<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER , 1995
REGISTRATION NO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GOLD KIST INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
GEORGIA 58-0255560
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
----------------
244 PERIMETER CENTER PARKWAY, N.E.
ATLANTA, GEORGIA 30346
404-393-5000
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ALEXANDER W. PATTERSON
ALSTON & BIRD
ONE ATLANTIC CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3424
404-881-7688
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------
COPIES TO:
PETER J. GIBBONS JACK L. LAWING
VICE PRESIDENT--FINANCE SECRETARY
GOLD KIST INC. AGVESTMENTS, INC.
POST OFFICE BOX 2210 POST OFFICE BOX 2210
ATLANTA, GEORGIA 30301 ATLANTA, GEORGIA 30301
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of this Registration Statement.
----------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
----------------
If the registrant elects to deliver its latest annual report to security-
holders, or a complete and legible facsimile thereof, pursuant to Item 11
(a)(1) of this form, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH PROPOSED PROPOSED
CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Subordinated Capital
Certificates of
Interest (Series D) 15
years.................. $ 2,800,000 $ 500(1) $ 2,800,000 $ 965
Subordinated Capital
Certificates of
Interest (Series D) 10
years.................. $ 1,000,000 $ 500(1) $ 1,000,000 $ 345
Subordinated Capital
Certificates of
Interest (Series A) 7
years.................. $ 4,000,000 $ 500(1) $ 4,000,000 $ 1,380
Subordinated Capital
Certificates of
Interest (Series A) 3
years.................. $ 3,000,000 $ 500(1) $ 3,000,000 $ 1,035
Subordinated Capital
Certificates of
Interest (Series A) 2
years.................. $ 5,000,000 $ 500(1) $ 5,000,000 $ 1,725
Subordinated Loan
Certificates (Series C)
1 year................. $10,000,000 $ 500(1) $10,000,000 $ 3,450
Subordinated Large
Denomination Loan
Certificates (Series A)
1 year................. $10,000,000 $50,000(2) $10,000,000 $ 3,450
- --------------------------------------------------------------------------------
Total................... $35,800,000 $35,800,000 $12,350
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) All certificates are offered at par in minimum denominations of $500;
however, certificates will be issued in any amount which is $500 or
larger.
(2) All certificates are offered at par in minimum denominations of $50,000;
however, certificates will be issued in any amount which is $50,000 or
larger.
Cover Page Continued on Following Page
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
----------------
PURSUANT TO RULE 429, THE COMBINED PROSPECTUS FILED AS A PART OF THIS
REGISTRATION STATEMENT RELATES AS WELL TO THE FOLLOWING REGISTRATION
STATEMENTS AND AMENDMENTS THERETO: REGISTRATION STATEMENTS NO. 2-86777, NO.
33-428, NO. 33-17394, NO. 33-24623, NO. 33-31164, NO. 33-42900, NO. 33-52268,
NO. 33-69204 AND NO. 33-55563.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
PART I
GOLD KIST INC.
CROSS REFERENCE SHEET BETWEEN REGISTRATION STATEMENT AND FORM OF PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION HEADING IN PROSPECTUS
----------------------- ---------------------
<C> <C> <S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of Facing Page of Registration
Prospectus........................... Statement; Cross Reference Sheet;
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Available Information; Information
Pages of Prospectus.................. Incorporated by Reference; Table of
Contents
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges... Prospectus Summary; Risk Factors
4. Use of Proceeds....................... Use of Proceeds
5. Determination of Offering Price....... Not Applicable
6. Dilution.............................. Not Applicable
7. Selling Security Holders.............. Not Applicable
8. Plan of Distribution.................. Cover Page of Prospectus
9. Description of Securities to be Description of Subordinated Capital
Registered........................... Certificates of Interest;
Description of Subordinated Loan
Certificates and Subordinated Large
Denomination Loan Certificates
10. Interests of Named Experts and Not Applicable
Counsel..............................
11. Information with Respect to the
Registrant
(a) Description of Business.......... Business
(b) Financial Statements............. Consolidated Financial Statements
(c) Information about Industry
Segments, Classes of Similar Business
Products, and Export Sales......
(d) Selected Financial Data.......... Selected Consolidated Financial Data
(e) Supplementary Financial
Information Selected Quarterly Not Applicable
Financial Data..................
(f) Management's Discussion and
Analysis of Financial Condition Management's Discussion and Analysis
and Results of Operations....... of Consolidated Results of
Operations and Financial Condition
(g) Changes in and Disagreements with
Accountants on Accounting and Not Applicable
Financial Disclosure............
12. Incorporation of Certain Information Information Incorporated by
by Reference......................... Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Not Applicable
Liabilities..........................
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
GOLD KIST INC.
$ 6,181,063--7.50%, FIFTEEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES D)
$ 5,626,355--7.25%, TEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES D)
$12,189,931--7.00%, SEVEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$11,796,442--6.75%, FIVE YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES C)
$14,534,668--6.50%, THREE YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$15,434,797--6.25%, TWO YEAR SUBORDINATED
[LOGO] CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$24,905,190--6.00%, ONE YEAR SUBORDINATED LOAN
CERTIFICATES (SERIES C)
$26,262,703--6.10%, ONE YEAR SUBORDINATED
LARGE DENOMINATION LOAN CERTIFICATES (SERIES
A)
$13,203,694--5.60%, SIX MONTH SUBORDINATED
LARGE DENOMINATION LOAN CERTIFICATE (SERIES A)
- --------------------------------------------------------------------------------
The Subordinated Capital Certificates of Interest, Subordinated Loan
Certificates and Subordinated Large Denomination Loan Certificates are
unsecured obligations of Gold Kist. The certificates of each series are
redeemable, subject to certain limitations, by the holders, and the Five,
Seven, Ten and Fifteen Year Certificates are subject to redemption at the call
of Gold Kist. The Certificates of each series are subordinated, in case of
liquidation of Gold Kist, to "Superior Indebtedness." As of July 1, 1995,
Superior Indebtedness (as defined in the indenture under which each series will
be issued) amounted to approximately $384,402,000. See Description of
--------------
Subordinated Capital Certificates of Interest and Description of Subordinated
- -----------------------------------------------------------------------------
Loan Certificates and Subordinated Large Denomination Loan Certificates.
- -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SEE "RISK FACTORS" ON PAGE 5.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND
PRICE TO COMMISSIONS PROCEEDS TO GOLD
PUBLIC (1)(2) KIST (2)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
SUBORDINATED CAPITAL CERTIFICATES
OF INTEREST
Fifteen Year (Series D)--Per Unit
(3)............................... $ 500
Total............................. $ 6,181,063 $247,243 $ 5,933,820
Ten Year (Series D)--Per Unit
(3)............................... $ 500
Total............................. $ 5,626,355 $168,791 $ 5,457,564
Seven Year (Series A)--Per Unit
(3)............................... $ 500
Total............................. $12,189,931 $304,748 $11,885,183
Five Year (Series C)--Per Unit
(3)............................... $ 500
Total............................. $11,796,442 $235,929 $11,560,513
Three Year (Series A)--Per Unit
(3)............................... $ 500
Total............................. $14,534,668 $145,347 $14,389,321
Two Year (Series A)--Per Unit (3). $ 500
Total............................. $15,434,797 $115,761 $15,319,036
SUBORDINATED LOAN CERTIFICATES
One Year (Series C)--Per Unit
(3)............................... $ 500
Total............................. $24,905,190 $124,526 $24,780,664
SUBORDINATED LARGE DENOMINATION
LOAN CERTIFICATES
One Year (Series A)--Per Unit
(4)............................... $ 50,000
Total............................. $26,262,703 $131,314 $26,131,389
Six Month (Series A)--Per Unit
(5)............................... $ 20,000
Total............................. $13,203,694 $ 33,009 $13,170,685
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Agvestments, Inc. ("Agvestments"), a wholly-owned subsidiary of Gold
Kist, has been engaged by Gold Kist to solicit from the public on a best
efforts basis offers to purchase the securities described herein. All offers to
purchase are subject to acceptance by Gold Kist. Gold Kist has agreed to pay
all of the expenses and disbursements of Agvestments, including the commissions
of its associated persons and to furnish all facilities, financing and
accounting, clerical and recordkeeping services necessary for the conduct of
Agvestments' business. Gold Kist has also agreed to pay all liabilities
incurred by Agvestments, including liabilities under the Securities Act of
1933. The commissions to be paid to Agvestments' associated persons will be
established by Agvestments from time to time within the following ranges of
percentage of the sales price of the certificates: Six Month Certificates--
1/8- 1/4%; One Year Certificates-- 1/4- 1/2%; Two Year Certificates-- 1/2-
3/4%; Three Year Certificates-- 1/4-1%; Five Year Certificates--1-2%; Seven
Year Certificates--1.5-2.5%; Ten Year Certificates--2-3%; and Fifteen Year
Certificates--2-4%. Agvestments offers cash bonuses to its associated persons
under an incentive program, but in no event can the total compensation to any
associated person exceed 5% of the sales price of certificates. Assuming that
all registered certificates are sold and that the maximum incentive bonuses are
earned by Agvestments' associated persons on such sales, the maximum
compensation to be paid to Agvestments on the sale of $130,134,843 in face
amount of certificates would total $1,531,068.
Agvestments is a registered broker-dealer under the Securities Exchange Act
of 1934 and a member of the National Association of Securities Dealers, Inc.
("NASD"). Agvestments' principal office is located at 244 Perimeter Center
Parkway, N.E., Post Office Box 2210, Atlanta, Georgia 30301. This offering is
being made in compliance with the terms of a partial exemption from the
requirements of Schedule E of the NASD By-Laws. As a condition of this partial
exemption, a minimum of 80 percent of the dollar amount of aggregate sales made
in this offering must be to members, equity holders, producer-suppliers, non-
member patrons or employees of Gold Kist, a subsidiary, franchisee or member
association, or to holders of securities thereof within the past three years
who were in one of the above categories at the time of purchase of such
securities, or to family members or affiliates of one of the above.
(2) The proceeds to Gold Kist of $128,603,775 are before deducting the
expenses to be borne by Gold Kist of an estimated amount of $103,350. The
certificates are offered on a best efforts basis for an indeterminate period of
time, not expected to be in excess of two years. There is no requirement that
the minimum amount of the securities of any series offered hereby must be sold.
(3) All certificates are offered at par in minimum denominations of $500;
however, certificates will be issued in any amount which is $500 or larger.
(4) All certificates are offered at par in minimum denominations of $50,000;
however, certificates will be issued in any amount which is $50,000 or larger.
(5) All certificates are offered at par in minimum denominations of $20,000;
however, certificates will be issued in any amount which is $20,000 or larger.
----------
AGVESTMENTS, INC.
The Date of this Prospectus is , 1995
<PAGE>
AVAILABLE INFORMATION
Gold Kist is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission").
Reports and other information filed by Gold Kist can be inspected and copied
at the public reference facilities of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
regional offices of the Commission: Northeast Regional Office, 7 World Trade
Center, Suite 1300, New York, N.Y. 10008; and Midwest Regional Office, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained by mail from the Public Reference Section of the
Commission, 450 Fifth Street N.W., Washington, D.C. 20549 at prescribed rates.
Gold Kist has filed with the Securities and Exchange Commission Registration
Statements under the Securities Act of 1933 with respect to the securities
offered hereby. This Prospectus does not contain all information set forth in
the Registration Statements, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to Gold Kist and the securities offered hereby,
reference is made to the Registration Statements, including the exhibits,
consolidated financial statements and schedules filed as a part thereof. The
Registration Statements may be inspected without charge at the principal
offices of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. Copies of the Registration Statements, or any part
thereof, may be obtained from the Commission's principal office in Washington,
D.C. upon payment of the fees prescribed by the Commission.
The summaries or descriptions of documents in this Prospectus do not purport
to be complete, and where any such document is an exhibit to the Registration
Statement, each such statement is qualified in all respects by the provisions
of such exhibit, to which reference is hereby made for a full statement of its
provisions.
INFORMATION INCORPORATED BY REFERENCE
The Annual Report on Form 10-K for the fiscal year ended July 1, 1995, which
was filed by Gold Kist with the Securities and Exchange Commission, is
incorporated into this Prospectus by reference.
Gold Kist will furnish without charge to each person to whom this Prospectus
is delivered, on the request of such person, a copy of any and all of the
information that has been incorporated by reference in the Registration
Statement (not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
the information that the Registration Statement incorporates). Such request
should be directed to Jack L. Lawing, Corporate Secretary, Gold Kist Inc., 244
Perimeter Center Parkway, N.E., Atlanta, Georgia 30346, whose telephone number
is (404) 393-5000.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights certain information about Gold Kist Inc. and
-----------------------------------------------------------------------------
is qualified in its entirety by the detailed information and financial
- ----------------------------------------------------------------------
statements and related notes appearing elsewhere in this Prospectus.
- -------------------------------------------------------------------
THE ASSOCIATION
Gold Kist Inc. is a diversified agricultural membership cooperative
association, headquartered in Atlanta, Georgia. Gold Kist serves approximately
25,000 active farmer members and other cooperative associations located
principally in the southeastern United States. Gold Kist both markets products
and purchases supplies and equipment for its members. See Business.
--------
THE OFFERING
The various classes of securities described below are offered for sale.
