UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(mark one)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended November 29, 1997
OR
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ____________ to ____________
Commission file number: 000-04892
CAL-MAINE FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware 64-0500378
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
3320 Woodrow Wilson Avenue, Jackson, Mississippi 39209
(Address of principal executive offices) (Zip Code)
(601) 948-6813
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No_____
Number of shares outstanding of each of the issuer's classes of common stock
(exclusive of treasury shares), as of January 5, 1998.
Common Stock, $0.01 par value 11,994,388 shares
Class A Common Stock, $0.01 par value 1,200,000 shares
CAL-MAINE FOODS, INC.
INDEX
Page
Part I. Financial Information Number
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets -
November 29, 1997 and May 31, 1997 3
Condensed Consolidated Statements of Operations -
Three Months and Six Months Ended
November 29, 1997 and November 30, 1996 4
Condensed Consolidated Statements of Cash Flow -
Six Months Ended November 29, 1997 and
November 30, 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
November 29, 1997 May 31, 1997
----------------- ------------
(unaudited) (note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 20,939 $ 23,737
Accounts receivable, net 24,303 13,086
Recoverable federal and state income taxes 162 1,137
Inventories - note 2 44,159 42,594
Prepaid expenses and other current assets 450 986
--------- ---------
Total current assets 90,013 81,540
Notes receivable and investments 5,013 4,747
Other assets 830 661
Property, plant and equipment 170,794 161,117
Less accumulated depreciation (71,151) (65,771)
--------- ---------
99,643 95,346
--------- ---------
TOTAL ASSETS $ 195,499 $ 182,294
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 31,047 $ 21,695
Current maturities of long-term debt 5,067 4,540
Current deferred income taxes 9,915 9,915
--------- ---------
Total current liabilities 46,029 36,150
Long-term debt, less current maturities 60,715 59,896
Deferred expenses 1,655 1,655
Deferred income taxes 9,951 9,951
--------- ---------
Total liabilities 118,350 107,652
Stockholders' equity:
Common stock $0.01 par value per share:
Authorized shares - 30,000,000
Issued and outstanding shares -
17,565,200 at November 30,
1997 and May 31, 1997 176 176
Class A common stock $0.01 par value,
authorized and issued
1,200,000 shares 12 12
Paid-in capital 18,784 18,785
Retained earnings 64,410 61,903
Common stock in treasury - 5,570,812
shares at November 30, 1997 and
5,583,200 shares at May 31, 1997 (6,233) (6,234)
--------- ---------
Total stockholders' equity 77,149 74,642
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 195,499 $ 182,294
========= =========
</TABLE>
See note next page. See notes to condensed consolidated financial statements.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
UNAUDITED
<TABLE>
<CAPTION>
13 Weeks Ended 26 Weeks Ended
Nov 29, 1997 Nov 30, 1996 Nov 29, 1997 Nov 30, 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 79,435 $ 78,629 $ 143,158 $ 144,192
Cost of sales 63,999 60,783 122,252 116,495
--------- --------- --------- ---------
Gross profit 15,436 17,846 20,906 27,697
Selling, general and
administrative 8,122 7,102 15,583 14,242
--------- --------- --------- ---------
Operating income 7,314 10,744 5,323 13,455
Other income (expense):
Interest expense, net (858) (1,182) (1,700) (2,089)
Other 232 200 255 190
--------- --------- --------- ---------
(626) (982) (1,445) (1,899)
--------- --------- --------- ---------
Income before income taxes 6,688 9,762 3,878 11,556
Income tax expense 2,444 3,831 1,371 4,528
--------- --------- --------- ---------
NET INCOME $ 4,244 $ 5,931 $ 2,507 $ 7,028
========= ========= ========= =========
Net income/common share $ 0.32 $ 0.52 $ .19 $ 0.61
========= ========= ========= =========
Weighted average shares
outstanding 13,194 11,502 13,191 11,507
========= ========= ========= =========
</TABLE>
Note: The balance sheet at May 31, 1997 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
See notes to condensed consolidated financial statements.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
<TABLE>
<CAPTION>
26 Weeks Ended
Nov 29, 1997 Nov 30, 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities $ 6,198 $ 12,920
Cash flows from investing activities:
Purchases of property, plant and equipment (4,022) (2,356)
Construction of production facilities (4,345) (3,162)
Purchases of shell egg production and
processing business (2,037) 0
Payments received on notes receivable and
from investments 62 34
Increase in note receivable, investments and
other assets (469) 0
Net proceeds from sale of property, plant and
equipment 469 274
--------- ---------
Net cash used in investing activities (10,342) (5,210)
Cash flows from financing activities:
Additional long-term borrowings 9,000 1,000
Principal payments on long-term debt and
capital leases (7,654) (3,590)
Purchases of common stock for treasury (78) (42)
Sale of common stock from treasury 79 0
Redemption of fractional shares of common stock (1) (4)
--------- ---------
Net cash provided by (used in) financing activities 1,346 (2,636)
--------- ---------
Increase (decrease) in cash and cash equivalents (2,798) 5,074
Cash and cash equivalents at beginning of period 23,737 3,959
--------- ---------
Cash and cash equivalents at end of period $ 20,939 $ 9,033
</TABLE>
See notes to condensed consolidated financial statements.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(in thousands, except share amounts)
November 29, 1997
(unaudited)
1. Presentation of Interim Information
The accompanying unaudited condensed consolidated financial statements are
presented in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of the management of Cal-Maine Foods, Inc. (the "Company"),
the accompanying unaudited condensed consolidated financial statements include
all normal adjustments considered necessary to present fairly the financial
position as of November 29, 1997, and the results of operations for the thirteen
and twenty-six weeks ended November 29, 1997 and November 30, 1996, and the
cash flows for the twenty-six weeks ended November 29, 1997 and November 30,
1996. Interim results are not necessarily indicative of results for a full
year. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report.
2. Acquisitions
In November 1997, the Company purchased the inventories and equipment of a
shell egg production and processing business for $2,037 and accounted for the
transaction as a purchase. In connection with the purchase, the Company leased
substantially all facilities of the business under operating leases with monthly
rentals of $22 through October 2004, with options to renew the leases for
five one-year terms. The operating results of these assets acquired are
included in the consolidated statements of the Company for the period
subsequent to the acquisition date.
3. Inventories
Inventories consisted of the following:
<TABLE>
<CAPTION>
Nov 29, 1997 May 31, 1997
------------ ------------
<S> <C> <C>
Flocks $ 27,790 $ 26,674
Eggs and egg products 4,288 4,030
Feed and supplies 8,982 8,377
Livestock 3,099 3,513
-------- --------
$ 44,159 $ 42,594
</TABLE>
4. Impact of Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share", which is required to be adopted on February 28,
1998. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior periods.
Under the new requirements for calculating primary earnings per share, the
dilutive effects of stock options will be excluded. The impact of Statement 128
on the calculation of primary and fully diluted earnings per share for the three
and six months ended November 29, 1997 and November 30, 1996 is not expected
to be material.
5. Subsequent Events
In December 1997, the Company and three of its lenders agreed to revised
terms, amounts and interest rates for long-term debt extended to the Company.
The revised arrangements provide for a total of $40 million of borrowings under
notes, with maturities ranging from 10 to 15 years at a weighted average fixed
interest rate of 7.10%. Approximately $20 million of existing debt was
refinanced and the Company was provided with an additional $20 million of
working capital.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is primarily engaged in the production, cleaning, grading,
packing and sale of fresh shell eggs and in the manufacture and sale of egg
products. The Company's fiscal year end is the Saturday closest to May 31.
The Company's operations are fully integrated. It owns facilities to
hatch chicks, grow pullets, manufacture feed, and produce, process,
manufacture and distribute shell eggs and egg products. The Company currently
is the largest producer and distributor of fresh shell eggs in the United
States. Shell eggs account for over 90% of the Company's net sales. The
Company primarily markets its shell eggs in the southwestern, southeastern,
mid-western and mid-Atlantic regions of the United States. Shell eggs are
sold directly by the Company primarily to national and regional supermarket
chains. Egg products are sold both on a direct basis and through egg product
brokers to institutional users, including manufacturers of baked goods,
mayonnaise and confections.
The Company currently uses contract producers for approximately 33% of its
total egg production. Contract producers operate under agreements with the
Company for the use of their facilities in the production of shell eggs by
layers owned by the Company, which owns the eggs produced. Also, some shell
eggs are purchased for resale by the Company from other, outside producers.
The Company's operating income or loss is significantly affected by wholesale
shell egg market prices, which can fluctuate widely and are outside of the
Company's control. Retail sales of shell eggs are greatest during the fall and
winter months and lowest during the summer months. Prices for shell eggs
fluctuate in response to seasonal factors and a natural increase in egg
production during the spring and early summer.
The Company's cost of production is materially affected by feed costs,
which average about 60% of Cal-Maine's total farm egg production cost. Changes
in feed costs result in changes in the Company's cost of goods sold. The cost
of feed ingredients is affected by a number of supply and demand factors such
as crop production and weather, and other factors, such as the level of grain
exports, over which the Company has little or no control.
Management's discussion contains forward-looking statements which involve
risks and uncertainties and the Company's actual experience may differ
materially from that discussed as follows. Factors that may cause such a
difference include, but are not limited to, those discussed in "Factors
Affecting Future Performance", below, as well as future events
that have the effect of reducing the Company's available cash balances, such
as unanticipated operating losses or capital expenditures related to possible
future acquisitions. Readers are cautioned not to place undue reliance on
forward-looking statements, which reflect management's analysis only as the
date hereof. The Company assumes no obligation to update forward-looking
statements. See also the Company's report to be filed from time to time with
the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934.
Factors Affecting Future Performance. The Company's future operating results
may be affected by various trends and factors which are beyond the Company's
control. These include adverse changes in shell egg prices and in the grain
market. Accordingly, past trends should not be used to anticipate future
results and trends. Further, the Company's prior performance should not be
presumed to be an accurate indication of future performance.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items from
the Company's Condensed Consolidated Statements of Income expressed as a
percentage of net sales.
<TABLE>
<CAPTION>
Percentage of Net Sales
13 Weeks Ended 26 Weeks Ended
Nov 29, 1997 Nov 30, 1996 Nov 29, 1997 Nov 30, 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 80.6 77.3 85.4 80.8
------ ------ ------ ------
Gross profit 19.4 22.7 14.6 19.2
Selling, general &
administrative 10.2 9.0 10.9 9.9
------ ------ ------ ------
Operating income 9.2 13.7 3.7 9.3
Other expense (.8) (1.3) (1.0) (1.3)
------ ------ ------ ------
Income before taxes 8.4 12.4 2.7 8.0
Income tax expense 3.1 4.9 1.0 3.1
------ ------ ------ ------
Net income 5.3% 7.5% 1.7% 4.9%
====== ====== ====== ======
</TABLE>
NET SALES
Net sales for the second quarter of fiscal 1998 were $79.4 million, an
increase of approximately $806,000, or 1.0%, as compared to net sales for the
second quarter of fiscal 1997. This increase is the net result of an increase
in dozens sold and a decrease in price per dozen sold. For the current quarter,
103.3 million dozens were sold as compared to 95.4 million dozens for the
second quarter last year, an increase of 7.9 million dozens or 8.3%. Purchases
from outside producers accounted for just over half of the increase in the
number of dozens sold. For the current quarter, the Company's net average
selling price per dozen was $.706, compared to $.772 per dozen for the
comparable quarter last year, a decrease of $.066 per dozen or 8.5%. The
selling price decrease is due to increased production and egg supply within the
industry and lower export sales. Average large shell egg market prices
decreased approximately $.073 per dozen for the current quarter as compared to
last year's quarter. On November 1, 1997, the beginning of the last month of
the current fiscal quarter, the Company purchased and leased assets of a
production, processing and marketing operation in Georgia. The operation also
sells feed to egg producers in the area. For the one month, that location
accounted for 2.8% of the dozens sold in the current quarter and had feed
sales of $2.1 million to outside egg producers.
Net sales for the twenty-six weeks ended November 29, 1997 were $143.2
million, a decrease over last year of $1.0 million, or .7%. Although dozens
sold increased for the current year, lower shell egg market prices for the
period resulted in a decrease in net sales as compared to last year. Dozens
sold for the current twenty-six week period were 201.4 million as compared to
184.8 million for last year, an increase of 9%. The increase in dozens sold was
provided equally by increased Company production and purchases from outside
producers. For the current period, the Company's net average selling price
per dozen was $.658 per dozen, compared to $.728 per dozen last year, a decrease
of $.07 per dozen or 9.6%. Average large shell egg market prices decreased
approximately $.075 per dozen for the current year as compared to last year's
twenty-six week period. As discussed above, increased egg supply is the primary
cause of reduced egg market prices.
COST OF SALES
Total cost of sales for the second quarter ended November 29, 1997 was $64
million, an increase of $3.2 million, or 5.3%, over a cost of sales of $60.8
million for the comparable period last year. This increase is primarily the
result of an increase in dozens sold. For the current quarter compared to
last year, cost of feed per dozen eggs decreased and, due to lower shell egg
market prices, cost per dozen of outside eggs purchased decreased. Feed cost
per dozen for the second quarter ended November 29, 1997, was $.266 as
compared to the cost per dozen of $.278 for the second quarter last year, a
decrease of 4.3%. Anticipation of and an actual good 1997 harvest of corn
and soybeans kept the cost of feed ingredients in the moderate range. The
decrease in egg selling prices resulted in a decrease of gross profit from 22.7%
of net sales in the quarter ended November 30, 1996 to 19.4% for the current
quarter ended November 29, 1997.
For the twenty-six week period ended November 29, 1997, total cost of sales
was $122.2 million, an increase of $5.7 million, or 4.9%, over a cost of sales
of $116.5 million for last year. As in the current quarter above, the increase
is primarily the result of an increase in dozens sold, even though the cost of
feed per dozen eggs decreased, and cost per dozen of outside eggs purchased
decreased. Feed cost per dozen for the current year was $.258, a decrease of
$.042 per dozen, or 14%, as compared to last year's cost per dozen of $.30.
