EXHIBIT 10.1
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CREDIT AGREEMENT
among
SANDERSON FARMS, INC.
and
HARRIS N.A.,
Individually and as Agent
and
SUNTRUST BANK,
Individually and as Documentation Agent
and
THE FROM TIME TO TIME BANKS PARTIES HERETO
November 17, 2005
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TABLE OF CONTENTS
SANDERSON FARMS, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
SECTION HEADING PAGE
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SECTION 1. THE CREDITS.......................................... 1
Section 1.1. The Revolving Credit................................. 1
Section 1.2. The Revolving Notes.................................. 2
Section 1.3. Swingline Loans under the Revolving Credit........... 3
(a) Swingline Commitment................................. 3
(b) Refunding Loans...................................... 4
(c) Participations....................................... 4
Section 1.4. Interest Rates....................................... 5
(a) Domestic Rate........................................ 5
(b) Eurodollar Rate...................................... 5
(c) Default Rate......................................... 5
Section 1.5. Manner of Borrowing and Rate Selection............... 5
Section 1.6. Letters of Credit.................................... 6
Section 1.7. Reimbursement Obligation............................. 8
Section 1.8. Participation in L/Cs................................ 8
SECTION 2. FEES, PREPAYMENTS AND TERMINATIONS................... 9
Section 2.1. Commitment Fee....................................... 9
Section 2.2. Agent's Fee.......................................... 9
Section 2.3. Optional Prepayments................................. 9
Section 2.4. Mandatory Prepayments................................ 10
Section 2.5. Terminations......................................... 10
SECTION 3. PLACE AND APPLICATION OF PAYMENTS.................... 10
SECTION 4. DEFINITIONS.......................................... 11
SECTION 5. REPRESENTATIONS AND WARRANTIES....................... 19
Section 5.1. Organization and Qualification....................... 19
Section 5.2. Financial Reports.................................... 19
Section 5.3. Litigation; Tax Returns; Approvals................... 20
Section 5.4. Regulation U......................................... 20
Section 5.5. No Default........................................... 20
Section 5.6. ERISA................................................ 20
Section 5.7. Compliance with Laws................................. 21
Section 5.8. Security Interests and Indebtedness.................. 21
Section 5.9. Subsidiaries......................................... 21
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Section 5.10. Accurate Information................................. 21
Section 5.11. Enforceability....................................... 21
SECTION 6. CONDITIONS PRECEDENT................................. 22
Section 6.1. General.............................................. 22
Section 6.2. Initial Extension of Credit.......................... 22
Section 6.3. Each Extension of Credit............................. 23
Section 6.4. Legal Matters........................................ 23
Section 6.5. Closing Fee.......................................... 24
SECTION 7. COVENANTS............................................ 24
Section 7.1. Maintenance of Property.............................. 24
Section 7.2. Taxes................................................ 24
Section 7.3. Maintenance of Insurance............................. 24
Section 7.4. Financial Reports.................................... 24
Section 7.5. Inspection........................................... 25
Section 7.6. Consolidation and Merger............................. 26
Section 7.7. Transactions with Affiliates......................... 26
Section 7.8. Material Subsidiaries................................ 26
Section 7.9. Consolidated Tangible Net Worth...................... 26
Section 7.10. Consolidated Indebtedness for Borrowed Money to
Total Capitalization.............................. 26
Section 7.11. Consolidated Current Ratio........................... 26
Section 7.12. Capital Expenditures................................. 26
Section 7.13. Liens................................................ 27
Section 7.14. Investments, Loans, Advances and Acquisitions........ 28
Section 7.15. Sale of Tangible Fixed Assets........................ 29
Section 7.16. Notice of Suit or Adverse Change in Business or
Default........................................... 30
Section 7.17. ERISA................................................ 30
Section 7.18. Use of Proceeds...................................... 30
Section 7.19. Compliance with Laws, etc............................ 30
Section 7.20. Environmental Covenant............................... 31
SECTION 8. EVENTS OF DEFAULT AND REMEDIES....................... 31
Section 8.1. Definitions.......................................... 31
Section 8.2. Remedies for Non-Bankruptcy Defaults................. 33
Section 8.3. Remedies for Bankruptcy Defaults..................... 33
SECTION 9. CHANGE IN CIRCUMSTANCES REGARDING EURODOLLAR LOANS... 33
Section 9.1. Change of Law........................................ 33
Section 9.2. Unavailability of Deposits or Inability to Ascertain
the Adjusted Eurodollar Rate.................. 34
Section 9.3. Taxes, Increased Costs and Reduced Return............ 34
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Section 9.4. Funding Indemnity.................................... 35
Section 9.5. Lending Branch....................................... 36
Section 9.6. Discretion of Bank as to Manner of Funding........... 36
SECTION 10. THE AGENT............................................ 36
Section 10.1. Appointment and Powers............................... 36
Section 10.2. Powers............................................... 36
Section 10.3. General Immunity..................................... 37
Section 10.4. No Responsibility for Loans, Recitals, etc........... 37
Section 10.5. Right to Indemnity................................... 37
Section 10.6. Action Upon Instructions of Banks.................... 37
Section 10.7. Employment of Agents and Counsel..................... 37
Section 10.8. Reliance on Documents; Counsel....................... 37
Section 10.9. May Treat Payee as Owner............................. 38
Section 10.10. Agent's Reimbursement................................ 38
Section 10.11. Rights as a Lender................................... 38
Section 10.12. Bank Credit Decision................................. 38
Section 10.13. Resignation of Agent................................. 38
Section 10.14. Duration of Agency................................... 39
Section 10.15. Removal of Agent..................................... 39
Section 10.16. Additional Agent..................................... 39
SECTION 11. MISCELLANEOUS........................................ 39
Section 11.1. Amendments and Waivers............................... 39
Section 11.2. Waiver of Rights..................................... 40
Section 11.3. Several Obligations.................................. 40
Section 11.4. Non-Business Day..................................... 40
Section 11.5. Survival of Indemnities.............................. 40
Section 11.6. Documentary Taxes.................................... 40
Section 11.7. Representations...................................... 41
Section 11.8. Notices.............................................. 41
Section 11.9. Costs and Expenses; Environmental Indemnity.......... 41
Section 11.10. Counterparts......................................... 42
Section 11.11. Successors and Assigns; Governing Law; Entire
Agreement......................................... 42
Section 11.12. No Joint Venture..................................... 42
Section 11.13. Severability......................................... 42
Section 11.14. Table of Contents and Headings....................... 42
Section 11.15. Sharing of Payments.................................. 43
Section 11.16. Participants......................................... 43
Section 11.17. Assignments.......................................... 43
Section 11.18. Confidentiality...................................... 44
Section 11.19. Waiver of Jury Trial................................. 45
Section 11.20. USA Patriot Act...................................... 45
Signature Page........................................................... 46
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Exhibit A Revolving Credit Note
Exhibit B Swingline Note
Exhibit C Letter of Credit Agreement
Exhibit D Guaranty Agreement
Exhibit E Compliance Certificate
Exhibit F Environmental Disclosure
Exhibit G Schedule of Subsidiaries
Exhibit H Litigation; Tax Returns; Approval
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SANDERSON FARMS, INC.
CREDIT AGREEMENT
Harris N.A.
Chicago, Illinois
The from time to time lenders parties hereto
Ladies and Gentlemen:
The undersigned, SANDERSON FARMS, INC., a Mississippi corporation (the
"Company"), applies to you for your several commitments, subject to all the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to make a revolving credit (the "Revolving
Credit") and a swingline (the "Swingline") available to the Company, all as more
fully hereinafter set forth. Harris N.A. in its individual capacity is sometimes
referred to herein as "Harris," and in its capacity as Agent for the Banks (as
hereinafter defined) is hereinafter in such capacity called the "Agent."
SECTION 1. THE CREDITS.
Section 1.1. The Revolving Credit. (a) Subject to all of the terms and
conditions hereof, the Banks agree, severally and not jointly, to extend a
Revolving Credit to the Company which may be utilized by the Company in the form
of loans (individually a "Revolving Credit Loan" and collectively the "Revolving
Credit Loans") and L/Cs (as hereinafter defined). The aggregate principal amount
of all Revolving Credit Loans, Swingline Loans (as hereinafter defined) and
Reimbursement Obligations (as hereinafter defined) at any time outstanding plus
the maximum amount available to be drawn under all L/Cs outstanding from time to
time shall not exceed the sum of the Banks' Revolving Credit Commitments (as
hereinafter defined) in effect from time to time during the term of this
Agreement. The Revolving Credit shall be available to the Company, and may be
availed of by the Company from time to time, be repaid and used again, during
the period from the date hereof to and including November 17, 2010 (the
"Revolving Credit Termination Date").
(b) At any time not earlier than July 17, 2008 and not later than September
17, 2008 (such period and each such period in the first or second calendar year
before the calendar year in which the Revolving Credit Termination Date then in
effect is to occur are referred to as an "Extension Request Period"), the
Company may request that the Banks extend the then scheduled Revolving Credit
Termination Date to the date one year from such Revolving Credit Termination
Date and make any changes in the terms and conditions of the Loan Documents
desired by the Company. Pursuant to any such request and no later than the
November 1 immediately following such Extension Request Period the Banks may
propose, by written notice to the Company, an extension of this Agreement to
such later date on such terms and conditions as the Banks may then require. If
the extension of this Agreement to such later date is acceptable to the Company
on the terms and conditions proposed by the Banks, the Company shall notify
the Banks of its acceptance or rejection no later than the November 16
immediately following such November 1, and upon the Company's acceptance of such
terms and conditions such later date will become the Revolving Credit
Termination Date hereunder and this Agreement shall otherwise be amended in the
manner described in the Banks' notice proposing the extension of this Agreement
upon the Agent's receipt of (i) resolutions of the Company's Board of Directors
authorizing such extension and (ii) an opinion of counsel to the Company in form
and substance acceptable to the Banks. The Company may request a further
extension of the Revolving Credit Termination Date during each subsequent
Extension Request Period and pursuant to any such requests the Banks may further
offer to extend the Revolving Credit Termination Date by November 1 preceding
any such later scheduled Revolving Credit Termination Date in the same manner as
set forth above for the initial Revolving Credit Termination Date.
(c) The respective maximum aggregate principal amounts of the Revolving
Credit at any one time outstanding 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 N.A. $ 45,000,000
SunTrust Bank $ 40,000,000
AmSouth Bank $ 32,500,000
U.S. Bank National Association $ 32,500,000
Regions Bank $ 25,000,000
Trustmark National Bank $ 25,000,000
Total $200,000,000
(d) Loans under the Revolving Credit may be Eurodollar Loans or Domestic
Rate Loans. All Revolving Credit Loans shall be made from each Bank in
proportion to its Commitment Percentage (as hereinafter defined). Each Domestic
Rate Loan shall be in an amount not less than $1,000,000 or such greater amount
which is an integral multiple of $100,000 and each Eurodollar Loan shall be in
an amount not less than $3,000,000 or such greater amount which is an integral
multiple of $500,000.
Section 1.2. The Revolving Notes. All Revolving Credit Loans made by each
Bank under its Revolving Credit Commitment shall be evidenced by a single
Revolving Credit Note of the Company substantially in the form of Exhibit A
hereto (individually, a "Revolving Note" and together, the "Revolving Notes")
payable to the order of such Bank in the principal amount of such Revolving
Credit Commitment, but the aggregate principal amount of indebtedness evidenced
by such Revolving Note at any time shall be, and the same is to be determined
by, the aggregate principal amount of all Revolving Credit Loans made by such
Bank to the Company pursuant hereto on or prior to the date of determination
less the aggregate amount of principal repayments on such Revolving Credit Loans
received by or on behalf of such Bank on or prior to such date of determination.
Each Revolving Note shall be dated as of the execution date of this Agreement,
shall be delivered concurrently herewith, and shall be expressed to mature on
the Revolving Credit Termination Date and to bear interest as provided in
Section 1.4 hereof. Each
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Bank shall record on its books or records or on a schedule to its Revolving Note
the amount of each Revolving Credit Loan made by it hereunder, whether each
Revolving Credit Loan is a Domestic Rate Loan or Eurodollar Loan, and, with
respect to Eurodollar Loans, the interest rate and Interest Period applicable
thereto, and all payments of principal and interest and the principal balance
from time to time outstanding, provided that prior to any transfer or assignment
of such Revolving Note all such amounts shall be recorded on the schedule to
such Revolving Note. The record thereof, whether shown on such books or records
or on the schedule to the Revolving Note, shall be prima facie evidence as to
all such amounts; provided, however, that the failure of any Bank to record, or
any mistake in recording, any of the foregoing shall not limit or otherwise
affect the obligation of the Company to repay all Revolving Credit Loans made
hereunder together with accrued interest thereon.
Section 1.3. Swingline Loans under the Revolving Credit. (a) Swingline
Commitment. Subject to the terms and conditions hereof and in reliance on the
obligations of the Banks to Harris under this Section 1.3, Harris agrees to
advance one or more swingline loans (each a "Swingline Loan") to the Company
from time to time before the Revolving Credit Termination Date on a revolving
basis up to $10,000,000 in aggregate principal amount at any time outstanding
(the "Swingline Commitment"); provided that Harris shall have no obligation to
advance any Swingline Loan to the extent the aggregate amount of the Revolving
Credit Loans, Swingline Loans and Reimbursement Obligations outstanding plus the
maximum amount available to be drawn under all L/Cs outstanding would thereby
exceed the Revolving Credit Commitments then in effect. All Swingline Loans will
be in an amount not less than $100,000 or an integral multiple of $50,000 in
excess thereof. Swingline Loans may be repaid and their principal amount
reborrowed before the Revolving Credit Termination Date, subject to the terms
and conditions hereof. Each Swingline Loan that bears interest based on the
Domestic Rate shall mature ten (10) days after such Loan is made and each
Offered Rate Loan (as hereinafter defined) shall mature on the last day of the
Interest Period applicable thereto.
All Swingline Loans made by Harris under the Swingline shall be evidenced
by a Swingline Note of the Company (the "Swingline Note") payable to the order
of Harris in the amount of its Swingline Commitment, the Swingline Note to be in
the form attached hereto as Exhibit B. Without regard to the face principal
amount of the Swingline Note, the actual principal amount at any time
outstanding and owing by the Company on account thereof during the period ending
on the Revolving Credit Termination Date shall be the sum of all advances then
or theretofore made thereon less all principal payments actually received
thereon during such period.
The Company may elect that each Swingline Loan shall bear interest on the
unpaid principal amount thereof from the date such Swingline Loan is made until
paid in full at either (a) the rate per annum (computed on the basis of a year
of 365/366 days and actual days elapsed) determined by adding the Applicable
Margin to the Domestic Rate as in effect from time to time, or (b) the rate per
annum (computed on the basis of a year of 360 days and actual days elapsed)
quoted to the Company by Harris for the Interest Period applicable thereto (each
such Swingline Loan is hereinafter referred to as an "Offered Rate Loan");
provided, however, that the Company understands and agrees that Harris has no
obligation to quote rates or to make any such Offered Rate Loan and may refuse
to make any such Offered Rate Loan after receiving a request therefor
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from the Company. The Company shall give the Agent notice (which may be written
or oral) of each Swing Loan requested by it hereunder no later than 2:00 p.m.
(Chicago time) in the case of a Swing Loan bearing interest based on the
Domestic Rate and no later than 12:00 noon (Chicago time) in the case of an
Offered Rate Loan, in each case on the day of the requested Swing Loan. The
Company acknowledges and agrees that the interest rate quoted by Harris for any
Offered Rate Loan may not be the best or lowest rate offered to other customers
of Harris and may not be the same rate offered to other customers of Harris for
loans of similar amounts and maturities, but is the rate at which Harris in its
sole and exclusive discretion is willing to make such Offered Rate Loan to the
Company for the specified amount and maturity. Interest based on the Domestic
Rate shall be payable quarterly in ARREARS on the last day of each calendar
quarter, commencing on December 31, 2005, and at maturity (whether by
acceleration, upon prepayment or otherwise), and interest on all Offered Rate
Loans shall be payable on the last day of the Interest Period applicable thereto
and at maturity (whether by acceleration, upon prepayment or otherwise). If any
Swingline Loan is not paid when due it shall bear interest at a rate per annum
(computed on the basis of a year of 365/366 days and actual days elapsed)
determined by adding the Applicable Margin to the Domestic Rate as in effect
from time to time plus 1.5%. Interest on all Swingline Loans after maturity
shall be due and payable upon demand.