SECURITIES OFFERED
<TABLE>
<CAPTION>
AGGREGATE
DESCRIPTION OF SECURITIES FACE AMOUNT
------------------------- -----------
<S> <C>
Subordinated Capital Certificates of Interest
15 year maturity, Series D (Interest as indicated on the front
cover of this Prospectus)......................................... $ 6,181,063
10 year maturity, Series D (Interest as indicated on the front
cover of this Prospectus)......................................... $ 5,626,355
7 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $12,189,931
5 year maturity, Series C (Interest as indicated on the front cover
of this Prospectus)............................................... $11,796,442
3 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $14,534,668
2 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $15,434,797
Subordinated Loan Certificates
1 year maturity, Series C (Interest as indicated on the front cover
of this Prospectus)............................................... $24,905,190
Subordinated Large Denomination Loan Certificates
1 year maturity, Series A (Interest as indicated on the front cover
of this Prospectus)............................................... $26,262,703
6 month maturity, Series A (Interest as indicated on the front
cover of this Prospectus)......................................... $13,203,694
</TABLE>
Equivalent Subordination
------------------------
The Subordinated Capital Certificates of Interest, the Subordinated Loan
Certificates and the Subordinated Large Denomination Loan Certificates of each
class rank equally under their respective subordination provisions. See
Description of Subordinated Capital Certificates of Interest--Subordination,
- ----------------------------------------------------------------------------
and Description of Subordinated Loan Certificates and Subordinated Large
- ------------------------------------------------------------------------
Denomination Loan Certificates--Subordination.
- ---------------------------------------------
Redemption at Request of Certificateholder
------------------------------------------
The certificates of each class may be redeemed prior to maturity upon the
death of a certificateholder or, subject to quarterly amount limitations except
in the case of the Subordinated Loan Certificates and Subordinated Large
Denomination Loan Certificates, at any time. Redemption prior to maturity,
other than upon the death of a certificateholder, requires a substantial
redemption penalty which, under certain circumstances, could exceed the amount
of interest paid or accrued on the certificate to the date of redemption, thus
resulting in a redemption price which is less than the principal amount of the
certificate. See Description of Subordinated Capital Certificates of Interest--
------------------------------------------------------------
Redemption at the Request of Certificateholder, and Description of Subordinated
- -------------------------------------------------------------------------------
Loan Certificates and Subordinated Large Denomination Loan Certificates--
- -----------------------------------------------------------------------
Redemption at the Request of Certificateholder.
- ----------------------------------------------
3
<PAGE>
The indentures governing the Subordinated Capital Certificates of Interest,
the Subordinated Loan Certificates and the Subordinated Large Denomination Loan
Certificates of each series do not contain additional redemption provisions
requiring Gold Kist to repurchase the certificates at the request of the
certificateholder upon the occurrence of a change in control of Gold Kist, nor
do the indentures contain any provisions designed to afford protection to
certificateholders in the event of a highly leveraged transaction involving
Gold Kist.
Redemption at the Option of Gold Kist
-------------------------------------
In addition to redemptions at the request of the certificateholder, Gold Kist
may, at its option, redeem all or, from time to time, any part of the
certificates of five, seven, ten and fifteen year maturity on any date prior to
maturity. In such event, the redemption price would be 100% of the principal
amount redeemed, plus accrued but unpaid interest on that amount, plus a
substantial redemption premium. See Description of Subordinated Capital
-----------------------------------
Certificates of Interest--Redemption at the Option of Gold Kist.
- ----------------------------------------------------------------
METHOD OF SALE
The securities are offered for sale by Agvestments, Inc. on a best efforts
basis.
SELLING PRICE
The securities are offered at par.
USE OF PROCEEDS
The proceeds from this offering of securities will be used primarily to repay
a portion of the Association's other indebtedness and for general corporate
purposes. See Use of Proceeds.
----------------
MATERIAL RISKS
Reference is made to the section of this Prospectus entitled Risk Factors.
SUMMARY OF SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED (000'S OMITTED)
---------------------------------------------------
JUNE 29, JUNE 27, JUNE 26, JUNE 25, JULY 1,
1991 1992 1993 1994 1995
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Net sales volume......... $1,259,033 1,300,906 1,400,566 1,561,034 1,688,537
Net margins (loss)(A).... $ 32,933 (20,614) 27,238 39,404 11,751
Ratio of net margins
(loss) to fixed
charges(B).............. 2.5 1.4 3.2 3.7 2.0
<CAPTION>
AS OF (000'S OMITTED)
---------------------------------------------------
JUNE 29, JUNE 27, JUNE 26, JUNE 25, JULY 1,
1991 1992 1993 1994 1995
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet
Data:
Total assets............. $ 671,756 676,698 665,102 716,432 821,637
Total liabilities........ $ 351,284 382,789 354,889 394,754 482,675
Patrons' and other
equity(A)............... $ 296,940 271,456 285,620 296,662 314,990
</TABLE>
- --------
A. See Note 6 and Note 9(a) of Notes to Consolidated Financial Statements.
-------------------------------------------------------------------
B. See Selected Consolidated Financial Data, Note C.
---------------------------------------------
4
<PAGE>
GOLD KIST INC.
Gold Kist Inc. ("Gold Kist" or the "Association") is a diversified
agricultural membership cooperative association, headquartered in Atlanta,
Georgia. Gold Kist serves approximately 25,000 active farmer members located
principally in the southeastern United States. In addition, other cooperative
associations are members.
Gold Kist is both a marketing and purchasing cooperative; it markets
products and commodities and purchases supplies and equipment for its members.
The Association also engages in marketing and purchasing transactions with
nonmembers. Transactions with its members are on a cooperative basis, and
members are entitled to receive patronage refunds out of net margins earned on
such business. See Business--Patronage Refunds. Patronage refunds are not paid
to nonmembers. The Association also engages in non-cooperative activities
through subsidiaries and partnerships.
Gold Kist conducts broiler and pork production operations, providing both
marketing and purchasing services to producers. Gold Kist also purchases or
manufactures feed, seed, fertilizers, pesticides, animal health products and
other farm supply items for sale at wholesale and retail. Additionally, the
Association is engaged in the processing, storage and marketing of cotton,
serves as a contract procurement agent for, and stores, farm commodities such
as soybeans and grain, and is a partner in a major peanut processing and
marketing business and in a pecan processing and marketing business.
The Association's principal office is located at 244 Perimeter Center
Parkway, N.E., Atlanta, Georgia 30346, and its telephone number is (404) 393-
5000.
RISK FACTORS
LACK OF ESTABLISHED MARKET FOR SECURITIES OFFERED
There is no established market for the Subordinated Capital Certificates of
Interest, Subordinated Loan Certificates and Subordinated Large Denomination
Loan Certificates presently outstanding, and it is unlikely that a market will
be available in which the certificates offered by this Prospectus can be sold.
SUBORDINATION OF SECURITIES OFFERED
Payment of the principal and interest on the Subordinated Capital
Certificates of Interest, Subordinated Loan Certificates and Subordinated
Large Denomination Loan Certificates of each series offered hereby is
subordinated in right of payment, in case of liquidation of Gold Kist, to the
prior payment in full of the principal of and interest on "Superior
Indebtedness," as set forth in the indentures under which each series of
Subordinated Capital Certificates of Interest, Subordinated Loan Certificates
and Subordinated Large Denomination Loan Certificates will be issued. As of
July 1, 1995, Superior Indebtedness (as defined in the indentures) amounted to
approximately $384,402,000 and additional Superior Indebtedness, without
limitation, may be created from time to time. See Description of Subordinated
---------------------------
Capital Certificates of Interest--Subordination, and Description of
- -------------------------------------------------------------------
Subordinated Loan Certificates and Subordinated Large Denomination Loan
- -----------------------------------------------------------------------
Certificates--Subordination.
- ----------------------------
AFFILIATED UNDERWRITER
Agvestments, Inc. is a wholly-owned subsidiary of Gold Kist. Under the terms
of an agreement with Gold Kist, Agvestments' business is restricted to the
offering and sale of securities issued by Gold Kist. This offering is being
made in compliance with the terms of a partial exemption from the requirements
of Schedule E of the NASD By-Laws; no persons other than associated persons of
Gold Kist or Agvestments participated in determining the price and other terms
of the securities offered hereby. The rate of interest borne by certificates
of each series is determined from time to time by the Board of Directors of
Gold Kist or its delegates, who are officers of Gold Kist, but no change in
the rate affects any certificates theretofore issued. The rates are
5
<PAGE>
reexamined weekly by officers of Gold Kist and Agvestments, and a pricing
determination is made based upon the yields offered on debt securities of
comparable maturities issued by the United States Government and other market
factors.
USE OF PROCEEDS
The maximum net proceeds to Gold Kist from the sale of the certificates
offered hereby are estimated to be $128,603,775 before deduction of expenses
estimated to be $103,350. The proceeds will be used in the following order of
priority. Approximately $37,442,000 of the proceeds will be used for the
repayment or redemption of outstanding Gold Kist Certificates of Interest,
Loan Certificates and Large Denomination Loan Certificates which will mature
during the twelve-month period ending October 31, 1996. The rates of interest
borne by such indebtedness are set forth in Note 4 of Notes to Consolidated
-------------------------------
Financial Statements. Any remaining proceeds will be used for general
- --------------------
corporate purposes, including additional production and processing plant
capacity expansion and additional working capital.
The Subordinated Capital Certificates of Interest, Subordinated Loan
Certificates and Subordinated Large Denomination Loan Certificates are being
offered as a continuous offering on a "best efforts" basis by Agvestments,
Inc. Consequently, no assurance can be given as to the amount of Subordinated
Capital Certificates of Interest, Subordinated Loan Certificates or
Subordinated Large Denomination Loan Certificates that will be sold or as to
the amount of net proceeds therefrom which will be available to Gold Kist from
time to time. If substantially less than the maximum proceeds are obtained, to
the extent that cash flow from future operations is not sufficient, Gold Kist
would borrow necessary additional funds from banks and other lenders. See
Note 4 of Notes to Consolidated Financial Statements.
- ----------------------------------------------------
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below under the captions
"Consolidated Statement of Operations Data" for each of the years in the five-
year period ended July 1, 1995 and "Consolidated Balance Sheet Data" as of
June 29, 1991, June 27, 1992, June 26, 1993, June 25, 1994 and July 1, 1995
are derived from the consolidated financial statements of Gold Kist Inc. and
subsidiaries, which consolidated financial statements have been audited by
KPMG Peat Marwick LLP, independent auditors. The consolidated financial
statements as of June 25, 1994 and July 1, 1995 and for each of the years in
the three-year period ended July 1, 1995, and the report thereon of KPMG Peat
Marwick LLP, which is based partially upon the report of other auditors, are
included elsewhere. The information set forth below should be read in
conjunction with Management's Discussion and Analysis of Consolidated Results
------------------------------------------------------------
of Operations and Financial Condition and the aforementioned consolidated
- -------------------------------------
financial statements, the related notes and the audit report, which refers to
changes in accounting for income taxes and for certain investments in debt and
equity securities, included elsewhere herein.
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED (000'S OMITTED)
---------------------------------------------------
JUNE 29, JUNE 27, JUNE 26, JUNE 25, JULY 1,
1991 1992 1993 1994 1995
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales volume.......................... $1,259,033 1,300,906 1,400,566 1,561,034 1,688,537
========== ========= ========= ========= =========
Interest expense.......................... $ 18,437 18,545 17,163 13,924 17,525
========== ========= ========= ========= =========
Margins (loss) before cumulative effect of
accounting changes....................... $ 32,933 (1,643) 27,238 34,065 11,751
Cumulative effect of changes in
accounting:
Income taxes (A)........................ $ -- -- -- 5,339 --
Postretirement benefits other than
pensions (net of $10,698 income tax
benefit)............................... -- (18,971) -- -- --
---------- --------- --------- --------- ---------
Net margins (loss)........................ $ 32,933 (20,614) 27,238 39,404 11,751
========== ========= ========= ========= =========
Ratio of net margins (loss) to fixed
charges (C).............................. 2.5 1.4 3.2 3.8 2.0
========== ========= ========= ========= =========
<CAPTION>
AS OF (000'S OMITTED)
---------------------------------------------------
JUNE 29, JUNE 27, JUNE 26, JUNE 25, JULY 1,
1991 1992 1993 1994 1995
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital........................... $ 114,652 108,045 140,629 139,847 146,585
========== ========= ========= ========= =========
Total assets.............................. $ 671,756 676,698 665,102 716,432 821,637
========== ========= ========= ========= =========
Long-term liabilities..................... $ 146,183 159,449 152,792 144,992 178,777
========== ========= ========= ========= =========
Total liabilities......................... $ 351,284 382,789 354,889 394,754 482,675
========== ========= ========= ========= =========
Patrons' and other equity (B)............. $ 296,940 271,456 285,620 296,662 314,990
========== ========= ========= ========= =========
Current ratio............................. 1.56 1.48 1.70 1.56 1.48
========== ========= ========= ========= =========
Ratio of long-term liabilities to total
capitalization........................... % 32.99 37.00 34.85 32.83 36.21
========== ========= ========= ========= =========
</TABLE>
- --------
Note:
(A) See Note 6 of Notes to Consolidated Financial Statements.
----------------------------------------------------
(B) See Note 9(a) of Notes to Consolidated Financial Statements.