Last year's higher cost of feed ingredients was the result of poor crop
conditions, as compared to a better crop and lower cost of feed ingredients this
year. Although egg production and purchase costs improved and dozens sold
increased for the current twenty-six week period, the decrease in egg selling
prices resulted in a decrease in gross profit. For the current year, gross
profit was 14.6% of net sales, as compared to 19.2% for last year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expense for the second quarter ended
November 29, 1997 was $8.1 million, an increase of $1.0 million, or 14.4%, as
compared to the $7.1 million for the comparable period last year. Approximately
one half of the current increase was for development costs associated with the
specialty egg business. Recently, the Company effected certain business
acquisitions and expanded markets for specialty eggs in New York City and
existing markets. The balance of the increase was made up of higher expenses
for more customer delivery volume and higher costs in legal and professional
fees. As a percent of net sales, selling, general and administrative expenses
have increased from 9% for the second quarter last year to 10.2% for the
current quarter.
For the twenty-six weeks ended November 29, 1997, selling, general and
administrative expense was $15.6 million, an increase of $1.4 million, or
9.4%, as compared to $14.2 million for the same period last year. Approximately
one half of the increased cost was due to higher customer delivery expenses
associated with a higher sales volume. The balance of the increase was in
specialty egg market development costs and in legal and professional fees. As a
percent of net sales, selling, general and administrative expense was 10.9%
for the current twenty-six weeks, as compared to 9.9% for last year.
OPERATING INCOME
As the result of the above, operating income was $7.3 million for the second
quarter ended November 29, 1997, as compared to $10.7 million for last year's
comparable quarter. As a percent of net sales, the fiscal 1998 quarter had a
9.2% operating profit, compared to 13.7% for last year.
For the twenty-six weeks ended November 29, 1997, operating income was $5.3
million, compared to $13.5 million for last year. As a percent of net sales,
operating income was 3.7% for the current year, as compared to 9.3% for last
year.
OTHER EXPENSE
Other expense for the second quarter ended November 29, 1997 was $626,000, a
reduction of $356,000, or 36.3%, as compared to the second quarter last year.
The current year reduction is the result of increased interest income from cash
investments and an increase in interest capitalized on construction projects.
As a percent of net sales, other expense decreased from 1.3% last year to .8%
for the current quarter.
For the twenty-six weeks ended November 29, 1997, other expense was $1.4
million, a decrease of approximately $500,000, or 23.9%, as compared to $1.9
million for last year's comparable period. As explained for the quarter above,
higher interest income and capitalized interest were the reasons for the
decrease. As a percent of net sales, other expense for this year was 1%, as
compared to 1.3% last year.
INCOME TAXES
As a result of the above, the Company's pre-tax income was $6.7 million for
the quarter ended November 29, 1997, compared to pre-tax income of $9.8
million for last year's quarter. For the current quarter, an income tax expense
of $2.4 million was recorded with an effective tax rate of 36.5%, as compared to
an income tax expense of $3.8 million with and effective rate of 39.2% for
last year's comparable quarter.
The Company's pre-tax income for the twenty-six week period ended November
29, 1997 was $3.9 million, compared to $11.6 million for last year. For the
current twenty-six week period, an income tax expense of $1.4 million was
recorded with an effective rate of 35.4%, as compared to an income tax expense
of $4.5 million with an effective rate of 39.2% for last year's comparable
period.
The Company's lower effective rate for the current quarter and year-to-date,
as compared to last year's effective rate, is due primarily to an increase in
tax exempt interest income as a percent of pre tax income during the current
year as compared to the prior year.
NET INCOME
Net income for the second quarter ended November 29, 1997 was $4.2 million,
or $.32 per share, compared to net income of $5.9 million, or $.52 per share
for last year's second quarter.
For the twenty-six week period ended November 29, 1997, net income was $2.5
million, or $.19 per share, compared to last year's net income of $7.0 million,
or $.61 per share.
CAPITAL RESOURCES AND LIQUIDITY
The Company's working capital at November 29, 1997 was $44.0 million,
compared to $45.4 million at May 31, 1997. The Company's need for working
capital generally is highest in the first and last fiscal quarters ending in
August and May, respectively, when egg prices are normally at seasonal lows.
Seasonal borrowing needs frequently are higher during these periods than
during other fiscal periods. The Company had an unused $35 million line of
credit with three banks at November 29, 1997. The Company's long-term debt
at that date, including current maturities and capitalized lease obligations,
totaled $65.8 million.
In December 1997, the Company and three of its lenders agreed to revised
terms, amounts and interest rates for long-term debt extended to the Company.
The revised arrangements provide for a total of $40 million of borrowings under
notes, with maturities ranging from 10 to 15 years at a weighted average fixed
interest rate of 7.10%. Approximately $20 million of existing debt was
refinanced and the Company was provided with an additional $20 million of
working capital.
Substantially all trade receivables collateralize the Company's line of
credit, and property, plant and equipment collateralize the Company's long-
term debt. The Company is required by certain provisions of these loan
agreements to (1) maintain minimum levels of working capital and net worth;
(2) limit dividends, capital expenditures, lease obligations and additional
long-term borrowings; and (3) maintain various current and cash-flow coverage
ratios, among other restrictions. The Company was in compliance with these
provisions at November 29, 1997.
For the twenty-six weeks ended November 29, 1997, $6.2 million in net cash
was provided by operating activities. This compares to net cash from operating
activities of $12.9 million for the comparable period last year. For the
current twenty-six week period, additional long-term borrowings of $9.0 million
were received from available borrowings of industrial revenue bonds for the
construction of a shell egg production and processing facility in Chase, Kansas.
During this current period, $4.3 million was expended for construction of the
Chase facility and $4.0 million was used for purchases of property, plant and
equipment. In November, $2.0 million was used to purchase the inventories and
rolling stock of a shell egg production, processing and distribution business.
In addition, principal payments of $7.6 million were made on long-term debt
and capital leases. The net result of these activities was a decrease in cash
and equivalents of $2.8 million.
For the comparable twenty-six week period last year, $12.9 million cash was
provided by operating activities, and long-term borrowings, through the
industrial revenue bonds, were received for $1.0 million. For the period last
year, $3.1 million was used for construction, $2.4 million was used for
purchases of property, plant and equipment, and $3.6 million was used for
repayment of long-term debt and capital leases. The net result was an increase
in cash and equivalents of $5.1 million.
At November 29, 1997, the Company had expended, since the start of the
project, approximately $15.4 million in the construction of the Chase facility.
The Company is financing approximately $13.5 million of the estimated $16.0
million to complete the project through industrial revenue bonds maturing in
2011. Borrowings under the industrial revenue bond agreement totaled $10.0
million at November 29, 1997. Late in the current quarter, the Company began
site preparation for construction of new shell egg production and processing
facilities in Waelder, Texas. The estimated cost of construction is
approximately $13.9 million with financing plans of approximately $10.4 million
in borrowings from an insurance company.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
The following Part I exhibit is filed herewith:
Exhibit
Number Exhibit
------- -------
10.10 Note Purchase Agreement, dated December 18, 1997, among
Cal-Maine Foods, Inc., Cal-Maine Farms, Inc., Cal-Maine
Egg Products, Inc., Cal-Maine Partnership, LTD, CMF of
Kansas-LLC and First South Production Credit Association
and Metropolitan Life Insurance Company (without exhibits,
except names of guarantors and forms of notes)
27 Financial data schedule
b. Reports on Form 8-K
No Current Report on Form 8-K was filed by the Company covering an event during
the second quarter of fiscal 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
<TABLE>
<CAPTION>
CAL-MAINE FOODS, INC.
(Registrant)
<S> <C>
Date: January 7, 1997 /s/Bobby J. Raines
---------------------
Bobby J. Raines
Vice President/Treasurer
(Principal Financial Officer)
Date: January 7, 1997 /s/Charles F. Collins
---------------------
Charles F. Collins
Vice President/Controller
(Principal Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-30-1998
<PERIOD-END> NOV-29-1997
<CASH> 20,939
<SECURITIES> 0
<RECEIVABLES> 24,303
<ALLOWANCES> 0
<INVENTORY> 44,159
<CURRENT-ASSETS> 90,013
<PP&E> 170,794
<DEPRECIATION> 71,151
<TOTAL-ASSETS> 195,499
<CURRENT-LIABILITIES> 46,029
<BONDS> 0
0
0
<COMMON> 188
<OTHER-SE> 77,149
<TOTAL-LIABILITY-AND-EQUITY> 195,499
<SALES> 143,158
<TOTAL-REVENUES> 143,158
<CGS> 122,252
<TOTAL-COSTS> 122,252
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,700
<INCOME-PRETAX> 3,878
<INCOME-TAX> 1,371
<INCOME-CONTINUING> 2,507
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,507
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
Exhibit 10.10
NOTE PURCHASE AGREEMENT
CAL-MAINE FOODS, INC.
Series A Senior Secured Notes Due December 15, 2007
Series B Senior Secured Notes Due December 15, 2009
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS 1
1.1 Definitions 1
1.2 Other Definitions 10
1.3 Definitions in Other Purchase Documents 10
1.4 Miscellaneous 10
ARTICLE 2 ISSUANCE, SALE AND PURCHASE OF NOTES 11
2.1 General Description of Financing 11
2.2 Interest 11
2.3 Payments 12
2.4 Mandatory Principal Payments 12
2.5 Optional Prepayment 12
2.6 Application of Payments 12
2.7 Notes 13
2.8 Use of Proceeds 13
2.9 Guarantors 13
ARTICLE 3 CONDITIONS AND CLOSING 13
3.1 Conditions to Purchase and Closing 13
3.2 Closing 16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES 17
4.1 Corporate Existence 17
4.2 Subsidiaries 17
4.3 Corporate Authority 17
4.4 Consents, Approvals, Etc. 18
4.5 Binding Effect and Enforceability 18
4.6 Default of Debt 18
4.7 Financial Condition 18
4.8 Title and Liens 19
4.9 Employee Plans 19
4.10 Taxes 19
4.11 Compliance with Laws 19
4.12 Litigation 19
4.13 Corporate Names; Location of Collateral 20
4.14 Solvency 20
4.15 Environmental Protection 20
4.16 Certain Fees 20
4.17 Disclosure 21
4.18 Margin Stock 21
4.19 Investment Company Act: Public Utility Holding Company Act 21
4.20 Labor Controversies 21
4.21 Senior Debt 21
4.22 Accuracy of Information 21
4.23 Offering of Notes 22
4.24 Unrestricted Subsidiaries 22
4.25 Acknowledgment 22
ARTICLE 5 AFFIRMATIVE COVENANTS 22
5.1 Financial Information and Reporting 22
5.2 Corporate Existence 24
5.3 Taxes and Laws 24
5.4 Inspection 24
5.5 Purchaser Costs 24
5.6 Employee Plans 24
5.7 Maintenance 25
5.8 Use of Proceeds of Notes 25
5.9 Environmental Matters 25
5.10 Insurance 26
ARTICLE 6 NEGATIVE COVENANTS 26
6.1 Liens 26
6.2 Additional Funded Debt 26
6.3 Fiscal Year and Tax Status 27
6.4 Restricted Payments 27
6.5 Investments in Other Persons 27
6.6 Transfer of Assets 27
6.7 Mergers. Etc. 27
6.8 False Statements 28
6.9 Transactions with Affiliates 28
6.10 Sale and Leaseback Transactions 28
6.11 Borrowing by Guarantors 29
6.12 Inconsistent Agreements 29
6.13 Environmental Matters 29
6.14 Change in Business or Accounting 29
6.15 Financial Covenants 29
6.16 Charter and Bylaws 29
ARTICLE 7 EVENTS OF DEFAULT 30
7.1 Events of Default 30
ARTICLE 8 RIGHTS AND REMEDIES 31
ARTICLE 9 MISCELLANEOUS 32
9.1 Waiver 32
9.2 Applicable Law 32
9.3 Severability 32
9.4 Section Headings 33
9.5 Binding Effect and Amendments 33
9.6 Notices 33
9.7 Entire Agreement; Amendment and Restatement 33
9.8 CONSENT TO JURISDICTION AND WAIVER OF JURY TRIAL AND PERSONAL SERVICE 33
</TABLE>
Schedules
Schedule 1 -- Existing Liens
Schedule 4.2 -- Subsidiaries
Schedule 4.7 -- Indebtedness Not in Financial Statements
Schedule 4.12 -- Litigation
Schedule 4.13 -- Location of Collateral
Exhibits
Exhibit B -- Guarantors
Exhibit C -- Form of Series A Note
Exhibit D -- Form of Series B Note
Exhibit F -- Intercreditor Agreement
NOTE PURCHASE AGREEMENT
CAL-MAINE FOODS, INC.
Series A Senior Secured Notes Due December 15, 2007
Series B Senior Secured Notes Due December 15, 2009
NOTE PURCHASE AGREEMENT` ("Agreement") dated as of December 18, 1997, by
and among CAL-MAINE FOODS, INC., a Delaware corporation (the "Company"), and the
Companies listed on Exhibit "B" hereto, as guarantors (the "Guarantors") and
FIRST SOUTH PRODUCTION CREDIT ASSOCIATION ("FSPCA") and METROPOLITAN LIFE
INSURANCE COMPANY, ("MetLife") (FSPCA and MetLife are each referred to herein as
a "Purchaser" or collectively the "Purchasers").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. In addition to terms defined elsewhere in this Agreement, when
used herein, the following terms have the meanings as set forth below:
"Affiliate" as to any Person means any other Person that directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with such Person and includes, without limitation, each
shareholder and any Subsidiaries of such Person. For purposes of this
definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Agreement" means, collectively, this Note Purchase Agreement, together with any
and all exhibits, appendices, schedules, and amendments hereto and
modifications, renewals, extensions, restatements and substitutions thereof and
therefor.
"Albuquerque Plant and Feed Mill" means the Farm and Plant/Feed Mill located on
the Facility Site in Albuquerque, New Mexico described in Exhibit "A" together
with all Facility FF&E related thereto.
"Bethune Plant and Feed Mill" means the Farm and Plant/Feed Mill located on the
Facility Site in Bethune, South Carolina described in Exhibit "A" together with
all Facility FF&E related thereto.
"Business Day" means any day other than a Saturday, Sunday or other day on which
commercial banks in (a) New York, New York are authorized or required to close
under the laws of the State of New York or the United States; and (b) Jackson,
Mississippi are authorized or required to close under the laws of the State of
Mississippi or the United States.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. 9601 et seq., as amended by the Superfund
Amendments and Reauthorization Act of 1986.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all of the Receivables, Inventory, Farm Products, related
contracts, margin accounts and the other personal property of the Company and
each of the Guarantors as described in the Security Agreement and the 6 parcels
of real property as more particularly described in Exhibit "A" together with
any and all improvements and furniture, fixtures, equipment or any other
personal property located thereon whether now existing or hereafter acquired
including the Facilities and Facilities FF&E all as more particularly described
in the Collateral Documents to secure the Company's Obligations.