(b) Refunding Loans. In its sole and absolute discretion, Harris may at any
time, on behalf of the Company (which hereby irrevocably authorizes Harris to
act on its behalf for such purpose), request each Bank by means of written or
telegraphic notices given no later than 5:00 p.m. (Chicago time) on any Business
Day to make a Domestic Rate Loan under the Revolving Credit in an amount equal
to such Bank's Commitment Percentage of the amount of the Swingline Loans
outstanding on the date such notice is given. Unless any of the conditions of
Section 6.3 are not fulfilled on such date, each Bank shall make the proceeds of
its requested Domestic Rate Loan available to Harris, in immediately available
funds, at the principal office of Harris in Chicago, Illinois, before 3:00 p.m.
(Chicago time) on the Business Day following the day such notice is given. The
proceeds of such Domestic Rate Loans shall be immediately applied to repay the
outstanding Swingline Loans. The Company authorizes Harris to charge the
Company's accounts with Harris (up to the amount available in such accounts) to
pay the amount of any such outstanding Swingline Loans to the extent amounts
received from the Banks are not sufficient to repay in full such Swingline
Loans.
(c) Participations. If any Bank refuses or otherwise fails to make a
Revolving Credit Loan when requested by Harris pursuant to Section 1.3(b) above
(because the conditions in Section 6.3 are not satisfied or otherwise), such
Bank will, by the time and in the manner such Revolving Credit Loan was to have
been funded to Harris, purchase from Harris an undivided participating interest
in the outstanding Swingline Loans in an amount equal to its Commitment
Percentage of the aggregate principal amount of Swingline Loans that were to
have been repaid with such Revolving Credit Loans. Each Bank that so purchases a
participation in a Swingline Loan shall thereafter be entitled to receive its
Commitment Percentage of each payment of principal received on the Swingline
Loan and of interest received thereon accruing from the date such Bank funded to
Harris its participation in such Loan. The obligation of the Banks to Harris
shall be absolute and unconditional and shall not be affected or impaired by any
Event of Default or Potential Default which may then be continuing hereunder
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Section 1.4. Interest Rates. (a) Domestic Rate. Each Domestic Rate Loan
shall bear interest (computed on the basis of a year of 365 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Loan is made
until maturity (whether by acceleration, upon prepayment or otherwise) at a rate
per annum equal to the sum of the Applicable Margin plus the Domestic Rate from
time to time in effect, payable quarterly in arrears on the last day of each
calendar quarter, commencing on December 31, 2005, and at maturity (whether by
acceleration, upon prepayment or otherwise).
(b) Eurodollar Rate. Each Eurodollar Loan shall bear interest (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is made or created until the last day of
the Interest Period applicable thereto or, if earlier, until maturity (whether
by acceleration or otherwise) at a rate per annum equal to the sum of the
Applicable Margin plus the Adjusted Eurodollar Rate, payable on the last day of
each Interest Period applicable thereto and at maturity (whether by acceleration
or otherwise) and, with respect to any Eurodollar Loan with an Interest Period
in excess of three months, on the date occurring every date which is three
months after the date such Loan is made or created; provided that if on the last
day of the Interest Period applicable to any Eurodollar Loan the Company does
not pay such Loan, such Loan shall automatically become a Domestic Rate Loan as
of the day immediately following the last day of the Interest Period applicable
thereto.
(c) Default Rate. During the existence of any Event of Default, all
Revolving Credit Loans and Reimbursement Obligations outstanding hereunder shall
bear interest (computed on the basis of a year of 365 days and actual days
elapsed) payable on demand, at a rate per annum equal to:
(i) with respect to any Domestic Rate Loan, the sum of 1.5% plus the
Applicable Margin plus the Domestic Rate from time to time in effect; and
(ii) with respect to any Eurodollar Loan, the sum of 1.5% plus the
rate of interest in effect thereon at the time of such default until the
end of the Interest Period then applicable thereto, and, thereafter, at a
rate per annum equal to the sum of 1.5% plus the Applicable Margin plus the
Domestic Rate from time to time in effect.
Section 1.5. Manner of Borrowing and Rate Selection. (a) Except as
otherwise provided in the first paragraph of Section 1.4(b) hereof and in
Section 1.7 hereof, the Company shall give telephonic, telex or telecopy notice
to the Agent (which notice, if telephonic, shall be promptly confirmed in
writing) no later than (i) 11:00 a.m. (Chicago time) on the date the Banks are
requested to make each Domestic Rate Loan and (ii) 11:00 a.m. (Chicago time) on
the date at least three (3) Business Days prior to the date of (x) each
Eurodollar Loan which the Banks are requested to make and (y) the conversion of
any Domestic Rate Loan into a Eurodollar Loan. Each such notice shall specify
the date of the Loan requested (which shall be a Business Day), the amount of
such Loan or the amount to be converted, as the case may be, whether the Loan is
to be made available by means of a Domestic Rate Loan or Eurodollar Loan and,
with respect to Eurodollar Loans, the Interest Period applicable thereto;
provided, that in no event shall the principal amount of any requested Revolving
Credit Loan plus the aggregate principal amount of all Revolving Credit Loans
and Swingline Loans outstanding hereunder exceed the amounts
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specified in Section 1.1(c) hereof. The Company agrees that the Agent may rely
on any such telephonic, telex or telecopy notice given by any person who the
Agent reasonably believes is the chief executive officer, the chief accounting
officer, the chief financial officer or the corporate cashier of the Company
without the necessity of independent investigation and in the event any notice
by such means conflicts with the written confirmation, such notice shall govern
if any Bank has acted in good faith reliance thereon. The Agent shall, on the
day any such notice is received by it, give prompt telephonic, telex or telecopy
(if telephonic, to be confirmed in writing within one Business Day) notice of
the receipt of notice from the Company hereunder to each of the Banks, and, if
such notice requests the Banks to make or effect by conversion any Eurodollar
Loans, the Agent shall confirm to the Company by telephonic, telex or telecopy
means, which confirmation shall be conclusive and binding on the Company in the
absence of manifest error, the Interest Period and the interest rate applicable
thereto promptly after such rate is determined by the Agent.
(b) Subject to the provisions of Section 6 hereof, the proceeds of each
Loan shall be made available to the Company at the principal office of the Agent
in Chicago, Illinois, in immediately available funds, on the date such Loan is
requested to be made by crediting the Company's general operating account
maintained with the Agent in Chicago, Illinois. Not later than 3:00 p.m. Chicago
time, on the date specified for any Loan to be made hereunder, each Bank shall
make its Commitment Percentage of such Loan available to the Company in
immediately available funds at the principal office of the Agent.
(c) Unless the Agent shall have been notified by a Bank prior to the date
of a Loan to be made by such Bank (which notice shall be effective upon receipt)
that such Bank does not intend to make the proceeds of such Loan available to
the Agent, the Agent may assume that such Bank has made such proceeds available
to the Agent on such date and the Agent may in reliance upon such assumption
(but shall not be required to) make available to the Company a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Bank, the Agent shall be entitled to receive such amount on demand from
such Bank (or, if such Bank fails to pay such amount forthwith upon such demand,
to recover such amount, together with interest thereon at the rate otherwise
applicable thereto under Section 1.4 hereof, from the Company) together with
interest thereon in respect of each day during the period commencing on the date
such amount was made available to the Company and ending on the date the Agent
recovers such amount, at a rate per annum equal to the effective rate charged to
the Agent for overnight Federal funds transactions with member banks of the
Federal Reserve System for each day, as determined by the Agent (or, in the case
of a day which is not a Business Day, then for the preceding Business Day) (the
"Fed Funds Rate"). Nothing in this Section 1.5(c) shall be deemed to permit any
Bank to breach its obligations to make Loans under the Revolving Credit or to
limit the Company's claims against any Bank for such breach.
Section 1.6. Letters of Credit. (a) Subject to all the terms and conditions
hereof, satisfaction of all conditions precedent to borrowing under this
Agreement and so long as no Potential Default or Event of Default is in
existence, at the Company's request Harris shall issue, at any time before the
first to occur of the Conversion Date and the Revolving Credit Termination Date,
letters of credit (an "L/C" and collectively the "L/Cs") for the account of the
Company subject to availability under the Revolving Credit, and the Banks hereby
agree to
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participate therein as more fully described in Section 1.8 hereof. Each L/C
shall be issued pursuant to an application for letter of credit (collectively
the "L/C Agreements" and individually an "L/C Agreement") in the form of Exhibit
C hereto, shall conform to the general requirements of the Bank for the issuance
of letters of credit as to form and substance, shall be in U.S. Dollars and
shall be a letter of credit which Harris may lawfully issue. The L/Cs shall
consist of standby and commercial letters of credit in an aggregate face amount
not to exceed $5,000,000. Each L/C shall have an expiry date not more than one
year from the date of issuance thereof (but in no event later than the Revolving
Credit Termination Date). The amount available to be drawn under each L/C issued
and outstanding pursuant hereto shall be deducted from the credit otherwise
available under the Revolving Credit but shall not reduce the Revolving Credit
Commitments of the Banks hereunder. In consideration of the issuance of L/Cs the
Company agrees to pay Harris for the pro rata benefit of the Banks a fee (the
"L/C Participation Fee") in the amount of the rate per annum (computed on the
basis of a 360 day year and actual days elapsed) equal to the Applicable Margin
as in effect from time to time for Eurodollar Loans of the undrawn amount for
each standby L/C issued for the account of the Company hereunder, payable
quarterly in arrears on the last day of each March, June, September and December
commencing December 31, 2005, and on the Revolving Credit Termination Date. The
Company shall also pay Harris a fronting fee in the amount of one-eighth of one
percent (0.125%) of the face amount of each standby L/C issued hereunder,
payable on the date of issuance of each such standby L/C hereunder and on the
date of each extension, if any, of the expiry date of each such standby L/C and
Harris' usual and customary fees with respect to each trade letter of credit
issued hereunder, payable upon negotiation thereof. In addition, the Company
shall pay to Harris for its own account Harris' standard charges for letters of
credit with respect to each L/C.
(b) Upon satisfaction of all conditions precedent to the initial Loan
hereunder, without any further action on the part of the Company, Harris, the
Agent or any Bank, (i) each of the letters of credit (the "Existing L/Cs")
previously issued by Harris for the account of the Company under the Existing
Agreement shall be deemed for all purposes of this Agreement to be an L/C issued
hereunder, (ii) each application and agreement for a letter of credit pursuant
to which each Existing L/C was issued shall be deemed for all purposes of this
Agreement to be an L/C Agreement, and (iii) all of the Company's indebtedness,
obligations and liabilities to Harris with respect to the Existing L/Cs shall be
deemed to be Reimbursement Obligations of the Company for all purposes of this
Agreement.
(c) Notwithstanding anything contained in any L/C Agreement to the
contrary: (i) the Company shall pay fees in connection with each L/C as set
forth in Section 1.6(a) hereof, (ii) prior to the occurrence and continuance of
an Event of Default, unless required by Section 2.4 hereof, Harris will not call
for the funding by the Company of any amount under an L/C issued for the
Company's account, or for any other form of additional collateral security for
the Company's obligations in connection with such L/C under the L/C Agreements,
and (iii) prior to the occurrence and continuance of an Event of Default or the
Revolving Credit Termination Date, unless required by Section 2.4 hereof, Harris
will not call for the funding by the Company of an L/C issued for its account
prior to being presented with a draft drawn thereunder (or, in the event the
draft is a time draft, prior to its due date). If Harris issues any L/C with an
expiration date that is automatically extended unless Harris gives notice that
the
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expiration date will not so extend beyond its then scheduled expiration date,
Harris will give such notice of non-renewal before the time necessary to prevent
such automatic extension if before such required notice date (i) the expiration
date of such L/C if so extended would be after the Revolving Credit Termination
Date, (ii) the Revolving Credit Commitments have been terminated, (iii) an Event
of Default or Potential Default has occurred and is continuing or (iv) the
renewal term for such L/C would exceed one year from the renewal date.
(d) The Agent shall give prompt telecopy notice to each Bank of each
issuance of, or amendment to, an L/C specifying the effective date of the L/C or
amendment, the amount, the beneficiary, and the expiration date of the L/C, in
each case as established originally or through the relevant amendment, as
applicable, the account party or parties for the L/C, each Bank's pro rata
participation in such L/C and whether the Agent has classified the L/C as a
commercial, performance, or financial letter of credit for regulatory reporting
purposes.
(e) The Banks shall, ratably in accordance with their respective Commitment
Percentages, indemnify Harris (to the extent not reimbursed by the Company)
against any cost, expense (including reasonable counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from Harris'
gross negligence or willful misconduct) that Harris may suffer or incur in
connection with any L/C. The obligations of the Banks under this Section 1.6(e)
and all other parts of this Section 1.6 shall survive termination of this
Agreement and of all L/C Agreements, and all drafts or other documents presented
in connection with drawings thereunder.
Section 1.7. Reimbursement Obligation. The Company is obligated, and hereby
unconditionally agrees, to pay in immediately available funds to the Agent for
the account of Harris and the Banks who are participating in L/Cs pursuant to
Section 1.8 hereof the face amount of each draft drawn, presented and paid by
Harris under the terms of an L/C issued by Harris hereunder (the obligation of
the Company under this Section 1.7 with respect to any L/C is a "Reimbursement
Obligation"). If at any time the Company fails to pay any Reimbursement
Obligation when due, the Company shall be deemed to have automatically requested
a Domestic Rate Loan from the Banks hereunder, as of the maturity date of such
Reimbursement Obligation, the proceeds of which Loan shall be used to repay such
Reimbursement Obligation. Such Loan shall only be made if the conditions
precedent contained in Section 6.3 hereof are satisfied or, if they are not
satisfied, upon approval by all of the Banks, and shall be subject to
availability under the Revolving Credit. If such Loan is not made by the Banks
for any reason, the unpaid amount of such Reimbursement Obligation shall be due
and payable to the Agent for the pro rata benefit of the Banks upon demand and
shall bear interest at the rate of interest specified in Section 1.4(c)(i)
hereof.
Section 1.8. Participation in L/Cs. Each of the Banks will acquire a risk
participation in each L/C upon the issuance thereof, ratably in accordance with
its Commitment Percentage. In the event any Reimbursement Obligation is not
immediately paid by the Company pursuant to Section 1.7 hereof, or if Harris is
required at any time to return to the Company or to a trustee, receiver,
liquidator, custodian or other Person any portion of any payment of any
Reimbursement Obligation, each Bank will pay to Harris funds in an amount equal
to such Bank's Commitment Percentage of such Reimbursement Obligation. At the
election of all of the Banks, such funding
-8-
by the Banks of the unpaid Reimbursement Obligations shall be treated as
additional Revolving Credit Loans to the Company hereunder rather than a
purchase of participations by the Banks in the related L/C held by Harris. The
obligation of the Banks to Harris under this Section 1.8 shall be absolute and
unconditional and shall not be affected or impaired by any Event of Default or
Potential Default which may then be continuing hereunder. Harris shall notify
each Bank by telephone of its Commitment Percentage of such unpaid Reimbursement
Obligation. If such notice has been given to each Bank by 12:00 Noon, Chicago
time, each Bank agrees to pay Harris in immediately available and freely
transferable funds on the same Business Day its Commitment Percentage of such
Reimbursement Obligation. Funds shall be so made available at the account
designated by Harris in such notice to the Banks. Upon the election by the Banks
to treat such funding as additional Revolving Credit Loans hereunder and payment
by each Bank, such Loans shall bear interest in accordance with Section 1.4(a)
hereof. Harris shall share with each Bank on a pro rata basis relative to its
Commitment Percentage a portion of each payment of a Reimbursement Obligation
(whether of principal or interest) and any L/C Participation Fee payable by the
Company. Any such amount shall be promptly remitted to the Banks when and as
received by Harris from the Company.
