating RLOC"),
(ii) A revolving line of credit in the original principal amount of
up to $80,000,000 (the "Evergreen RLOC"), and
(iii) A revolving line of credit in the original principal amount of
up to $50,000,000 (the "Stock Loan").
B. Smithfield Foods, Inc. and/or certain of its subsidiaries/affiliates
(the "SF Acquiring Parties") have entered into certain transactions (the
"Transactions") with Borrowers and/or certain of their affiliates (the "SF
Acquired Parties"), (which transactions are more specifically described on
Exhibit A attached hereto and incorporated herein by reference) whereby the SF
Acquiring Parties will own, as their interests appear, all of the stock of the
SF Acquired Parties.
C. Lender has previously provided its consent to the Transactions and
waiver of certain violations of or defaults under the Loan Agreement which would
have occurred as a result of the Transactions, which consent and waiver was
provided by letter dated May 3, 1999 from Lender to C. Larry Pope, Vice
President-Finance, Smithfield Foods, Inc. (the "Waiver and Consent Letter"), a
copy of which is attached hereto as Exhibit B; PROVIDED HOWEVER, that such
consent and waiver was conditioned, among other things, upon a guaranty by
Smithfield Foods, Inc., of all obligations of Borrowers to Lender arising under
or in connection with the Operating RLOC and the Evergreen RLOC and costs
related thereto or arising therefrom.
D. Contemporaneously herewith, Lender, Borrowers and others have entered
into a modification of the Loan Agreement which provides, among other things,
for the termination of the Stock Loan.
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, and in order to induce Lender, from time to time, in its
sole discretion to extend or continue to extend credit (with or without
security) to and/or to engage in business transactions and enter into various
contractual relationships with Borrowers (without limiting the generality of the
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foregoing) this Unconditional Guaranty is being given in order to induce Lender
to enter into certain amendments to the Loan Agreement and loan documents
related thereto (the "Loan Documents"), to loan and continue to loan money;
renew, extend or modify loans and/or otherwise extend credit or forbearance(s)
and otherwise to deal with Borrowers, Guarantor hereby absolutely and
unconditionally guarantees to Lender and its successors and assigns, the due and
punctual payment and performance of all liabilities and obligations of Borrowers
to Lender, primary or secondary (whether by way of endorsement or otherwise),
whether now existing or hereafter arising, whether arising out of contract(s),
tort(s) or otherwise, whether created directly with Lender or acquired by Lender
through assignment, endorsement or otherwise; whether matured or unmatured;
whether absolute or contingent; whether joint or several; as and when the same
become due and payable (whether by acceleration or otherwise), together with all
interest, prepayment penalties or finance charges thereon, costs of court and
the reasonable attorneys' fees of Lender related thereto or arising in
accordance with the terms of any such instruments, accounts receivable and other
security agreements and/or other contracts evidencing any such indebtedness,
obligations or liabilities, including all renewals, extensions and/or
modifications thereof to the extent that any or all of the foregoing arise from
or are related to Borrowers' obligations under the Operating RLOC and the
Evergreen RLOC (all such liabilities and obligations of Borrowers to Lender,
hereinafter collectively being termed "Obligations of Borrowers").
Further, whether or not suit is brought by Lender to acquire possession of
collateral or to enforce collection of any unpaid balance(s) hereunder,
Guarantor expressly hereby agrees to pay all legal expenses and the reasonable
attorneys' fees actually incurred by Lender.
In order to implement the foregoing and as additional inducements to
Lender, Guarantor further covenants and agrees:
1. This Unconditional Guaranty is and shall remain an unconditional and
continuing guaranty of payment and not of collection, shall remain in full force
and effect irrespective of any interruption(s) in the business or other dealings
and relations of Borrowers with Lender and shall apply to and guarantee the due
and punctual payment of all Obligations of Borrowers to Lender. To that end,
Guarantor hereby expressly waives any right to require Lender to bring any
action against Borrowers or any other guarantor, or any one or more of them, or
any other person(s) or to require that resort be had to any security or to any
balance(s) of any deposit or other account(s) or debt(s) or credit(s) on the
books of Lender in favor of Borrowers, or any one or more of them, or any other
person(s). Guarantor acknowledges that its liabilities and obligations hereunder
are primary rather than secondary. To that end and without limiting the
generality of the foregoing, Guarantor herewith expressly waives any rights it
otherwise might have had under provisions of G.S. SECTION 26-7, ET SEQ., AND/OR
OTHER NORTH CAROLINA LAWS to require Lender to attempt to recover against
Borrowers, or any one or more of them and/or realize upon any securities or
collateral security which Lender holds for the Obligations of Borrowers.
2. TIME IS OF THE ESSENCE HEREOF. Any notice(s) to Guarantor shall be
sufficiently given to the Guarantor and deemed to have been received and to be
effective on the day on which delivered to the Guarantor c/o or if sent by
certified mail, return receipt requested, to such address, on the day of
delivery or refusal of delivery as evidenced by the return receipt therefor.