-------------------------------------------------------
(C) The ratio is calculated by dividing the sum of margins (loss) before
cumulative effect of change in accounting principle, income tax expense
(benefit), equity in the earnings (loss) of certain partially-owned
affiliates, minority interest in earnings (loss) of subsidiary, adjusted
to exclude earnings not distributed of partially-owned affiliates,
interest capitalized and fixed charges by fixed charges. Fixed charges
consist of interest charges on all indebtedness and that portion of
rentals considered to be the interest factor. The ratio computation does
not include interest charges incurred by Golden Peanut Company of $10,684,
$8,151, $9,126, $10,113 and $15,249 for 1991, 1992, 1993, 1994 and 1995,
respectively.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The nature of the poultry industry and the agriculture (agribusiness)
industry in general is such that supply and demand market forces exert a
significant amount of influence over the operations of firms engaged in these
businesses. Prices of commodities react directly to supply and demand.
Additionally, demand for poultry and other agricultural products produced,
processed and marketed by Gold Kist is often influenced by supplies and prices
of alternative products.
As with other perishable commodity businesses, the integrated poultry
industry has demonstrated a cyclical nature with varying levels of profits,
and to a lesser extent, losses over its 36 year history. Although the past
twelve years have been a period of continued profitability with the exception
of a brief period during 1992, net margins have varied from year to year in
response to market fundamentals. The following addresses the various factors
that have influenced poultry industry profitability during the past several
years. Broiler market prices declined in 1991 and remained at low levels
throughout 1992 as a result of the economic recession affecting the United
States, the decline in poultry exports and excess industry supply. Improved
market prices in 1993 and 1994 were the result of a general economic recovery
in the United States and increased demand for poultry products. During 1995,
broiler market prices declined due to the large supply of competing meats,
such as beef and pork, and the continuation of broiler industry expansion.
According to USDA estimates, the supply of broilers is expected to increase at
a 6.6% rate in 1995 and a 6.2% rate in 1996 as compared to the 6.5% average
annual increase between 1991 and 1994. In 1991, feed grain prices, which
represent approximately 50% of total broiler production costs, moderated as a
result of the favorable United States grain harvests. In 1992, market prices
for corn and soybean meal increased as supplies came in balance with world
demand. The record 1992 domestic corn harvest brought lower feed ingredient
prices in 1993. In 1994, feed ingredient prices increased substantially as a
result of the reduced corn harvest in 1993. As a result of the increase in
planted corn and soybean acreage and favorable growing conditions in the
summer of 1994, market prices for feed ingredients declined in 1995. Feed
ingredient prices are expected to increase in 1996 due to poor spring planting
conditions in the Midwest and difficult growing conditions during the summer
of 1995. Management is unable to predict whether such conditions will continue
in the future or to what extent cyclical pressures will affect the
Association's operations.
Historically, weather has had a significant impact on the farm economy and
the operating results of the Association. Favorable weather conditions
contributed to normal grain production in the United States, which contributed
to lower commodity prices resulting in lower broiler production costs in 1991.
Wet weather conditions in the Southeast during the 1991 spring planting season
contributed to reduced planting of corn and soybean acreage. However, planted
acreage of peanuts and cotton, although delayed by wet weather, increased in
1991 as compared to the prior year. Generally, favorable weather conditions
throughout 1992 provided for a near perfect planting season in the Southeast,
which contributed to improved 1992 operating results in the Agri-Services
segment. Wet weather conditions in the Southeast during the 1993 spring
planting season reduced corn and peanut acreage and were followed by early
summer drought conditions. These inclement weather factors had a negative
impact on 1993 Agri-Services operating results. Flooding in the Midwestern
United States during the summer of 1993 severely impacted the domestic grain
harvest and boosted feed ingredient prices to near record levels. Hot, dry
weather conditions in the late summer of 1993 damaged pastures in the
Southeast, which resulted in increased sales of agricultural products in 1994.
In addition, favorable spring weather conditions contributed to increased
planting activity in 1994. In 1995, generally favorable spring weather
conditions in the Southeast contributed to increased sales of agricultural
inputs in the Association's primary retail sales area. However, wet weather
conditions in the Delta and Midwest regions of the U.S. negatively impacted
market prices for corn, seed and certain fertilizers in areas where these
products are sold through independent dealers and four of the Association's
retail stores.
Export sales for 1993, 1994 and 1995 were $27.5 million, $37.7 million and
$70.1 million, respectively. In 1994 and 1995, export sales increased
primarily as a result of the demand for poultry from the Commonwealth of
Independent States and the Far East. Export sales of poultry products will be
influenced by credit availability
8
<PAGE>
to foreign countries, political and economic stability, particularly in the
Commonwealth of Independent States, Eastern European nations and Mexico, and
the United States government's willingness to support the industry through
export enhancements.
The Association's operations are classified into two reportable business
segments. See Note 10 of Notes to Consolidated Financial Statements. The
-----------------------------------------------------
discussion of results of operations relates the effects of these significant
economic factors on those segments for each of the years in the three-year
period ended July 1, 1995.
RESULTS OF OPERATIONS
Fiscal 1994 Compared to Fiscal 1993
-----------------------------------
Net sales volume of $1.6 billion for 1994 increased 11.5% or $160.5 million
from the prior fiscal year as a result of increased sales of poultry products,
as well as increased sales of agricultural production inputs. The Association
had net margins from operations, before general corporate expenses and other
deductions, of $60.6 million for 1994 as compared to $45.1 million in 1993. The
34.3% increase resulted primarily from higher selling prices for poultry
products and increased sales of agricultural products in the Southeast. The
Association's margins before the cumulative effect of accounting changes were
$34.1 million for 1994 as compared to $27.2 million in 1993.
The Poultry segment had record setting net sales volume of $1.2 billion for
1994, which represented a 9.8% increase from the previous fiscal year. Net
margins from operations for 1994 were $52.2 million, a 20.6% increase as
compared to 1993. The increase in net sales volume resulted from an 6.7%
increase in pounds of poultry marketed and a 6.3% increase in average selling
prices. The impact of these factors on net sales volume was partially offset by
lower sales of non-poultry items. As previously discussed, the increase in
market prices for poultry products reflected the general economic recovery in
the United States and the increase in poultry exports during 1994. The increase
in poultry net margins was partially offset by increased feed ingredient prices
which averaged approximately 10.0% above the prior year. Market prices for corn
and soybean meal increased 21.0% and 8.7%, respectively, over the prior year
due to the weather reduced crop in 1993. Market prices for competing meats in
late 1994 declined as a result of heavy cattle and pork processing. As a
result, net margins in the pork production operation declined to $775,000 for
1994 as compared to $1.2 million in 1993.
Net sales volume in the Agri-Services segment for 1994 was $377.3 million, an
increase of $54.7 million or 16.9% as compared to 1993. Net margins from
operations for 1994 were $8.5 million which represented a $6.6 million increase
from 1993. The improvements were due primarily to increased sales of
agricultural production inputs such as fertilizers, chemicals, seed and animal
feeds through the Association's farm supply stores and independent dealers.
Hot, dry weather conditions in 1993 damaged pastures in the Southeast, which
resulted in increased sales of animal feeds in the fall and winter and led to
increased plantings necessary to reestablish pastures. Also, contributing to
these improvements was the increase in cotton acreage and generally favorable
weather conditions for planting during the late winter and spring of 1994.
In 1994, the Association's distribution, administrative and general expenses
were $121.4 million as compared to $111.5 million for 1993, an increase of
8.9%. The increase reflects higher incentive compensation expense related to
the increase in margins and general expense increases related to expansion in
the Poultry segment and increased net sales volume in the Agri-Services
segment. Distribution, general and administrative expenses as a percentage of
net sales were 7.8% for 1994 and 8.0% for 1993.
The various components included in other income (deductions) represented a
deduction of $4.3 million for 1994 as compared to income of $4.2 million for
1993. Interest income of $6.8 million for 1994 declined approximately $788,000
from 1993 due primarily to the sale of collateralized loans to an insurance
company. See Note 8 of Notes to Consolidated Financial Statements. Interest
----------------------------------------------------
expense for 1994 was $13.9 million as compared to $17.2 million in 1993. The
$3.2 million decline was due primarily to an 11% reduction in average
borrowings and lower interest rates. The Association's $1.1 million pro rata
share of the Golden Peanut
9
<PAGE>
Company's 1994 loss (equity in loss of partnership) represented a significant
portion of the decrease in other income (deductions) for 1994. Golden Peanut
Company adopted Statement of Financial Accounting Standards No. 106 (SFAS 106)
"Employers' Accounting for Postretirement Benefits other Than Pensions,"
resulting in a charge of $3.9 million to earnings in 1994. Also, the decline
in Golden Peanut Company's 1994 operating results was related to the general
oversupply situation that exists in the United States for domestic peanuts and
the increase of peanut based foods imported into the United States. See Note
----
9(b) of Notes to Consolidated Financial Statements. Miscellaneous, net
- ---------------------------------------------------
includes the Association's equity in the earnings of a partially-owned foreign
affiliate whose principal business activities include the marketing,
purchasing and resale of edible peanuts. The Association recognized income for
1994 and 1993 of $250,000 and $1.6 million, respectively. The decline in the
affiliate's net earnings was the result of lower market prices for foreign
sourced peanuts. Miscellaneous, net for 1994 includes patronage refunds from
other cooperatives and other dividends totaling $710,000 as compared to $2.9
million for 1993. Rental income of approximately $1.8 million was included in
miscellaneous, net for 1994 and 1993.
Fiscal 1995 Compared to Fiscal 1994
-----------------------------------
The Association's accounting cycle resulted in 53 weeks of operations in
1995 and 52 weeks in 1994.
Net sales volume for 1995 was $1.7 billion, which represented an 8.2%
increase over the prior fiscal year. Net margins from operations, before
general corporate expenses and other deductions, were $38.7 million as
compared to $60.6 million for 1994. The decline in net margins from operations
was due primarily to lower market prices for poultry products.
The Poultry segment's net sales volume of $1.3 billion was up 6.0% from 1994
as a result of increased pounds of poultry sold, which was partially offset by
lower average selling prices. The decline in average selling prices
contributed to a 35% decline in net margins from operations to $34.1 million.
The 4.9% decline in average selling prices for 1995 was due to excessive
supplies of competing meats and increased broiler industry production. The
impact of the decline in selling prices on net sales was offset by an 11.0%
increase in poultry pounds sold. The decline in poultry net margins from
operations was partially offset by an 8.6% decline in feed ingredient costs.
Due to the lower pork market prices, the poultry segment's Pork Division
incurred a net loss of $3.7 million as compared to a net margin of $775,000
for 1994.
In the Agri-Services segment, net sales volume for 1995 of $433.4 million
increased 14.9% as compared to 1994 due to increased sales of agricultural
production inputs, including fertilizer, chemicals and farm supplies sold
through the Association's farm supply stores and independent dealers. Net
margins from operations for 1995 were $4.6 million, down $3.9 million from
1994. The net sales increase for 1995 was due to increased sales prices for
fertilizer, increased application in the Southeast related to the increase in
cotton acreage and the addition of five retail outlets primarily in the
Mississippi Delta region. The decline in net margins from operations for 1995
was due primarily to lower margins on seed corn sold in the Midwest, reduced
gross margins on retail fertilizer sales and expenses related to the closing
of four suburban retail stores.
Distribution, administrative and general expenses for 1995 and 1994 were
$131.4 million and $121.4 million, respectively, which represent 7.8% of net
sales volume. The $10.0 million increase reflects the growth in the Agri-
Services operations, which was partially offset by lower incentive
compensation expenses related to the decrease in net operating margins.
The various components included in other income (deductions) represented a
deduction of $5.6 million for 1995 as compared to $4.3 million for 1994.
Interest income of $8.8 million for 1995 increased $2.0 million as a result of
increased crop financing for patrons and other customers. Interest expense for
1995 was $17.5 million as compared to $13.9 million in 1994 due to increased
average borrowings of approximately 10.0% and higher interest rates on short-
term borrowings. In 1995, interest expense includes $1.6 million related to
income tax litigation. The Association's $9.6 million pro rata share of the
Golden Peanut Company's 1995 loss (equity in loss of partnership) represented
a significant portion of other income (deductions) for 1995. The decline in
10
<PAGE>
Golden Peanut Company's 1995 operating results was primarily the result of low
peanut selling prices resulting from the general oversupply situation that
exists for domestic and export peanuts, reduced U.S. consumption of peanut
products and the increase of peanut based foods imported into the United
States. See Note 9(b) of Notes to Consolidated Financial Statements. The $3.1
-------------------------------------------------------
million gain on sale of investments represents the sale of common stock in two
agricultural related entities. Miscellaneous, net for 1995 includes the
Association's $1.7 million pro rata share in the loss of a partially-owned
foreign affiliate whose principal business activities include the marketing,
purchasing and resale of edible peanuts. In 1994, the Association recognized
income of $250,000 on this investment. Miscellaneous, net for 1995 includes
$1.7 million representing the Association's equity in the earnings of a pecan
processing and marketing enterprise in South Carolina. Miscellaneous, net for
1994 includes patronage refunds from other cooperatives and other dividends of
$4.4 million as compared to $710,000 for 1994. Net rental income of
approximately $2.0 million and $1.8 million, respectively, was included in
miscellaneous, net for 1995 and 1994.