SECTION 2. FEES, PREPAYMENTS AND TERMINATIONS.
Section 2.1. Commitment Fee. For the period from the date hereof to and
including the Revolving Credit Termination Date or such earlier date on which
the Revolving Credit is terminated in whole pursuant to Section 2.5 hereof, the
Company shall pay to the Agent for the account of the Banks a commitment fee
with respect to the Revolving Credit at the rate equal to the Applicable Margin
in effect as of the time such fee is payable on the average daily unused amount
of the Banks' Revolving Credit Commitments hereunder in effect from time to time
(but without reduction on account of any outstanding Swingline Loans), all such
fees to be payable quarterly in arrears on the last day of each calendar quarter
(commencing on December 31, 2005), unless the Revolving Credit is terminated in
whole pursuant to Section 2.5 hereof on an earlier date, in which event the
commitment fee for the final period shall be paid on the date of such earlier
termination in whole, and all such fees to be computed on the basis of a year of
360 days for the actual number of days elapsed.
Section 2.2. Agent's Fee. The Company shall pay to and for the sole account
of the Agent fees in an amount and payable at such times as the Company and the
Agent may agree upon in writing, including without limitation the fees provided
for in the letter agreement dated as of July 7, 2005, from the Company to
Harris. Such fee payments shall be in addition to any fees and charges the Agent
may be entitled to receive under Section 10 hereunder or under the other Loan
Documents.
Section 2.3. Optional Prepayments. (a) The Company shall have the privilege
of prepaying without premium or penalty and in whole or in part (but if in part,
then in a minimum principal amount of $1,000,000 or such greater amount which is
an integral multiple of $100,000) any Domestic Rate Loan at any time upon prior
telex or telephonic notice to the Agent on or before 12:00 noon on the same
Business Day.
-9-
(b) The Company may prepay any Eurodollar Loan, subject to Section 9.4
hereof, which prepayment may be made in whole or in part (but, if in part, then
in an amount not less than $3,000,000 or such greater amount which is an
integral multiple of $500,000) upon three Business Days' prior notice to the
Agent (which notice shall be irrevocable once given, must be received by the
Agent no later than 11:00 a.m., Chicago time on the third Business Day preceding
the date of such prepayment and shall specify the principal amount to be
prepaid); provided, however, that after giving effect to any such prepayment the
outstanding principal amount of any such Eurodollar Loan prepaid in part shall
not be less than $3,000,000. Any such prepayment shall be effected by payment of
the principal amount to be prepaid and accrued interest thereon to the
prepayment date, plus any amount certified by any Bank to be payable under
Section 9.4 hereof with respect to such prepayment.
(c) Any amount prepaid under the Revolving Credit may, subject to the terms
and conditions of this Agreement, be borrowed, repaid and borrowed again.
(d) The Company may not voluntarily prepay any Swingline Loan bearing
interest at an Offered Rate before its scheduled maturity date.
Section 2.4. Mandatory Prepayments. The Company shall not permit the sum of
the principal amount of all Revolving Credit Loans, Swingline Loans, L/Cs and
unpaid Reimbursement Obligations at any time outstanding to exceed the Banks'
Revolving Credit Commitments. The Company will make such payments on any
outstanding Loans and, if necessary, deposit with the Agent cash collateral for
any then outstanding L/Cs, which are necessary to cure any such excess within 2
Business Days after written notice from any Bank of the occurrence thereof
without any further notice or demand from the Agent or any of the Banks, all of
which are expressly waived by the Company. Any amount repaid under the Revolving
Credit may, subject to the terms and conditions of this Agreement, be borrowed,
repaid and borrowed again.
Section 2.5. Terminations. The Company shall have the right at any time
upon 10 Business Days' (or such shorter period to which the Agent may agree)
prior written notice to the Banks to terminate the Revolving Credit without
penalty in whole or in part (but only in a minimum principal amount of
$1,000,000 or such greater amount which is an integral multiple of $1,000,000);
provided, however, that the Company may not terminate any portion of the
Revolving Credit which represents outstanding Revolving Credit Loans, Swingline
Loans, L/Cs or Reimbursement Obligations. Each termination the Revolving Credit
shall automatically terminate each Bank's Revolving Credit Commitment by its
Commitment Percentage of such termination.
SECTION 3. PLACE AND APPLICATION OF PAYMENTS.
All payments of principal and interest made by the Company in respect of
the Notes, Reimbursement Obligations and all fees payable by the Company
hereunder, shall be made to the Agent at its office at 111 West Monroe Street,
Chicago, Illinois, 60690 and in immediately available funds, prior to 12:00 noon
on the date of such payment. Any payments received after 12:00 noon Chicago time
(or after such later time as the Banks may otherwise direct) shall be
-10-
deemed received upon the following Business Day. The Agent shall remit to each
Bank its proportionate share of each payment of principal, interest and fees,
received by the Agent, on the same Business Day on which such payment is
received before 12:00 noon, Chicago time, or is deemed to have been received by
the Agent. In the event the Agent does not remit any amount to any Bank when
required by the preceding sentence, the Agent shall pay to such Bank interest on
such amount until paid at a rate per annum equal to the Fed Funds Rate. The
Company hereby authorizes the Agent to automatically debit its general operating
account with Harris for any principal, interest and fees when due under the
Notes or this Agreement and to transfer the amount so debited from such account
to the Agent for application as herein provided, but the Agent shall give prompt
telephonic notice thereof to the Company.
SECTION 4. DEFINITIONS.
The terms hereinafter set forth when used herein shall have the following
meanings:
"Adjusted Eurodollar Rate" means a rate per annum determined pursuant to
the following formula:
Adjusted Eurodollar Rate = Eurodollar Rate
-------------------------
100% - Reserve Percentage
"Affiliate" shall mean any person, company or business entity under common
control or having shareholders owning at least ten percent (10%) of each
thereof, whether such common control be direct or indirect. All of the Company's
officers, shareholders who own, directly or indirectly, more than 5% of the
shares of the Company, directors, joint ventures, Subsidiaries and partners
shall be deemed to be the Company's Affiliates for purposes of this Agreement.
"Agent" is defined in the first paragraph of this Agreement.
"Agreement" shall mean this Credit Agreement as supplemented and amended
from time to time.
"Anniversary Date" shall mean July 31 in each calendar year during the term
of this Agreement.
"Applicable Margin" with respect to Domestic Rate Loans, Eurodollar Loans,
the L/C Participation Fee payable pursuant to Section 1.6(a) hereof and 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
Leverage Ratio specified for each Level:
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LEVEL I LEVEL II LEVEL III LEVEL IV
------- ------------------- ------------------- ----------
Leverage Ratio <25% > or = 25% and <35% > or = 35% and <45% > or = 45%
Eurodollar Loans and L/C 0.75%% 1.00% 1.25% 1.50%
Participation Fee
Domestic Rate Loans 0% 0% 0% 0%
Commitment Fee 0.15% 0.20% 0.20% 0.25%
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 Leverage Ratio for the applicable
period and shall promptly notify the Company of such determination and of any
change in the 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 Loans outstanding and L/C Participation Fees 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
Leverage 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 I above.
"Bank" and "Banks" means and includes Harris and the other financial
institutions from time to time party to this Agreement, including each assignee
Bank pursuant to Section 11.17 hereof.
"Business Day" shall mean any day except Saturday or Sunday on which banks
are open for business in Chicago, Illinois and, with respect to Eurodollar
Loans, dealing in United States dollar deposits in London, England and Nassau,
Bahamas.
"Capitalized Lease" shall mean any lease or obligation for rentals which is
required to be capitalized on a consolidated balance sheet of the Company and
its Subsidiaries in accordance with generally accepted accounting principles.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time.
"CERCLIS" shall mean the CERCLA data base created and maintained by the
United States Environmental Protection Agency pursuant to CERCLA.
"Change in Law" shall have the meaning specified in Section 9.3 hereof.
"Change of Control" means any of (a) the acquisition by any "person" or
"group" (as such terms are used in sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as
-12-
amended) at any time of beneficial ownership of a majority of the voting power
in the elections of directors, other than acquisitions of such interests by the
estate of Joe Franklin Sanderson, deceased, the direct lineal descendents of Joe
Franklin Sanderson, deceased, the direct lineal descendants of Dewey Sanderson,
deceased, their spouses, any trusts for the benefit of any of the foregoing, and
any employee stock ownership plan established by the Company, (b) the failure of
individuals who are members of the board of directors (or similar governing
body) of the Company on May 18, 2004, (together with any new or replacement
directors whose initial nomination for election was approved by a majority of
the directors who were either directors on such date or previously so approved)
to constitute a majority of the board of directors (or similar governing body)
of the Company, or (c) any "Change of Control" (or words of like import), as
defined in any agreement or indenture relating to any issue of Indebtedness for
Borrowed Money in an aggregate principal amount in excess of $10,000,000 of the
Company shall occur."
"Commitment" shall mean a Revolving Credit Commitment or the Swingline
Commitment of any Bank, and "Commitments" shall mean the Revolving Credit
Commitment and Swingline Commitment of a Bank or Banks.
"Commitment Percentage" means, for each Bank, the percentage of the
Revolving Credit Commitments represented by such Bank's Revolving Credit
Commitment or, if the Revolving Credit Commitments have been terminated, the
percentage held by such Bank (including through participation interests in
Reimbursement Obligations) of the aggregate principal amount of all Revolving
Credit Loans, L/Cs and Reimbursement Obligations then outstanding.
"Company" shall have the meaning specified in the first paragraph of this
Agreement.
"Consolidated Current Ratio" shall mean the ratio of the current assets of
the Company and its Subsidiaries to the current liabilities of the Company and
its Subsidiaries, all as determined and computed according to generally accepted
accounting principles (as defined herein) consistently applied; provided,
however, that the current portion of Consolidated Deferred Income Taxes and the
current portion of all Loans and Reimbursement Obligations outstanding under
this Agreement shall be excluded from the determination of the current
liabilities of the Company and its Subsidiaries.
"Consolidated Deferred Income Taxes" shall mean, for any period, all
deferred federal, state or other income taxes of the Company and its
Subsidiaries for such period as shown on the most recent financial statements of
the Company.
"Consolidated Indebtedness for Borrowed Money" shall mean, with respect to
the Company, all Indebtedness for Borrowed Money (as defined herein) of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with generally accepted accounting principles consistently applied.
"Consolidated Net Income" for any period shall mean net income of the
Company and its Subsidiaries as determined and computed on a consolidated basis
according to generally accepted accounting principles (as defined herein),
consistently applied.
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"Consolidated Net Worth" shall mean as of any time the same is to be
determined the aggregate of capital (including without limitation redeemable
preferred stock), surplus (exclusive of any surplus arising by virtue of any
appraisal or revaluation of any assets) and retained earnings of the Company and
its Subsidiaries as determined on a consolidated basis in accordance with
generally accepted accounting principles (as defined herein) consistently
applied.
"Consolidated Tangible Net Worth" shall mean Consolidated Net Worth less
the amount of all Intangible Assets of the Company and its Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles, consistently applied.
"Domestic Rate" means for any day the rate of interest announced by Harris
from time to time as its prime commercial rate in effect on such day, with any
change in the Domestic Rate resulting from a change in said prime commercial
rate to be effective as of the date of the relevant change in said prime
commercial rate (the "Harris Prime Rate"), provided that if the rate per annum
determined by adding 0.5% to the rate at which Harris would offer to sell
federal funds in the interbank market therefor on or about 10:00 a.m. (Chicago
time) on any day (the "Adjusted Fed Funds Rate") shall be higher than the Harris
Prime Rate on such day, the Domestic Rate for such day and for any immediately
succeeding day(s) which is not a Business Day shall be such Adjusted Fed Funds
Rate. The determination of the Adjusted Fed Funds Rate by Harris shall be final
and conclusive provided Harris has acted in good faith in connection therewith.
"Domestic Rate Loan" means a Revolving Credit Loan which bears interest as
provided in Section 1.4(a) hereof.
"Economic Development Bonds" means any industrial revenue bonds, economic
development bonds or other similar notes, debentures or instruments issued by or
on behalf of a governmental entity, unit or authority for the benefit of the
Company or a Subsidiary for the purpose of financing or refinancing Property
(including by means of a sale and leaseback or similar transaction involving
Property of the Company or a Subsidiary).
"Environmental Laws" shall means all applicable federal, state and local
environmental, health and safety statutes and regulations.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Loan" means a Revolving Credit Loan which bears interest as
provided in Section 1.4(b) hereof.
"Eurodollar Rate" shall mean for each Interest Period applicable to a
Eurodollar Loan, (a) the LIBOR Index Rate for such Interest Period, if such rate
is available, and (b) if the LIBOR Index Rate cannot be determined, the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to nearest 1/100 of 1%) at which deposits in U.S. dollars in
immediately available funds are offered to the Agent at 11:00 a.m. (London,
England time) two
-14-
(2) Business Days before the beginning of such Interest Period by three (3) or
more major banks in the interbank eurodollar market for a period equal to such
Interest Period and in an amount equal or comparable to the principal amount of
the Eurodollar Loan scheduled to be made by the Agent during such Interest
Period.
"Event of Default" shall mean any event or condition identified as such in
Section 8.1 hereof.
"Existing Agreement" shall mean the Credit Agreement dated as of July 31,
1996, as amended, among the Company, Harris N.A., successor by merger to Harris
Trust and Savings Bank, individually and as agent thereunder, SunTrust Bank,
Trustmark National Bank and AmSouth Bank (the "Existing Lenders").
"Fed Funds Rate" shall have the meaning specified in Section 1.5(c) hereof.
"generally accepted accounting principles" shall mean generally accepted
accounting principles consistently applied and maintained throughout the period
indicated and consistent with the latest audited consolidated financial
statements delivered to the Banks pursuant to Section 7.4.
"Guarantor Subsidiaries" shall mean collectively Sanderson Farms, Inc.
(Foods Division), Sanderson Farms, Inc. (Production Division), Sanderson Farms,
Inc. (Processing Division) and any Material Subsidiary which has complied with
Section 7.8 hereof, so long as each such corporation is a party to the
Subsidiary Guaranty, and "Guarantor Subsidiary" shall mean any of the Guarantor
Subsidiaries.
"Harris" shall have the meaning specified in the first paragraph of this
Agreement.
"Harris-Related Person" means Harris, together with its Affiliates, and the
officers, directors, employees, agents and attorneys-in-fact of Harris and such
Affiliates.
"Indebtedness for Borrowed Money" of any Person shall mean the aggregate
principal amount, without duplication and without giving effect to intercompany
transactions that would be eliminated in preparing consolidated financial
statements of the Company and its Subsidiaries in accordance with generally
accepted accounting principles, consistently applied, of:
(a) all indebtedness, obligations and liabilities of such Person with
respect to borrowed money;
(b) all guaranties, endorsements and other contingent obligations of
such Person with respect to indebtedness arising from money borrowed by
others;
(c) all reimbursement and other obligations with respect to letters of
credit that have been funded and all indebtedness, obligations and
liabilities with respect to bankers' acceptances;
-15-
(d) the amount shown on such Person's balance sheet with respect to
Capitalized Leases; and
(e) all indebtedness, obligations and liabilities representing the
deferred purchase price of property, except for trade payables on ordinary
business terms;
provided that for purposes of determining compliance with the financial
covenants contained in Sections 7.9, 7.10 and 7.11 of this Agreement, the term
"Indebtedness for Borrowed Money" shall not include indebtedness relating to the
Economic Development Bonds so long as the Company or a Subsidiary of the Company
is the holder of such Economic Development Bonds.
"Intangible Assets" shall mean amortizable loan costs, business acquisition
costs, license agreements, trademarks, trade names, patents, capitalized
research and development, proprietary products (the results of past research and
development treated as long term assets and excluded from inventory), goodwill
and all other assets which would be classified as intangible assets (all
determined in accordance with generally accepted accounting principles
consistently applied).