"Collateral Agent" means Rabobank acting in the capacity of collateral agent
with respect to the Collateral in accordance with the Intercreditor Agreement.
"Collateral Documents" means, collectively, this Agreement, the Notes, the
Security Agreement, the Consolidated, Amended and Restated Guaranty, the deeds
of trusts, mortgages, UCC-I financing statements, title insurance documents,
Intercreditor Agreement or any other agreements, instruments, financing
statements or other documents that evidence or set forth the lien or the
interests of the Purchasers in the Collateral.
"Contingent Liabilities" means any agreement, undertaking or arrangement by
which any Person (i) guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the debt,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or (ii) guarantees the payment of
dividends or other distributions upon the shares of any other Person, or
(iii) undertakes or agrees (contingently or otherwise) (a) to purchase,
repurchase, or otherwise acquire any Debt, obligation or liability or any
security therefor, or (b) to provide funds for the payment or discharge
thereof (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or (c) to make payment other than for values
received, or (d) to maintain solvency, assets, level of income, or other
financial condition. The amount of any Person's obligation under any
Contingent Liability shall (subject to any limitation set forth therein) be
deemed to be the outstanding principal amount (or maximum permitted
principal amount, if larger) of the debt, obligation or other liability
guaranteed or supported thereby.
"Consolidated Tangible Net Worth" means, as of any date of determination, the
sum of the capital stock (including nonredeemable preferred stock but
subtracting treasury stock) and additional paid-in capital plus retained
earnings (or minus accumulated deficit) of the Company and its Subsidiaries,
on a consolidated basis determined in conformity with GAAP, minus intangible
assets such as organization costs and franchise costs, intangible assets
recorded in accordance with Financial Accounting Standards No. E7, deferred
debits not relating to future tax benefits and all good will, trade names,
trademarks, patents and other like intangibles.
"Debt" of any Person means: (i) all obligations of such Person for borrowed
money and all obligations evidenced by bonds, debentures, notes, acceptances
or other similar instruments; (ii) all obligations relative to the face amount
of all letters of credit, if drawn, and banker's acceptances issued for the
account of such Person; (iii) all obligations as lessee under leases
which have beeer than accounts payable arising in the ordinary course of
business payable on terms customary in the trade), (v) indebtedness secured
by a Lien on property owned or being purchased by such Person whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse; (vi) all Contingent Liabilities of such Person in respect of any
Debt of any Person, and (vii) any hedging obligations, if and to the extent such
obligations must appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, consistently applied.
"Default" means any event which, with the giving of notice or the passage of
time or both, would constitute, become or mature into an Event of Default.
"Default Rate" means a rate of interest which is two percent (2%) above the
interest rate payable on such Note prior to its due date.
"EBIT" means, with respect to any Person, the average Net Income before interest
and taxes (all as determined in accordance with GAAP, consistently applied) for
the most recent twelve fiscal quarter periods from the date of determination.
"Edwards Laying Complex I" means the Laying Complex located on the Facility Site
near Edwards, Mississippi described in Exhibit "A" together with all Facility
FF&E related thereto.
"Employee Plan" means any pension, retirement, disability, medical, dental or
other health plan, life insurance or other death benefit plan, profit sharing,
deferred compensation, stock option, bonus or other incentive plan, vacation
benefit plan, severance plan, or other employee benefit plan or arrangement,
including, without limitation, those pension, profit-sharing and retirement
plans of the Company or any its Subsidiaries described from time to time in
the Financial Statements and any pension plan, welfare plan, Defined Benefit
Pension Plans (as defined in ERISA) or any multi-employer plan, maintained or
administered by the Company or any Subsidiary or Affiliate of the Company, to
which the Company or any Subsidiary or Affiliate of the Company is a party or
may have any liability or by which the Company or any Subsidiary or Affiliate of
the Company is bound.
"Environmental Law" means, whenever enacted or promulgated, any applicable
federal, state, county or local law, statute, ordinance, rule, regulation,
license, permit, authorization, approval, covenant, criteria, guideline,
administrative or court order, judgment, decree, injunction, code or requirement
or any agreement with a Governmental Authority:
(x) relating to pollution (or the cleanup, removal, remediation or
encapsulation thereof, or any other response thereto), or the regulation or
protection of human health, safety or the environment, including air, water,
vapor, surface water, groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life, or
(y) concerning exposure to, or the use, containment, storage, recycling,
treatment, generation, discharge, emission, release or threatened release,
transportation, processing, handling, labeling, containment, production,
disposal or remediation of any hazardous substance, hazardous condition or
hazardous activity (all as defined in such Environmental Laws and hereafter
sometimes referred to as "Hazardous Substance," "Hazardous Condition" or
"Hazardous Activity").
in each case as amended and as now or hereafter in effect, and any common law or
equitable doctrine (including injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may impose liability
or obligations for injuries (whether personal or property) or damages due to
or threatened as a result of the presence of, exposure to, or ingestion of, any
Hazardous Substance, whether such common law or equitable doctrine is now or
hereafter recognized or developed. Applicable laws include, but are not limited
to, CERCLA; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901
et seq.; the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.; the
Clean Air Act, 42 U.S.C. 7401 et seq.; the National Environmental Policy
Act, 42 U.S.C. 4321; the Refuse Act, 33 U.S.C. 401 et seq; the
Hazardous Materials Transportation Act of 1975, 49 U.S.C. 1801-1812; the
Toxic Substances Control Act, 15 U.S.C. 2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. 136 et seq.; the
Safe Drinking Water Act, 42 U.S.C. 300f et seq., each as amended and as
now or hereafter in effect, and their state and local counterparts or
equivalents, including any regulations promulgated thereunder.
"Environmental Violation" means any activity, occurrence or condition that
violates or results in non-compliance with any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, together with all rules and regulations issued thereunder
or in connection therewith.
"Event of Default" means an event or occurrence described in Article 7 of this
Agreement.
"Facilities" means collectively the Albuquerque Plant and Feed Mill; the Bethune
Plant and Feed Mill; the Edwards Laying Complex I; the Greensburg Farm and
Plant; the Hammond Feed Mill; and the Lincoln Plant and Farm Hatchery.
"Facility" means any one of the Facilities.
"Facility FF&E" means with respect to any Facility any and all equipment,
systems, apparatus, furniture, fixtures, fittings and personal property of every
kind and nature whatsoever whether now owned or hereafter acquired and now or
subsequently attached to, contained in or used or usable in any way in
connection with any operation of such Facility, together with any substitutions
therefor, replacements thereof and additions thereto from time to time all as
more particularly described in the Collateral Documents.
"Facility Site" means, with respect to any Facility, the parcel of real property
on which such Facility is located as described on Exhibit "A" together with all
appurtenant rights attached thereto.
"Fair Market Value" means, with respect to any asset, the value of the
consideration obtainable in a sale of such asset in the open market at a
specified date assuming a sale by a willing seller to a willing purchaser
dealing at arm's length and arranged in an orderly manner over a reasonable
period of time having regard to the nature and characteristics of such asset.
"Farm Products" shall have the meaning as set forth for such term in the
Security Agreement.
"Financial Statements" means the consolidated balance sheets, statements of
income (or operations) and retained earnings and statements of cash flows or
changes in stockholders' equity of the Company and its Subsidiaries for each
Fiscal Year or each partial period thereof to be delivered to the Purchaser
pursuant to Section 5.1 of this Agreement.
"Fiscal Year" means the 12 consecutive calendar months ending on the Saturday
nearest May 31 of each calendar year; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "1997 Fiscal Year") refer to the
Fiscal Year ending on the Saturday nearest May 31 of such calendar year.
"Funded Debt" of any Person means all Debt that matures more than one year from
the date of determination or matures within one year from such date but is
renewable or extendable, at the option of the debtor, to a date more than one
year from such date or arises under a committed revolving credit or similar
agreement that obligates the lender to extend credit during a period of more
than one year from such date (in each case including amounts of Funded Debt
required to be paid or prepaid within one year from the date of determination)
"GAAP" means United States generally accepted accounting principles (including
principles of consolidation), in effect from time to time.
"Greensburg Farm and Plant" means the Farm and Plant located on the Facility
Site in Greensburg, Louisiana described in Exhibit "A" together with all
Facility FF&E related thereto.
"Guarantor" means each of those entities set forth in Exhibit "B" hereto and any
Person that becomes a Subsidiary of the Company or any Guarantor and is required
to deliver a Subsidiary Joinder Agreement in accordance with Section 2.9 hereof;
but shall exclude any Unrestricted Subsidiary.
"Hammond Feed Mill" means the Feed Mill located on the Facility Site in Hammond,
Louisiana described in Exhibit "A" together with all Facility FF&E related
thereto.
"Holder" means any holder from time to time of the Series A Note or the Series B
Note.
"Intercreditor Agreement" means that certain Second Amended and Restated
Intercreditor Agreement in the form of Exhibit "F" attached hereto by and among
inter alia Rabobank, as Collateral Agent, the Purchasers and the other lenders
named therein as parties thereto.
"Interest Coverage Ratio" means, for any period, the ratio of EBIT to Interest
Expense, both determined on a consolidated basis for the Company and its
Subsidiaries.
"Interest Expense" means, for any period, gross interest expense for such
period, determined in accordance with GAAP and in any event including, without
duplication, all commissions, discounts and other fees and charges owed with
respect to letters of credit, interest capitalized during construction, and
the portion of any capitalized lease obligations allocable to interest expense.
"Inventory" shall have the meaning as set forth for such term in the Security
Agreement.
"Issue Date" means the date on which the Notes are issued to and purchased by
the Purchasers.
"Laws" means all ordinances, statutes, rules, regulations, codes, orders,
injunctions, writs or decrees of any government, whether federal, state,
municipal or local, of any political subdivision or agency thereof, or of any
court, board or similar entity established by any of the foregoing.
"Lien" means any security interest, whether or not filed, recorded or perfected
under applicable law, mortgage, deed of trust, charge, pledge, hypothecation,
collateral assignment, deposit arrangement, encumbrance, lien (statutory or
other), conditional sale or other title retention agreement, any lease,
whether or not filed, recorded or perfected under applicable law, and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction.
"Lincoln Plant and Farm Hatchery" means the Plant and Farm/Hatchery located on
the Facility Site in Lincoln, Arkansas as described in Exhibit "A" together with
all Facility FF&E related thereto and the property located in Westville,
Oklahoma as described in Exhibit "A" together with all Facility FF&E related
thereto.
"Make-Whole Amount" means the present value of the remaining scheduled principal
and interest payments due on a Note, determined by discounting the remaining
scheduled principal and interest payments due on a Note at a discount rate equal
to the yield on United States Treasury obligations having a maturity equal to
the then remaining average life of a Note plus 50 basis points.
"Materially Adverse Effect" means, relative to any occurrence of whatever nature
(including any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), a materially adverse effect on:
(a) the assets of or the business, revenues, financial condition, operations
or prospects of the Company and its Subsidiaries taken as a whole; or (b) the
ability of the Company or any Guarantor to timely and fully perform any of its
payment or other material obligations under this Agreement, the Notes or the
Collateral Documents.
"Net Income" means, for any period, the net income (or loss) of such Person for
such period (taken as a single accounting period) determined in conformity with
GAAP, excluding (to the extent otherwise included therein) any gains or losses,
together with any related provision for taxes, realized upon any sale of
assets other than in the ordinary course of business.
"Notes" means the Series A Notes and the Series B Notes to be purchased by the
Purchasers hereunder, and "Note" means the note(s) in each series.
"Obligations" means each and every promise, agreement, covenant, debt and all
other liabilities, obligations and indebtedness of the Company or any Guarantor
to the Purchasers, their successors or assigns, whether primary, secondary,
contingent, direct, or indirect, howsoever incurred, created, arising or
evidenced, whether presently or hereafter existing, evidenced, arising or
becoming due, including such liabilities, obligations and indebtedness of the
Company or any Guarantor to the Purchasers hereunder or arising from or in
connection with the Notes or any exchanges, refinancings, substitutions,
extensions, renewals, replacements and modifications for or of the foregoing,
or the enforcement by the Purchasers of their rights and remedies under any
or all of the foregoing (including all reasonable costs, expenses and
reasonable attorneys' and paralegal' fees and expenses incurred by Purchasers).
"Pari Passu", as applied to the ranking of any Debt of a Person in relation to
other Debt of such Person, means that each such Debt either (i) is not
subordinate in right of payment to any Debt or (ii) is subordinate in right
of payment to the same Debt as is the other, and is so subordinate to the
same extent, and is not subordinate in right of payment to each other or to any
Debt as to which the other is not so subordinate.
"Pari Passu Debt" means Debt of the Company or any Guarantor that is secured by
any part of the Collateral, provided that such Pari Passu Debt is subject to the
Intercreditor Agreement with the Purchasers.
"Permitted Investments" means (i) investments in one or more Guarantors or any
Person which, concurrently with such investment, becomes a Subsidiary and
Guarantor; (ii) property to be used in the ordinary course of business;
(iii) current assets arising from the sale of goods and services in the
ordinary course of business; (iv) direct obligations of the United States of
America, or any agency thereof fully guaranteed by the United States of
America, provided that such obligations mature within one year from the date
acquired; (v) certificates of deposit maturing within one year from the date
acquired or money market accounts issued by a bank or trust company organized
under the laws of the United States or any of its states, and having capital
surplus and undivided profits aggregating at least $100,000,000 and maintaining
an equivalent Standard & Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("Moody's) rating of "A"/"A2" or higher; (vi) commercial paper
rated with the highest rating given by S&P or Moody's and maturing not more than
270 days from the date acquired; and (vii) certain issues of preferred stock
known as "Dutch-Auction Preferred, " " Capital-Market Preferred, " "Remarked
Preferred, " "Variable-Rate Preferred," or similar terms, rated with the
highest rating given by S&P or Moody's; and (vii) purchases of substantially all
the assets or properties of another person.