In 1995 and 1994, the Association's combined federal and state effective tax
rates were 51% and 30%, respectively. The effective tax rate for 1995 reflects
$5.5 million of additional tax related to an adverse tax court decision. See
Note 6 of Notes to Consolidated Financial Statements.
- ----------------------------------------------------
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Association's liquidity is dependent upon funds from operations and
external sources of financing. The principal sources of external short-term
financing are proceeds from the continuous offering of Subordinated Loan
Certificates, an unsecured committed credit facility with a group of banks and
uncommitted letters and lines of credit. The Association had unused loan
commitments of $53.0 million and additional unused uncommitted facilities to
provide loans and letters of credit from banks aggregating approximately $15.1
million at July 1, 1995. A $50.0 million unsecured line of credit is available
beginning December 1, 1995 through May 31, 1996. The primary sources of
external long-term financing are a note agreement with an insurance company,
proceeds from the continuous offering of Subordinated Capital Certificates of
Interest and revolving credit agreements. See Note 4 of Notes to Consolidated
-------------------------------
Financial Statements.
- --------------------
Covenants under the terms of the loan agreements with lenders include
conditions that could limit short-term and long-term financing available from
various external sources. The terms require a ratio of current assets to
current liabilities of not less than 1.20:1, the ratio of senior funded debt
to total capitalization not to exceed 40% and total funded debt to total
capitalization not to exceed 50%. At July 1, 1995, Gold Kist's current ratio,
senior funded debt to total capitalization and total funded debt to
capitalization, determined under the loan agreements, were 1.41:1, 21% and
36%, respectively. The loan agreements apply to the Association and its
subsidiaries, excluding Golden Poultry. At July 1, 1995, the Association was
in compliance with the agreements. See Note 4 of Notes to Consolidated
-------------------------------
Financial Statements.
- --------------------
During 1993, net cash provided by operations and proceeds from long-term
debt were used primarily to repay short-term and long-term borrowings of $76.7
million. The Association and its consolidated subsidiaries investment
activities for 1993 included $23.3 million in expenditures for property, plant
and equipment. The Association's use of cash included $4.8 million for cash
patronage refunds and other equity payments as compared to $8.8 million in
1992. The expenditures for property, plant and equipment during 1993 included
$17.5 million related to expansion and improvements in the poultry operations,
as well as $5.5 million for the acquisition of retail stores, agricultural
chemical distribution facilities, and a chemical application equipment
manufacturer and distributor.
In 1994, existing cash balances, proceeds from long-term debt and short-term
borrowings, and net cash provided by operations of $36.8 million were used for
capital expenditures, repayments of long-term debt, patronage refunds and
other equity payments. Capital expenditures in 1994 included $32.7 million
related to expansion and improvements in poultry operations, as well as $3.8
million for improvements to retail stores and other agricultural operations.
During 1994, the Association had cash payments of approximately $22.7 million
for patronage refunds and other equity payments. These payments included $10.2
million representing the redemption of Revolving Fund Certificates and
Cumulative Preferred Capital Certificates of Interest with no fixed
maturities.
11
<PAGE>
During 1995, uses of cash included capital expenditures of $61.8 million,
$36.7 million for repayments of long-term debt and patronage refunds and other
equity distributions of $19.5 million. The funds for these investing and
financing activities were provided primarily by borrowings of approximately
$110.0 million and to a lesser extent, cash provided by operating activities
of $7.2 million and the sale of investments in marketable securities totaling
$8.9 million. Capital expenditures in 1995 included $43.3 million related to
expansion and improvement in poultry operations, as well as $18.0 million for
the acquisition of Agri-Services operations, improvements to retail stores and
the construction of cotton facilities.
The Association, including its non-cooperative subsidiaries, plans capital
expenditures of approximately $90.0 million in 1996 that primarily include
expenditures for expansion and technological advances in poultry production
and processing and expansion into cotton ginning and warehousing. In addition,
planned capital expenditures include other asset improvements and necessary
replacements. Management intends to finance the planned 1996 capital
expenditures with existing cash balances and cash provided by operating
activities and additional long-term borrowings as needed. In 1996, management
expects cash expenditures to approximate $12.0 million for equity redemptions.
The Association believes cash on hand at July 1, 1995 and cash expected to be
provided from operations, in addition to borrowings available under existing
credit arrangements, will be sufficient to maintain cash flows adequate for
the Association's projected growth and operational objectives during 1996.
EFFECTS OF INFLATION
The major factor affecting the Association's net sales volume and cost of
sales is the change in commodity market prices for broilers, hogs, feed grains
and fertilizers. The prices of these commodities are affected by world market
conditions and are volatile in response to supply and demand, as well as
political and economic events. The price fluctuations of these commodities do
not necessarily correlate with the general inflation rate. Inflation has,
however, affected operating costs such as labor, energy and material costs.
FUTURE ACCOUNTING REQUIREMENTS
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by
Creditors for Impairment of a Loan" and in October 1994, the FASB issued SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan-Income Recognition
and Disclosures," which must be applied by fiscal 1996. SFAS 114 and 118 are
not expected to have a significant impact upon adoption.
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which must
be applied by fiscal 1997. SFAS 121 is not expected to have a significant
impact upon adoption.
BUSINESS
Gold Kist offers both cooperative marketing and cooperative purchasing
services to its member patrons. The standard Membership, Marketing and/or
Purchasing Agreement between each member and Gold Kist does not require the
member to market agricultural products or to purchase farm supplies through
Gold Kist. The Association undertakes to market for the member agricultural
products of a type marketed by Gold Kist and to purchase or manufacture and
sell to the member farm supplies, provided handling such supplies is
advantageous for Gold Kist. The Association also is engaged in the purchase,
sale, processing and storage of cotton, serves as a contract procurement agent
for, and storer of, farm commodities such as soybeans and grain and is a
partner in a major peanut processing and marketing business and in a pecan
processing and marketing business.
Agriculture is generally cyclical in nature. Agricultural commodities are
subject to wide fluctuations in price, based on supply of the farm commodities
and demand for the raw or processed products. In addition, a portion of Gold
Kist's business is dependent on the demand of farmers for the purchase of
products, which is influenced by the general farm economy and the success of
particular crops. The cyclical nature of Gold Kist's operations related to
various commodities causes variations from year to year in sales, costs, and
prices which has resulted in net margins in certain years and losses in
others.
12
<PAGE>
Gold Kist follows the general practice of hedging varying amounts of its feed
ingredients by buying or selling options or contracts for future delivery in
the commodity markets. While hedging is designed to reduce the risk of
fluctuations in the market prices of commodities, hedging itself involves
substantial risks and can result in losses. Gold Kist's activities related to
commodities futures hedging strategies have not been significant to its feed
grain requirements, and the results of commodities options transactions have
not been material to results of operations.
For information relating to Gold Kist's industry segments, see Note 10 of
----------
Notes to Consolidated Financial Statements.
- ------------------------------------------
POULTRY
Gold Kist provides cooperative purchasing and marketing services to its
members who are producers under its integrated broiler or pork production
programs. Six broiler complexes operating on a cooperative basis and
encompassing broiler, pullet and breeder flocks, hatcheries, feed mills,
poultry processing plants and transportation facilities, are located in
Alabama, Florida and Georgia. Golden Poultry, a subsidiary owned 73% by Gold
Kist, owns and operates integrated broiler complexes on a non-cooperative
basis, in Alabama, Georgia and North Carolina. Carolina Golden Products
Company, a general partnership consisting of Golden Poultry and AgriGolden,
Inc., a wholly-owned subsidiary of Gold Kist, operates a poultry processing
complex on a non-cooperative basis in South Carolina.
The principal poultry products marketed are whole chickens, cut-up chickens,
segregated chicken parts and further processed products packaged in various
forms, i.e., bulk fresh ice pack, chill pack and frozen. Ice pack chicken is
sold primarily to distributors, grocery stores and fast food chains. Chill pack
chicken is packaged for retail sale and kept chilled by mechanical
refrigeration from the packing plant to the store counter. Frozen chicken is
marketed primarily to school systems, the military services, fast food chains
and in the export market. Further processed products, which include preformed
breaded chicken nuggets and patties, and deboned, skinless and marinated
products, are marketed primarily to fast food and grocery store chains. Chill
pack chicken is sold in certain localities under the Young 'n Tender(R) label;
however, some volume is sold under customer's private labels. Most of the
frozen chicken carries the Gold Kist(R) or Early Bird(R) label. Cornish game
hens are marketed in frozen form primarily to hotels, restaurants and grocery
stores under the Young 'n Tender and Medallion(R) labels.
Broiler products are marketed directly from the processing plant in each
broiler complex, from the Association's headquarters in Atlanta and from
separate distribution facilities located near major metropolitan areas. Gold
Kist is one of the largest poultry processors in the United States. It competes
with other large processors and with smaller companies on the basis of price,
quality and service.
The following table shows the amount and percentage of Gold Kist's net sales
volume contributed by sales of broiler products for each of the years
indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED (000'S OMITTED)
-----------------------------------
JUNE 26, JUNE 25, JULY 1,
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Broiler Products
Volume.................................... $1,041,175 $1,152,252 $1,226,104
Percentage (%)............................ 74.3 73.8 72.6
</TABLE>
Gold Kist also markets hogs raised by members and non-members in Alabama,
Georgia and North Carolina.
AGRI-SERVICES
Gold Kist purchases, manufactures and processes fertilizers, agricultural
chemicals, seed, pet food, feed, animal health products and other farm supply
items for distribution and sale at wholesale and retail. These products are
distributed through approximately 92 Gold Kist retail stores and at wholesale
to national accounts and independent dealers. The Gold Kist stores are located
in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, South Carolina
and Texas. A typical store is a complete farm supply center offering for sale
many types of feeds, animal health products, fertilizers, pesticides, seeds,
farm supplies and equipment. It also offers services such as customized
fertilizer spreading, field mapping, soil testing, insect scouting, and
agronomic and animal nutrition advice. Urban locations offer turf and garden
supplies, consumer items and houseware products.
13
<PAGE>
The Association operates a system of receiving and storing facilities for
unprocessed commodities located principally in Alabama, Florida, Georgia and
South Carolina. The principal farm commodities handled are soybeans, corn and
other grains. Gold Kist has aggregate storage capacity of approximately seven
million bushels. Approximately 98% of Gold Kist storage facilities are licensed
by the federal or state government and can issue negotiable warehouse receipts.
Pursuant to a renewable five year grain handling agreement which terminates in
July 2000, Gold Kist utilizes these facilities and assets exclusively as
independent buying points operating on a commission basis for the Archer
Daniels Midland Company.
Gold Kist distributes granular, blended and liquid fertilizers and fertilizer
materials in bagged and bulk form. Gold Kist is a member of CF Industries,
Inc., a cooperative owned by regional cooperatives, which produces and supplies
fertilizer materials to its members. For the fiscal year ended July 1, 1995,
Gold Kist purchased approximately 32% percent of its total volume of fertilizer
materials and products at market prices from CF Industries. The remaining
fertilizer materials and products were purchased from more than 50 other
suppliers.
The following table shows the amount and percentage of Gold Kist's net sales
volume contributed by sales of fertilizer and chemical products for each of the
years indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED (000'S
OMITTED)
--------------------------
JUNE 26, JUNE 25, JULY 1,
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Fertilizer and Chemicals
Volume............................................. $173,778 $211,218 $268,625
Percentage (%)..................................... 12.4 13.5 15.9
</TABLE>
Gold Kist's four AgriServices feed mills produce feeds distributed at
wholesale or at retail through the Gold Kist stores and independent dealers.
Approximately one-half of the feed distributed through the stores is delivered
in bulk form directly from the feed mill to the farm; the remainder is sold in
bag form.
In fiscal 1995, the Association began cotton ginning and storage operations
in Georgia. Cotton ginning facilities are operated at Byromville and DeSoto,
Georgia. New ginning and storage facilities are under construction at
Statesboro, Georgia and a central storage warehouse is under construction in
Moultrie, Georgia. The Association will provide ginning and storage services to
members and will market cotton purchased from members to domestic and foreign
textile mills.
AgraTech Seeds, Inc., a wholly-owned subsidiary of Gold Kist, owns and
operates a seed business which consists of the development, contract
production, processing and sale primarily of proprietary seed varieties. Seed
is marketed by AgraTech Seeds at wholesale to seed retailers, including Gold
Kist stores and independent seed retail outlets, in the Southeast and Midwest.
AgraTech Seeds contracts with farmers for the production of seed and processes
or contracts for the processing of approximately 95% of the seeds it
distributes. Proprietary corn, soybean, sorghum and peanut seed varieties are
marketed under the trademark AgraTech (R).
PARTNERSHIP INTEREST
Gold Kist, the Archer Daniels Midland Company ("ADM") and Alimenta Processing
Corporation ("Alimenta") are partners in Golden Peanut Company, a general
partnership formed to operate a peanut procuring, processing, and marketing
business. Each partner leases peanut facilities, equipment, and fixed assets to
the partnership. Gold Kist, as a general partner, participates in all
partnership allocations in proportion to its 33 1/3% partnership interest. See
Note 9(b) of Notes to Consolidated Financial Statements.