"Interest Period" shall mean (a) with respect to any Eurodollar Loan, the
period used for the computation of interest commencing on the date the relevant
Eurodollar Loan is made, continued or effected by conversion and concluding on
the date one, two, three or six months thereafter as selected by the Company in
its notice as provided herein, and (b) with respect to any Offered Rate Loan,
the period used for the computation of interest commencing on the date the
relevant Offered Rate Loan is made and concluding on the date 1 to 10 days
thereafter as selected by the Company in its notice as provided herein, provided
that all of the foregoing provisions relating to Interest Periods are subject to
the following:
(i) if any Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall be extended to the next succeeding
Business Day, unless in the case of an Interest Period for a Eurodollar
Loan the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the Revolving Credit
Termination Date;
(iii) the interest rate to be applicable to each Eurodollar Loan or
Offered Rate Loan for each Interest Period shall apply from and including
the first day of such Interest Period to but excluding the last day
thereof; and
(iv) no Interest Period may be selected if after giving effect thereto
the Company will be unable to make a principal payment scheduled to be made
during such Interest Period without paying part of a Eurodollar Loan on a
date other than the last day of the Interest Period applicable thereto.
-16-
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"L/C" and "L/Cs" shall have the meanings specified in Section 1.6(a)
hereof.
"L/C Agreement" and "L/C Agreements" shall have the meanings specified in
Section 1.6(a) hereof.
"L/C Participation Fee" shall have the meaning specified in Section 1.6(a)
hereof.
"Leverage Ratio" shall have the meaning specified in Section 7.10 hereof.
"LIBOR Index Rate" shall mean, for any Interest Period applicable to a
Eurodollar Loan, the rate per annum (rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a period equal to such Interest Period, which appears on the
Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day two
Business Days before the commencement of such Interest Period.
"Loan" shall mean a Revolving Credit Loan or a Swingline Loan and "Loans"
shall mean any two or more Revolving Credit Loans or Swingline Loans.
"Loan Documents" shall mean this Agreement and any and all exhibits hereto,
the Revolving Notes, the Swingline Note, the L/C Agreements and the Subsidiary
Guaranty.
"Long Term Indebtedness for Borrowed Money" shall mean Indebtedness for
Borrowed Money which would be classified as long term indebtedness in accordance
with generally accepted accounting principles, consistently applied.
"Material Subsidiary" shall mean each Subsidiary whose assets have a book
value in excess of 5% of the aggregate book value of the total assets of the
Company and its Subsidiaries on a consolidated basis in accordance with
generally accepted accounting principles, consistently applied.
"Net Proceeds of Stock" shall mean an amount (but not less than zero) equal
to the change in the Company's Consolidated Tangible Net Worth resulting from
any transaction in which the Company or any Subsidiary issues shares of its
capital stock, determined on a pro forma basis in accordance with generally
accepted accounting principles consistently applied.
"Note" shall mean either a Revolving Note or the Swingline Note, and
"Notes" shall mean any two or more Revolving Notes or the Swingline Note.
"Person" shall mean and include any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or
-17-
government (whether national, federal, state, county, city, municipal, or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Plan" shall mean any employee benefit plan covering any officers or
employees of the Company or any Subsidiary, any benefits of which are, or are
required to be, guaranteed by the PBGC.
"Portion" shall have the meaning specified in Section 1.3 hereof.
"Potential Default" shall mean any event or condition specified in Section
8.1(a)(ii), (d), (e), (g), (h), (i) and (k) which, with the lapse of time, or
giving of notice, or both, would constitute an Event of Default.
"Property" shall mean all assets and properties of any nature whatsoever,
whether real or personal, tangible or intangible.
"Reimbursement Obligation" shall have the meaning set forth in Section 1.7
hereof.
"Required Banks" shall mean any Bank or Banks which in the aggregate hold
more than 50% of the aggregate unpaid principal balance of the Loans, L/Cs and
Reimbursement Obligations or, if no Loans L/Cs and Reimbursement Obligations are
outstanding hereunder, any Bank or Banks in the aggregate having more than 50%
of the Revolving Credit Commitments.
"Reserve Percentage" means the daily arithmetic average maximum rate at
which reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed on member banks of the Federal Reserve System
during the applicable Interest Period by the Board of Governors of the Federal
Reserve System (or any successor) under Regulation D on "eurocurrency
liabilities" (as such term is defined in Regulation D), subject to any
amendments of such reserve requirement by such Board or its successor, taking
into account any transitional adjustments thereto. For purposes of this
definition, the Eurodollar Loans shall be deemed to be Eurocurrency liabilities
as defined in Regulation D without benefit or credit for any prorations,
exemptions or offsets under Regulation D.
"Revolving Credit" shall have the meaning specified in the first paragraph
of this Agreement.
"Revolving Credit Commitment" and "Revolving Credit Commitments" shall have
the meanings specified in Section 1.1(c) hereof.
"Revolving Credit Loan" and "Revolving Credit Loans" shall have the
meanings specified in Section 1.1(a) hereof.
"Revolving Credit Termination Date" shall have the meaning set forth in
Section 1.1(a) hereof.
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"Revolving Note" or "Revolving Notes" shall have the meanings specified in
Section 1.2 hereof.
"Subsidiary" shall mean any corporation or other entity at least a majority
of the outstanding voting stock (or equivalent) of which is at the time owned
directly or indirectly by the Company and/or its Subsidiaries.
"Subsidiary Guaranty" shall mean the Guaranty Agreement of the Guarantor
Subsidiaries in the form of Exhibit D hereto.
"Swingline" shall have the meaning specified in the first paragraph hereof.
"Swingline Commitment" shall have the meaning specified in Section 1.3(a)
hereof.
"Swingline Loan" shall have the meanings specified in Section 1.3(a)
hereof.
"Swingline Note" shall have the meaning specified in Section 1.3(a) hereof.
"Telerate Page 3750" shall mean the display designated as "Page 3750" on
the Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"Total Capitalization" shall mean the sum of (a) the outstanding principal
amount of Consolidated Indebtedness for Borrowed Money, plus (b) Consolidated
Tangible Net Worth.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Banks as follows:
Section 5.1. Organization and Qualification. The Company is duly organized
and validly existing under the laws of the State of Mississippi, has full and
adequate corporate power to carry on its business as now conducted, is duly
licensed or qualified in all jurisdictions wherein the failure to be so licensed
or qualified would have a material adverse effect on the condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole, has full
corporate right, power and authority to enter into this Agreement and the other
Loan Documents to which it is a party, to make the borrowings herein provided
for and encumber its assets as collateral security therefor, to execute and
issue the Notes in evidence thereof, and to perform its obligations under the
Loan Documents; and the Company's execution of this Agreement does not, nor does
the performance or observance by the Company of any of the matters or things
provided for in this Agreement and the other Loan Documents, contravene any
provision of law or any charter or by-law provision or any covenant, indenture
or agreement of or judgment, order or decree applicable to or affecting the
Company or any of its Property.
Section 5.2. Financial Reports. The Company has heretofore delivered to the
Agent a copy of the annual audit report as of October 31, 2004, of the Company
and its Subsidiaries and
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unaudited financial statements of the Company and its Subsidiaries as of, and
for the nine-month period ending, July 31, 2005. Such financial statements have
been prepared in accordance with generally accepted accounting principles
(except that such unaudited financial statements may omit any footnotes), on a
basis consistent, except as otherwise noted therein, with that of the previous
fiscal year or period and fairly reflect the financial position of the Company
as of the dates thereof, and the results of its operations for the periods
covered thereby, and as of the respective dates of such financial statements the
Company and its Subsidiaries had no significant known contingent liabilities
required to be disclosed in financial statements or notes thereto under
generally accepted accounting principles other than as indicated on said
financial statements or notes thereto or otherwise disclosed in writing to the
Banks prior to the execution of this Agreement. Since said date of October 31,
2004, there has been no material adverse change in the condition, financial or
otherwise, of the Company and its Subsidiaries taken as a whole, except those
affecting business and/or the poultry industry generally and those disclosed in
the Company's reports under the Securities and Exchange Act of 1934 filed prior
to the date of this Agreement or in writing to the Banks prior to the date of
this Agreement.
Section 5.3. Litigation; Tax Returns; Approvals. Except as otherwise
disclosed on Exhibit H, there is no known litigation, labor controversy or
governmental proceeding pending, nor to the best knowledge of the Company
threatened, against the Company or any Subsidiary which can reasonably be
expected to result in any material adverse change in the properties, business or
operations of the Company and its Subsidiaries taken as a whole. All United
States federal income tax returns for the Company and its Subsidiaries required
to be filed have been filed on a timely basis (taking into account any
extensions duly obtained therefor), and all amounts required to be paid as shown
by said returns have been paid. Except as disclosed on Exhibit H, (a) there are
no pending or, to the best of the Company's knowledge, threatened objections to
or controversies in respect of the United States federal income tax returns of
the Company and its Subsidiaries for any fiscal year except such objection or
controversies that are being contested in good faith by appropriate proceedings
and adequate reserves have been provided therefor in accordance with generally
accepted accounting principles consistently applied, and (b) no authorization,
consent, license, exemption or filing or registration with any court or
governmental department, agency or instrumentality, is or will be necessary to
the valid execution, delivery or performance by the Company or any Subsidiary of
the Loan Documents, except those as may have been obtained.
Section 5.4. Regulation U. Neither the Company nor any Subsidiary is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System) and no part of the proceeds of any Loan
or other extension of credit hereunder will be used to purchase or carry any
margin stock or to extend credit to others for such a purpose.
Section 5.5. No Default. No Potential Default or Event of Default is
existing under this Agreement.
Section 5.6. ERISA. As of the date of this Agreement neither the Company
nor any Subsidiary sponsors, maintains or participates in any Plan.
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Section 5.7. Compliance with Laws. The Company and its Subsidiaries are in
compliance with the requirements of all federal, state and local laws, rules and
regulations applicable to or pertaining to their Property or business operations
(including, without limitation, the Occupational Safety and Health Act of 1970,
the Americans with Disabilities Act of 1990, and laws and regulations
establishing quality criteria and standards for air, water, land and toxic or
hazardous wastes and substances), where any such non-compliance, individually or
in the aggregate, could reasonably be expected to have a material adverse effect
on the business, operations, Property, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole.
Section 5.8. Security Interests and Indebtedness. There are no security
interests, liens or encumbrances on any of the assets or Property of the Company
or any Subsidiary except the security interests, liens and charges which are now
existing and those which are permitted by Section 7.13 of this Agreement.
Section 5.9. Subsidiaries. As of the date hereof, the Company's only
Subsidiaries are identified on Exhibit G hereof. Each of the Company's
Subsidiaries is duly organized and validly existing under the laws of the state
or country of its incorporation, has full and adequate corporate power to carry
on its business as now conducted, is duly licensed or qualified to do business
in all jurisdictions wherein the failure to be so licensed or qualified would
have a material adverse effect on the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole and has, except as set forth in
the opinions delivered in satisfaction of Section 6.4 hereof, full corporate
right, power and authority to enter into the Loan Documents executed and
delivered by it and to perform its obligations under the Loan Documents.
Section 5.10. Accurate Information. Taken as a whole, the written
information, exhibits and reports furnished by the Company and its Subsidiaries
to the Banks in connection with the negotiation and performance of the Loan
Documents and the Company's reports under the Securities and Exchange Act of
1934, filed after October 31, 2004 and before the date of this Agreement do not
contain any material misstatement of a material fact or omit to state a material
fact necessary to make the statements contained therein not misleading in light
of the circumstances in which made.
Section 5.11. Enforceability. This Agreement and the other Loan Documents,
when executed and delivered by the Company and the Guarantor Subsidiaries, and
assuming the due execution and delivery by the other parties thereto, will be
the legal, valid and binding agreements of the Company and the Guarantor
Subsidiaries, enforceable against them in accordance with their terms, except
(a) as may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws or judicial decisions for the relief
of debtors or the limitation of creditors' rights generally; and (ii) any
equitable principles relating to or limiting the rights of creditors generally
or any equitable remedy which may be granted to cure any defaults, and (b) as
set forth in the opinions referred to in Section 5.9.
-21-
SECTION 6. CONDITIONS PRECEDENT.
The obligation of the Banks to make any Loan or issue any L/C pursuant
hereto shall be subject to the following conditions precedent:
Section 6.1. General. The Agent shall have received the notice of
borrowings and the Notes hereinabove provided for.
Section 6.2. Initial Extension of Credit. Prior to the initial Loan or L/C
(whichever shall come first) hereunder, the Company shall have delivered to the
Agent for the benefit of the Banks in sufficient counterparts or copies for
distribution to the Banks:
(a) the Revolving Notes and the Swingline Note;
(b) a fully executed Guaranty Agreement substantially in the form of
Exhibit D hereto, from the Guarantor Subsidiaries;
(c) a fully executed intercreditor agreement in form and substance
satisfactory to all of the Banks among the Banks and all of the holders of
the Company's $20,000,000 6.65% Senior Notes due July 7, 2007;
(d) a pay-off letter from the lenders under the Existing Agreement
setting forth, among other things, the total amount of indebtedness
outstanding and owing to them (or outstanding letters of credit issued for
the account of the Company or any Subsidiary), which pay-off letter shall
be in form and substance acceptable to the Agent;
(e) a good standing certificate or certificate of existence for the
Company and each Guarantor Subsidiary, dated no earlier than November 1,
2005, from the office of the secretary of state of the states of their
respective incorporation;
(f) copies of the Articles of Incorporation, as restated, and all
amendments thereto, of the Company and each Guarantor Subsidiary certified
by the office of the secretary of state of their respective states of
incorporation as of a date no earlier than November 1, 2005;
(g) copies of the By-Laws, as restated, and all amendments thereto, of
the Company and each Guarantor Subsidiary, certified as true, correct and
complete on the date hereof by the Treasurer of the Company and each
Guarantor Subsidiary, respectively;
(h) copies, certified by the Treasurer of the Company and each
Guarantor Subsidiary, of resolutions regarding the transactions
contemplated by this Agreement, duly adopted by the Board of Directors of
the Company and each Guarantor Subsidiary, respectively, and satisfactory
in form and substance to all of the Banks; and
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(i) an incumbency signature certificate for the Company and each
Guarantor Subsidiary satisfactory in form and substance to all of the
Banks.
Section 6.3. Each Extension of Credit. As of the time of the making of each
Loan (including each Term Loan) and issuing each L/C, hereunder (including the
initial Loan and L/C):
(a) each of the representations and warranties set forth in Section 5
hereof shall have been true and correct in all material respects on the
date of this Agreement; and each of the representations and warranties set
forth in Section 5.1, the second sentence of Section 5.2 (substituting, for
the financial statements referred to in the first sentence of that Section,
the latest audited financial statements delivered to the Banks pursuant to
Section 7.4(b) hereof and the latest monthly financial statements delivered
pursuant to Section 7.4(a) for the last month in each fiscal quarter of the
Company after such latest audited financial statements), Section 5.3,
Section 5.4, Section 5.5, Section 5.7, Section 5.8, the last sentence of
Section 5.9, Section 5.10, and Section 5.11, shall be and remain true and
correct as of the time of the making of such Loan or issuing such L/C, as
the case may be, as if made again as of such time;
(b) after giving effect to the Company's application of the proceeds
of the initial Loan hereunder, no Potential Default or Event of Default
shall have occurred and be continuing;
(c) with respect to each requested Loan and L/C, after giving effect
to the requested extension of credit and to each Loan that has been made
and each L/C and Reimbursement Obligation outstanding hereunder, the
aggregate principal amount of all Loans, L/Cs and Reimbursement Obligations
then outstanding shall not exceed the sum of the Banks' Revolving Credit
Commitments then in effect; and
(d) no statute, rule or regulation shall have been adopted by a
jurisdiction in which a Guarantor Subsidiary is incorporated and no
judicial decision of an appellate court of such a jurisdiction shall have
been published to the effect in any such case that guaranty agreements such
as the Subsidiary Guaranty are beyond the corporate power of corporations
subject to the laws of such jurisdiction, and neither the Company nor any
Guarantor Subsidiary shall have repudiated, disavowed or purported to
terminate, repudiate or disavow any Guarantor Subsidiary's obligations
under the Subsidiary Guaranty, unless in any such case all of the Guarantor
Subsidiaries shall have been merged into the Company within 60 days of any
such event.
and the request by the Company for any Loan or L/C pursuant hereto shall be and
constitute a warranty to the foregoing effects (other than as to the matters set
forth in subsection (d) above).