"Permitted Liens" means Liens: (i) for taxes or assessments not yet due and
payable; (ii) of mechanics, materialmen, warehousemen or carriers or other
similar liens incurred in the ordinary course of business, payment with
respect to which is not delinquent; (iii) which, in the aggregate, are not
substantial in amount and do not materially impair or adversely affect the
value or use of the assets and properties of the Company and its Subsidiaries
taken as a whole or the operation or condition of the business of the Company
and its Subsidiaries; (iv) which are being contested in good faith by
appropriate and lawful proceedings, so long as levy and execution thereon have
been and continue to be stayed, appropriate reserves have been made in
accordance with GAAP, and which do not materially impair or adversely affect the
value or use of the assets and properties of the Company and its Subsidiaries or
the Collateral, or the operation or condition of the business of the Company
and its Subsidiaries and provided that no Event of Default has occurred and
has not been cured; (v) all purchase money liens and security interests as they
exist on the date hereof as reflected in the UCC searches delivered as required
in Section 3.1(a) hereof and the approved existing Liens described on Schedule
1 hereto; (vi) purchase money liens or purchase money security interests upon or
in any property acquired after the Issue Date (other than for replacement of
existing equipment), provided that the principal amount of the Debt incurred
that is secured by such purchase money liens or purchase money security
interests shall be permitted hereunder and shall not, in any event, exceed 100%
of the cost of such property, and shall not extend to or cover any other
property; (vii) liens and security interests in connection with leases which
have been or should be, in accordance with GAAP, recorded as capitalized lease
liabilities (other than for replacement of existing equipment); provided,
however, that such liabilities are otherwise permitted hereunder and that no
lien or security interest referred to in this clause (vii) or the preceding
clause (vi) shall extend to or cover any property other than the related
property being acquired or leased (as the case may be) and the proceeds thereof;
(viii) liens on assets that do not constitute Collateral securing Debt permitted
to be incurred under this Agreement; (ix) liens securing the Obligations in
respect of this Agreement and the Notes and liens on Collateral securing Pari
Passu Debt permitted to be incurred under this Agreement; and (x) liens arising
out of pledges or deposits under workers' compensation laws, unemployment
insurance, old age benefits, social security benefits or retirement benefits or
similar legislation.
"Permitted Restricted Payments" means Restricted Payments and Restricted
Investments provided that the sum of all Restricted Payments and Restricted
Investments made since the Issue Date does not exceed 50% of the Net Income
(less 100% of cumulative losses) of the Company and its Subsidiaries on a
consolidated basis subsequent to May 31, 1997 plus Seven Million Five Hundred
Thousand Dollars ($7,500,000) plus the net proceed of sales of the Company's
common stock and conversion of the Company's convertible securities; provided,
however, that no Default will exist or be continuing after giving effect to a
payment described in the preceding clause, and the Company and its Subsidiaries
would be able to incur at least $1.00 of additional Funded Debt
"Person" means any individual, sole proprietorship, joint venture, partnership,
limited liability company, association, unincorporated organization, joint-stock
company or association, trust, corporation, entity, institution or government
body.
"Placement Agent" means Rabobank in its capacity as placement agent in
connection with the placement of the Notes.
"Priority Debt" means without duplication, (a) liens securing Debt of the
Company which is not subject to the Intercreditor Agreement, and (b) Debt of
Guarantors which is not subject to the Intercreditor Agreement.
"Purchase Documents" means, collectively, all of those documents set forth and
described in Section 3.1 hereof, as amended, modified, supplemented or restated
from time to time.
"Rabobank" means Co"peratieve Centrale Raiffeisen - Boerenleenbank B.A.,
"Rabobank Nederland," a cooperative banking organization organized and existing
under the laws of the Netherlands, acting through its New York branch.
"Receivables" shall have the meaning as set forth for such terms in the Security
Agreement.
"Required Holders" means with respect to any series of Notes, the holder or
holders of more than 60% of the aggregate principal amount of such series.
"Restricted Investments" with respect to any Person means any investments which
are not Permitted Investments.
"Restricted Payments" means (i) any dividend payment or other distribution of
assets, properties, cash, rights, obligations or securities on account of any
shares of any class of capital stock of the Company, other than shares of common
stock of the Company or (ii) any purchase, redemption or other acquisition for
value of any shares of any class of capital stock of the Company or any
warrants, rights or options to acquire any such shares, now or hereafter
outstanding.
"Restricted Subsidiary" means, at any time, any Subsidiary of the Company that
is not then an Unrestricted Subsidiary.
"Rolling Period" means, in respect of any fiscal quarter, such fiscal quarter
and the three preceding fiscal quarters.
"Security Agreement" means the Consolidated, Amended and Restated Security
Agreement in favor of the Collateral Agent to be executed as a Collateral
Document in connection herewith.
"Senior Debt" means with respect to any Person all Debt for borrowed money which
is secured by a lien or other interest on any property or assets of such Person.
"Subsidiary" with respect to any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"Short Term Debt" means all Debt which is not Funded Debt.
"Total Capitalization" means, as of any date of determination, the sum of
(i) Consolidated Tangible Net Worth plus (ii) Total Funded Debt.
"Total Consolidated Assets" means the sum of the assets of the Company and its
Subsidiaries, on a consolidated basis determined in accordance with GAAP,
consistently applied.
"Total Funded Debt" means, as of any date of determination, the sum of all
Funded Debt for the Company and its Subsidiaries on a consolidated basis.
"UCC" means the version of the Uniform Commercial Code as enacted in New York,
as amended from time to time.
"Unrestricted Subsidiary" means any Subsidiary of the Company which the
Purchasers have agreed is an Unrestricted Subsidiary and not required to execute
a Guaranty as required by Section 9.9 hereof. The following existing
Subsidiaries of the Company are designated as Unrestricted Subsidiaries:
Sunbelt Freight, Inc., a Mississippi corporation, and BCM Partnership, a
partnership.
1.2 Other Definitions. Any accounting terms used but not otherwise defined
herein shall have their customary meanings as defined in, pursuant to, or in
accordance with GAAP. All other terms used but not otherwise defined herein
shall have the meanings provided by the UCC to the extent said terms are used
or defined therein.
1.3 Definitions in Other Purchase Documents. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the other Purchase Documents.
1.4 Miscellaneous. In this Agreement and each other Purchase Document, unless a
clear contrary intention appears: (i) the singular number includes the plural
number, and vice versa; (ii) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and assigns
are permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually; (iii)
reference to any gender includes each other gender; (iv) reference to any
agreement (including this Agreement and the Schedules. Appendices and Exhibits
hereto), document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof and reference to any
promissory note includes any promissory note which is an extension or renewal
thereof or a substitute or replacement therefor; (v) unless the context
indicates otherwise, reference to any Article, Section, Appendix, Schedule or
Exhibit means such Article or Section hereof or Schedule, Appendix or Exhibit
hereto; (vi) "hereunder", "hereof', "hereto" and words of similar import shall
be deemed references to this Agreement as a whole and not to any particular
Article, Section or other provision hereof; (vii) "including" (and with
correlative meaning "include") means including without limiting the generality
of any description preceding such term; and (viii) relative to the
determination of any period of time, "from" means "from and including" and
"to" and "through" means "to but excluding".
ARTICLE 2
ISSUANCE, SALE AND PURCHASE OF NOTES
2.1 General Description of Financing.
(a) Series A Notes. The Company will authorize the issue of its 6.87% Senior
Secured Note in the aggregate principal amount of Eleven Million Five Hundred
Thousand Dollars ($11,500,000.00), due ten (10) years from the Issue Date and
payable as set forth in the Series A Senior Secured Note (the "Series A Note")
(herein, together with any note or notes which may be issued hereunder in
substitution, exchange, modification, renewal, extension, and/or restatement
thereof or therefore, the "Series A Note" or "Series A Notes"), substantially in
the form of Exhibit "C" attached hereto with appropriate insertions in the
blanks thereof
The Company will issue and sell to FSPCA, and, subject to the terms and
conditions hereof and in reliance on the representations and warranties and
other covenants and agreements of the Company contained herein, FSPCA will
purchase from the Company, at the purchase price of 100% of the $11,500,000.00
principal amount thereof, the Series A Note at the closing referred to herein.
The purchase price shall be paid by the FSPCA at the Closing in immediately
available funds.
(b) The Company will authorize the issue of its 7.18% Senior Secured Note in the
aggregate principal amount of Fifteen Million Dollars ($15,000,000.00), due
twelve (12) years from the Issue Date and payable as set forth in the Series B
Senior Secured Note (the "Series B Note") (herein, together with any note or
notes which may be issued hereunder in substitution, exchange, modification,
renewal, extension, and/or restatement thereof or therefore, the "Series B
Note" or "Series B Notes"), substantially in the form of Exhibit "D" attached
hereto with appropriate insertions in the blanks thereof.
The Company will issue and sell to MetLife, and, subject to the terms and
conditions hereof and in reliance on the representations and warranties and
other covenants and agreements of the Company contained herein, MetLife will
purchase from the Company, at the purchase price of 100% of the $15,000,000.00
principal amount thereof, the Series B Note at the closing referred to herein.
The purchase price shall be paid by MetLife at the Closing in immediately
available funds.
2.2 Interest.
(a) Series A Note. The Series A Note shall bear interest at the rate of 6.87%
per annum.
(b) Series B Note. The Series B Note shall bear interest at the rate of 7.18%
per annum.
(c) Interest will be payable under each note semi-annually in arrears on the
fifteen (15th) day of each June and December commencing June 15, 1998. Interest
under each Note shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period
for which such interest is payable over a year comprised of 360 days of twelve
30-day months.
2.3 Payments. All sums payable to a Purchaser hereunder or under a Note shall
be paid directly to the Holder of such Note, at its address set forth herein, or
at such banking institution as such Holder may from time to time designate, in
immediately available funds.
2.4 Mandatory Principal Payments.
(a) Series A Note. Principal of the Series A Note shall be repaid in five equal
annual instalments of $1,916,666.00 payable on the 15th day of December of each
year commencing December 15, 2002, and by a final installment on December 15,
2007 in an amount equal to the unpaid principal balance.
(b) Series B Note. Principal of the Series B Note shall be repaid in six equal
annual instalments of $2,142,857.00 payable on the 15th day of December of each
year commencing December 15, 2003, and by a final installment on December 15,
2009 in an amount equal to the unpaid principal balance.
2.5 Optional Prepayment. The Company may at any time and from time to time,
upon giving the notice referred to below, prepay all or any part (in a minimum
amount of $200,000 and integral multiples of $100,000 thereafter) of the
principal amount of either Note, upon payment of such principal amount and
accrued interest thereon (if any) to the date of any such prepayment, plus a
premium in an amount equal to the greater of (a) zero, or (b) the Make-Whole
Amount less the par value of such Note. The Company shall give at least 30
days' written notice to the Holder of said Note of its intention to prepay
pursuant to this Section 2.5, specifying the date of such prepayment and the
amount thereof, and shall on such prepayment date pay the amounts referred to
herein. All optional prepayments pursuant to this Section 2.5 shall be
credited to principal payment in the inverse order of their maturity.
2.6 Application of Payments. All payments with respect to a Note shall be
applied first to premium (if any), then to any cost or expenses of Holder
related to or incurred in connection with the Notes, Collateral Documents, or
Purchase Documents, then to interest at the rate(s) herein or in such Note
specified, and then to principal as herein or therein specified. Whenever
any payment shall otherwise be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day. If payments on or
under either Note are not paid in full when due (including any applicable grace
period), then to the fullest extent permitted by law the Company shall pay
interest on such Note (after as well as before judgment) on such past due
obligations at the Default Rate.2.7 Notes.
(a) Exchange of Notes. At any time and from time to time upon the prior written
request of any holder of the Notes and upon surrender of the Notes for such
purpose to the Company, the Company at its expense will issue in exchange
therefor, or upon the transfer thereof, a new Note or Notes in such
denominations (of $250,000.00 and multiples thereof as nearly as possible) as
may be requested in an aggregate principal amount equal to the unpaid
principal amount of the Notes surrendered and substantially in the form of the
Notes with appropriate revisions. In addition to the exchange and transfers of
the Notes, the Holder thereof may assign or participate all or any portion of
its Note; provided, however, that in the event Holder shall desire to assign
or participate all or any portion of its Note to other than (i) an affiliate
of Holder; or (ii) another lending institution in the federal Farm Credit
System, then Holder shall give the Company thirty (30) days prior notice in
which it shall have the right to prepay that portion of the Note being assigned
or participated for the consideration which the third party assignee or
participant would pay.
(b) Proportionate Payments. If at any time there is more than one Note in a
series outstanding, all payments or prepayments of principal on the Note shall
be made on such Notes in such series then outstanding as nearly as may be in the
proportion of the unpaid principal amount of each such Note in such series to
the total unpaid principal amount of such Notes in such series then outstanding.
2.8 Use of Proceeds. the Notes shall amend and restate certain existing
indebtedness of the Company as set forth in the Intercreditor Agreement
purchased by the Purchasers and shall further evidence proceeds advanced to
the Company for general corporate purposes and for no other purposes and the
Company agrees to utilize the proceeds only for the purposes enumerated above.
2.9 Guarantors. Each Guarantor does hereby agree to be bound by the terms and
conditions of this Agreement and to execute that certain Consolidated, Amended
and Restated Guaranty in the form attached hereto as Exhibit "E" (the
"Guaranty"). The Company and each Guarantor hereby agree that any Person that
shall become a Subsidiary shall become a party to the Guaranty by delivering
a Subsidiary Joinder Agreement to the Guaranty in the form attached to the
Guaranty, unless the Purchasers shall otherwise approve such Subsidiary to be an
Unrestricted Subsidiary.
ARTICLE 3
CONDITIONS AND CLOSING
3.1 Conditions to Purchase and Closing. Notwithstanding any other provisions of
this Agreement, each Purchaser, at its sole option and in its sole discretion,
need not purchase the Note it is designated to purchase or make the loan
evidenced thereby (the "Loan" or collectively the "Loans"), unless the following
conditions precedent are fulfilled to the satisfaction of each Purchaser.
(a) Delivery of Documents as Conditions Precedent. The delivery of each of the
following documents (the "Purchase Documents") by or on behalf of the Company to
the Purchasers shall constitute separate and distinct conditions precedent to
the purchase of the Note and the making of the Loan.