- -------------------------------------------------------
Golden Peanut Company procures, processes and markets peanuts and peanut by-
products in each of the three peanut producing areas of the United States
(Southeast, Southwest and Virginia/Carolina). Golden Peanut Company is a major
processor of edible peanuts and is active in domestic and international
markets. The principal peanut product is shelled edible peanuts. Shelled edible
peanuts are marketed primarily to manufacturers of peanut butter, candy and
salted nuts and are sold in the export market. Golden Peanut also processes
peanuts for sale in the shell or for processing by others into oil and meal.
14
<PAGE>
EXPORT SALES
Gold Kist owns no physical facilities overseas and has no overseas
employees. Product sales managers maintain sales networks overseas through
contacts with independent dealers and customers. During the fiscal year ended
July 1, 1995, the approximate export sales volume of the primary export
product (poultry) was $70.1 million. During that period, export sales of
poultry were mainly to customers in the Commonwealth of Independent States,
Eastern Europe, Far East, Mexico and the Caribbean area. Subsidized foreign
competition has depressed export demand for many products. Export sales
involve an additional element of transportation and credit risk to the shipper
beyond that normally encountered in domestic sales.
PATRONAGE REFUNDS
The By-Laws of Gold Kist provide that Gold Kist shall operate on a
cooperative basis. After the close of each fiscal year, the net taxable
margins of Gold Kist for that year from business done with or for member
patrons (patronage margins) are computed and, after adjustments, are
distributed to members as patronage refunds on the basis of their respective
patronage during that year. Patronage refunds are distributed in the form of
either qualified or nonqualified written notices of allocation (as defined for
purposes of Subchapter T of the Internal Revenue Code). If qualified notices
are used, at least 20% of each patronage refund is distributed in cash or by
qualified check (as defined in the Internal Revenue Code) with the remainder
distributed in written notices of allocated reserves. See Notes 1(f) and 6 of
-------------------
Notes to Financial Statements. Allocated reserves distributed as a part of
- ------------------------------
either qualified or nonqualified notices bear no interest and are subordinate
in the event of insolvency of the Association to outstanding patronage
dividend certificates and to all indebtedness of Gold Kist. Patronage refunds
distributed by check or as qualified written notices are deductible from Gold
Kist's gross income for federal income tax purposes. To the extent that Gold
Kist distributes nonqualified written notices of allocation, has income from
transactions with nonmembers or has income from non-patronage sources, it will
be taxed at the corporate rate. Gold Kist has subsidiaries which are not
cooperatives, and the income of these subsidiaries is subject to corporate
income taxes.
DESCRIPTION OF SUBORDINATED CAPITAL CERTIFICATES OF INTEREST
Gold Kist's Subordinated Capital Certificates of Interest of the six series
offered hereby are issued under indentures (the "Indentures") between Gold
Kist and Trust Company Bank, as Trustee (the "Trustee"). A separate Indenture
dated as of September 1, 1979, amended by a First Supplemental Indenture dated
as of September 1, 1980 and a Second Supplemental Indenture dated as of
September 1, 1982, governs each of the following three series of certificates
offered hereby: the Fifteen Year Subordinated Capital Certificates of Interest
(Series D), (the "Fifteen Year Certificates"); the Ten Year Subordinated
Capital Certificates of Interest (Series D), (the "Ten Year Certificates");
and the Five Year Subordinated Capital Certificates of Interest (Series C),
(the "Five Year Certificates"). The Two Year Subordinated Capital Certificates
of Interest (Series A), (the "Two Year Certificates") are governed by an
Indenture dated as of September 1, 1980. The Seven Year Subordinated Capital
Certificates of Interest (Series A), (the "Seven Year Certificates") and the
Three Year Subordinated Capital Certificates of Interest (Series A), (the
"Three Year Certificates") are governed by separate Indentures dated as of
September 1, 1985. The forms of the Indentures and Supplemental Indentures are
filed as exhibits to Registration Statements No. 2-59948, No. 2-65587, No.
2-69267, No. 2-79538 and No. 33-428. With the exception of the maturities of
and interest rates borne by the certificates issued thereunder, the redemption
provisions, and the other exceptions indicated below, the terms of the six
Indentures, as amended, and the certificates issued thereunder and offered
hereby are identical in all material respects. The following summaries of
certain provisions of the Indentures do not purport to be complete, and where
particular provisions of the Indentures are referred to, such provisions
including definitions of certain terms, are incorporated by reference as a
part of such summaries or terms, which are qualified in their entirety by such
reference.
The certificates are unsecured obligations of Gold Kist which are
transferable on the books of Gold Kist when properly endorsed, but are not
negotiable. (Section 2.04 of the Indentures.) The certificates are issued in a
15
<PAGE>
minimum amount of $500 or in any larger amount. The certificates are issued as
of the date on which payment of the purchase price is received by Gold Kist or
its agent for such purpose, except that, where payment is received by the 15th
of January, April, July or October, the certificate will be issued as of the
first of such month, and where payment is received by the 10th of any other
month, the certificate will be issued as of the first of such month. Each
Fifteen Year Certificate matures Fifteen years from the date of such
certificate; each Ten Year Certificate matures ten years from the date of such
certificate; each Seven Year Certificate matures seven years from the date of
such certificate; each Five Year Certificate matures five years from the date
of such certificate; each Three Year Certificate matures three years from the
date of such certificate; and each Two Year Certificate matures two years from
the date of such certificate. (Section 2.01 of the Indentures.)
Each certificate bears interest from the date issued at the per annum rate
stated on the face thereof. The rate of interest borne by certificates of each
series shall be determined from time to time by the Board of Directors of Gold
Kist or its delegate, but no change in the rate will affect any certificates
theretofore issued. The Five, Seven, Ten and Fifteen Year Certificates are
further subdivided and designated by subseries. Each subseries encompasses all
Certificates of the particular series issued pursuant to a single
determination of the rate of interest to be borne by Certificates of that
series; more than one subseries may bear the same rate of interest. The
current rate of interest borne by certificates of each series is set forth on
the front cover of this Prospectus. Interest is payable on July 1 of each year
to holders of record as of the preceding June 30. Holders of $5,000 or more of
certificates of a given series are entitled to payment of interest on such
certificates quarterly, on the first day in January, April, July and October
of each year. (Sections 1.01 and 2.01 of the Indentures.)
Upon the written request of a holder of certificates, Gold Kist will retain
the interest otherwise payable to the holder and pay such interest (i) at the
maturity of the certificate, (ii) annually (if the interest is accumulated
quarterly and if requested by the holder), or (iii) subject to any applicable
redemption penalty, upon redemption prior to maturity, in each case together
with interest thereon at the per annum rate stated on the face of the
certificate compounded as of each Interest Payment Date. Any holder who makes
such a request may at any time, by written notice delivered to Gold Kist at
its principal office in Atlanta, Georgia, terminate such request or withdraw
any interest so retained together with accrued interest thereon through the
date of withdrawal, or both. The certificates will be paid in full, including
all principal and accrued but unpaid interest, at maturity. (Section 5.02 of
the Indentures.)
The Indentures do not limit the aggregate principal amount of certificates
which may be issued thereunder and each Indenture may be modified by Gold Kist
and the Trustee, without the consent of the certificateholders, to provide for
the issuance under the Indentures of one or more additional series of
certificates having terms different from those of the series offered hereby.
(Sections 2.01 and 10.01 of the Indentures.) Certificates of previous series
have been issued and are outstanding under certain of the Indentures governing
the certificates. As of July 1, 1995, there were the following aggregate
principal amounts of the series offered hereby outstanding: Fifteen Year--
$9,887,000; Ten Year--$8,886,000; Seven Year--$11,305,000; Five Year--
$12,456,000; Three Year--$8,154,000; and Two Year--$8,095,000. The Indentures
do not limit the amount of other securities, either secured or unsecured,
superior or subordinate to the certificates, which may be issued by Gold Kist.
REDEMPTION AT THE REQUEST OF CERTIFICATEHOLDER
Upon the death of a registered holder of a certificate, at the request of
(a) the personal representative of the deceased holder's estate or (b) any
surviving joint holder of a jointly held certificate, Gold Kist will redeem
certificates held by such deceased holder. In such event, redemption shall be
at the full face value of the certificate redeemed plus interest accrued and
unpaid thereon to the date of redemption only. (Section 3.01 of the
Indentures.)
Additional Redemptions at the Request of Certificateholder
----------------------------------------------------------
In addition to redemption upon the death of a registered holder of a
certificate, Gold Kist agrees to redeem prior to maturity a limited amount of
the certificates of any series of Subordinated Capital Certificates of
Interest
16
<PAGE>
offered hereby at the request of the registered holders. The maximum principal
amount of certificates of any series that Gold Kist will redeem during each
calendar quarter shall be equal to five percent (5%) of the aggregate
principal amount of all certificates of that series outstanding at the end of
the last preceding calendar quarter. For example, if there were $5,000,000 in
principal amount of Fifteen Year Subordinated Capital Certificates of Interest
(Series D) outstanding on March 31, 1996, Gold Kist would redeem at the
request of the holders up to $250,000 of such Fifteen Year Certificates during
the quarter beginning on April 1, 1996 and ending on June 30, 1996. (Section
3.04 of the Indenture governing the Fifteen Year Certificates; Section 3.03 of
the remaining Indentures.)
All such redemptions shall be only at the written request of the registered
holder(s) of the certificates redeemed delivered to the Association at its
principal office in Atlanta, Georgia. Redemptions will be made in the order
that such requests are received, and the redemption date will be a date
determined by Gold Kist which is within fifteen (15) days after such request
is received.
The redemption price of each certificate redeemed will be an amount equal to
the full principal amount of the certificate, plus interest accrued but unpaid
to the redemption date (including, if appropriate, interest compounded on
interest retained by the Association at the request of the holder) less a
redemption penalty computed in accordance with the following table.
REDEMPTION PENALTIES APPLICABLE TO VARIOUS CLASSES
<TABLE>
<C> <S>
Two and Three Year Certificates --An amount equal to six (6)
months' interest on the
principal amount of the
certificate computed at the
nominal (simple interest)
rate shown on the face of the
certificate.
Five, Seven, Ten and Fifteen Year Certificates --An amount equal to one (1)
year's interest on the
principal amount of the
certificate computed at the
nominal (simple interest)
rate shown on the face of the
certificate.
</TABLE>
The redemption penalty computed as provided above will be deducted
regardless of the length of time the certificate has been outstanding. The
---
penalty could exceed the amount of interest paid or accrued on the certificate
- ------------------------------------------------------------------------------
to the redemption date, thus resulting in a redemption price which is less
- --------------------------------------------------------------------------
than the principal amount of the certificate.
- ---------------------------------------------
The following examples illustrate the calculation of the redemption price
assuming the stated principal amounts and interest rates. The Total Redemption
Price in each example will vary with different interest rates and amounts of
principal.
A. For a Five Year Certificate in the principal amount of $1,000 bearing
interest at 6.75%, purchased on January 1, 1996, and redeemed at the request
of the holder on June 14, 1996, the redemption price would equal:
<TABLE>
<C> <C> <S>
$1,000.00 (Principal amount)
plus 30.51 (165 days' accrued interest at 6.75% per annum)
---------
$1,030.51
less 67.50 (1 year's simple interest at 6.75% per annum)
---------
$ 963. 01 (Total Redemption Price)
</TABLE>
17
<PAGE>
B. For a Five Year Certificate in the principal amount of $5,000, bearing
interest at 6.75% (paid quarterly at the election of the holder), purchased on
January 1, 1996 and redeemed at the request of the holder on June 15, 1996,
the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
plus 69.35 (75 days' accrued interest at 6.75% per annum. Interest
--------- previously paid on April 1, 1996 equals $84.38)
$5,069.35
less 337.50 (1 year's simple interest at 6.75% per annum)
---------
$4,731.85 (Total Redemption Price)
</TABLE>
C. For a Five Year Certificate in the principal amount of $5,000 bearing
interest at 6.75% (accumulated quarterly at the election of the holder),
purchased on January 1, 1996, and redeemed at the request of the holder on
June 15, 1998, the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
plus 890.92 (2 1/4 years, 75 days' accrued interest at 6.75% per annum
--------- accumulated and compounded quarterly)
$5,890.92
less 337.50 (1 year's simple interest at 6.75% per annum)
---------
$5,553.42 (Total Redemption Price)
</TABLE>
Except to the extent described above, certificates cannot be cashed by the
holder before maturity.
The indentures governing the Subordinated Capital Certificates of each
series do not contain additional redemption provisions requiring Gold Kist to
repurchase the certificates at the request of the certificateholder upon the
occurrence of a change in control of Gold Kist, nor do the indentures contain
any provisions designed to afford protection to certificateholders in the
event of a highly leveraged transaction involving Gold Kist.
REDEMPTION AT THE OPTION OF GOLD KIST
Gold Kist may, at its option, redeem all, or from time to time any part, of
the certificates of any subseries of Five, Seven, Ten or Fifteen Year
Certificates on any date prior to maturity. The redemption price of each
certificate redeemed at the option of Gold Kist will be an amount equal to the
full principal amount redeemed (whether the certificate is redeemed in whole
or in part), plus interest accrued but unpaid on the principal amount redeemed
to the redemption date (including, if appropriate, interest compounded on
interest retained by the Association at the request of the holder), plus a
redemption premium equal to one (1) year's interest on the principal amount
redeemed, computed at the nominal (simple interest) rate shown on the face of
the certificate. Notice of redemption will be mailed to each affected
certificateholder not less than 15 nor more than 60 days before the redemption
date. Gold Kist is not required to transfer or exchange any certificates
selected for redemption in whole or in part.