Section 6.4. Legal Matters. Legal matters incident to the execution and
delivery of the Loan Documents shall be reasonably satisfactory to each of the
Banks and their legal counsel; and prior to the initial Loan hereunder, the
Agent shall have received the favorable written opinion of Wise, Carter, Child &
Caraway, PA, counsel for the Company and the Guarantor
-23-
Subsidiaries, substantially in form and substance satisfactory to each of the
Banks and their respective legal counsel.
Section 6.5. Closing Fee. The Agent shall have received for the pro rata
benefit of the Banks the fees agreed to between the Company and the Agent.
SECTION 7. COVENANTS.
It is understood and agreed that so long as credit is in use or available
under this Agreement, any L/C is outstanding hereunder or any amount remains
unpaid on any Note or Reimbursement Obligation, except to the extent compliance
in any case or cases is waived in writing by the Required Banks:
Section 7.1. Maintenance of Property. The Company will, and will cause each
Subsidiary to, keep and maintain all of the material Properties necessary or
useful in their business taken as a whole in good condition, and make all
necessary renewals, replacements, additions, betterments and improvements
thereto; provided, however, that nothing in this Section shall prevent the
Company or any Subsidiary from discontinuing the operating and maintenance of
any of its Properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business and not disadvantageous in any material
respect to the Banks as holders of the Notes.
Section 7.2. Taxes. The Company will, and will cause each Subsidiary to,
duly pay and discharge all material taxes, rates, assessments, fees and
governmental charges upon or against the Company or any Subsidiary or against
its Properties in each case before the same becomes delinquent and before
penalties accrue thereon unless and to the extent that the same is being
contested in good faith and by appropriate proceedings and adequate reserves,
determined in accordance with generally accepted accounting principles
consistently applied, have been established with respect thereto.
Section 7.3. Maintenance of Insurance. The Company will, and will cause
each Subsidiary to, maintain insurance with insurers recognized as financially
sound and reputable by prudent business persons in such forms and amounts and
against such risks as the Company reasonably believes is prudent and normal
within the industry. The Company shall, at the Agent's request, provide copies
to the Agent of all insurance policies and other materials related thereto
maintained by the Company and its Subsidiaries. The Company shall furnish each
Bank as soon as available, and in any event no later than each Anniversary Date,
a summary of its insurance coverage which summary shall be reasonably
satisfactory in form and substance to the Banks.
Section 7.4. Financial Reports. The Company will, and will cause each
Subsidiary to, maintain a system of accounting in accordance with sound
accounting practice and will furnish promptly to the Banks and their duly
authorized representatives such information respecting the business and
financial condition of the Company and its Subsidiaries as may from time to time
be reasonably requested and, without any request, will furnish each Bank:
-24-
(a) as soon as available, and in any event within 40 days after the
close of each monthly fiscal period of the Company, a copy of consolidated
balance sheets and consolidated profit and loss statements for the Company
and its Subsidiaries (for such monthly period and the year to date) for
such period of the Company and for the corresponding periods of the
preceding fiscal year, all in reasonable detail, prepared by the Company
and accompanied by a certificate of the chief financial officer, chief
executive officer or chief accounting officer of the Company to the effect
that said financial statements were prepared in conformity with generally
accepted accounting principles and, in his opinion, are fairly and
accurately stated;
(b) as soon as available, and in any event within 90 days after the
close of each fiscal year of the Company, a copy of the audit report for
such year and accompanying financial statements, including consolidated
balance sheets, reconciliations of change in stockholders' equity, profit
and loss statements and statements of cash flows for the Company and its
Subsidiaries showing in comparative form the figures for the previous
fiscal year of the Company, all in reasonable detail, accompanied by the
unqualified opinion of Ernst & Young or other independent public
accountants of nationally recognized standing selected by the Company and
reasonably satisfactory to the Required Banks;
(c) within 45 days after the last day of every fiscal quarter, a
Compliance Certificate in the form of Exhibit E attached hereto, prepared
and signed by the chief financial officer, chief executive officer or chief
accounting officer of the Company;
(d) as soon as available but in any event no later than November 30 of
each year, a consolidated budget for the Company and its Subsidiaries for
such fiscal year showing the Company's and its Subsidiaries' projected
consolidated profits and losses, and a consolidated budget for the Company
and its Subsidiaries for such fiscal year showing the Company's and its
Subsidiaries' projected consolidated capital expenditures, all in
reasonable detail; and
(e) as soon as available but in any event within 10 days of the filing
thereof, copies of all 10-K, 10-Q and 8-K filings and all shareholder proxy
materials filed by the Company or any Subsidiary with the Securities and
Exchange Commission.
Section 7.5. Inspection. The Company shall, and shall cause each Subsidiary
to, permit the Banks, by their representatives and agents, to reasonably inspect
any of the Properties, corporate books and financial records of the Company and
each Subsidiary, to reasonably examine and make copies of the books of accounts
and other financial records of the Company and its Subsidiaries and to discuss
the affairs, finances and accounts of the Company and its Subsidiaries with, and
to be advised as to the same by, its officers at such reasonable times during
normal business hours and reasonable intervals as the Banks may request. The
Company shall pay to the Banks from time to time upon demand an amount (but not
to exceed $3,000 for each inspection) sufficient to compensate the Banks for
their reasonable out-of-pocket fees, charges and expenses in connection with any
such inspection of the Company and the
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Subsidiaries, provided that so long as no Event of Default shall have occurred
and be continuing, the Company shall be required to pay for only one such
inspection per year.
Section 7.6. Consolidation and Merger. The Company will not, and will not
permit any Subsidiary to, consolidate with or merge into any Person, or permit
any other Person to merge into it, or acquire (in a transaction analogous in
purpose or effect to a consolidation or merger) all or substantially all of the
Property or capital stock of any other Person except (a) as permitted by Section
7.14(d) hereof, (b) any Subsidiary may consolidate with or merge into or with
any other Subsidiary, and (c) any Subsidiary may merge into the Company.
Section 7.7. Transactions with Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into any material transaction, including
without limitation, the purchase, sale, lease or exchange of any Property, or
the rendering of any service, with any Affiliate of the Company except in the
ordinary course of and pursuant to the reasonable requirements of the Company's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of the
Company; provided however that the foregoing shall not prevent any transactions
between any Subsidiary and any other Subsidiary or the Company on any terms
mutually acceptable to them.
Section 7.8. Material Subsidiaries. The Company shall cause each Material
Subsidiary, whether now existing or hereafter created or acquired, to execute
and deliver to the Agent for the benefit of the Banks, within 30 days of
becoming a Material Subsidiary, a guaranty substantially in the form of the
Subsidiary Guaranty, together with items described in Sections 6.2(c), (d), (e),
(f) and (g) and 6.4 of this Agreement (each dated as of the date of the
Subsidiary Guaranty to which it relates) with respect to such Material
Subsidiary and such guaranty.
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 $250,000,000 (commencing with the fiscal quarter
ending July 31, 2005) increasing on the last day of each fiscal quarter ending
thereafter by an amount equal to (a) 100% of any Net Proceeds of Stock issued
during such quarter plus (b) 60% of an amount (but not less than zero) equal to
(i) the Company's Consolidated Net Income for such fiscal quarter, minus (ii)
the lesser of (x) $3,000,000 and (y) the aggregate amount of all dividends
actually paid during such fiscal quarter rounded to the next highest $100,000.
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 "Leverage
Ratio"), expressed as a percentage, at any time to exceed 50%.
Section 7.11. Consolidated Current Ratio. The Company shall maintain at all
times a Consolidated Current Ratio of not less than 2.0 to 1.
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
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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, 2005 $140,000,000 Unlimited
October 31, 2006 $130,000,000 Unlimited
October 31, 2007 $ 75,000,000 Unlimited
October 31, 2008 $ 30,000,000 $7,500,000
October 31, 2009 $ 30,000,000 $7,500,000
Thereafter $ 30,000,000 $7,500,000
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.
Section 7.13. Liens. The Company will not, and will not permit any
Subsidiary to, pledge, mortgage or otherwise encumber or subject to or permit to
exist upon, or be subjected to any lien, charge or security interest of any kind
(including any conditional sale or other title retention agreement and any lease
in the nature thereof) on, any of its Properties of any kind or character at any
time owned by the Company or any Subsidiary, other than:
(a) liens, pledges or deposits for worker's compensation, unemployment
insurance, old age benefits or social security obligations, taxes,
assessments, statutory obligations or other similar charges, good faith
deposits made in connection with tenders, contracts or leases to which the
Company or a Subsidiary is a party or other deposits required to be made in
the ordinary course of business, provided in each case the obligation
secured is not overdue or, if overdue, is being contested in good faith by
appropriate proceedings and adequate reserves have been provided therefor
in accordance with generally accepted accounting principles and that the
obligation is not for borrowed money, customer advances or trade payables;
(b) the pledge of assets for the purpose of securing an appeal or stay
or discharge in the course of any legal proceedings, provided that the
aggregate amount of liabilities of the Company or a Subsidiary so secured
by a pledge of property permitted under this subsection (b) including
interest and penalties thereon, if any, shall not be in excess of
$5,000,000 at any one time outstanding;
(c) liens, pledges, mortgages, security interests or other charges
existing on the date hereof and disclosed in financial statements (or notes
thereto) referred to in Section 5.2 hereof;
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(d) liens for property taxes and assessments or governmental charges
or levies which are not yet due and payable;
(e) liens incidental to the conduct of business or the ownership of
Properties and assets (including warehousemen's liens, mechanic's liens,
grower liens and attorneys' liens and statutory landlords' liens) or other
liens of like general nature incurred in the ordinary course of business
and not in connection with the borrowing of money, provided in each case,
the obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings and for which adequate
reserves, determined in accordance with generally accepted accounting
principles, have been established;
(f) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and which
do not in any event materially impair the operation of the business of the
Company and its Subsidiaries taken as a whole; and
(g) additional pledges, mortgages, encumbrances, liens, charges and
security interests (including any conditional sale or other title retention
agreement and any lease in the nature thereof) on fixed assets (classified
in accordance with generally accepted accounting principles, consistently
applied) having an aggregate book value at the end of the fiscal quarter
immediately preceding the fiscal quarter in which the latest of such
mortgages, liens, or encumbrances are created of no more than fifteen
percent (15%) of the book value of all of the Company's and its
Subsidiaries' tangible assets (determined in accordance with generally
accepted accounting principles, consistently applied) at such time.
Section 7.14. Investments, Loans, Advances and Acquisitions. The Company
will not, and will not permit any Subsidiary to, make or retain any investment
(whether through the purchase of stock, obligations, capital contributions or
otherwise) in or make any loan or advance to, any other Person, or acquire
substantially as an entirety the Property or business of any other Person, other
than:
(a) investments in certificates of deposit having a maturity of two
years or less issued by any Bank or any other commercial bank having a
long-term rating at the time of investment of at least AA by Standard &
Poor's Ratings Services Group, a division of The McGraw-Hill Companies,
Inc. ("S&P") or Aa by Moody's Investor Services, Inc. ("Moody's") and a
short-term rating at the time of investment of A-1 from S&P or P-1 from
Moody's;
(b) investments in commercial paper rated at the time of investment
P-1 by Moody's or A-1 by S&P maturing within 270 days of the date of
issuance thereof;
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(c) investments shown on the financial statements referred to in
Section 5.2 in existing Subsidiaries;
(d) acquisitions of the Property or business of any Person, provided
(i) that no Potential Default or Event of Default shall then exist after
giving effect to such acquisition and no change of the voting control or
management of the Company shall result therefrom; (ii) that the aggregate
purchase price (including the principal amount of obligations assumed by
the Company or a Subsidiary) paid in any single acquisition shall not
exceed $15,000,000 and (iii) that the aggregate purchase price (determined
as described above) paid in all such acquisitions made prior to the
Revolving Credit Termination Date shall not exceed $25,000,000;
(e) marketable full faith and credit obligations of the United States
of America or of any agency thereof for which the full faith and credit of
the United States of America has been pledged;
(f) repurchase, reverse repurchase and security lending agreements
collateralized by securities of the type described in subsection (e),
provided that the Company or Subsidiary, as the case may be, which is a
party to such arrangement shall hold (individually or through an agent or
bailee) all securities relating thereto during the entire term of each such
arrangement;
(g) municipal debt securities commonly known as "lower floaters" or
"variable rate demand notes" so long as (i) such securities provide that
the owner thereof may require that such securities be bought from it upon 7
days notice by such owner, and (ii) such securities shall have a long-term
rating at the time of investment of at least AA by S&P or Aa by Moody's and
a short-term rating at the time of investment of A-1 from S&P or P-1 from
Moody's;
(h) investments in an aggregate principal amount of up to $1,000,000
and not otherwise permitted by this Section, in certificates of deposit in
any commercial bank;
(i) investments in and loans and advances to the Company or any
Subsidiary by the Company or any other Subsidiary; and
(j) a loan in a principal amount not to exceed $500,000 to the
Company's employees' stock ownership plan.
Section 7.15. Sale of Tangible Fixed Assets. The Company will not, and will
not permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose
of tangible fixed assets (as classified in accordance with generally accepted
accounting principles, consistently applied) if the book value of the Property
sold, leased, assigned, transferred or otherwise disposed of in the latest such
transaction, together with the Property sold, leased, assigned, transferred or
otherwise disposed of in all other such transactions after the date of this
Agreement, would exceed 15% of the book value of all of the Company's and its
subsidiaries' tangible assets (determined in accordance with generally accepted
accounting principles, consistently applied) at the time of the
-29-
latest such transaction, except for (a) sales of obsolete or worn-out equipment
in the ordinary course of business, (b) transfer of such assets between any
Subsidiary and the Company or any other Subsidiary, to each of which this
Section shall not apply, and (c) the transfer of Property in connection with the
issuance of Economic Development Bonds which (i) are held by the Company or a
Subsidiary of the Company or (ii) have an aggregate principal amount not to
exceed $10,000,000 during the term of this Agreement.
Section 7.16. Notice of Suit or Adverse Change in Business or Default. The
Company shall give written notice to the Agent within five (5) Business Days
after the Company learns of, or forms a belief as to the existence of, any of
the following:
(a) any proceeding(s) being instituted or threatened in writing to be
instituted against the Company or any Subsidiary in any federal, state,
local or foreign court or before any commission or other regulatory body
(federal, state, local or foreign) that is material to the Company and its
Subsidiaries taken as a whole;
(b) any material adverse change in the business, Property or
condition, financial or otherwise, of the Company and its Subsidiaries
taken as a whole, except those affecting business and/or the poultry
industry generally; and
(c) the occurrence of any Potential Default or Event of Default.
Section 7.17. ERISA. The Company will, and will cause each Subsidiary to,
promptly pay and discharge all obligations and liabilities arising under ERISA
of a character which if unpaid or unperformed is likely to result in the
imposition of a lien against any material portion of the Property of the Company
and its Subsidiaries taken as a whole and will promptly notify the Agent, upon
the Company becoming aware, of (a) the occurrence of any reportable event (as
defined in ERISA) which might result in the termination by the PBGC of any Plan,
(b) receipt of any notice from PBGC of its intention to seek termination of any
such Plan or appointment of a trustee therefor, and (c) its intention to
terminate or withdraw from any Plan. The Company will not, and will not permit
any Subsidiary to, terminate any such Plan or withdraw therefrom unless it shall
be in compliance with all of the terms and conditions of this Agreement after
giving effect to any liability to PBGC resulting from such termination or
withdrawal.
Section 7.18. Use of Proceeds. The Company shall use the proceeds of each
Loan and other extensions of credit hereunder only to repay all of the Company's
indebtedness under the Existing Agreement and for general corporate purposes of
the Company and the Subsidiaries.