1. Executed Agreement. A copy of this Agreement duly executed by the
Company, each Guarantor, and each Purchaser;
2. Executed Notes. The Series A Note and Series B Note duly issued and
executed by the Company;
3. Executed Guaranty. The Guaranty duly executed by each Guarantor;
4. Articles of Incorporation. Copies, certified of recent date by the Secretary
of State of the jurisdiction of incorporation, of the Company's and each
Guarantor's Articles of Incorporation, and each and every amendment thereto;
5. Good Standing Certificate. Certificate of the Secretary of State of each
state where the Company and each Guarantor conducts business, of recent date, as
to the good standing of the Company and each Guarantor in such states where each
conducts business;
6. Secretary's Certificate. Certificate of the Secretary of the Company and
each Guarantor as to (i) resolutions authorizing entry into, execution, delivery
and performance of the obligations of the Company and each Guarantor under this
Agreement, the Guaranty, the Notes, the Collateral Documents and Purchase
Documents; (ii) Articles of Incorporation; and (iii) such entity's bylaws;
7. Opinion of the Company's Counsel. The satisfactory opinion letter of
counsel for the Company acceptable to Purchasers and the Guarantor, and local
counsel acceptable to Purchasers in each state where each Facility or Collateral
is located, dated as of the date of the Notes and addressed to the Purchasers in
form satisfactory to counsel to the Purchasers;
8. Collateral Documents. The execution, delivery and filing, as required, of
all Collateral Documents in form satisfactory to counsel to the Purchasers;
9. Intercreditor Agreement. Execution and delivery of the Intercreditor
Agreement;
10. Title Insurance. A mortgagee title insurance policy (ALTA Loan Policy -
1992 Revision) in the aggregate amount of $47,006,900 issued by a national title
insurance company acceptable to Purchasers and the Collateral Agent, insuring
the liens of the mortgages or deeds of trust in favor of the Purchasers or the
Collateral Agent, on behalf of the Purchasers, as a first lien subject only to
Permitted Liens, deleting standard exceptions for creditors rights, mechanics
liens and survey, and including endorsements for zoning (ALTA 3.1 or
equivalent), or 100XC, usury, revolving line of credit, variable rate, access,
contiguity, environmental lien, and separate tax parcel, first loss, and
providing gap coverage; provided, however, that a standard survey exception to
the extent applicable shall be acceptable on the Bethune Plant and Feed Mill
Facility Site. No title insurance shall be required on that portion of the
Lincoln Plant and Farm Hatchery located in Oklahoma. To the extent that the
title insurance is subject to reinsurance or co-insurance, the Company shall
provide copies of the re-insurance or co-insurance agreements along with the
title insurance policy, which agreement or agreements by their terms shall
provide direct access by Purchasers or the Collateral Agent on behalf of the
Purchasers. The Company shall also provide Uniform Commercial Code searches
covering all financing statement filings necessary to perfect the security
interest in all Collateral subject to the Uniform Commercial Code, listing no
filings prior to the filings in favor of the Purchaser or the Collateral Agent
on behalf of the Purchasers as secured party.
11. Appraisal. An appraisal of the Facilities (except for that portion of the
Lincoln Plant and Farm Hatchery located in Oklahoma) addressed to Purchasers in
form and amount satisfactory to Purchasers.
12. Survey. A complete, current survey of the Facilities (except for that
portion of the Lincoln Plant and Farm Hatchery located in Oklahoma) certified to
Purchasers prepared by a licensed professional surveyor approved by Purchasers
and prepared in accordance with the requirements of Purchasers; provided,
however, that the existing survey conducted in 1978 shall be acceptable for
the Bethune Plant and Feed Mill Facility Site.
13. Environmental Condition. Approval by Purchasers of the physical
environment of the Facilities (except for that portion of the Lincoln Plant and
Farm Hatchery located in Oklahoma), including but not limited to, compliance
with all requirements of governmental authorities concerning Environmental Laws
and other conditions, as evidenced by environmental studies or other analysis
of the Facilities as required by Purchasers.
14. Insurance Certificates. Certificates evidencing the insurance required in
Section 5.10 hereof.
15. Due Diligence. Purchasers' satisfactory completion of any investigation it
deems necessary and desirable to complete its due diligence investigation.
16. Officer's Certificates. Such other Officer's Certificates of the Company
and each Guarantor in form reasonably satisfactory to Purchasers; and
17. Termination and Release or Assignment to Purchasers of Existing
Indebtedness with Respect to the Facilities. The restructure, assignments and
restatements of existing Collateral Documents and as otherwise required in the
documents referenced therein, shall have been completed in accordance with the
Intercreditor Agreement to the satisfaction of the Purchasers and their counsel.
18. Documents. In form and substance satisfactory to the Purchasers, each
and every document, note, title commitment and policy for each Facility and
Facility Site, certificate, notice, affidavit, exhibit, schedule, resolution,
and legal opinion which the Purchaser may reasonably request from or to be
delivered by the Company hereunder.
(b) Events as Conditions Precedent. The following conditions shall have
occurred or exist as of the date of the purchase of the Note and making of the
Loan and shall constitute conditions precedent thereto:
1. Material Adverse Change. No Materially Adverse Effect shall have
occurred subsequent to May 31, 1997, as reasonably determined by the
Purchasers.
2. Representations and Warranties. The representations and warranties of the
Company and Guarantors set forth in Article 4 hereof shall be true and correct
in all material respects as of the date on which each Note is purchased and the
Loan is made pursuant thereto.
3. Closing Fees, Expenses, Etc. The Company has paid all fees, costs and
expenses which have been invoiced and/or are payable upon the Closing.
4. Purchase Permitted. Purchase of the Notes shall (i) be permitted by the
laws and regulations of each jurisdiction to which each Purchaser is subject,
without recourse to provisions permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(ii) not violate any applicable law or regulation (including, without
limitation, Regulation G, T or X of the Board of Governors of the Federal
Reserve System), and (iii) not subject any Purchaser to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date of this Agreement. Purchasers shall
have received a certificate from the Company's officers certifying as to such
matters of fact as Purchasers may reasonably specify to enable a determination
to be made regarding whether such purchase is so permitted.
3.2 Closing. Assuming satisfaction of the conditions precedent set forth above,
the closing of the same and purchase of the Note hereunder (the "Closing") shall
take place at the offices of Watkins Ludlam & Stennis, P.A. at 633 North State
Street, Jackson, Mississippi, at 10:00 a.m. central time, on December 15, 1997
(the "Closing Date") or at such other time and place as the Company and the
Purchasers may agree. At the Closing the Company will deliver to the Purchaser
the Note to be purchased by such Purchaser as provided hereunder (in the form of
a single Note payable to such Purchaser or its order) against payment of the
purchase price thereof in immediately available funds. If at the Closing the
Company shall fail to tender as herein provided each Note to be purchased by
each Purchaser, each Purchaser shall be relieved of all remaining obligations
under this Agreement, but the Company and Guarantors shall be responsible for
all costs and expenses of the Purchasers, including all fees and expenses of
counsel to the Purchasers, whether or not the issuance is consummated.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
I. Of the Company and Guarantors.
As further inducement to the Purchasers to enter into this Agreement, and make
the Loans, the Company and each Guarantor represents and warrants, as of the
date hereof and as of the Closing Date, the following, which shall survive the
Closing and until all of the Obligations and indebtedness of the Company and
Guarantors have been paid, satisfied or discharged in full, regardless of any
investigation by the Purchasers of the Company's financial condition or assets:
4.1 Corporate Existence. The Company and each Guarantor (other than Cal-Maine
Partnership, Ltd., a limited partnership and CMF of Kansas - LLC, a limited
liability company) is a corporation duly organized, validly existing and in good
standing under the Laws of their respective jurisdictions of incorporation and
Cal-Maine Partnership, Ltd. is a limited partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and CMF of Kansas - LLC, is a limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and each is duly licensed or qualified to do and transact business and in good
standing as a foreign corporation or limited partnership, or limited liability
company, as applicable, in each and every jurisdiction in which the conduct of
its business or the location of its property requires such qualification or
licensing.
4.2 Subsidiaries. The Company and each Guarantor do not have any Subsidiaries
other than as identified in Schedule 4.2 hereto. The capital stock of each
Subsidiary is duly authorized, validly issued and fully paid and nonassessable.
Each Subsidiary is duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation or organization and
is duly licensed or qualified as a foreign corporation or limited partnership,
as applicable, authorized to transact business and is in good standing in each
jurisdiction in which the character of the properties owned by it or the
nature of the business transacted by it makes such licensing or qualification
necessary. Each Subsidiary has full corporate power and authority to own its
assets and properties, and to operate its business as presently owned and
conducted. Schedule 4.2 correctly sets forth the ownership interest of the
Company and each Subsidiary in each of their respective Subsidiaries as of the
Closing Date.
4.3 Corporate Authority. The execution, issuance, delivery, and performance of
this Agreement, the Notes, the Collateral Documents and all other Purchase
Documents and the incurrence and performance of the Obligations and indebtedness
of the Company and each Guarantor hereunder (i) have been duly and properly
authorized by all necessary corporate, director, shareholder and/or any other
action of the Company and each Guarantor and (ii) have not resulted in and will
not result in:
(a) the creation or imposition of any lien, security interest, mortgage, deed of
trust, charge or any encumbrance of any nature whatsoever upon any of the
Company's or any Guarantor's property or assets, or
(b) the violation of, contravention of, the occurrence of a default, event of
default or event, which with the passage of time or giving of notice or both,
would constitute, mature into or become a default or event of default under,
any term or provision of the Company's or any Guarantor's organizational
documents or bylaws, any certificates of authority to do or transact business,
any order of any court, or any contract, agreement, mortgage, deed of trust,
indenture, instrument, judgment or Laws to which the Company or any Guarantor is
a party or signatory or by which the Company or any Guarantor or any of its
property is bound.
4.4 Consents, Approvals, Etc. No consent, approval or authorization of, or
filing, registration or qualification with, any Person, governmental,
regulatory, or otherwise, is required to be obtained or effected by the Company
or any Guarantor in connection with the execution, issuance, delivery and
performance of this Agreement, the Collateral Documents, the Guaranty, the
Notes or any other Purchase Documents or the incurrence or performance of the
Obligations of the Company and each Guarantor or, if so required, has been duly
obtained or effected before the date hereof.
4.5 Binding Effect and Enforceability. Upon delivery hereof and thereof, this
Agreement, the Notes, the Guaranty, the Collateral Documents or any other
Purchase Documents will be the legal, valid and binding obligations of the
Company and each Guarantor who are parties thereto enforceable in accordance
with their terms and provisions (except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally) and, on the date of said delivery, the Company and Guarantors
will not be in violation or contravention of, and no Default or Event of Default
will exist under any of the foregoing.
4.6 Default of Debt. The Company is not in default and no event of default or
event, which with the passage of time or giving of notice or both, would
constitute, mature into or become a default or event of default, has occurred
and is continuing with respect to any Debt of any kind or nature of the
Company or any Guarantor, other than those for which a non-monetary waiver has
been obtained and no such default or event of default with respect to payments
of, or on account of, any such Debt has occurred during the five year period
preceding the date of this Agreement.
4.7 Financial Condition. The consolidated audited Financial Statements of the
Company and its Subsidiaries for the Fiscal Years ended May 31, 1997, June 1,
1996 and June 3, 1995 and the consolidated unaudited Financial Statements for
the Company and its subsidiaries fiscal quarter ending August 30, 1997, each
heretofore delivered to each Purchaser have been prepared in accordance with
GAAP, consistently applied, and fairly present the financial condition of the
Company as at the dates thereof and results of operations for the periods
covered thereby. Since May 31, 1997, there have been no Materially Adverse
Effect, and no dividends on or redemptions of the Company's capital stock have
been made. Except as disclosed on the unaudited Financial Statements delivered
to the Purchasers which are referred to in the first sentence of this
paragraph, and/or on Schedule 4.7 attached hereto: (i) the Company has no
indebtedness, except as permitted hereunder, or liabilities, contingent or
otherwise.
4.8 Title and Liens. The Company and each Guarantor have good and marketable
title to all of their respective property and assets owned by the Company and
each Guarantor, including all property and assets listed on its most recent
Financial Statements and, except for Permitted Liens, its property and assets
are not subject to any Liens.
4.9 Employee Plans. (i) All of the Company's Employee Plans are in compliance
with the provisions of ERISA and the Code and the regulations and published
interpretations thereunder meet the minimum funding standards of Section 302 of
ERISA where applicable, (ii) no withdrawal liability has been incurred or is
expected to be incurred under any such Employee Plans, (iii) no Prohibited
Transaction or Reportable Event as defined in ERISA, has occurred with
respect to any such Employee Plans or is expected to occur, unless approved by
the appropriate governmental agencies, (iv) no proceedings have been instituted
to terminate or appoint a trustee to administer any such Employees Plans.
4.10 Taxes. The Company and each Subsidiary has filed all federal, state and
local tax returns and reports required by applicable Laws (or has filed for and
received extensions under applicable Laws), has paid all taxes, assessments,
penalties, interest and any other governmental charges which are or were due and
payable (except such taxes, if any, as are being contested in good faith by
appropriate proceedings and as to which adequate reserves have been provided),
has made adequate provision for the payment of all taxes, assessments,
penalties, interest and other governmental charges which are accruing but are
not yet due and payable, and has no knowledge of any deficiency or additional
assessment which has arisen in connection with any of the foregoing.
4.11 Compliance with Laws. Except to the extent that the failure to comply
would not have a Materially Adverse Effect, the Company and each Subsidiary has
complied with all applicable Laws with respect to: (1) any restrictions,
specifications or other requirements pertaining to products, including,
without limitation, the Farm Products, that the Company manufactures, leases,
sells or distributes or to the services it performs; (2) the conduct of its
business; and (3) the use, maintenance and operation of the real and personal
properties owned or leased by it in the conduct of its business, including,
without limitation, each of the Facilities, Facilities FF&E and Facility Sites.
4.12 Litigation. Except as set forth on Schedule 4.12 hereto, there is no
action, suit, proceeding or arbitration (whether or not purportedly on behalf of
the Company or its Subsidiaries) at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, pending or to the
knowledge of the Company or any Guarantor threatened against or affecting the
Company or any of its Subsidiaries or any of their properties which would result
in any Materially Adverse Effect, or would materially adversely affect the
ability of the Company to perform its Obligations, and there is not basis known
to the Company or any Guarantor for any such action, suit or proceeding.
4.13 Corporate Names; Location of Collateral. Neither the Company nor any
Guarantor has any assumed corporate names and is not doing business under any
corporate name other than the name under which incorporated or organized. The
chief executive office and the principal place of business for the Company and
each Guarantor is located in Jackson, Hinds County (First Judicial District),
Mississippi. All of the Collateral, including books and records pertaining to
the Receivables, Farm Products, all Inventory and Facility FF&E, of the Company
and each Guarantor is maintained only in the locations as set forth on Schedule
4.13 and the Company and Guarantors agree that they have no other locations at
which any Collateral is located. The Company and each Guarantor shall not
maintain any of the Collateral at any locations other than as set forth in
Schedule 4.13 without giving the Purchasers at least 30 days prior written
notice thereof. The name of the Company or any Guarantor shall not be changed
unless the Purchasers are given at least 30 days prior written notice thereof.