Gold Kist does not have the option of redeeming Two or Three Year
-----------------------------------------------------------------
Certificates prior to maturity.
- -------------------------------
SUBORDINATION
In case of liquidation of Gold Kist, whether voluntary or involuntary, the
payment of the principal of and interest on the certificates is subordinate to
the payment in full of the principal of and interest on any notes or accounts
payable, now due or hereafter made by Gold Kist to any bank, any other lending
agency or creditor ("Superior Indebtedness"); except that none of the
Subordinated Capital Certificates of Interest issued pursuant to the
Indentures dated as of December 1, 1977, September 1, 1979, September 1, 1980
or September 1, 1985, the One Year Subordinated Loan Certificates issued
pursuant to the indentures dated as of December 1, 1977 or September 1, 1979,
the One Year or Six Month Subordinated Large Denomination Loan Certificates
issued pursuant to the Indentures dated as of September 1, 1985, the 5%
Cumulative Preferred Capital Certificates of
18
<PAGE>
Interest previously issued by Gold Kist, or the Cumulative Preferred Capital
Certificates of Interest of any other series previously issued by Gold Kist
shall be Superior Indebtedness, but shall rank equally with the certificates
outstanding under each of the Indentures. As of July 1, 1995, Superior
Indebtedness amounted to approximately $384,402,000, and additional Superior
Indebtedness, without limitation, may be created from time to time. (Article
Four and Section 1.01 of the Indentures.) Gold Kist is jointly and severally
liable for (i) the obligations of Golden Peanut Company, a general partnership
in which Gold Kist has a 33 1/3% interest and (ii) the obligations of Young
Pecan Company, a general partnership in which Gold Kist has a 25% equity
interest and a 35% earnings (loss) allocation. Any such liability incurred
would constitute additional Superior Indebtedness. See Note 9(b) of Notes to
---------------------
Consolidated Financial Statements.
- ----------------------------------
Nothing contained in the subordination provisions prevents Gold Kist from
making payments of principal or interest on the certificates except during the
pendency of any dissolution or liquidation proceedings with respect to Gold
Kist.
DUTIES OF TRUSTEE
Trust Company Bank is the Trustee under each Indenture and is to perform
only such duties as are specifically set forth in the Indenture. (Section 8.01
of the Indentures.) In the event of a default, the holders of a majority in
aggregate principal amount of the certificates outstanding at the time under
any Indenture have the right to require the Trustee to take action to remedy
such default. (Section 7.12 of the Indentures.)
MODIFICATION OF THE INDENTURE
Each Indenture contains provisions permitting Gold Kist and the Trustee, (i)
with the written consent of the holders of not less than 66 2/3% in aggregate
principal amount of all the certificates outstanding under the Indenture on a
record date set for such purpose, to execute supplemental indentures amending
the provisions of the Indenture or any supplemental indenture so as to modify
the rights of the holders of all the certificates or (ii) with the written
consent of the holders of not less than 66 2/3% in aggregate principal amount
of the certificates of a given series outstanding under the Indenture, on a
record date set for such purpose, to execute supplemental indentures amending
the provisions of the Indenture relating to certificates of such series;
provided that no such supplemental indenture shall (a) extend the maturity of
any certificate or reduce the principal amount thereof or reduce the rate or
extend the time of payment of interest, (b) reduce the 66 2/3% requirement as
to the consent of the holders of the certificates outstanding under the
Indenture or of any series of certificates outstanding thereunder, as
required, for amendment of the provisions of the Indenture, or (c) modify the
provisions of the Indenture which allow holders of not less than 75% of all
certificates outstanding under the Indenture to consent to the postponement of
interest on all certificates outstanding under the Indenture for a period not
exceeding three (3) years from its due date, without the consent of the holder
of each certificate affected thereby. (Section 10.02 of the Indentures.)
DEFAULTS AND NOTICE THEREOF
Each Indenture provides that any of the following shall constitute an event
of default: (a) failure to pay principal when due; (b) failure to pay interest
when due, continued for sixty (60) days; (c) certain events of bankruptcy or
insolvency; and (d) failure to perform any other covenant or agreement
contained in the Indenture, which failure continues for ninety (90) days after
notice to Gold Kist by the Trustee or holders of 10% in aggregate principal
amount of the certificates outstanding under the Indentures. (Section 7.01 of
the Indentures.)
Each Indenture provides that the Trustee shall, within ninety (90) days
after the occurrence of an event of default, give to the Certificateholders
notice of all such defaults unless such defaults have been cured, provided
that, except in the case of a default in the payment of principal of or
interest on any of the certificates outstanding under the Indenture, the
Trustee shall be protected in withholding such notice if, and so long as, the
Trustee determines that the withholding of such notice is in the interest of
the Certificateholders. (Section 8.02 of the Indentures.)
19
<PAGE>
Each Indenture provides that upon the occurrence of a default, the Trustee
or the holders of not less than 25% in aggregate principal amount of the
certificates then outstanding under the Indenture may declare the principal of
all certificates outstanding under the Indenture immediately due and payable.
(Section 7.02 of the Indentures.)
SATISFACTION AND DISCHARGE OF INDENTURE
Each Indenture shall be discharged upon payment of all certificates
outstanding thereunder or upon deposit with the Trustee of funds sufficient
therefor. (Section 11.01 of the Indenture.)
AUTHENTICATION AND DELIVERY OF CERTIFICATES
The certificates may be authenticated by the Trustee in the form set forth
in each Indenture and delivered upon the written order of Gold Kist without
any further corporate action. (Section 2.03 of the Indentures.)
STATEMENTS AS TO COMPLIANCE
Each Indenture requires Gold Kist to furnish to the Trustee annually a
statement that Gold Kist has fulfilled all of its obligations throughout the
year, or specifying any default in the fulfillment of any such obligation.
(Section 5.07 of the Indentures.) In addition, upon any application or demand
by Gold Kist to the Trustee to take any action under any of the provisions of
the Indenture, Gold Kist shall first furnish to the Trustee an Officer's
Certificate stating that all such conditions precedent provided for in the
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel to Gold Kist stating that in the opinion of such counsel
all such conditions precedent have been complied with. (Section 1.02 of the
Indentures.)
CONCERNING THE TRUSTEE
Gold Kist has a $10,000,000 revolving credit line, a $10,000,000 committed
364 day credit line and a $10,000,000 committed seasonal credit line (December
1995 through May 1996), all of which can be used for seasonal advances, with
the Trust Company Bank, under which varying amounts are outstanding from time
to time. Any such indebtedness to the Trust Company Bank would constitute
Superior Indebtedness as defined in the Indenture. Gold Kist also maintains
deposit accounts with the Trust Company Bank, and from time to time the Bank
provides other banking and trust services to Gold Kist in the ordinary course
of its business. Trust Company Bank serves as trustee under indentures
governing certain previously issued series of Subordinated Capital
Certificates of Interest and Subordinated Loan Certificates.
DESCRIPTION OF SUBORDINATED LOAN CERTIFICATES
AND SUBORDINATED LARGE DENOMINATION LOAN CERTIFICATES
Gold Kist's Subordinated Loan Certificates (Series C) (the "One Year Loan
Certificates") are issued under an indenture (the "Indenture") dated as of
September 1, 1979, amended by a First Supplemental Indenture dated as of
September 1, 1980, between Gold Kist and Trust Company Bank, as Trustee (the
"Trustee"). Gold Kist's Subordinated Large Denomination Loan Certificates of
the two series offered hereby are issued under indentures (the "Indentures")
between Gold Kist and Trust Company Bank, as Trustee (the "Trustee"). Separate
Indentures dated as of September 1, 1985 govern the One Year Subordinated
Large Denomination Loan Certificates (Series A) (the "One Year Jumbo Loan
Certificates") and the Six Month Subordinated Large Denomination Loan
Certificates (Series A) (the "Six Month Jumbo Loan Certificates"). The forms
of the Indentures and Supplemental Indentures are filed as exhibits to
Registration Statements No. 2-65587, No. 2-69267, and No. 33-428. The
following summaries of certain provisions of the Indentures do not purport to
be complete, and where particular provisions of the Indentures are referred
to, such provisions, including definitions of certain terms, are incorporated
by reference as a part of such summaries or terms, which are qualified in
their entirety by such references.
20
<PAGE>
The loan certificates are unsecured obligations of Gold Kist, which are
transferable on the books of Gold Kist when properly endorsed, but are not
negotiable. (Section 2.04 of the Indentures). The One Year Loan Certificates
are issued in a minimum amount of $500 or in any larger amount. The One Year
Jumbo Loan Certificates and Six Month Jumbo Loan Certificates are issued in
minimum amounts of $50,000 and $20,000, respectively, or any larger amount.
The loan certificates are issued as of the date on which payment of the
purchase price is received by Gold Kist or its agent for such purpose and
mature one year or six months, respectively, from that date.
Loan certificates bear interest from the dates issued at the per annum rate
stated on the face thereof. The rate of interest borne by loan certificates
shall be determined from time to time by the Board of Directors of Gold Kist
or its delegate, but no change in the rate will affect any loan certificates
theretofore issued. The current rates of interest borne by loan certificates
are set forth on the front cover of this Prospectus. Interest is payable on
the maturity date. Holders of $5,000 or more of the One Year Loan Certificates
are entitled to payment of interest on such loan certificates quarterly, on
the first day of January, April, July and October of each year. Holders of the
One Year Jumbo Loan Certificates and Six Month Jumbo Loan Certificates are
entitled to payment of interest on such loan certificates monthly, on the
first day of each month. (Sections 1.01 and 2.01 of the Indentures.)
Upon the written request of a holder of loan certificates entitled to
quarterly or monthly interest payments, on each Interest Payment Date Gold
Kist will retain the interest otherwise payable to the holder and pay such
interest at the maturity of the certificate, or subject to any applicable
redemption penalty, upon redemption prior to maturity, together with interest
thereon at the per annum rate stated on the face of the certificate,
compounded as of each Interest Payment Date. The holder may terminate such
request or withdraw any interest so retained together with interest accrued on
such interest through the date of withdrawal, or both, at any time by written
request delivered to Gold Kist at its principal office in Atlanta, Georgia.
The loan certificates will be paid in full, including all principal and
accrued but unpaid interest, at maturity. (Section 5.02 of the Indentures.)
The Indentures do not limit the aggregate principal amount of loan
certificates which may be issued thereunder, and each Indenture may be
modified by Gold Kist and the Trustee, without the consent of the
certificateholders, to provide for the issuance under the Indenture of one or
more additional series of loan certificates having terms different from those
of the series offered hereby. (Sections 2.01 and 10.01 of the Indentures.) As
of July 1, 1995, there were the following aggregate principal amounts of the
series offered hereby outstanding: One Year Loan Certificates -- $12,981,000,
One Year Jumbo Loan Certificates -- $14,382,000, and Six Month Jumbo Loan
Certificates -- $-0-. The Indentures do not limit the amount of other
securities, either secured or unsecured, superior or subordinate to the loan
certificates, which may be issued by Gold Kist.
REDEMPTION AT THE REQUEST OF CERTIFICATEHOLDER
Upon the death of a registered holder of a loan certificate, at the request
of (a) the personal representative of the deceased holder's estate or (b) any
surviving joint holder of a jointly held certificate, Gold Kist will redeem
loan certificates held by such deceased holder. In such event, redemption
shall be at the full face value of the certificate redeemed plus interest
accrued and unpaid thereon to the date of redemption only. (Section 3.02 of
the Indentures.)
Additional Redemptions at the Request of Certificateholder
----------------------------------------------------------
In addition to redemptions upon the death of a registered holder of a loan
certificate, Gold Kist agrees to redeem prior to maturity the loan
certificates of any series offered hereby at the request of the registered
holders. (Section 3.03 of the Indentures.)
All such redemptions shall be only at the written request of the registered
holder(s) of the loan certificates redeemed delivered to the Association at
its principal office in Atlanta, Georgia. Redemptions will be made in the
order that such requests are received, and the redemption date will be a date
determined by Gold Kist which is within fifteen (15) days after such request
is received.
21
<PAGE>
The redemption price of each loan certificate redeemed will be an amount
equal to the full principal amount of the certificate, plus interest accrued
----
but unpaid to the redemption date (including, if appropriate, interest
compounded on interest retained by the Association at the request of the
holder) less a redemption penalty computed in accordance with the following
----
table.
REDEMPTION PENALTIES APPLICABLE TO VARIOUS CLASSES
<TABLE>
<C> <S>
One Year Loan Certificates and One --An amount equal to three (3) months'
Year Jumbo Loan Certificates interest on the principal amount of the
certificate computed at the nominal
(simple interest) rate shown on the
face of the certificate.
Six Month Jumbo Loan Certificates --An amount equal to one (1) month's
interest on the principal amount of the
certificate computed at the nominal
(simple interest) rate shown on the
face of the certificate.