Section 7.19. Compliance with Laws, etc. The Company will, and will cause
each of its Subsidiaries to, comply in all material respects with all applicable
laws, rules, regulations and orders, such compliance to include (without
limitation) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation, except where the failure to so comply or
to be so qualified would not have a material adverse effect on the condition,
financial or otherwise, of the Company and its Subsidiaries taken as a whole.
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Section 7.20. Environmental Covenant. The Company will, and will cause each
of its Subsidiaries to, except as disclosed on Exhibit F attached hereto, use
and operate all of its facilities and Properties in compliance with all
Environmental Laws, keep all necessary material permits, approvals,
certificates, licenses and other authorizations relating to environmental
matters in effect and remain in material compliance therewith, and handle all
hazardous materials in material compliance with all applicable Environmental
Laws, except, as to each of the foregoing, where the failure to do so would not
have a material adverse effect on the Company and its Subsidiaries taken as a
whole.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
Section 8.1. Definitions. Any one or more of the following shall constitute
an Event of Default:
(a) (i) Default in the payment when due of any principal of or
interest on any Note or Reimbursement Obligation, whether at the stated
maturity thereof or as required by Section 2.4 hereof or at any other time
provided in this Agreement, or (ii) default in the payment of any fee or
other amount payable by the Company pursuant to this Agreement within 5
Business Days after the Company receives an invoice therefor;
(b) Default in the observance or performance of any covenant set forth
in Section 7.18 hereof;
(c) Default in the observance or performance of any covenant set forth
in Sections 7.5, 7.6, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 7.14, 7.15, 7.16
and 7.19 hereof; or
(d) Default in the observance or performance of any covenant set forth
in Section 7.4 hereof and the continuation thereof for 3 Business Days
after notice thereof to the Company by any Bank;
(e) Default in the observance or performance of any other covenant,
condition, agreement or provision hereof or any of the other Loan Documents
and such default shall continue for 30 days after written notice thereof to
the Company by any Bank;
(f) Default shall occur under any evidence of Indebtedness for
Borrowed Money in an aggregate principal amount exceeding $5,000,000 issued
or assumed or guaranteed by the Company or any Subsidiary, or under any
mortgage, agreement or other similar instrument under which the same may be
issued or secured and such default shall continue for a period of time
sufficient to permit the acceleration of maturity of the indebtedness
evidenced thereby or outstanding or secured thereunder;
(g) Any representation or warranty made by the Company or any
Subsidiary herein or in any Loan Document or in any written statement or
certificate furnished by it pursuant hereto or thereto after the date of
this Agreement, proves untrue in any material respect as of the date made
or deemed made pursuant to the terms hereof and any such
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breach which is capable of being cured shall not be remedied within 30 days
after written notice thereof to the Company by any Bank;
(h) Any judgment or judgments, writ or writs, or warrant or warrants
of attachment, or any similar process or processes which order the payment
of money in excess of $5,000,000 over and above any insurance proceeds
payable with respect thereto or have a material adverse effect on the
ability of the Company and its Subsidiaries taken as a whole to continue to
conduct their business in the ordinary course, shall be entered or filed
against the Company or any Subsidiary or against any of their respective
Property or assets and remain unstayed and undischarged for a period of 30
days from the date of its entry;
(i) Any reportable event (as defined in ERISA) which constitutes
grounds for the termination of any Plan or for the appointment by the
appropriate United States District Court of a trustee to administer or
liquidate any such Plan, shall have occurred and be continuing thirty (30)
days after written notice to such effect shall have been given to the
Company by any Bank; or any such Plan shall be terminated in a manner that
can reasonably be expected to result in liability under ERISA that is
material to the Company and its Subsidiaries taken as a whole; or a trustee
shall be appointed by the appropriate United States District Court to
administer any such Plan, or the PBGC shall institute proceedings to
administer or terminate any such Plan, and any such administration or
termination could reasonably be expected to have a material adverse effect
on the Company and its Subsidiaries taken as a whole;
(j) The Company or any Guarantor Subsidiary shall (i) have entered
involuntarily against it an order for relief under the Bankruptcy Code of
1978, as amended, (ii) admit in writing its inability to pay, or not pay,
its debts generally as they become due or suspend payment of its
obligations, (iii) make an assignment for the benefit of creditors, (iv)
apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, conservator, liquidator or similar official
for it or any substantial part of its property, (v) file a petition seeking
relief or institute any proceeding seeking to have entered against it an
order for relief under the Bankruptcy Code of 1978, as amended, to
adjudicate it insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, marshalling of assets, adjustment or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or fail to file an answer
or other pleading denying the material allegations of any such proceeding
filed against it, or (vi) fail to contest in good faith any appointment or
proceeding described in Section 8.1(k) hereof;
(k) A custodian, receiver, trustee, conservator, liquidator or similar
official shall be appointed for the Company or any Guarantor Subsidiary or
any substantial part of the Property of the Company and its Subsidiaries
taken as a whole, or a proceeding described in Section 8.1(j)(v) shall be
instituted against the Company or any Guarantor Subsidiary and such
appointment continues undischarged or any such proceeding continues
undismissed or unstayed for a period of 60 days; or
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(l) a Change of Control shall occur.
Section 8.2. Remedies for Non-Bankruptcy Defaults. When any Event of
Default, other than an Event of Default described in subsections (j) and (k) of
Section 8.1 hereof, has occurred and is continuing, the Agent, if directed by
the Required Banks, shall give notice to the Company and take any or all of the
following actions: (a) terminate the remaining Commitments and on the date
(which may be the date thereof) stated in such notice, (b) declare the principal
of and the accrued interest on the Notes and all Reimbursement Obligations to be
forthwith due and payable and thereupon the Notes and all Reimbursement
Obligations, including both principal and interest, shall be and become
immediately due and payable without further demand, presentment, protest or
notice of any kind, and (c) take any action or exercise any remedy under any of
the Loan Documents or exercise any other action, right, power or remedy
permitted by law. Any Bank may exercise the right of set-off with regard to any
deposit accounts or other accounts maintained by the Company with any of the
Banks, and the Company's indebtedness hereunder shall be satisfied to the extent
of any amount set-off against such indebtedness.
Section 8.3. Remedies for Bankruptcy Defaults. When any Event of Default
described in subsections (j) or (k) of Section 8.1 hereof has occurred and is
continuing, then the Notes and all Reimbursement Obligations shall immediately
become due and payable without presentment, demand, protest or notice of any
kind, and the obligation of the Banks to extend further credit pursuant to any
of the terms hereof shall immediately terminate.
SECTION 9. CHANGE IN CIRCUMSTANCES REGARDING EURODOLLAR LOANS.
Section 9.1. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time after the date hereof with respect to
Eurodollar Loans, any Bank shall determine in good faith that any change in
applicable law or regulation or in the interpretation thereof makes it unlawful
for such Bank to make or continue to maintain any Eurodollar Loan or to give
effect to its obligations with respect thereto as contemplated hereby, such Bank
shall promptly give notice thereof to the Company to such effect, and such
Bank's obligation to make or relend any such affected Eurodollar Loans under
this Agreement shall terminate until it is no longer unlawful for such Bank to
make or maintain such affected Loan. In the event of such a determination, the
Company shall prepay the outstanding principal amount of any such affected
Eurodollar Loan made to it, together with all interest accrued thereon and all
other amounts due and payable to the Banks under Section 9.4 of this Agreement,
on the earlier of the last day of the Interest Period applicable thereto and the
first day on which such Bank has given the Company not less than one (1)
Business Day's prior written notice that it is illegal for such Bank to have
such Loans outstanding; provided, however, the Company shall then be permitted
to elect to borrow the principal amount of such affected Eurodollar Loan by
means of another type of Loan available hereunder, subject to all of the terms
and conditions of this Agreement. In the event that Eurodollar Loans shall be
unavailable as provided in this Section, the Banks and the Company shall
negotiate in good faith to make available to the Company, on mutually acceptable
terms, Loans bearing interest at a rate per annum determined with reference to
the rates quoted to Harris in the secondary market by three certificate of
deposit dealers of recognized standing for the purchase at face value of Harris'
certificates of deposit in an amount
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and for an interest period equal to an amount and interest period of the
requested Loans, adjusted for reserves and FDIC insurance assessments (the
"Adjusted CD Rate").
Section 9.2. Unavailability of Deposits or Inability to Ascertain the
Adjusted Eurodollar Rate. Notwithstanding any other provision of this Agreement
or any Note to the contrary, if prior to the commencement of any Interest Period
any Bank shall reasonably determine (i) that deposits in the amount of any
Eurodollar Loan scheduled to be outstanding are not available to it in the
relevant market or (ii) by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the Adjusted
Eurodollar Rate, then the Agent shall promptly give telephonic or telex notice
thereof to the Company and the Banks (such notice to be confirmed in writing),
and the obligation of the Banks to make any such Eurodollar Loan in such amount
and for such Interest Period shall terminate until the Company shall thereafter
request a Eurodollar Loan and deposits in such amount and for the Interest
Period selected by the Company shall again be readily available in the relevant
market and adequate and reasonable means exist for ascertaining the Adjusted
Eurodollar Rate. Upon the giving of such notice, the Company may elect to either
(i) pay or prepay, as the case may be, such affected Loan or (ii) reborrow such
affected Loan as another type of Loan or Portion available hereunder, subject to
all terms and conditions of this Agreement. In the event that Eurodollar Loans
are unavailable pursuant to this Section, the Banks and the Company shall
negotiate in good faith for Loans bearing interest at a rate per annum based on
the Adjusted CD Rate to be made available to the Company.
Section 9.3. Taxes, Increased Costs and Reduced Return. (a) With respect to
any outstanding Eurodollar Loans, if any Bank shall determine in good faith that
any change in any applicable law, treaty, regulation or guideline (including,
without limitation, Regulation D of the Board of Governors of the Federal
Reserve System) or any new law, treaty, regulation or guideline, or any
interpretation of any of the foregoing by any governmental authority charged
with the administration thereof or any central bank or other fiscal, monetary or
other authority having jurisdiction over such Bank or its lending branch or the
Eurodollar Loans contemplated by this Agreement (whether or not having the force
of law) ("Change in Law") shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirements against assets held by, or deposits in or for the
account of, or Eurodollar Loans by, or any other acquisition of funds or
disbursements by, such Bank (other than reserves included in the
determination of the Adjusted Eurodollar Rate);
(ii) subject such Bank, any Eurodollar Loan or any Note to any tax
(including, without limitation, any United States interest equalization tax
or similar tax however named applicable to the acquisition or holding of
debt obligations and any interest or penalties with respect thereto), duty,
charge, stamp tax, fee deduction or withholding in respect of this
Agreement, any Eurodollar Loan or any Note except such taxes as may be
measured by the overall net income of such Bank or its lending branch and
imposed by the jurisdiction, or any political subdivision or taxing
authority thereof, in which such Bank's principal executive office or its
lending branch is located or in which the Bank has nexus;
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(iii) change the basis of taxation of payments of principal and
interest due from the Company to such Bank hereunder or under any Note
(other than by a change in taxation of the overall net income of such
Bank); or
(iv) impose on such Bank any penalty with respect to the foregoing or
any other condition regarding this Agreement, its disbursement, any
Eurodollar Loan or any Note;
and such Bank shall determine in good faith that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or adding to a
cost) to such Bank of making or maintaining any Eurodollar Loan hereunder or to
reduce the amount of principal or interest received by such Bank, then, within
fifteen (15) days after demand by such Bank (with a copy to the Agent), the
Company shall pay to such Bank from time to time as specified by such Bank such
additional amounts as such Bank shall determine are sufficient to compensate and
indemnify it for such increased cost or reduced amount.
(b) If, after the date hereof, any Bank or the Agent shall have determined
in good faith that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein (including, without
limitation, any revision in the Final Risk-Based Capital Guidelines of the Board
of Governors of the Federal Reserve System (12 CFR Part 208, Appendix A; 12 CFR
Part 225, Appendix A) or of the Office of the Comptroller of the Currency (12
CFR Part 3, Appendix A), or in any other applicable capital rules heretofore
adopted and issued by any governmental authority), or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital, or on the capital
of any corporation controlling such Bank, in each case as a consequence of its
obligations hereunder to a level below that which such Bank would have achieved
but for such adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within fifteen (15) days after
demand by such Bank (with a copy to the Agent), the Company shall pay to such
Bank such additional amount or amounts as will compensate such Bank for such
reduction.
(c) If any Bank makes such a claim for compensation, it shall provide to
the Company a certificate setting forth such increased cost or reduced amount as
a result of any event mentioned herein specifying such Change in Law, and such
certificate shall be conclusive and binding on the Company as to the amount
thereof except in the case of manifest error. Upon the imposition of any such
cost, the Company may prepay any affected Loan, subject to the provisions of
Sections 2.3 and 9.4 hereof.
Section 9.4. Funding Indemnity. (a) In the event any Bank shall incur any
loss, cost, expense or premium (including, without limitation, any loss of
profit and any loss, cost, expense or premium incurred by reason of the
liquidation or re-employment of deposits or other funds
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acquired by such Bank to fund or maintain any Eurodollar Loan or the relending
or reinvesting of such deposits or amounts paid such Bank) as a result of:
(i) any payment or prepayment of a Eurodollar Loan on a date other
than the last day of the then applicable Interest Period; or
(ii) any failure by the Company to borrow any Eurodollar Loan on the
date specified in the notice given pursuant to Section 1.5 hereof;
then, upon the demand of such Bank, the Company shall pay, within fifteen (15)
days after demand by such Bank (with a copy to the Agent), to such Bank such
amount as will reimburse such Bank for such loss, cost or expense.
(b) If any Bank makes a claim for compensation under this Section 9.4, it
shall provide to the Company a certificate setting forth the amount of such
loss, cost or expense in reasonable detail and such certificate shall be
conclusive and binding on the Company as to the amount thereof except in the
case of manifest error.
Section 9.5. Lending Branch. Each Bank may, at its option, elect to make,
fund or maintain its Eurodollar Loans hereunder at the branch or office
specified opposite its signature on the signature page hereof or such other of
its branches or offices as such Bank may from time to time elect, subject to the
provisions of Section 1.5(b) hereof.
Section 9.6. Discretion of Bank as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary, each Bank which is
match-funding its Eurodollar Loans shall be entitled to fund and maintain its
funding of all or any part of its Loans in any manner it sees fit, it being
understood however, that for the purposes of this Agreement all determinations
hereunder shall be made as if the Banks which are match-funding their Eurodollar
Loans had actually funded and maintained each Eurodollar Loan during each
Interest Period for such Loan through the purchase of deposits in the relevant
interbank market having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the Adjusted Eurodollar Rate for such Interest
Period.
SECTION 10. THE AGENT.
Section 10.1. Appointment and Powers. Harris N.A. is hereby appointed by
the Banks as Agent under the Loan Documents and each of the Banks irrevocably
authorizes the Agent to act as the Agent of such Bank. The Agent agrees to act
as such upon the express conditions contained in this Agreement.
Section 10.2. Powers. The Agent shall have and may exercise such powers
hereunder as are specifically delegated to the Agent by the terms of the Loan
Documents, together with such powers as are incidental thereto. The Agent shall
have no implied duties to the Banks, nor any obligation to the Banks to take any
action under the Loan Documents except any action specifically provided by the
Loan Documents to be taken by the Agent.
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Section 10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Banks or any Bank for any
action taken or omitted to be taken by it or them under the Loan Documents or in
connection therewith except for its or their own gross negligence or willful
misconduct.
Section 10.4. No Responsibility for Loans, Recitals, etc. The Agent shall
not (i) be responsible to the Banks for any recitals, reports, statements,
warranties or representations contained in the Loan Documents or furnished
pursuant thereto, (ii) be responsible for any Loans or Reimbursement Obligations
hereunder or (iii) be bound to ascertain or inquire as to the performance or
observance of any of the terms of the Loan Documents. In addition, neither the
Agent nor its counsel shall be responsible to the Banks for the enforceability
or validity of any of the Loan Documents.