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3. No waivers or modifications of this Unconditional Guaranty shall be valid
unless they are reduced to writing, duly executed by the party to be charged
thereby, and expressly approved in writing by an officer of Lender actually
involved in the transactions being guaranteed hereby.
4. All moneys available to and/or received by Lender for application toward
payment of (or reduction of) the Obligations of Borrowers may be applied by
Lender to such individual debt(s) in such manner, and apportioned in such
amount(s) and at such time(s) as Lender, in its sole discretion, may deem
suitable or desirable.
5. Guarantor agrees that in the event judgment or any court order for turnover
or recovery is entered against Lender (whether by consent, compromise settlement
or otherwise) pursuant to any section of Chapter 5 of the United States
Bankruptcy Code for the amount of any monetary payment or transfer of any
property (whether real, personal or mixed, tangible or intangible, or the value
thereof) made to Lender by or on behalf of any Borrower and/or Guarantor for
credit to the Obligations of Borrowers, then in such event (and notwithstanding
the prior discharge or satisfaction in whole or in part of any or all the
Obligations of Borrowers due Lender, or the written or stamped notation of
cancellation, release or satisfaction affixed to this Unconditional Guaranty or
any instrument of indebtedness evidencing the Obligations of Borrowers, or any
prior notice of termination of this Unconditional Guaranty as to future
Obligations of Borrowers), the amount or value of any such payments or property
recovered from Lender shall be deemed to be Obligations of Borrowers and this
Unconditional Guaranty and the liabilities of Guarantor hereunder shall continue
and remain in full force and effect as to the same, together with interest
thereon from date of recovery at the rate(s) applicable to the Obligations of
Borrowers to which such payments or transfers in connection therewith were
credited.
6. Guarantor acknowledges that any attempted termination of liability hereunder
shall not release Guarantor from full liability for Obligations of Borrowers
hereby guaranteed and then in existence or from any renewal(s) or extension(s)
thereof in whole or in part whether such renewals or extensions are made before
or after the effective date of such termination, and with or without notice to
Guarantor, except as may be specifically agreed to in writing by Lender
hereafter.
7. Guarantor agrees that its liability hereunder shall not be diminished by any
failure on the part of Lender to perfect (by filing, recording or otherwise) any
security interest(s) it may have in any property securing this Unconditional
Guaranty and/or the Obligations of Borrowers secured hereby and hereunder.
8. Guarantor agrees that the whole or any part of the security now or hereafter
held for the Obligations of Borrowers may be exchanged, compromised, or
surrendered from time to time; that Lender shall have no obligation to protect,
perfect, secure or insure any such security interests, liens or encumbrances now
or hereafter held for the Obligations of Borrowers or the properties subject
thereto; that the time or place of payment of the Obligations of Borrowers may
be changed or extended, in whole or in part, to a time certain or otherwise, and
may be renewed or accelerated, in whole or in part; that Borrowers may be
granted indulgences generally; that any of the provisions of any loan agreement,
note, or any other documents executed in connection with the Obligations of
Borrowers, may be modified, amended or waived; that any party (including any
co-guarantor) liable for the payment thereof may be granted indulgences or
released; all without notice to or further
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assent by Guarantor, who shall remain bound thereon, notwithstanding any such
exchange, compromise, surrender, extension, renewal, acceleration, modification,
indulgence, or release.
9. Guarantor further hereby consents and agrees that Lender may at any time, or
from time to time, in its sole discretion: (i) extend or change the time of
payment, and/or the manner, place or terms of payment of any or all of the
Obligations of Borrowers; (ii) exchange, release and/or surrender all or any of
the collateral security, or any part(s) thereof, by whomsoever deposited, which
is or hereafter may be held by it in connection with all or any of the
Obligations of Borrowers and/or any liabilities of Guarantor hereunder; (iii)
sell or otherwise dispose of and/or purchase all or any of such collateral at
public or private sale, or to or through any investment securities broker, and
after deducting all costs and expenses of every kind for collection, preparation
for sale, sale or delivery, the net proceeds of any such sale(s) or other
disposition may be applied by Lender upon all or any of the Obligations of
Borrowers; and (iv) settle or compromise with Borrowers, any insurance carrier
and/or any other person(s) liable thereon, any and all of the Obligations of
Borrowers, and/or subordinate the payment of all or any part of same, to the
payment of any other debts or claims, which may at any time(s) be due or owing
to Lender and/or any other person(s); all in such manner and upon such terms as
Lender may deem proper and/or desirable, and without notice to or further assent
from Guarantor, it being agreed that Guarantor shall be and remain bound upon
this Unconditional Guaranty irrespective of the existence, value or condition of
any collateral, and notwithstanding any such change, exchange, settlement,
compromise, surrender, release, sale or other disposition, application, renewal
or extension. Further, this Unconditional Guaranty shall not be construed to
impose any obligation on Lender to extend or continue to extend credit or
otherwise to deal with Borrowers, or any of them, at any time.