4.14 Solvency. The Company and its Subsidiaries on a consolidated basis (i) is
solvent and will not be rendered insolvent by the incurrence of the Obligations
and indebtedness hereunder, by the execution of this Agreement, the Notes,
Guaranty and Purchase Documents, (ii) is able to pay their debts as they come
due and does not intend to incur, or believe that it will incur, debts beyond
their ability to pay such debts as they mature or come due, (iii) has capital
sufficient to carry on their business and any business in which it intends or is
about to engage, and (iv) owns property and assets having a value in excess of
their liabilities and debts.
4.15 Environmental Protection. As of the Closing Date, the Company and each
Subsidiary has obtained all material permits, licenses and other authorizations
that are required with respect to the operation of their businesses under any
Environmental Law; the Company and each Subsidiary is in compliance with all
terms and conditions of the required permits, licenses and authorizations, and
is also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws, except to the extent that the failure to
comply therewith would not result in a Materially Adverse Effect. There is no
Environmental Violation by the Company or any Subsidiary and there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or
threatened against the Company or any of its Subsidiaries relating in any way to
the Environmental Laws which would result in a Materially Adverse Effect; and
there are no past or present (or, to the best of the Company and each of its
each Guarantor's knowledge, future) events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or
prevent compliance or continued compliance with the Environmental Laws, or which
may give rise to any common law or other legal liability or otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, notice of
violation, study or investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, chemical or industrial, toxic or
hazardous substance or waste.
4.16 Certain Fees. No broker's or finder's fee or commission will be payable by
or on behalf of the Company or any of its Subsidiaries with respect to this
Agreement or the transactions contemplated hereby except to the Placement Agent,
and such fees to the Placement Agent have been paid, and the Company or any of
its Subsidiaries hereby indemnify the Purchasers against and agrees that they
will hold the Purchasers harmless from any claim, demand or liability for
broker's or finder's fees, including the fees to the Placement Agent, alleged
to have been incurred by the Company or any of its Subsidiaries in connection
with this Agreement or the transactions contemplated hereby.
4.17 Disclosure. As of the Closing Date, there is no fact known to the Company
or any Guarantor which would have a Materially Adverse Effect which has not been
disclosed herein or in such other documents, certificates and statements
furnished to the Purchasers for use in connection with the transactions
contemplated hereby.
4.18 Margin Stock. None of the Loans will be used for the purpose of purchasing
or carrying any "margin stock" as defined in Regulations U, Regulation X or
Regulation G, or for the purpose of reducing or retiring any Debt which was
originally incurred to purchase or carry "margin stock" or for any other purpose
which might constitute this transaction a "purpose credit" within the meaning of
Regulation U, Regulation X or Regulation G.
4.19 Investment Company Act: Public Utility Holding Company Act. The Company
nor any Subsidiary is an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended, or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
4.20 Labor Controversies. There are no labor controversies pending or, to the
best knowledge of the Company and Guarantors, threatened against the Company or
any Subsidiary which, if adversely determined, would be reasonably likely to
have a Materially Adverse Effect.
4.21 Senior Debt. The Notes constitute Senior Debt and are Pari Passu with all
other Senior Debt of the Company and each Guarantor. The only other Senior Debt
of the Company and Guarantors is listed in Exhibit "G". The only Pari Passu Debt
of the Company or any Guarantor is the Debt incurred pursuant to the Revolving
Credit Agreement and the Dairy Facility Reimbursement Agreement, each as defined
in the Intercreditor Agreement.
4.22 Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the Company in writing to the
Purchaser for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all other such factual information
hereafter furnished by or on behalf of the Company to the Purchaser in writing
will be, true and accurate in every material respect on the date as of which
such information is dated or certified and such information is not, or shall
not be, as the case may be, incomplete by knowingly omitting to state any
material fact necessary to make such information not misleading. To the best
knowledge of the Company and Guarantors there is no fact which has a
Materially Adverse Effect on the business or prospects or condition (financial
or otherwise) of the Company or any Guarantor or its properties or assets which
has not been set forth herein or in written materials, certificates or
statements furnished to the Purchasers by or on behalf of the Company prior to
the date hereof.
4.23 Offering of Notes. Neither the Company nor any agent acting on its behalf
has directly or indirectly, offered the Notes or any similar security of the
Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with
respect thereto with, any Person other than institutional investors, and
neither the Company nor any agent acting on its behalf has taken or will take
any action which would subject the issuance or sale of the Notes to the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, or the registration requirements of any securities or blue sky law of
any applicable jurisdiction.
4.24 Unrestricted Subsidiaries. Sunbelt Freight, Inc. is an inactive
corporation and not currently conducting any business nor will any business be
conducted by Sunbelt Freight, Inc. in the future and Sunbelt Freight, Inc.
does not and will not own any material assets and the Company is in the
process of causing the dissolution of Sunbelt Freight, Inc. BCM Partnership
is a partnership whose operations are separate and distinct from those of the
Company and the Guarantors.
II. Representations of the Purchaser
4.25 Acknowledgment. Each Purchaser acknowledges that the Notes have not been
registered under the Securities Act of 1933 or any applicable state securities
laws and that such registration is not legally required. Each Purchaser
represent that it is acquiring its Note for its own account and, except as
provided below, with no present intention of distributing or reselling the
same or any part thereof, subject, nevertheless, to its right to dispose of the
Note or any part thereof if at some future time in its sole discretion it
deems it advisable to do so. Each Purchaser reserves the right to assign or
grant participations with respect to all or any part of its respective Note,
provided, however, FSPCA contemplates granting a 100% participation in the
Series A Note to AgFirst Farm Credit Bank at or contemporaneously with the
Closing and AgFirst Farm Credit Bank contemplates granting a subparticipation of
50% to AgriBank, FCB at or contemporaneously with the Closing.
Each Purchaser has knowledge and experience in financial and business matters
and is capable of evaluating the merits and risks of purchasing its respective
Note.
ARTICLE 5
AFFIRMATIVE COVENANTS
The Company and Guarantors hereby covenant and agree with the Purchasers that,
until the Notes have been satisfied and discharged in full, Company will comply
with the following covenants, unless the Required Holders (as defined in Section
1.1) shall give prior written consent to the contrary:
5.1 Financial Information and Reporting. The Company and each Guarantor will
maintain and will cause each of its Subsidiaries to maintain a system of
accounting established and administered in accordance with GAAP, in which all
dealings or transactions relating to their respective business and affairs
will be recorded, and the Company shall cause to be furnished to the Purchaser:
(a) As soon as available and in any event within sixty (60) days after the end
of each fiscal quarter, other than the fourth fiscal quarter, an unaudited
consolidated balance sheet of Company and its Subsidiaries as at such date and
statement of income and retained earnings for the period from the beginning of
the current Fiscal Year to the end of such quarter, all in reasonable detail
and presented in the same format as the annual audited Financial Statements to
be delivered below (but in any event with comparable information at the close of
and for the corresponding fiscal quarter or period, as the case may be, of the
prior Fiscal Year), certified by the Company's president or authorized financial
officer as to his best knowledge being accurate in all material respects and
having been prepared in accordance with GAAP as applied in the preparation of
the Company's annual Consolidated Financial Statements, subject to changes
resulting from year-end audit adjustments;
(b) As soon as available and in any event within ninety (90) days after the end
of the Fiscal Year, the Company's Annual 10-K Report as filed with the
Securities and Exchange Commission which shall contain the consolidated
statements of income and retained earnings and a statement of cash flows/
changes in financial position for the Fiscal Year then ended and a balance
sheet of the Company and its Subsidiaries as of the end of such Fiscal Year, in
each case with comparable information at the close of and for the prior Fiscal
Year, all in reasonable detail and audited by an independent certified public
accountants selected by the Company and acceptable to the Purchaser and
prepared in accordance with GAAP, together with the following from such
independent certified public accountants: (a) an opinion thereon, which opinion
shall not be subject to a "going concern" or similar qualification, to the
effect that such consolidated financial statements have been prepared in
accordance with GAAP and present fairly the financial condition of the Company
and its Subsidiaries reported on and that the examination of such accountants
in connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, includes such tests of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances; and (b) the written statement of such
accountants that in performing the audit such accountant has not obtained
knowledge of any Default, or disclosing all Defaults of which they have
obtained knowledge and acknowledging that the Purchaser is being provided with
and is relying on such financial statements in making its credit decisions with
respect to the Company;
(c) Together with the Financial Statements for each quarter or Fiscal Year, a
certificate of the Company executed by the president or chief financial officer
of the Company computing compliance with the financial covenants as set forth in
Article 6 hereof, stating to his best knowledge whether any Default or Event of
Default currently exists and is continuing and what action, if any, the Company
is to take or proposes to take with respect thereto;
(d) Promptly upon any filings or furnishings thereof any annual, periodic or
special report or registration statement filed by the Company with the
Securities and Exchange Commission or with any securities exchange on which any
securities of the Company may be listed, together with any press releases and
other statements generally made available to the public concerning material
developments in the business;
(e) Such other financial or other information concerning the Company, any
Guarantor or any Subsidiary, their respective business, condition or assets,
provided for hereunder or which a Purchaser may reasonably request from time to
time;
(f) Notice within ten (10) days of any actions, suits, arbitration or other
proceedings instituted, commenced or threatened against or affecting the Company
or any Subsidiary which are not covered by insurance and which, if adversely
determined, could have a Materially Adverse Effect; and
(g) Notice within ten (10) days of any Default or Event of Default under this
Agreement or any other Senior Debt.
5.2 Corporate Existence. Except as permitted by Section 6.7 below, the Company
and each Guarantor will maintain and preserve their respective corporate,
limited partnership or limited liability company existence, good standing,
certificates of authority, licenses, permits, franchises, patents, trademarks,
trade names, service marks, copyrights, leases and all other contracts and
rights necessary or desirable to continue its business on a profitable basis and
will generally continue the same lines of business as that being presently
conducted.
5.3 Taxes and Laws. The Company and each Subsidiary will pay when due, all
taxes, assessments, charges and levies imposed on the Company and each
Subsidiary or any of their respective property or assets or which the Company or
any Subsidiary is required to withhold and pay out and will comply with all
applicable present and future Laws unless the Company or Subsidiary is
contesting in good faith, by an appropriate proceeding, the validity, amount or
imposition of the above while maintaining reserves, deemed adequate by the
Purchasers in their reasonable discretion to cover the above, and such contest
does not have or cause a Materially Adverse Effect and levy and execution with
respect thereto have been and continue to be stayed.
5.4 Inspection. The Company and each Subsidiary, during normal business hours,
will allow any Purchaser, and any of its officers, employees or agents, to
visit, for inspection, audit, and/or review, any of their respective premises
and will make available and furnish to any Purchaser the books and records and
such financial information concerning the Company's and each Subsidiary's
property or assets, business, affairs, operations or financial condition as
reasonably requested by any Purchaser; provided any Purchaser agrees that any
such inspection shall be conducted so as not to unreasonably interfere with
the operations of the Company and its Subsidiaries.
5.5 Purchaser Costs. The Company shall pay on demand all reasonable out-of-
pocket fees, costs and expenses incurred or paid by the Purchaser in connection
with outside counsels' preparation, documentation, amendment, modification,
administration, collection or enforcement of this Agreement, the Notes, the
Guaranty, Purchase Documents and/or the Collateral Documents.
5.6 Employee Plans. The Company and its Subsidiaries shall (i) keep in full
force and effect any and all Employee Plans which are presently in existence or
may, from time to time, come into existence under ERISA and the Code, and not
withdraw from any such employee Plans, unless such withdrawal can be effected or
such Employee Plans can be terminated without material liability to the Company
and its Subsidiaries; (ii) make contributions to all of such Employee Plans in
a timely manner and in a sufficient amount to comply with the requirements of
ERISA, including the minimum funding standards of Section 302 of ERISA;
(iii) comply with all material requirements of ERISA and the Code which relate
to such Employee Plans; (iv) notify the Purchaser immediately upon receipt by
the Company or any Subsidiary of any notice concerning the imposition of any
withdrawal liability or of the institution of any proceeding or other action
which may result in the termination of any such Employee Plans or the
appointment of a trustee to administer such Employee Plans; and (v) promptly
advise each Purchaser of the occurrence of any Reportable Event or Prohibited
Transaction, as defined in ERISA, with respect to any such Employee Plans.
5.7 Maintenance. The Company and each Guarantor will keep their respective
property in good repair, working order and condition, and from time to time make
all necessary and proper repairs, renewals, replacements, extensions, additions,
betterments and improvements thereto, so that the business carried on by each
may be properly conducted at all times in accordance with prudent business
management.
5.8 Use of Proceeds of Notes. The Company shall use the proceeds of the sale of
the Notes as set forth in Section 2.8, hereof.
5.9 Environmental Matters.
(a) If the Company or any of its Subsidiaries receives notice of any of the
following:
1. the issuance of a complaint, notice or citation alleging a material
violation of any Environmental Law by the Company or any of its Subsidiaries;
2. the issuance of an administrative or judicial complaint or order against the
Company or any of its Subsidiaries requiring that action be taken to respond to
or clean up a release of Hazardous Substances (as those terms are defined in the
Environmental Laws) into the environment; or
3. a notice alleging that the Company may be liable or responsible for costs
associated with a response to or cleanup of a release of Hazardous Substances
(as those terms are defined in the Environmental Laws); and if either (x) such
notice claims more than $100,000 against the Company or any Subsidiary, or (y)
based upon information reasonably available at the time of receipt, the
Company expects that any such complaint, notice, citation or order is
reasonably likely to result in the payment of fines, compliance costs or cleanup
costs by the Company or any Subsidiary in excess of an aggregate of $100,000,
then the Company shall provide each Purchaser with a copy of such notice
within 10 days of receipt thereof by the Company or any Subsidiary. In addition,
if at any time subsequent to any such notice, any information subsequently
becomes available to the Company or any Subsidiary which leads the Company or
any Subsidiary to expect that any such complaint, notice, or citation is
reasonably likely to result in the payment of fines, compliance costs or clean-
up costs by the Company in excess of an aggregate of $100,000, then the Company
shall provide each Purchaser with a copy of such notice and a summary of such
information within 10 days after receipt of such information by the Company.
(b) Within 10 days of the Company or any Subsidiary having learned of the
proposal, enactment or promulgation of any Environmental Law or regulation which
has a reasonable likelihood of having a Materially Adverse Effect, the Company
shall provide each Purchaser with notice thereof.