Section 10.5. Right to Indemnity. The Banks hereby indemnify the Agent for
any actions taken in accordance with this Section 10, and the Agent shall be
fully justified in failing or refusing to take any action hereunder, unless it
shall first be indemnified to its satisfaction by the Banks pro rata in
accordance with their respective Commitment Percentages against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action, other than any liability which may arise out
of Agent's gross negligence or willful misconduct.
Section 10.6. Action Upon Instructions of Banks. The Agent agrees, upon the
written request of the Required Banks, to take any action of the type specified
in the Loan Documents as being within the Agent's rights, duties, powers or
discretion. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with written instructions signed
by the Required Banks, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Banks and on all holders of
the Notes. In the absence of a request by the Required Banks, the Agent shall
have authority, in its sole discretion, to take or not to take any such action,
unless the Loan Documents specifically require the consent of all of the Banks.
Section 10.7. Employment of Agents and Counsel. The Agent may execute any
of its duties as Agent hereunder by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Banks, except as to money
or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it in good faith
and with reasonable care. The Agent shall be entitled to advice and opinion of
legal counsel concerning all matters pertaining to the duties of the agency
hereby created and shall be protected in acting in reliance thereon.
Section 10.8. Reliance on Documents; Counsel. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it in good faith to be
genuine and correct and to have been signed or sent by the proper person or
persons, and, in respect to legal matters, upon the opinion of legal counsel
selected by the Agent.
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Section 10.9. May Treat Payee as Owner. The Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of any person, firm or
corporation who at the time of making such request or giving such authority or
consent is the holder of any such Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note issued in
exchange therefor.
Section 10.10. Agent's Reimbursement. Each Bank agrees to reimburse the
Agent pro rata in accordance with its Commitment Percentage for any reasonable
out-of-pocket expenses (including fees and charges for field audits) not
reimbursed by the Company (a) for which the Agent is entitled to reimbursement
by the Company under the Loan Documents and (b) for any other reasonable
expenses incurred by the Agent on behalf of the Banks, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents.
Section 10.11. Rights as a Lender. With respect to its commitment, Loans
made by it, Reimbursement Obligations held by it and the Notes issued to it, the
Agent shall have the same rights and powers hereunder as any Bank and may
exercise the same as though it were not the Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of banking or trust business with the Company and
any Subsidiary as if it were not the Agent.
Section 10.12. Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to in Section 5.2 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into the Loan Documents. Each Bank also acknowledges that it
will, independently and without reliance upon the Agent or any other Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents.
Section 10.13. Resignation of Agent. Subject to the appointment of a
successor Agent, the Agent may resign as Agent for the Banks under this
Agreement and the other Loan Documents at any time by sixty days' notice in
writing to the Banks. Such resignation shall take effect upon appointment of
such successor. The Banks shall have the right to appoint a successor Agent who
shall be entitled to all of the rights of, and vested with the same powers as,
the original Agent under the Loan Documents. In the event a successor Agent
shall not have been appointed within the sixty day period following the giving
of notice by the Agent, the Agent may appoint its own successor. Resignation by
the Agent shall not affect or impair the rights of the Agent under Sections 10.5
and 10.10 hereof with respect to all matters preceding such resignation. Any
successor Agent must be a national banking association or a bank chartered in
any State of the United States and must have capital and surplus of at least
$250,000,000 and be approved by the Company (which approval will not be
unreasonably withheld).
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Section 10.14. Duration of Agency. The agency established by Section 10.1
hereof shall continue, and Sections 10.1 through and including this Section
10.14 shall remain in full force and effect, until the Notes, all Reimbursement
Obligations and all other amounts due hereunder and thereunder shall have been
paid in full and the Banks' commitments to extend credit to or for the benefit
of the Company shall have terminated or expired.
Section 10.15. Removal of Agent. Subject to the appointment of a successor
Agent, the Required Banks, with the consent of the Company (which consent will
not be unreasonably withheld), may remove the Agent for the Banks under this
Agreement at any time by thirty days' notice in writing to the Agent. Such
removal shall take effect upon appointment of such successor. The Required Banks
shall have the right to appoint a successor Agent who shall be entitled to all
of the rights of, and vested with the same powers as, the original Agent under
the Loan Documents. In the event a successor Agent shall not have been appointed
within the thirty day period following the giving of notice to the Agent, the
Agent may appoint its own successor. The removal of the Agent shall not affect
or impair the rights of the Agent under Sections 10.5 and 10.10 hereof with
respect to all matters preceding such removal. Any successor Agent must be a
national banking association or a bank chartered in any State of the United
States and must have capital and surplus of at least $250,000,000 and be
approved by the Company (which approval will not be unreasonably withheld).
Section 10.16. Additional Agent. The designation of a Bank as a
"documentation agent" or other similar designation shall have no substantive
effect and such Bank shall have no additional powers, duties or responsibilities
as a result of such designation.
SECTION 11. MISCELLANEOUS.
Section 11.1. Amendments and Waivers. Any term, covenant, agreement or
condition of this Agreement may be amended only by a written amendment executed
by the Company, the Required Banks and, if the rights or duties of the Agent are
affected thereby, the Agent, or compliance therewith only may be waived (either
generally or in a particular instance and either retroactively or
prospectively), if the Company shall have obtained the consent in writing of the
Required Banks and, if the rights or duties of the Agent are affected thereby,
the Agent, provided, however, that without the consent in writing of the holders
of all outstanding Notes, or all Banks if no Notes are outstanding, no such
amendment or waiver shall (i) change the amount or postpone the date of payment
of any scheduled payment or required prepayment of principal of the Notes or
reduce the rate or extend the time of payment of interest on the Notes, or
reduce the amount of principal thereof, or modify any of the provisions of the
Notes with respect to the payment or prepayment thereof, (ii) give to any Note
any preference over any other Notes, (iii) amend the definition of Required
Banks, (iv) alter, modify or amend the provisions of this Section 11.1, (v)
change the amount or term of, or extend, any of the Banks' Revolving Credit
Commitments or Harris' Swingline commitment or the fees required under Section
2.1 hereof, (vi) alter, modify or amend the provisions of Section 6 of this
Agreement, (vii) alter, modify or amend any Bank's right hereunder to consent to
any action, make any request or give any notice, or (viii) terminate the
Subsidiary Guaranty or knowingly release any Guarantor Subsidiary from its
obligations thereunder. Any such amendment or waiver shall apply equally to all
Banks and the holders of the Notes and shall be binding upon them, upon each
future holder of any Note
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and upon the Company, whether or not such Note shall have been marked to
indicate such amendment or waiver. No such amendment or waiver shall extend to
or affect any obligation not expressly amended or waived.
Section 11.2. Waiver of Rights. No delay or failure on the part of the
Agent or any Bank or on the part of the holder or holders of any Note in the
exercise of any power or right shall operate as a waiver thereof, nor as an
acquiescence in any Potential Default or Event of Default, nor shall any single
or partial exercise of any power or right preclude any other or further exercise
thereof, or the exercise of any other power or right, and the rights and
remedies hereunder of the Agent, the Banks and of the holder or holders of any
Notes are cumulative to, and not exclusive of, any rights or remedies which any
of them would otherwise have.
Section 11.3. Several Obligations. The commitments of each of the Banks
hereunder shall be the several obligations of each Bank and the failure on the
part of any one or more of the Banks to perform hereunder shall not affect the
obligation of the other Banks hereunder, provided that nothing herein contained
shall relieve any Bank from any liability for its failure to so perform. In the
event that any one or more of the Banks shall fail to perform its commitment
hereunder, all payments thereafter received by the Agent on the principal of
Loans or Reimbursement Obligations hereunder shall be distributed by the Agent
to the Banks making such additional Loans or Reimbursement Obligations ratably
as among them in accordance with the principal amount of additional Loans or
Reimbursement Obligations made by them until such additional Loans or
Reimbursement Obligations shall have been fully paid and satisfied, and all
payments on account of interest shall be applied as among all the Banks ratably
in accordance with the amount of interest owing to each of the Banks as of the
date of the receipt of such interest payment.
Section 11.4. Non-Business Day. (a) If any payment of principal or interest
on any Domestic Rate Loan or Domestic Rate Portion shall fall due on a day which
is not a Business Day, interest at the rate such Loan or Portion bears for the
period prior to maturity shall continue to accrue on such principal from the
stated due date thereof to and including the next succeeding Business Day on
which the same is payable.
(b) If any payment of principal or interest on any Eurodollar Loan shall
fall due on a day which is not a Business Day, the payment date thereof shall be
extended to the next date which is a Business Day and the Interest Period for
such Loan shall be accordingly extended, unless as a result thereof any payment
date would fall in the next calendar month, in which case such payment date
shall be the next preceding Business Day.
Section 11.5. Survival of Indemnities. All indemnities and all provisions
relative to reimbursement to the Banks of amounts sufficient to protect the
yield to the Banks with respect to Eurodollar Loans, including, but not limited
to, Sections 9.3 and 9.4 hereof, shall survive the termination of this Agreement
and the payment of the Notes.
Section 11.6. Documentary Taxes. Although the Company is of the opinion
that no documentary or similar taxes are payable in respect to this Agreement or
the Notes, the Company agrees that it will pay such taxes, including interest
and penalties, in the event any such taxes are
-40-
assessed irrespective of when such assessment is made and whether or not any
credit is then in use or available hereunder.
Section 11.7. Representations. All representations and warranties made
herein or in certificates given pursuant hereto shall survive the execution and
delivery of this Agreement and of the Notes, and shall continue in full force
and effect with respect to the date as of which they were made and as reaffirmed
on the date of each borrowing (as and to the extent provided in Section 6.3
hereof) and as long as any credit is in use or available hereunder.
Section 11.8. Notices. Unless otherwise expressly provided herein, all
communications provided for herein shall be in writing or by telex and shall be
deemed to have been given or made when served personally, when an answer back is
received in the case of notice by telex or 2 days after the date when deposited
in the United States mail (registered, if to the Company) addressed if to the
Company to 225 North 13th Avenue, Laurel, Mississippi 39440, Attention: Chief
Financial Officer; if to the Agent or Harris at 111 West Monroe Street, Chicago,
Illinois 60690, Attention: Food Group; and if to any of the Banks, at the
address for such Bank set forth under its signature hereon; or at such other
address as shall be designated by any party hereto in a written notice to each
other party pursuant to this Section 11.8.
Section 11.9. Costs and Expenses; Environmental Indemnity. (a) The Company
agrees to pay on demand all customary and reasonable out-of-pocket costs and
expenses of the Agent in connection with the negotiation, preparation, execution
and delivery of this Agreement, the Notes and the other instruments and
documents to be delivered hereunder or in connection with the transactions
contemplated hereby (unless otherwise expressly limited herein), including the
reasonable fees and expenses of Chapman and Cutler LLP, special counsel to the
Agent; all reasonable out-of-pocket costs and expenses of the Agent and the
reasonable out-of-pocket costs and expenses of each Bank (including in each case
reasonable attorneys' fees and expenses) incurred in connection with any
consents or waivers hereunder or amendments hereto in each case requested by the
Company, and all reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees and expenses), if any, incurred by the Agent, the
Banks or any other holders of a Note in connection with the enforcement against
the Company or any Guarantor Subsidiary of this Agreement or the Notes and the
other instruments and documents to be delivered hereunder.
(b) Without limiting the generality of the foregoing, the Company
unconditionally agrees to indemnify, defend and hold harmless, the Agent and
each Bank, and covenants not to sue for any claim for contribution against, the
Agent or any Bank for any damages, costs, loss or expense, including without
limitation, response, remedial or removal costs, arising out of any of the
following: (i) any presence, release, threatened release or disposal of any
hazardous or toxic substance or petroleum by the Company or any Subsidiary or
otherwise occurring on or with respect to their respective Property, (ii) the
operation or violation of any Environmental Law, whether federal, state, or
local, and any regulations promulgated thereunder, by the Company or any
Subsidiary or otherwise occurring on or with respect to their respective
Property, (iii) any claim for personal injury or property damage in connection
with the Company or any Subsidiary or otherwise occurring on or with respect to
their respective Property, and (iv) the inaccuracy or breach of any
environmental representation, warranty or covenant by the Company made herein
-41-
or in any loan agreement, promissory note, mortgage, deed of trust, security
agreement or any other instrument or document evidencing or securing any
indebtedness, obligations or liabilities of the Company owing to the Agent or
any Bank or setting forth terms and conditions applicable thereto or otherwise
relating thereto; provided, however, the foregoing provisions shall not apply to
damages arising from the Agent's or such Bank's willful misconduct or gross
negligence. This indemnification shall survive the payment and satisfaction of
all indebtedness, obligations and liabilities of the Company owing to the Agent
and the Banks and the termination of this Agreement, and shall remain in force
beyond the expiration of any applicable statute of limitations and payment or
satisfaction in full of any single claim under this indemnification. This
indemnification shall be binding upon the successors and assigns of the Company
and shall inure to the benefit of Agent and the Banks and their respective
directors, officers, employees, agents, and collateral trustees, and their
successors and assigns.
(c) The provisions of this Section 11.9 shall survive payment of the Notes
and Reimbursement Obligations and the termination of the Banks' Commitments
hereunder.
Section 11.10. Counterparts. This Agreement may be executed in any number
of counterparts and all such counterparts taken together shall be deemed to
constitute one and the same instrument. One or more of the Banks may execute a
separate counterpart of this Agreement which has also been executed by the
Company, and this Agreement shall become effective as and when all of the Banks
have executed this Agreement or a counterpart thereof and lodged the same with
the Agent.
Section 11.11. Successors and Assigns; Governing Law; Entire Agreement.
This Agreement shall be binding upon each of the Company and the Banks and their
respective successors and assigns, and shall inure to the benefit of the Company
and each of the Banks and the benefit of their respective successors and
assigns, including any subsequent holder of any Note. This Agreement and the
rights and duties of the parties hereto shall be construed and determined in
accordance with the laws of the State of Illinois, without regard to Illinois
conflict of laws principles. This Agreement constitutes the entire understanding
of the parties with respect to the subject matter hereof and any prior
agreements, whether written or oral, with respect thereto are superseded hereby.
The Company may not assign any of its rights or obligations hereunder without
the written consent of all of the Banks. The Banks may assign their rights under
the Loan Documents only in accordance with Sections 11.16 and 11.17 hereof.
Section 11.12. No Joint Venture. Nothing contained in this Agreement shall
be deemed to create a partnership or joint venture among the parties hereto.
Section 11.13. Severability. In the event that any term or provision hereof
is determined to be unenforceable or illegal, it shall be deemed severed
herefrom to the extent of the illegality and/or unenforceability and all other
provisions hereof shall remain in full force and effect.
Section 11.14. Table of Contents and Headings. The table of contents and
section headings in this Agreement are for reference only and shall not affect
the construction of any provision hereof.
-42-
Section 11.15. Sharing of Payments. Each Bank agrees with each other Bank
that if such Bank shall receive and retain any payment, whether by set-off or
application of deposit balances or otherwise ("Set-Off"), on any Loan,
Reimbursement Obligation or other amount outstanding under this Agreement in
excess of its ratable share of payments on all Loans, Reimbursement Obligations
and other amounts then outstanding to the Banks, then such Bank shall purchase
for cash at face value, but without recourse, ratably from each of the other
Banks such amount of the Loans and Reimbursement Obligations held by each such
other Bank (or interest therein) as shall be necessary to cause such Bank to
share such excess payment ratably with all the other Banks; provided, however,
that if any such purchase is made by any Bank, and if such excess payment or
part thereof is thereafter recovered from such purchasing Bank, the related
purchases from the other Banks shall be rescinded ratably and the purchase price
restored as to the portion of such excess payment so recovered, but without
interest. Each Bank's ratable share of any such Set-Off shall be determined by
the proportion that the aggregate principal amount of Loans and Reimbursement
Obligations then due and payable to such Bank bears to the total aggregate
principal amount of Loans and Reimbursement Obligations then due and payable to
all the Banks.