</TABLE>
The redemption penalty computed in this manner will be deducted regardless
of the length of time the loan certificate has been outstanding. The penalty
-----------
could exceed the amount of interest paid or accrued on the loan certificate to
- ------------------------------------------------------------------------------
the redemption date, thus resulting in a redemption price which is less than
- ----------------------------------------------------------------------------
the principal amount of the loan certificate.
- --------------------------------------------
The following examples illustrate the calculation of the redemption price
assuming the stated principal amounts and interest rates. The Total Redemption
Price in each example will vary with different interest rates and amounts of
principal.
A. For a One Year Loan Certificate in the principal amount of $1,000
bearing interest at 6.00%, purchased on January 1, 1996, and redeemed at
the request of the holder on February 15, 1996, the redemption price would
equal:
<TABLE>
<C> <C> <S>
$1,000.00 (Principal amount)
plus 7.40 (45 days' accrued interest at 6.00% per annum)
---------
$1,007.40
less 15.00 (3 month's simple interest at 6.00% per annum)
---------
$ 992.40 (Total Redemption Price)
</TABLE>
B. For a One Year Loan Certificate in the principal amount of $5,000,
bearing interest at 6.00% (paid quarterly at the election of the holder),
purchased on January 1, 1996 and redeemed at the request of the holder on
June 15, 1996, the redemption price would equal:
<TABLE>
<C> <S>
$5,000.00 (Principal amount)
plus 61.64 (75 days' accrued interest at 6.00% per annum. Interest
---------
$5,061.64 previously paid on April 1, 1996 equals $75.00)
less 75.00 (3 month's simple interest at 6.00% per annum)
---------
$4,986.64 (Total Redemption Price)
</TABLE>
Total redemption price ($4,986.64) plus interest previously paid ($75.00)
equals $5,061.64.
The indentures governing the loan certificates of each series do not contain
additional redemption provisions requiring Gold Kist to repurchase the
certificates at the request of the certificateholder upon the occurrence of a
change in control of Gold Kist, nor do the indentures contain any provisions
designed to afford protection to certificateholders in the event of a highly
leveraged transaction involving Gold Kist.
Gold Kist does not have the option of redeeming loan certificates prior to
--------------------------------------------------------------------------
maturity.
- --------
22
<PAGE>
SUBORDINATION
In case of liquidation of Gold Kist, whether voluntary or involuntary, the
payment of the principal of and interest on the loan certificates is
subordinate to the payment in full of the principal of and interest on any
notes or accounts payable, now due or hereafter made by Gold Kist to any bank,
any other lending agency or creditor ("Superior Indebtedness"); except that
none of the Subordinated Capital Certificates of Interest issued pursuant to
the Indentures dated as of December 1, 1977, September 1, 1979, September 1,
1980 or September 1, 1985, the One Year Subordinated Loan Certificates issued
pursuant to the Indentures dated as of December 1, 1977 or September 1, 1979,
the One Year or Six Month Subordinated Large Denomination Loan Certificates
issued pursuant to the Indentures dated as of September 1, 1985, the 5%
Cumulative Preferred Capital Certificates of Interest previously issued by
Gold Kist, or the Cumulative Preferred Capital Certificates of Interest of any
other series previously issued by Gold Kist shall be Superior Indebtedness,
but shall rank equally with the loan certificates outstanding under each of
the Indentures. As of July 1, 1995, Superior Indebtedness amounted to
approximately $384,402,000, and additional Superior Indebtedness, without
limitation, may be created from time to time. (Article Four and Section 1.01
of the Indentures.) Gold Kist is jointly and severally liable for (i) the
obligations of Golden Peanut Company, a general partnership in which Gold Kist
has a 33 1/3% interest, and (iii) the obligations of Young Pecan Company, a
general partnership in which Gold Kist has a 25% equity interest and a 35%
earnings (loss) allocation. Any such liability incurred would constitute
additional Superior Indebtedness. See Note 9 (b) of Notes to Consolidated
-----------------------------------
Financial Statements.
- ---------------------
Nothing contained in the subordination provisions prevents Gold Kist from
making payments of principal or interest on the loan certificates except
during the pendency of any dissolution or liquidation proceedings with respect
to Gold Kist.
DUTIES OF TRUSTEE
Trust Company Bank is the Trustee under each Indenture and is to perform
only such duties as are specifically set forth in the Indenture. (Section 8.01
of the Indentures.) In the event of a default, the holders of a majority in
aggregate principal amount of the loan certificates outstanding at the time
under any Indenture have the right to require the Trustee to take action to
remedy such default. (Section 7.12 of the Indentures.)
MODIFICATION OF THE INDENTURE
Each Indenture contains provisions permitting Gold Kist and the Trustee, (i)
with the written consent of the holders of not less than 66 2/3% in aggregate
principal amount of all the loan certificates outstanding under the Indenture
on a record date set for such purpose, to execute supplemental indentures
amending the provisions of the Indenture or any supplemental indenture so as
to modify the rights of the holders of all the loan certificates or (ii) with
the written consent of the holders of not less than 66 2/3% in aggregate
principal amount of the loan certificates of a given series outstanding under
the Indenture, on a record date set for such purpose, to execute supplemental
indentures amending the provisions of the Indenture relating to loan
certificates of such series; provided that no such supplemental indenture
shall (a) extend the maturity of any loan certificate or reduce the principal
amount thereof or reduce the rate or extend the time of payment of interest,
(b) reduce the 66 2/3% requirement as to the consent of the holders of the
loan certificates outstanding under the Indenture or of any series of
certificates outstanding thereunder, as required, for amendment of the
provisions of the Indenture, or (c) modify the provisions of the Indenture
which allow holders of not less than 75% of all loan certificates outstanding
under the Indenture to consent to the postponement of interest on all loan
certificates outstanding under the Indenture for a period not exceeding three
(3) years from its due date, without the consent of the holder of each loan
certificate affected thereby. (Section 10.02 of the Indentures.)
DEFAULTS AND NOTICE THEREOF
Each Indenture provides that any of the following shall constitute an event
of default: (a) failure to pay principal when due; (b) failure to pay interest
when due, continued for sixty (60) days; (c) certain events of
23
<PAGE>
bankruptcy or insolvency; and (d) failure to perform any other covenant or
agreement contained in the Indenture, which failure continues for ninety (90)
days after notice to Gold Kist by the Trustee or holders of at least 10% in
aggregate principal amount of the outstanding loan certificates under the
Indenture. (Section 7.01 of the Indentures.)
Each Indenture provides that the Trustee shall, within ninety (90) days
after the occurrence of an event of default, give to the Certificateholders
notice of all such defaults unless such defaults have been cured, provided
that, except in the case of a default in the payment of principal of or
interest on any of the loan certificates outstanding under the Indenture, the
Trustee shall be protected in withholding such notice if, and so long as, the
Trustee determines that the withholding of such notice is in the interest of
the Certificateholders. (Section 8.02 of the Indentures).
Each Indenture provides that upon the occurrence of a default, the Trustee
or the holders of not less than 25% in aggregate principal amount of the loan
certificates then outstanding under the Indenture may declare the principal of
all loan certificates outstanding under the Indenture immediately due and
payable (Section 7.02 of the Indentures.)
SATISFACTION AND DISCHARGE OF INDENTURE
Each Indenture shall be discharged upon payment of all loan certificates
outstanding thereunder or upon deposit with the Trustee of funds sufficient
therefor. (Section 11.01 of the Indentures.)
AUTHENTICATION AND DELIVERY OF CERTIFICATES
The loan certificates may be authenticated by the Trustee in the form set
forth in each Indenture and delivered upon the written order of Gold Kist
without any further corporate action. (Section 2.03 of the Indentures.)
STATEMENTS AS TO COMPLIANCE
Each Indenture requires Gold Kist to furnish to the Trustee annually a
statement that Gold Kist has fulfilled all of its obligations throughout the
year, or specifying any default in the fulfillment of any such obligation.
(Section 5.07 of the Indentures.) In addition, upon any application or demand
by Gold Kist to the Trustee to take any action under any of the provisions of
the Indenture, Gold Kist shall first furnish to the Trustee an Officer's
Certificate stating that all such conditions precedent provided for in the
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel to Gold Kist stating that in the opinion of such counsel
all such conditions precedent have been complied with. (Section 1.02 of the
Indentures.)
CONCERNING THE TRUSTEE
Gold Kist has a $10,000,000 revolving credit line, a $10,000,000 committed
364 day credit line and a $10,000,000 committed seasonal credit line (December
1995 through May 1996), all of which can be used for seasonal advances, with
the Trust Company Bank, under which varying amounts are outstanding from time
to time. Any such indebtedness to the Trust Company Bank would constitute
Superior Indebtedness as defined in the Indenture. Gold Kist also maintains
deposit accounts with the Trust Company Bank, and from time to time the Bank
provides other banking and trust services to Gold Kist in the ordinary course
of its business. Trust Company Bank serves as trustee under indentures
governing certain previously issued series of Subordinated Capital
Certificates of Interest and Subordinated Loan Certificates.
EXPERTS
The consolidated financial statements and schedule of Gold Kist Inc. as of
June 25, 1994 and July 1, 1995, and for each of the years in the three-year
period ended July 1, 1995 included herein or incorporated by
24
<PAGE>
reference herein and in the registration statement have been included herein
or incorporated by reference herein and in the registration statement in
reliance upon the reports of KPMG Peat Marwick LLP, independent auditors,
appearing elsewhere herein or incorporated by reference, and upon the
authority of said firm as experts in accounting and auditing. The reports of
KPMG Peat Marwick LLP covering the July 1, 1995 and June 25, 1994 consolidated
financial statements refer to changes in accounting for income taxes and for
certain investments in debt and equity securities.
The consolidated financial statements of Golden Peanut Company and
Subsidiaries at June 30, 1995 and 1994 and for each of the years in the three-
year period ended June 30, 1995 appearing in Gold Kist's Annual Report (Form
10-K) for the year ended July 1, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph with respect to a change in accounting for
postretirement benefits other than pensions) appearing elsewhere herein. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
QUALIFIED INDEPENDENT UNDERWRITER
Interstate/Johnson Lane Corporation, a member of the NASD, has participated
as a qualified independent underwriter, for compensation paid by Gold Kist, in
the "due diligence" review with respect to the preparation of this Prospectus.
LEGAL OPINION
The legality of the securities offered hereby is being passed upon for Gold
Kist by Alston & Bird, One Atlantic Center, 1201 West Peachtree Street,
Atlanta, Georgia 30309-3424.
25
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of DirectorsGold Kist Inc.:
We have audited the accompanying consolidated balance sheets of Gold Kist
Inc. and subsidiaries as of June 25, 1994 and July 1, 1995, and the related
consolidated statements of operations, patrons' and other equity, and cash
flows for each of the years in the three-year period ended July 1, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the consolidated
financial statements of Golden Peanut Company, a partnership investment
accounted for using the equity method of accounting, as described in Note 9(b)
to the consolidated financial statements. The consolidated financial
statements of Golden Peanut Company were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for Golden Peanut Company, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Gold Kist Inc. and subsidiaries
as of June 25, 1994 and July 1, 1995, and the results of their operations and
their cash flows for each of the years in the three-year period ended July 1,
1995, in conformity with generally accepted accounting principles.
As discussed in notes 1, 6 and 9(a) to the consolidated financial
statements, the Company changed its method of accounting for income taxes in
1994 and for certain investments in debt and equity securities in 1995.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
September 1, 1995
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partnership Committee
Golden Peanut Company
We have audited the consolidated balance sheets of Golden Peanut Company and
Subsidiaries (the "Partnership") as of June 30, 1995 and 1994, and the related
consolidated statements of operations, partners' equity, and cash flows for
each of the three years in the period ended June 30, 1995 (not presented
separately herein). Our audits also included the financial statement schedule
of the Partnership (not presented separately herein). These financial
statements and schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Golden Peanut
Company and Subsidiaries at June 30, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended June 30, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule of the Partnership, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
As discussed in Note 8 to the consolidated financial statements, in 1994 the
Partnership changed its method of accounting for postretirement benefits other
than pensions.