5.10 Insurance. In addition to any insurance required by any Collateral
Documents, the Company and its Subsidiaries will maintain, with reputable,
financially sound insurance companies, insurance (including insurance against
claims and liabilities arising out of the manufacture, processing, sale or
distribution of any products, including without limitation, Farm Products)
with respect to its properties and business against such casualties and
contingencies and of such types and in such amounts as is customary in
accordance with prudent business practice in the case of similar business in
similar locations and will, upon request, furnish to each Purchaser at
reasonable intervals a certificate of an authorized officer setting forth the
nature and extent of all insurance maintained by the Company and its
Subsidiaries. The Company and its Subsidiaries shall retain all incidents of
ownership of the insurance maintained pursuant hereto and shall not borrow
upon or otherwise impair its right to receive the proceeds of such insurance.
Each policy of property insurance shall contain a standard non-contributory
mortgage clause in favor of Purchasers and/or the Collateral Agent and each
public liability policy shall name Purchasers and/or the Collateral Agent as
additional insureds. All policies shall be written by insurers, in amounts,
with endorsements and on terms and conditions satisfactory to Purchasers.
Property insurance shall be in an amount equal to the lesser of 100% of the then
replacement value of the Facilities or 125% of the combined principle balances
of the Notes, but in any event an amount sufficient (including taking into
account any deductibles) to prevent the Company or any Guarantor from becoming a
co-insurer. The proceeds of any insurance shall be payable to the Collateral
Agent for the benefit of the Purchasers pursuant to the Intercreditor Agreement.
ARTICLE 6
NEGATIVE COVENANTS
The Company and Guarantors hereby covenant and agree with each Purchaser that,
until its respective Notes has been satisfied and discharged in full, the
Company and its Subsidiaries will comply with the following negative covenants:
6.1 Liens. The Company and Guarantors shall not create, incur, grant, pledge,
permit or suffer to exist, any Lien upon any of the Collateral, except Permitted
Liens.
6.2 Additional Funded Debt. The Company and its Subsidiaries shall not,
directly or indirectly, create, assume, incur, become or be liable for or with
respect to any additional Funded Debt unless, immediately thereafter, the ratio
of Total Funded Debt to Total Capitalization is not greater than 60%.
6.3 Fiscal Year and Tax Status. The Company or any Subsidiary shall not change
its Fiscal Year without prior written notice to each Purchaser.
6.4 Restricted Payments. The Company or any Subsidiary shall not declare or
make any Restricted Payments or Restricted Investments; provided, however, so
long as no Event of Default is then existing or would result therefrom, the
Company and any Subsidiary may make Permitted Investments or Permitted
Restricted Payments.
6.5 Investments in Other Persons. The Company or its Subsidiaries shall not
make any loan or advance to, or investment in, any other Person, or purchase or
otherwise acquire any shares of capital stock, obligations or other securities
of, or make any capital contribution to, or otherwise invest in, any other
Person, or acquire all or substantially all of the assets or properties
of any other Person, except for Permitted Investments.
6.6 Transfer of Assets. The Company and its Subsidiaries shall not sell,
assign, transfer, lease or otherwise dispose of any of their property or assets,
except for: (i) the sale of assets in the ordinary course of business, or
(ii) as permitted by Section 6.7 hereof.
6.7 Mergers. Etc.
(a) Merger Consolidation or Sale of More Than 50% of Assets. The Company and
its Subsidiaries may not merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) more than 50% of Total Consolidated Assets (whether now owned or
hereafter acquired) without the consent of the Required Holders, unless
immediately thereafter:
1. the surviving entity would be a U.S. corporation authorized to do business
in each state where the Company or any Guarantor is authorized to do business;
2. the surviving entity would be able to incur at least $1 of additional Funded
Debt in accordance with the covenants provided hereunder;
3. the surviving entity would not be in Default hereunder and no Event of
Default would exist hereunder;
4. the Notes would be an obligation of the surviving or combined entity; and
5. in the case of a sale of assets, the purchaser specifically assumes the
obligations of the Company under the Notes.
If the consent of the Required Holders is required and is denied, and such
merger, consolidation or sale of assets is subsequently completed, the Company
or the surviving entity shall have the option of prepaying the Notes at par plus
accrued interest, plus a penalty equal to the greater of zero or the Make
Whole Amount at or before consummation of such merger, consolidation or
sale of assets.
(b) Sales of Less Than 50% of Assets. Neither the Company nor any Guarantor
will, except in the ordinary course of business or as permitted in Section
6.7(a) above, sell, lease or otherwise transfer any of its assets to others
unless:
1. such assets are less than 15% of the Company's Total Consolidated Assets;
or
2. immediately after giving effect thereto, the Company and its Subsidiaries
would be permitted to incur at least $1 of additional Funded Debt.
6.8 False Statements. The Company shall not furnish any Purchaser any
certificate or other document that will knowingly contain any untrue statement
of material fact or that will knowingly omit to state a material fact necessary
to make it not misleading in light of the circumstances under which it was
furnished.
6.9 Transactions with Affiliates. The Company or its Subsidiaries shall not
enter into, or cause, suffer or permit to exist any arrangement or contract with
any of its Affiliates unless such arrangement is fair and equitable to the
contracting entity and is not of a sort which would not be entered into by a
prudent Person in the position of the Company or its Subsidiaries with,
or which is on terms which are less favorable than are obtainable from, any
Person which is not one of their respective Affiliates.
6.10 Sale and Leaseback Transactions. The Company and its Subsidiaries will not
enter into any sale and leaseback transactions more than 180 days after the date
of acquisition or occupancy of such asset, whichever shall be the later to
occur, with the intention of leasing it back except
(a) where the lease, including renewals, does not exceed three years;
(b) where the transaction represents a sale by a Guarantor to the Company or by
the Company to a Guarantor.
(c) where the proceeds of the sale of the assets to be leased are at least equal
to their Fair Market Value and the proceeds are applied to the purchase or
acquisition (or, in the case of real property, the construction) of assets to be
used in the Company's business or to the retirement of Funded Debt; or
(d) sale and leaseback transactions other than those permitted by clauses (a),
(b) and (c) above provided that Priority Debt does not exceed 15% of Total
Capitalization.
6.11 Borrowing by Guarantors. Each Guarantor will not create, assume, incur or
guarantee or otherwise become liable in respect of, any Debt or preferred stock,
except Debt or preferred stock which is:
(a) owed to the Company or a Guarantor;
(b) outstanding on the date of this Agreement or such later date when a person
or entity becomes a Guarantor, and renewals or extensions thereof; and
(c) Debt and preferred stock of Guarantors other than that permitted by clauses
(a) and (b) above provided that Priority Debt does not exceed 15% of Total
Capitalization.
6.12 Inconsistent Agreements. The Company and its Subsidiaries shall not enter
into any agreement containing any provision which would be violated or breached
by the Loans or by the performance by the Company or Guarantors of their
obligations hereunder or under the Notes.
6.13 Environmental Matters. The Company and its Subsidiaries shall not violate
any Environmental Law if such violation would be reasonably likely to have a
Materially Adverse Effect and, without limiting the foregoing, the Company and
its Subsidiaries shall not, and shall not permit any Person to, except in
accordance with applicable Environmental Laws, dispose of any Hazardous
Substances into, onto or from any real property owned or operated by the
Company or any Subsidiary, nor allow any Lien imposed pursuant to any Law
relating to hazardous materials or the disposal thereof to remain on such real
property.
6.14 Change in Business or Accounting. The Company shall not make any material
change in the nature or conduct of its business, or make or permit any
significant change in accounting policies or reporting practices except for any
such change required or permitted by GAAP or the Internal Revenue Service.
6.15 Financial Covenants. The Company and its Subsidiaries shall not:
(a) Interest Coverage Ratio. Permit at the end of any Rolling Period its
Interest Coverage Ratio to be less than 2.0:1.0.
(b) Consolidated Tangible Net Worth. Permit the Consolidated Tangible Net Worth
to be less than Sixty Million Dollars ($60,000,000.00).
6.16 Charter and Bylaws. The Company will not amend, modify or change in any
material manner the organizational documents or bylaws of the Company or any
Guarantor without the prior written consent of Purchaser.
ARTICLE 7
EVENTS OF DEFAULT
.1 Events of Default. The following events shall constitute and be deemed
Events of Default hereunder:
(a) Obligations. Failure by the Company or any Guarantor, as applicable (i) to
make any principal or premium payment or mandatory pre-payment Obligation when
due, (ii) to make any interest payment Obligation within five (5) Business Days
of when due; (iii) to make any fee or expense payment Obligation within five (5)
Business Days of demand; (iv) to perform, keep or observe any of the covenants
set forth in Article 6 unless waived in accordance with Section 9.1 hereof and
to cure any unwaived breach resulting therefrom within 30 calendar days of the
occurrence thereof; or (v) to perform, keep or observe any other covenants or
agreements hereunder or the other Collateral Documents and Purchase Documents
(unless a shorter time period is specified therein) and to cure any breach
resulting therefrom within 45 calendar days of the occurrence thereof.
(b) Representation and Warranties. Any warranty or representation now or
hereafter made by the Company or any Guarantor hereunder is knowingly untrue or
incorrect in any material respect or knowingly fails to state a material fact
necessary to make such warranty or representation not misleading in light of the
circumstances in which it was made, or any schedule, certificate, statement,
report, financial data, notice or writing furnished to the Purchasers at any
time by the Company or any Guarantor is knowingly untrue or incorrect in any
material respect or knowingly fails to state a material fact needed to make
the foregoing not misleading in light of the circumstances in which the
foregoing were furnished, on the date as of which the facts set forth therein
are stated or certified.
(c) Judgments. A judgment(s) or order(s) requiring payment in excess of Seven
Hundred Fifty Thousand Dollars ($750,000.00) shall be rendered against the
Company or any of its Subsidiaries and such judgment or order shall remain
unsatisfied or undischarged and in effect for ten (10) consecutive days without
a stay of enforcement or execution thereof or posting of a bond pending
appeal or in any event later than five (5) days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment or similar
process.
(d) Insolvency and Related Proceedings. If the Company or any Guarantor (i) is
dissolved; (ii) authorizes or makes an assignment for the benefit of creditors;
(iii) generally shall not pay its debts as they become due; (iv) shall admit in
writing its inability to pay its debts generally; or (v) shall authorize or
commence (whether by the entry of an order for relief or the appointment of a
receiver, trustee, examiner, custodian or other similar official therefor or for
any substantial part of its property) any proceeding or voluntary case under any
bankruptcy, reorganization, insolvency, dissolution, liquidation, adjustment or
arrangement of debt, receivership or similar Laws or if such proceedings are
commenced or instituted, or an order for relief or approving any petition
commencing such proceedings is entered against the Company or any Guarantor
and the Company or any Guarantor, by any action or failure to act, authorizes,
approves, acquiesces, or consents to the commencement or institution of such
proceedings, or such proceedings are not dismissed within thirty (30) days after
the date of filing, commencement or institution.
(e) Other Material Agreements. If (i) the Company or any Subsidiary defaults in
any payment obligation for borrowed money (other than an Obligation hereunder)
in excess of $1,000,000, beyond any applicable grace period with respect
thereto, or (ii) if the Company defaults in the performance of any term,
provision or condition contained in any agreement under which any such other
payment obligation for borrowed money in excess of $1,000,000 was created or
is governed, the effect of which is to cause, or to permit the holder or holders
thereof to cause, such other payment obligation for borrowed money in excess of
$1,000,000 to become due prior to its stated maturity, or if any such payment
obligation shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated maturity
hereof, or (iii) if the Company or any Subsidiary defaults or a default or an
event of default occurs under or in the performance of its obligations under any
other material agreement, other than for borrowed money and such default,
breach, or event of default continues beyond any applicable grace period
thereunder and the effect of which shall be to allow the holder of such
agreement to terminate same, and, with respect only to this clause (iii), the
foregoing has a Materially Adverse Effect.
(f) Failure of Lien. Any Collateral Document shall for any reason fail to
create a valid and perfected first priority security interest in any Collateral,
subject to Permitted Liens, purported to be covered thereby, or any Collateral
Agreement or Guaranty or any other Purchase Documents shall fail to remain in
full force or effect or any action shall be taken to discontinue or to assert
the invalidity or unenforceability of any Collateral Agreement or Guaranty or
any other Purchase Documents.
ARTICLE 8
RIGHTS AND REMEDIES
Upon the happening or occurrence of an Event of Default described in Section
7.1(d) above, the Notes and all other Obligations shall automatically thereupon
be and become forthwith, due and payable. Upon the happening or occurrence of
any other Event of Default, then and in each and every such case the Required
Holders of any series of the Notes then unpaid may declare the unpaid balance
of such series of the Notes to be forthwith due and payable and thereupon such
balance shall become so due and payable without presentation, protest or further
demand or notice of any kind, all of which are hereby expressly waived
notwithstanding anything contained herein or in such series of the Notes to the
contrary. At all times the holders of the Notes shall have all rights and
remedies now or hereafter provided by applicable Laws.
Upon the occurrence of an Event of Default, the Purchaser, in its sole
discretion, may exercise any of its rights or remedies set forth in the
Collateral Agreements.
This Article 8, however, is subject to the condition that, if at any time after
the principal of the Notes shall have become due and payable as aforesaid
(except automatically as aforesaid), and before any judgment or decree for the
payment of the moneys so due, or any thereof, shall be entered, all arrears of
interest upon the Notes and all other sums payable under the Notes (except
the principal of such Notes which shall have become payable solely by reason
of such declaration) shall have been duly paid, and every other Default and
Event of Default with respect to any covenant or provision of this Agreement
shall have been made good or cured, then and in each and every such case the
Required Holders of the series of the Notes then unpaid shall, by written
instrument filed with the Company, rescind and annul such declaration and its
consequences; but no such recision or annulment shall extend to or affect any
subsequent Default or Event of Default or impair any right consequent thereon.
If any Holder of any Note shall demand payment thereof or take any other action
in respect of an Event of Default, the Company shall forthwith give written
notice thereof, specifying such action and the nature of the Event of Default,
to each Holder of record of each series of the Notes. The Company will also
give prompt written notice to each Holder of each series of Notes of any
written instrument of recision or annulment filed with it as aforesaid.