Section 11.16. Participants. Subject to applicable legal requirements
(including any applicable securities laws), each Bank shall have the right at
its own cost to grant participations (to be evidenced by one or more agreements
or certificates of participation) in the Loans made and Reimbursement
Obligations and/or Commitments held by such Bank at any time and from time to
time to one or more other Persons; provided that no such participation shall
relieve any Bank of any of its obligations under this Agreement, and, provided,
further that no such participant shall have any rights under this Agreement
except as provided in this Section, and the Agent shall have no obligation or
responsibility to such participant. Any agreement pursuant to which such
participation is granted shall provide (a) that the granting Bank shall retain
the sole right and responsibility to enforce the obligations of the Company
under this Agreement and the other Loan Documents including, without limitation,
the right to approve any amendment, modification or waiver of any provision of
the Loan Documents, except that such agreement may provide that such Bank will
not agree to any modification, amendment or waiver of the Loan Documents that
would reduce the amount of or postpone any fixed date for payment of any
indebtedness, obligation or liability in which such participant has an interest,
(b) that the participant agrees to be bound by Section 11.18 of this Agreement
to the same extent as if it were a Bank and (c) that the participant may not
grant subparticipations in, or further assign, its rights in the Loans,
Reimbursement Obligations, Commitments or Notes. Any party to which such a
participation has been granted shall have the benefits of Section 9.3 and
Section 9.4 hereof. The Company authorizes each Bank to disclose to any
participant or prospective participant under this Section, if such person has
agreed in writing to be bound by Section 11.18 below to the same extent as if it
were a Bank, any financial or other information pertaining to the Company or any
Subsidiary.
Section 11.17. Assignments. (a) Each Bank shall have the right at any time,
with the prior consent of the Agent and, so long as no Event of Default then
exists, the Company (which consent of the Company shall not be unreasonably
withheld) to sell, assign, transfer or negotiate all or any part of its rights
and obligations under the Loan Documents (including, without limitation, the
indebtedness evidenced by the Notes then held by such assigning Bank, together
-43-
with an equivalent percentage of its obligation to make Loans and participate in
L/Cs) to one or more commercial banks or other financial institutions or
investors, provided that, unless otherwise agreed to by the Agent, such
assignment shall be of a fixed percentage (and not by its terms of varying
percentage) of the assigning Bank's rights and obligations under the Loan
Documents; provided, however, that in order to make any such assignment (i)
unless the assigning Bank is assigning all of its Commitments, outstanding Loans
and interests in L/Cs and Reimbursement Obligations, the assigning Bank shall
retain at least $5,000,000 in unused Commitments, outstanding Loans and
interests in L/Cs and Reimbursement Obligations, (ii) the assignee Bank shall
have Commitments, outstanding Loans and interests in L/Cs and Reimbursement
Obligations of at least $5,000,000, (iii) each such assignment shall be
evidenced by a written agreement (in form acceptable to the Agent) executed by
such assigning Bank, such assignee Bank or Banks, the Agent and, if required as
provided above, the Company, which agreement shall specify in each instance the
portion of the Company's indebtedness, obligations and liabilities which are to
be assigned to the assignee Bank and the portion of the Commitments of the
assigning Bank to be assumed by the assignee Bank, and (iv) the assigning Bank
shall pay to the Agent a processing fee of $3,500 and any out-of-pocket
attorneys' fees and expenses incurred by the Agent in connection with any such
assignment agreement. Any such assignee shall become a Bank for all purposes
hereunder to the extent of the rights and obligations under the Loan Documents
it assumes and the assigning Bank shall be released from its obligations (other
than those under Section 11.18), and will have released its rights, under the
Loan Documents to the extent of such assignment. The address for notices to such
assignee Bank shall be as specified in the assignment agreement executed by it.
Promptly upon the effectiveness of any such assignment agreement, the Company
shall execute and deliver replacement Notes to the assignee Bank and the
assigning Bank in the respective amounts of their Commitments (or assigned
principal amounts, as applicable) after giving effect to the reduction
occasioned by such assignment (all such Notes to constitute "Notes" for all
purposes of the Loan Documents), and the assignee Bank shall thereafter
surrender to the Company its old Notes. The Company authorizes each Bank to
disclose to any purchaser or prospective purchaser of an interest in the Loans
and interest in L/Cs owed to it or its Commitments under this Section, if such
person has agreed in writing to be bound by Section 11.18 below to the same
extent as if it were a Bank, any financial or other information pertaining to
the Company or any Subsidiary.
(b) Any Bank may at any time pledge or grant a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Bank, including any such pledge or grant to a Federal Reserve Bank, and this
Section shall not apply to any such pledge or grant of a security interest;
provided that no such pledge or grant of a security interest shall release a
Bank from any of its obligations hereunder or substitute any such pledgee or
secured party for such Bank as a party hereto; provided further, however, the
right of any such pledgee or grantee (other than any Federal Reserve Bank) to
further transfer all or any portion of the rights pledged or granted to it,
whether by means of foreclosure or otherwise, shall be at all times subject to
the terms of this Agreement; and provided further, however, that any such
pledgee or grantee has agreed in writing to be bound by Section 11.18 below.
Section 11.18. Confidentiality. Each Bank will keep confidential any
non-public information concerning the Company and its Subsidiaries furnished by
the Company (which is designated by the Company as confidential at the time such
information is furnished to the Bank
-44-
or is actually known by such Bank to be confidential) or obtained by such Bank
through its inspections and audits pursuant to Section 7.5 hereof or any
Security Document and known by such Bank to be confidential, except that any
Bank may disclose such information (i) to regulatory authorities having
jurisdiction, (ii) pursuant to subpoena or other legal process, (iii) to such
Bank's counsel and auditors in connection with matters concerning this
Agreement, (iv) to such Bank's consultants in connection with negotiations
concerning this Agreement or the other Loan Documents and (v) to prospective
participants or assignees in the Loans and participants and assignees in the
Loans, provided that any Persons described in clauses (iv) and (v) shall first
agree in writing to be bound to comply with the terms of this Section to the
same extent as if it were a Bank. In the situations described above (except
where the Company is a party), each Bank shall notify the Company as promptly as
practicable of the receipt of a request for such disclosure and furnish it with
a copy of such subpoena or other legal process (to the extent such Bank is
legally permitted to do so). The provisions of this Section shall survive the
payment of the Loans and Reimbursement Obligations and the termination of this
Agreement.
Section 11.19. Waiver of Jury Trial. THE COMPANY, THE AGENT AND EACH BANK
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATIVE TO ANY LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
Section 11.20. USA Patriot Act. Each Bank that is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act") hereby notifies the Company that pursuant to
the requirements of the Act, it is required to obtain, verify, and record
information that identifies the Company, which information includes the name and
address of the Company and other information that will allow such Bank to
identify the Company in accordance with the Act.
-45-
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of November 17, 2005.
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 N.A., individually and as Agent
By /s/ David J. Bechstein
-------------------------------------
Its Vice President
Address: 111 West Monroe Street
Chicago, Illinois 60690
Attention: Food Group
SUNTRUST BANK
By /s/ Jerry White
-------------------------------------
Its Managing Director
------------------------------------
Address: 303 Peachtree St., 3rd Floor
Atlanta, Georgia 30308
Attention: Mail Code: 1922
-46-
AMSOUTH BANK
By /s/ Stanley A. Herren
-------------------------------------
Its Vice President
------------------------------------
Address: 210 East Capitol Street
4th Floor
Jackson, MS 39201
-------------------------------
Attention: Stanley A. Herren
-----------------------------
U.S. BANK NATIONAL ASSOCIATION
By /s/ Alan V. Schuler
-------------------------------------
Its Senior Vice President
------------------------------------
Address: 950 17th Street, Suite 350
Denver, Colorado 80202
Attention: Alan V. Schuler
-----------------------------
REGIONS BANK
By /s/ Jay Ingram
-------------------------------------
Its Vice President
------------------------------------
Address: 110 South 40th Avenue
Hattiesburg, MS 39402
Attention: Marcus Robinson
-----------------------------
TRUSTMARK NATIONAL ASSOCIATION
By /s/ William H. Edwards
-------------------------------------
Its First Vice President
------------------------------------
Address: 248 East Capitol Street
Jackson, Missippi 39201
-------------------------------
Attention: William H. Edwards
-----------------------------
-47-
EXHIBIT A
SANDERSON FARMS, INC.
REVOLVING CREDIT NOTE
_______________, 2005
FOR VALUE RECEIVED, the undersigned, SANDERSON FARMS, INC., a Mississippi
corporation (the "Company") promises to pay to the order of
_________________________ (the "Lender") on the Revolving Credit Termination
Date (as defined in the Credit Agreement referred to below) at the principal
office of Harris N.A. in Chicago, Illinois, the principal sum of
____________________________________________ or, if less, the aggregate unpaid
principal amount of all Revolving Credit Loans made by the Lender to the Company
under the Revolving Credit provided for under the Credit Agreement hereinafter
mentioned and remaining unpaid on the Revolving Credit Termination Date together
with interest on the principal amount of each Revolving Credit Loan from time to
time outstanding hereunder at the rates, and payable in the manner and on the
dates, specified in said Credit Agreement.
The Lender shall record on its books or records or on the schedule to this
Note which is a part hereof the principal amount of each Revolving Credit Loan
made under the Revolving Credit, all payments of principal and interest and the
principal balances from time to time outstanding; provided that prior to the
transfer of this Note all such amounts shall be recorded on the schedule
attached to this Note. The record thereof, whether shown on such books or
records or on the schedule to this Note, shall be prima facie evidence as to all
such amounts; provided, however, that the failure of the Lender to record, or
any mistake in recording, any of the foregoing shall not limit or otherwise
affect the obligation of the Company to repay all Revolving Credit Loans made
under the Revolving Credit, together with accrued interest thereon.
This Note is one of the Revolving Notes referred to in and issued under
that certain Credit Agreement dated as of November 17, 2005, among the Company,
Harris N.A., as Agent, and the banks named therein, as amended from time to time
(the "Credit Agreement"), and this Note and the holder hereof are entitled to
all of the benefits and security provided for thereby or referred to therein.
Payment of this Note has been guaranteed pursuant to that certain Guaranty
Agreement dated as of November 17, 2005, from the Guarantor Subsidiaries to the
Banks, to which reference is hereby made for a statement of the terms thereof.
All defined terms used in this Note, except terms otherwise defined herein,
shall have the same meaning as such terms have in said Credit Agreement.
Prepayments may be made on any Revolving Credit Loan evidenced hereby and
this Note (and the Revolving Credit Loans evidenced hereby) may be declared due
prior to the expressed maturity thereof, all in the events, on the terms and in
the manner as provided for in said Credit Agreement.
The Company hereby waives presentment for payment and demand.
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Illinois.
SANDERSON FARMS, INC.
By
-------------------------------------
Its
------------------------------------
-2-
EXHIBIT B
SANDERSON FARMS, INC.
SWINGLINE NOTE
$__________________ ___________, 2005
FOR VALUE RECEIVED, the undersigned, Sanderson Farms, Inc., a Mississippi
corporation (the "Company"), promises to pay to the order of Harris N.A. (the
"Bank"), at the principal office of Harris N.A. in Chicago, Illinois, the
aggregate unpaid principal amount of all Swingline Loans made by the Bank to the
Company under the Credit Agreement hereinafter mentioned in the amounts and
payable in the manner and on the dates specified in said Credit Agreement,
together with interest on the principal amount of each Swingline Loan from time
to time outstanding hereunder at the rates, and payable in the manner and on the
dates specified in said Credit Agreement
This Note is the Swingline Note referred to in and issued under that
certain Credit Agreement dated as of November 17, 2005, among the Company,
Harris N.A., as Agent, and the banks named therein, as amended from time to time
(the "Credit Agreement"), and this Note and the holder hereof are entitled to
all of the benefits and security provided for thereby or referred to therein.
Payment of this Note has been guaranteed pursuant to that certain Guaranty
Agreement dated as of November 17, 2005, from the Guarantor Subsidiaries to the
Banks, to which reference is hereby made for a statement of the terms thereof.
All defined terms used in this Note, except terms otherwise defined herein,
shall have the same meaning as such terms have in said Credit Agreement.
Prepayments may be made on any Swingline Loan evidenced hereby and this
Note (and the Swingline Loans evidenced hereby) may be declared due prior to the
expressed maturity thereof, all in the events, on the terms and in the manner as
provided for in said Credit Agreement.
The Company hereby waives presentment for payment and demand.
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Illinois.
SANDERSON FARMS, INC.
By
-------------------------------------
Its
------------------------------------
EXHIBIT E
COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished to Harris N.A., as agent (the
"Agent"), pursuant to that certain Credit Agreement dated as of November 17,
2005, by and among Sanderson Farms, Inc., a Mississippi corporation (the
"Company"), the Agent and the other Bank parties thereto (the "Agreement").
Unless otherwise defined herein, the terms used in this Compliance Certificate
have the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly acting chief _____________ officer of the Company,
acting herein in such capacity;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company during the accounting period
covered by the attached financial statements sufficient for me to provide
this Certificate;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which
constitutes a Potential Default or Event of Default during or at the end of
the accounting period covered by the attached financial statements or as of
the date of this Certificate, except as set forth below; and
4. Schedule 1 attached hereto sets forth financial data and
computations evidencing the Company's compliance with certain covenants of
the Agreement, all of which data and computations are true, complete and
correct to the best of my knowledge, information and belief.
Described below (or on the attached sheet) are the exceptions, if any, to
paragraph 3 by listing, in detail, the nature of the condition or event, the
period during which it has existed and the action which the Company has taken,
is taking or proposes to take with respect to each such condition or event:
-------------------------------------------------------
-------------------------------------------------------
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _____ day of _______________,
20__.
,
---------------------------------------
as Chief _____________ Officer
of Sanderson Farms, Inc.
-2-
SCHEDULE 1
TO COMPLIANCE CERTIFICATE
SANDERSON FARMS, INC.
Compliance Calculations for
Credit Agreement Dated as of November 17, 2005
Calculations as of the last day of the fiscal quarter ended __________, 20__
Section 7.9 Consolidated Tangible Net Worth
(a) Prior Fiscal Quarter's Required
Minimum Amount $______________
(b) Consolidated Net Income for
Current Fiscal Quarter
to "as of" date $______________
(c) Dividends paid during Current Fiscal Quarter $______________
(d) Adjustment (lesser of $3,000,000 and line (c)) $______________
(e) (b) - (d)* $______________
(f) 60% of (e) $______________
(g) Net Proceeds of Stock for Current Fiscal Quarter
to "as of" date $______________
(h) Current Fiscal Quarter's
Required Minimum Amount
(a) + (f) + (g) $______________
(i) Current Fiscal Year Consolidated
Tangible Net Worth $______________
Compliance Yes _____ No _____
* But not less than $0.
Section 7.10 Leverage Ratio
(a) Consolidated Indebtedness for
Borrowed Money $______________
(b) Consolidated Indebtedness for
Borrowed Money $______________
Consolidated Tangible Net Worth $______________
TOTAL $______________
(a)/(b) _____________*
* Required to not exceed 50%.
Compliance Yes _____ No _____
Section 7.11 Consolidated Current Ratio
(a) Consolidated Current Assets $______________
(b) Consolidated Current Liabilities $______________
(c) Consolidated Deferred Taxes $______________
(d) Consolidated Current Liabilities
minus Consolidated Deferred
Taxes [(b)-(c)] $______________
(a)/(d) _____________*
* Required to be not less than 2.0 to 1.
Compliance Yes _____ No _____
Section 7.12 Capital Expenditures
(a) Maximum Amount Allowed $______________
(b) Expenditures Year-to-date $______________
(a)-(b) _____________*
Compliance Yes _____ No _____
-2-
EXHIBIT F
ENVIRONMENTAL DISCLOSURE
NONE
EXHIBIT G
SCHEDULE OF SUBSIDIARIES
STATE OF PERCENTAGE OF
NAME INCORPORATION OWNERSHIP
---- ------------- -------------
1. Sanderson Farms, Inc.
(Foods Division) Mississippi 100%
2. Sanderson Farms, Inc.
(Production Division) Mississippi 100%
3. Sanderson Farms, Inc.
(Processing Division) Mississippi 100%
EXHIBIT H
LITIGATION; TAX RETURNS; APPROVALS
NONE