10. This Unconditional Guaranty covers all Obligations of Borrowers purporting
to be created or undertaken on behalf of Borrowers by any of their respective
officers, partners, managers or agents, without regard to the actual authority
of any such officers, partners, managers or agents, whether or not corporate,
partnership or other resolutions authorizing any such actions of the respective
Borrower, proper or otherwise, are given by the Borrowers, or any one or more of
them, to Lender, and/or whether or not such purported organizations are legally
chartered or organized.
11. This Unconditional Guaranty shall be binding upon Guarantor, and the
successors and assigns of Guarantor and it shall inure to the benefit of, and be
enforceable by Lender, and its successors, transferees and assigns. It further
shall be deemed to have been made under and shall be governed by the laws of the
State of North Carolina in all respects, including matters of construction,
validity and performance.
12. All terms or expressions contained herein which are defined in Article 1, 3
or 9 of the North Carolina Uniform Commercial Code shall have the same meaning
herein as in said Articles of said Code.
13. No waiver by Lender of any default(s) by Guarantor or Borrowers shall
operate as a waiver of any other default or of the same default on a future
occasion. Use of the masculine or neuter pronoun herein shall include the
masculine, feminine and neuter, and also the plural. Lender, or any other holder
hereof, may correct patent errors in this Unconditional Guaranty.
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14. Guarantor hereby waives: (i) notice of acceptance of this Unconditional
Guaranty; (ii) notice(s) of extensions of credit and/or continuations of credit
extensions to Borrowers by Lender; (iii) notice(s) of entering into and engaging
in business transactions and/or contractual relationships and any other dealings
between Borrowers, any other guarantor or any one or more of them, and Lender;
(iv) presentment and/or demand for payment of any of the Obligations of
Borrowers; (v) protest or notice of dishonor or default to Guarantor or to any
other person with respect to any of the Obligations of Borrowers; and (vi) any
demand for payment under this Unconditional Guaranty.
15. Any indebtedness of Borrowers, or any one or more of them, to the Guarantor
now or hereafter existing, together with any interest thereon, shall be, and
such indebtedness hereby is, deferred, postponed and subordinated to the
Obligations of Borrowers; provided, however, that until notice of a default in
the Obligations of Borrowers has been given to Guarantor, Borrowers, or any one
or more of them, may repay such indebtedness as and when the same becomes due
unless such repayment would result in a default in the Obligations of Borrowers.
Any lien or charge on any collateral, all rights therein and thereto, and on the
revenue and income to be realized therefrom, which Guarantor may have or obtain
as security for any loans shall be, and such lien or charge hereby is,
subordinated to the liens and rights of Lender under the Loan Documents and to
the Obligations of Borrowers.
16. Guarantor hereby waives and renounces any and all rights it has or may have
for subrogation, indemnity, reimbursement or contribution against Borrowers, or
any of them, for amounts paid under this Unconditional Guaranty unless and until
all Obligations of Borrowers have been satisfied and paid in full. This waiver
is expressly intended to prevent Guarantor from constituting a creditor of
Borrowers, or any of them, in respect of such reimbursement within the meaning
of Section 547(b) of the Bankruptcy Code in the event of a subsequent case
involving Borrowers, or any of them.
17. In the event any provision(s) of this instrument should be left blank or
incomplete, Guarantor hereby authorizes and empowers Lender to supply and
complete the necessary information to complete or fill in the blank
provision(s).
18. Guarantor shall be in default under this Unconditional Guaranty upon the
happening of any of the following events, circumstances or conditions; namely:
(a) Default in the payment or performance of any of the obligations
or of any covenant, warranty or liability contained or referred to
herein or discovery of any material misrepresentation made or
furnished to Lender by or on behalf of Borrowers or Guarantor in
connection with this Unconditional Guaranty; or
(b) The occurrence of any Event of Default under the Loan Agreement,
as the same may be amended from time to time, or any of the other
Loan Documents (as defined in the Loan Agreement).
19. Upon the occurrence of any of the foregoing events, circumstances, or
conditions of default, all of the obligations evidenced herein and secured or
guaranteed hereby shall be due and payable immediately without notice. Further,
Lender then shall have all of the rights and remedies of a Secured Party
hereunder and all of the rights and remedies of a Secured Party and/or
Holder-in-Due-
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Course under the North Carolina Uniform Commercial Code and/or under other laws
of North Carolina.
WITNESS the Hand(s) and Seal(s) of the undersigned, this Unconditional Guaranty
being executed and delivered on the date first above written.
ATTEST: Smithfield Foods, Inc.
/s/ Michael H. Cole By: /s/ Aaron D. Trub
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Michael H. Cole Aaron D. Trub
Assistant Secretary Vice President
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