The Company covenants that, if an Event of Default occurs with respect to any
payment (including mandatory pre-payment) of principal of, or premium (if any)
or interest on, any of the Notes, it will pay to the person entitled to
receive such payment such further amount, to the extent lawful, as shall be
sufficient to cover the reasonable costs and expenses of collection, including
reasonable compensation of the attorneys of such person for all services
rendered in that connection.
ARTICLE 9
MISCELLANEOUS
9.1 Waiver. A Holder's failure or delay, at any time or times hereafter, either
to require strict performance by the Company or any Guarantor of any provisions
of this Agreement, the Guaranty, the Collateral Agreements, Purchase Documents,
or its Note or to enforce the Holder's rights under such terms or provisions,
shall not waive, effect or diminish or modify such terms or provisions,
notwithstanding any conduct or custom, actual or implied, of such Holder to
the contrary or in refraining from so doing at any time or times. Any suspension
or waiver by the Holders of a Default or an Event of Default hereunder, under
the Collateral Agreements, Purchase Documents, the Guaranty or under its Note or
right or remedy hereunder or thereunder shall not suspend, waive, release or
affect any other Default or Event of Default or right or remedy hereunder or
thereunder. No Obligations of the Company, Default, Event of Default or
right or remedy hereunder or under the Collateral Agreements or the Note shall
be deemed suspended or waived by the Holders unless such suspension or waiver is
in writing signed by the Required Holders (or all Holders, if required by
Section 9.5 below) and directed to the Company detailing such suspension or
waiver.
9.2 Applicable Law. This Agreement, the Purchase Documents and the Note have
been executed, issued, delivered and accepted in and shall be deemed to have
been made under and shall be governed by and construed in accordance with the
Laws of the State of New York.
9.3 Severability. This Agreement, the Collateral Agreements, Guaranty, Purchase
Documents and the Notes shall be construed and interpreted in such manner as to
be effective, enforceable and valid under all applicable Laws. If any provision
of this Agreement or the Note shall be held invalid, prohibited or unenforceable
under any applicable Laws of any applicable jurisdiction, such invalidity,
prohibition or unenforceability shall be limited to such provision and shall not
affect or invalidate the other provisions hereof or thereof or affect the
validity or enforceability of such provision in any other jurisdiction, and to
that extent, the provisions hereof and thereof are severable.
9.4 Section Headings. Section headings used in this Agreement are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
9.5 Binding Effect and Amendments. This Agreement shall be binding upon and
inure to the benefit of the Purchasers and the Company and Guarantors, and their
respective successors and assigns; provided, however, that the Company has no
right to assign any of its rights or its Obligations hereunder, except as
specifically provided for herein, without the prior written consent of the
Required Holders under each series of Notes. This Agreement and the terms and
provisions hereof may only be amended or modified by a written instrument or
agreement signed by the Company and the Required Holders under each series of
Notes; provided, however, that no such amendment or modification shall be
effective to reduce the principal of, or the premiums or rate of interest
payable on, any Note or to postpone any date fixed for the payment of principal
of, or any installment of interest on, any Note, without the consent of the
Holder thereof, or to reduce the percentage of the principal amount of the Notes
designated for constituting Required Holders without the consent of all Holders
of such Note then unpaid.
9.6 Notices. Any notices or consents required or permitted by this Agreement
shall be (i) in writing and (ii) delivered in person, telexed, telecopied or
sent by certified or registered mail, postage prepaid, return receipt requested,
to the address set forth below, unless such address is changed by written
notice hereunder (including such address designated from time to time by any
Holder), and (iii) deemed duly given upon compliance with the above.
9.7 Entire Agreement; Amendment and Restatement. This Agreement and the
Purchase Documents constitute the entire agreement between the parties hereto
with respect to the subject matter hereof as of the date hereof. Pursuant to
the Intercreditor Agreement, the Purchasers have been assigned the Existing Term
Obligations (as defined in the Intercreditor Agreement) which include the
rights under the Term Loan Agreement, the Existing MetLife Loan Agreement (as
such terms are defined in the Intercreditor Agreement) and the notes issued
pursuant to the terms thereof. This Agreement and the Purchase Documents
amend and restate in their entirety the Term Loan Agreement and the Existing
MetLife Loan Agreement. The Existing Term Obligations are not extinguished but
are continued under the terms of this Agreement and the Purchase Documents. As
a result, this Agreement and the Purchase Documents do not constitute a novation
of the Existing Term Obligations.
9.8 CONSENT TO JURISDICTION AND WAIVER OF JURY TRIAL AND
PERSONAL SERVICE. THE COMPANY AND EACH GUARANTOR KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND EXPRESSLY SUBMITS AND CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW
YORK, NEW YORK IN ANY ACTION, SUIT OR PROCEEDING COMMENCED THEREIN
IN CONNECTION WITH OR WITH RESPECT TO OR IN RESPECT OF THE
OBLIGATIONS, THIS AGREEMENT OR THE NOTES (INCLUDING, WITHOUT
LIMITATION, ANY DEFENSES OR COUNTERCLAIMS THEREIN) AND WAIVES ANY
RIGHT TO JURY TRIAL THAT COMPANY MAY NOW OR HEREAFTER HAVE UNDER
ANY LAWS AND ANY OBJECTION TO VENUE IN CONNECTION THEREWITH.
COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS OR
PAPERS ISSUED OR SERVED IN CONNECTION WITH THE FOREGOING AND AGREES
THAT SERVICE OF SUCH PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, DIRECTED
TO THE COMPANY AS SET FORTH IN SECTION 9.6 ABOVE.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
<TABLE>
<CAPTION>
<S> <C>
COMPANY: PURCHASER OF SERIES A NOTE:
CAL-MAINE FOODS, INC. FIRST SOUTH PRODUCTION CREDIT
ASSOCIATION
By:_____________________________ By:__________________________________
Name:___________________________ Name:________________________________
Title:________________________ Title:_____________________________
Address:________________________ Address:____________________________
________________________________ _____________________________________
Attn:___________________________ Attn:________________________________
Phone:__________________________ Phone:_______________________________
Fax No.: (____)_________________ Fax No. (____)_______________________
GUARANTORS: PURCHASER OF SERIES B NOTE:
CAL-MAINE FARMS, INC. METROPOLITAN LIFE INSURANCE COMPANY
By:_____________________________ By:_________________________________
Name:___________________________ Name:_______________________________
Title:________________________ Title:____________________________
Address:________________________ Address:____________________________
________________________________ ____________________________________
Phone:__________________________ Phone:______________________________
Fax No.: (____)_________________ Fax No.: (____)_____________________
</TABLE>
CAL-MAINE EGG PRODUCTS, INC.
By:_____________________________
Name:___________________________
Title:________________________
Address:________________________
Phone:__________________________
Fax No.:________________________
CAL-MAINE PARTNERSHIP, LTD.
By:_____________________________
Name:___________________________
Title:________________________
Address:________________________
Phone:__________________________
Fax No.:________________________
CMF OF KANSAS - LLC
By:_____________________________
Name:___________________________
Title:________________________
Address:________________________
Phone:__________________________
Fax No.:________________________
Exhibit B
Guarantors
Cal-Maine Farms, Inc.
Cal-Maine Egg Products, Inc.
Cal-Maine Partnership, Ltd.
CMF of Kansas - LLC
Exhibit C
Form of Series A Note
CAL-MAINE FOODS, INC.
6.87% SERIES A SENIOR SECURED NOTE DUE 2007
$11,500,000.00 Jackson, Mississippi
December 18, 1997
CAL-MAINE FOODS, INC., a Delaware corporation (the "Maker"), for value received,
hereby promises to pay to the order of First South Production Credit Association
or assigns (the "Holder"), the principal amount of Eleven Million Five Hundred
Thousand Dollars ($11,500,000.00) in such coin or currency of the United States
of America as at the time of payment shall be legal tender for public and
private debts, and to pay interest (computed on the basis of the actual number
of days - including the first day but excluding the last day - occurring
during the period for which such interest is payable over a year comprised of
360 days or twelve 30-day months), on the unpaid portion of said principal
amount from the date hereof, semi-annually in arrears on the fifteenth (15th)
day of each December and June, commencing on the first such date after the date
hereof, at the rate of six and 87/100 percent (6.87%) per annum until such
unpaid portion of such principal amount shall have become due and payable and at
the Default Rate (as defined in the Note Agreement referred to below) thereafter
(including any applicable grace period) and, so far as may be lawful, on any
overdue installment of principal and interest at the Default Rate. All interest
on the Note accrued and unpaid on the date of maturity shall be paid on such
date.
The principal amount hereunder shall be paid in six annual installments as
follows:
<TABLE>
<CAPTION>
Principal Amount Due Date of Payment
---------------- -------------------
<S> <C>
$1,916,666.00 December 15, 2002
$1,916,666.00 December 15, 2003
$1,916,666.00 December 15, 2004
$1,916,666.00 December 15, 2005
$1,916,666.00 December 15, 2006
$1,916,670.00 December 15, 2007
</TABLE>
All payments and prepayments of principal, premium (if any) and interest on this
Note shall be payable in the manner and at such place as the holder of this Note
may designate in writing to the undersigned, from time to time, which, until any
further designation, shall be as follows: Post Office Box 1770, Ridgeland,
Mississippi 39158. If any payment or prepayment of principal, premium (if any)
or interest hereunder shall become due on a day other than a Business Day (as
defined in the Note Agreement referred to below), such payment shall be made on
the next succeeding Business Day. This Note is subject to prepayment, in whole
or in part, in certain cases with a premium and in other cases without premium,
all as specified in the Note Agreement (as hereinafter defined). All payments
and prepayments hereunder shall be applied as set forth in the Note Agreement.
The Holder of this Note may record in accordance with its usual practice, the
date and amount of each principal interest or premium payment hereunder.
This Note is the Series A Note referenced in the Note Purchase Agreement dated
as of December 18, 1997 between the Maker, the Holder, Metropolitan Life
Insurance Company and certain entities named therein as Guarantors ("Note
Agreement"), to which Note Agreement reference is hereby made for a statement
of the terms and conditions under which the due date of this Note or any payment
thereon may be accelerated or is automatically accelerated. The Holder of
this Note is entitled to all of the benefits provided in the Note Agreement.
The Maker agrees to pay all costs of collection and all reasonable attorneys'
fees paid or incurred by the Holder hereof in enforcing any of the Holder's
rights hereunder or under the Note Agreement promptly on demand of the Holder.
The undersigned hereby waives demand, presentment, protest, notice of protest,
notice of dishonor or default and any other notice or demand of whatsoever kind
or nature in connection with this Note, the Loan evidenced hereby or in the Note
Agreement. This Note and the Loan evidenced hereby have been made in and shall
be construed in accordance with and governed by the laws of the State of New
York.
CAL-MAINE FOODS, INC.
By:_______________________________
Name:___________________________
Title:________________________
Exhibit D
Form of Series B Note
CAL-MAINE FOODS, INC.
7.18% SERIES B SENIOR SECURED NOTE DUE 2009
$15,000,000.00 Jackson, Mississippi
December 18, 1997
CAL-MAINE FOODS, INC., a Delaware corporation (the "Maker"), for value received,
hereby promises to pay to the order of Metropolitan Life Insurance Company or
assigns (the "Holder"), the principal amount of Fifteen Million Dollars
($15,000,000.00) in such coin or currency of the United States of America as
at the time of payment shall be legal tender for public and private debts, and
to pay interest (computed on the basis of the actual number of days - including
the first day but excluding the last day - occurring during the period for which
such interest is payable over a year comprised of 360 days or twelve 30-day
months), on the unpaid portion of said principal amount from the date hereof,
semi-annually in arrears on the fifteenth (15th) day of each December and June,
commencing on the first such date after the date hereof, at the rate of seven
and 18/100 percent (7.18%) per annum until such unpaid portion of such
principal amount shall have become due and payable and at the Default Rate (as
defined in the Note Agreement referred to below) thereafter (including any
applicable grace period) and, so far as may be lawful, on any overdue
installment of principal and interest at the Default Rate. All interest on
the Note accrued and unpaid on the date of maturity shall be paid on such date.
The principal amount hereunder shall be paid in seven annual installments as
follows:
<TABLE>
<CAPTION>
Principal Amount Due Date of Payment
---------------- -------------------
<S> <C>
$2,142,857.00 December 15, 2003
$2,142,857.00 December 15, 2004
$2,142,857.00 December 15, 2005
$2,142,857.00 December 15, 2006
$2,142,857.00 December 15, 2007
$2,142,857.00 December 15, 2008
$2,142,858.00 December 15, 2009
</TABLE>
All payments and prepayments of principal, premium (if any) and interest on this
Note shall be promptly and punctually paid by wire transfer of immediately
available funds pursuant to the wiring instructions provided to Maker or, if so
requested, by check mailed (not later than three days prior to the date any
amount is due) to: Metropolitan Life Insurance Company, Agricultural
Investments, Box 27-131, Kansas City, Missouri 64180-0001 or by such other
method or to such other address as may be designated in writing by the Holder
of this Note. If any payment or prepayment of principal, premium (if any) or
interest hereunder shall become due on a day other than a Business Day (as
defined in the Note Agreement referred to below), such payment shall be made
on the next succeeding Business Day. This Note is subject to prepayment, in
whole or in part, in certain cases with a premium and in other cases without
premium, all as specified in the Note Agreement (as hereinafter defined).
All payments and prepayments hereunder shall be applied as set forth in the Note
Agreement.
The Holder of this Note may record in accordance with its usual practice, the
date and amount of each principal, interest or premium payment hereunder.
This Note is the Series B Note referenced in the Note Purchase Agreement dated
as of December 18, 1997 between the Maker, the Holder, First South Production
Credit Association and certain entities named therein as Guarantors ("Note
Agreement"), to which Note Agreement reference is hereby made for a statement of
the terms and conditions under which the due date of this Note or any payment
thereon may be accelerated or is automatically accelerated. The Holder of
this Note is entitled to all of the benefits provided in the Note Agreement.
The Maker agrees to pay all costs of collection and all reasonable attorneys'
fees paid or incurred by the Holder hereof in enforcing any of the Holder's
rights hereunder or under the Note Agreement promptly on demand of the Holder.
The undersigned hereby waives demand, presentment, protest, notice of protest,
notice of dishonor or default and any other notice or demand of whatsoever kind
or nature in connection with this Note, the Loan evidenced hereby or in the Note
Agreement. This Note and the Loan evidenced hereby have been made in and shall
be construed in accordance with and governed by the laws of the State of New
York.
CAL-MAINE FOODS, INC.
By:______________________________
Name:__________________________
Title:_______________________
Exhibit F
Form of Intercreditor Agreement