ERNST & YOUNG LLP
Atlanta, Georgia
August 10, 1995
F-2
<PAGE>
GOLD KIST INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 25, 1994 JULY 1, 1995
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 15,670 16,597
Receivables, principally trade, including notes
receivable of $42.8 million in 1994 and $43.8
million in 1995, less allowance for doubtful
accounts of $5,369 in 1994 and $5,877 in 1995..... 160,714 189,180
Inventories (note 2)............................... 198,467 226,988
Other current assets............................... 14,758 17,718
-------- -------
Total current assets.............................. 389,609 450,483
Investments (note 9)................................ 72,105 93,039
Property, plant and equipment, net (note 3)......... 204,783 227,646
Other assets........................................ 49,935 50,469
-------- -------
$716,432 821,637
======== =======
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of long-term
debt (note 4):
Short-term borrowings............................. $ 12,798 70,800
Subordinated loan certificates.................... 25,079 27,363
Current maturities of long-term debt.............. 35,405 25,834
-------- -------
73,282 123,997
Accounts payable................................... 117,926 117,952
Accrued compensation and related expenses.......... 26,431 28,817
Patronage refund and other equity payable in cash.. 14,588 8,863
Interest left on deposit (note 4).................. 9,340 10,493
Other current liabilities.......................... 8,195 13,776
-------- -------
Total current liabilities......................... 249,762 303,898
Long-term debt, excluding current maturities (note
4)................................................. 109,817 138,659
Accrued postretirement benefit costs (note 7(b)).... 34,488 36,929
Other liabilities................................... 687 3,189
-------- -------
Total liabilities................................. 394,754 482,675
-------- -------
Minority interest................................... 25,016 23,972
Patrons' and other equity (note 5):
Common stock, $1.00 par value--Authorized 500
shares; issued and outstanding 79 in 1994 and 62
in 1995........................................... 79 62
Patronage reserves................................. 219,164 216,854
Unrealized gain on marketable equity security (net
of deferred income taxes of $11.6 million (note
9(a))............................................. -- 18,531
Retained earnings.................................. 77,419 79,543
-------- -------
Total patrons' and other equity................... 296,662 314,990
Commitments and contingent liabilities (notes 7 and
8)
-------- -------
$716,432 821,637
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
----------------------------------------
JUNE 26, 1993 JUNE 25, 1994 JULY 1, 1995
------------- ------------- ------------
<S> <C> <C> <C>
Net sales volume...................... $1,400,566 1,561,034 1,688,537
Cost of sales......................... 1,249,509 1,385,239 1,525,924
---------- --------- ---------
Gross margins........................ 151,057 175,795 162,613
Distribution, administrative and
general expenses..................... 111,519 121,417 131,410
---------- --------- ---------
Net operating margins................ 39,538 54,378 31,203
---------- --------- ---------
Other income (deductions):
Interest income...................... 7,540 6,752 8,779
Interest expense..................... (17,163) (13,924) (17,525)
Equity in earnings (loss) of
partnership (note 9(b))............. 4,659 (1,110) (9,625)
Gain on sale of investments.......... -- -- 3,070
Miscellaneous, net................... 9,118 3,978 9,684
---------- --------- ---------
4,154 (4,304) (5,617)
---------- --------- ---------
Margins before income taxes, minority
interest and cumulative effect of
accounting change................... 43,692 50,074 25,586
Income taxes (note 6)................. 14,187 14,861 13,094
---------- --------- ---------
Margins before minority interest and
cumulative effect of accounting
change.............................. 29,505 35,213 12,492
Minority interest..................... (2,267) (1,148) (741)
---------- --------- ---------
Margins before cumulative effect of
accounting change................... 27,238 34,065 11,751
Cumulative effect of change in
accounting for income taxes
(note 6)............................. -- 5,339 --
---------- --------- ---------
Net margins.......................... $ 27,238 39,404 11,751
========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF PATRONS' AND OTHER EQUITY
FOR THE YEARS ENDED JUNE 26, 1993, JUNE 25, 1994 AND JULY 1, 1995
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
REVOLVING UNREALIZED
FUND AND GAIN ON
CUMULATIVE MARKETABLE
COMMON PREFERRED EQUITY PATRONAGE RETAINED
TOTAL STOCK CERTIFICATES SECURITY RESERVES EARNINGS
-------- ------ ------------ ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
June 27, 1992........... $271,456 81 10,561 -- 206,992 53,822
Net margins for 1993... 27,238 -- -- -- 19,107 8,131
Nonqualified patronage
refund and other
equity payable in
cash.................. (8,525) -- -- -- (8,525) --
Redemptions and other
changes............... (4,549) (2) (308) -- (8,060) 3,821
-------- --- ------- ------ ------- ------
June 26, 1993........... 285,620 79 10,253 -- 209,514 65,774
Net margins for 1994... 39,404 -- -- -- 30,830 8,574
Nonqualified patronage
refund and other
equity payable in
cash.................. (14,588) -- -- -- (14,588) --
Redemptions and other
changes............... (13,774) -- (10,253) -- (6,592) 3,071
-------- --- ------- ------ ------- ------
June 25, 1994........... 296,662 79 -- -- 219,164 77,419
Net margins for 1995... 11,751 -- -- -- 12,590 (839)
Nonqualified patronage
refund and other
equity payable in
cash.................. (8,941) -- -- -- (8,941) --
Redemptions and other
changes............... (3,013) (17) -- -- (5,959) 2,963
Implementation of
change in accounting
for marketable equity
security (note 9(a)).. 18,531 -- -- 18,531 -- --
-------- --- ------- ------ ------- ------
July 1, 1995............ $314,990 62 -- 18,531 216,854 79,543
======== === ======= ====== ======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
GOLD KIST INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
----------------------------------------
JUNE 26, 1993 JUNE 25, 1994 JULY 1, 1995
------------- ------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net margins.......................... $ 27,238 39,404 11,751
Non-cash items included in net mar-
gins:
Depreciation and amortization....... 36,315 37,251 38,085
Cumulative effect of changes in ac-
counting principle................. -- (5,339) --
Gains on sales of assets............ (703) (201) (3,459)
Equity in (earnings) loss of part-
nership............................ (4,659) 1,110 9,625
Deferred income tax benefit......... (1,650) (5,562) (6,650)
Other............................... 2,943 3,208 1,943
Changes in operating assets and lia-
bilities:
Receivables......................... (4,902) (26,943) (28,466)
Inventories......................... (5,018) (23,963) (28,521)
Other current assets................ 546 152 (3,382)
Accounts payable and accrued ex-
penses............................. 16,167 21,765 15,117
Interest left on deposit............ 532 (4,052) 1,153
-------- ------- -------
Net cash provided by operating ac-
tivities.......................... 66,809 36,830 7,196
-------- ------- -------
Cash flows from investing activities:
Acquisitions of investments.......... (212) (762) (5,093)
Acquisitions of property, plant and
equipment........................... (23,280) (37,232) (61,762)
Proceeds from partnership earnings
distribution........................ 11,404 1,770 --
Proceeds from disposal of invest-
ments............................... 1,795 1,279 8,942
Proceeds from sales of loans......... 20,084 5,040 4,925
Other................................ 1,498 (7,653) (7,179)
-------- ------- -------
Net cash provided by (used in) in-
vesting activities................ 11,289 (37,558) (60,167)
-------- ------- -------
Cash flows from financing activities:
Short-term borrowings (repayments),
net................................. (48,675) 11,491 60,286
Proceeds from long-term debt......... 22,381 26,668 49,752
Principal payments of long-term
debt................................ (28,056) (30,130) (36,676)
Patronage refunds and other equity
paid in cash........................ (4,812) (22,717) (19,464)
-------- ------- -------
Net cash provided by (used in) fi-
nancing activities................ (59,162) (14,688) 53,898
-------- ------- -------
Net change in cash and cash equiva-
lents............................. 18,936 (15,416) 927
Cash and cash equivalents at beginning
of year.............................. 12,150 31,086 15,670
-------- ------- -------
Cash and cash equivalents at end of
year................................. $ 31,086 15,670 16,597
======== ======= =======
Supplemental disclosure of cash flow
data:
Cash paid during the years for:
Interest (net of amounts capital-
ized).............................. $ 17,495 18,575 18,792
======== ======= =======
Income taxes........................ $ 12,791 23,352 21,144
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 26, 1993, JUNE 25, 1994 AND JULY 1, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Gold Kist Inc. and subsidiaries
conform to generally accepted accounting principles and to general practices
among agricultural cooperatives. The following is a summary of the significant
accounting policies.
(a) Basis of Presentation
-------------------------
The accompanying consolidated financial statements include the accounts of
Gold Kist Inc. and its wholly and majority owned subsidiaries (Gold Kist or
Association). All significant intercompany balances and transactions have been
eliminated in consolidation. Certain reclassifications have been made to the
1993 and 1994 consolidated financial statements to conform to the presentation
in the 1995 consolidated financial statements.
(b) Cash and Cash Equivalents
-----------------------------
Gold Kist's policy is to invest cash in excess of operating requirements in
highly liquid interest bearing debt instruments, which include commercial
paper and reverse repurchase agreements. These investments are stated at cost
which approximates market. For purposes of the consolidated statements of cash
flows, Gold Kist considers all highly liquid debt instruments purchased with
original maturities of three months or less to be cash equivalents.
(c) Inventories
---------------
Merchandise for sale includes feed, fertilizer, seed, pesticides, equipment
and general farm supplies purchased or manufactured by Gold Kist for sale to
agricultural producers and consumers. These inventories are stated, generally,
on the basis of the lower of cost (first-in, first-out or average) or market.
Live poultry and hogs consist of broilers, breeding stock and market hogs.
The broilers and market hogs are stated at the lower of average cost or
market. The breeding stock is stated at average cost, less accumulated
amortization.
Raw materials and supplies consist of feed and fertilizer ingredients,
uncleaned seed, hatching eggs, packaging materials and operating supplies.
These inventories are stated, generally, on the basis of the lower of cost
(first-in, first-out or average) or market. Gold Kist hedges varying amounts
of its feed ingredient purchases to minimize the risk of adverse price
fluctuations. Futures contracts are accounted for as hedges and option
contracts are accounted for at market. Gains or losses on futures and options
transactions are included as a part of product cost.
Marketable products consist primarily of dressed and further processed
poultry. These inventories are stated, principally, on the basis of selling
prices, less estimated brokerage, freight and certain other selling costs
where applicable (estimated net realizable value).
(d) Property, Plant and Equipment
---------------------------------
Property, plant and equipment is recorded at cost. Depreciation of plant and
equipment is calculated by the straight-line method over the estimated useful
lives of the respective assets.
(e) Investments
---------------
Investments in other cooperatives are recorded at cost and include the
amount of patronage refund certificates and patrons' equities allocated, less
distributions received. These investments are not readily
F-7
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
marketable and quoted market prices are not available. The equity method of
accounting is used for investments in other companies in which Gold Kist's
voting interest is 20 to 50 percent. Investments in less than 20 percent owned
companies which are not readily marketable are stated at cost. For years prior
to fiscal 1994, the investment in the marketable equity security was stated at
the lower of cost or market.
Effective June 26, 1994, Gold Kist adopted the provisions of Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain
Investments in Debt and Equity Securities." Pursuant to the provisions of SFAS
115, the Association has classified its marketable equity security and
collateralized loans as "available-for-sale." "Available-for-sale" securities
are those the Association intends to hold for a period of time and are not
acquired with the intent of selling them in the near term. Unrealized gains
and losses on "available-for-sale" securities are included as a separate
component of patrons' and other equity in the accompanying 1995 financial
statements, net of deferred income taxes. Upon initial application of SFAS
115, Gold Kist recorded an increase to investments of $20.5 million and to
patrons' and other equity of $12.9 million (net of deferred income taxes of
$7.6 million) related to the marketable equity security (see note 9(a)).
Management believes the carrying value of the collateralized loans approximate
market value and, accordingly, no adjustment has been recognized in the
accompanying financial statements.
Gold Kist's investment in the Golden Peanut Company partnership is accounted
for using the equity method (see note 9(b)). Other investments accounted for
under the equity method are not significant.
(f) Income Taxes
----------------
Gold Kist operates as an agricultural cooperative not exempt from Federal
income taxes. Aggregate margins not refunded in cash to members or allocated
in the form of qualified written notices are subject to income taxes.
The bylaws of Gold Kist provide for the issuance of either qualified or
nonqualified patronage refunds (as defined for purposes of Subchapter T of the
Internal Revenue Code). Gold Kist utilized nonqualified patronage refunds in
1993, 1994 and 1995, which are deductible for income tax purposes only to the
extent paid or redeemed in cash.
Effective June 27, 1993, Gold Kist adopted the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes" and reported the cumulative effect of that change in the method of
accounting for income taxes in the 1994 consolidated statement of operations.
SFAS 109 requires an asset and liability approach in accounting for income
taxes and, therefore, required a change from the deferred method Gold Kist
previously used. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under SFAS 109, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized as income or expense in the period that includes
the enactment date.
Pursuant to the deferred method under Accounting Principles Board Opinion
11, which was applied in fiscal 1993 and prior years, deferred income taxes
were recognized for income and expense items that were reported in different
years for financial reporting purposes and income tax purposes using the tax
rate applicable for the year of the calculation. Under the deferred method,
deferred taxes were not adjusted for subsequent changes in tax rates.
(g) Fair Value of Financial Instruments
---------------------------------------
Gold Kist's financial instruments include cash and cash equivalents,
accounts receivables and payables, notes receivable and debt. Because of the
short maturity of cash equivalents, accounts receivables and payables,
F-8
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
and certain short-term debt which matures in less than one year, the carrying
value approximates fair value. All financial instruments are considered to
have an estimated fair value which approximates carrying value at July 1, 1995
unless otherwise specified (see note 4).
(h) Fiscal Year
---------------
Gold Kist employs a 52/53 week fiscal year. The consolidated financial
statements for 1993 and 1994 reflect 52 weeks and 1995 reflects 53 weeks.
Fiscal 1996 will be a 52 week year.
(2) INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1994 1995
-------- -------
<S> <C> <C>
Merchandise for sale...................................... $ 65,795 85,054
Live poultry and hogs..................................... 75,600 76,211
Raw materials and supplies................................ 30,090 35,191
Marketable products....................................... 26,982 30,532
-------- -------
$198,467 226,988
======== =======
</TABLE>
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
1994 1995
-------- -------
<S> <C> <C>
Land and land improvements................................ $ 29,757 31,809
Buildings................................................. 159,065 166,806
Machinery and equipment................................... 304,535 325,270
Construction in progress.................................. 4,332 27,812
-------- -------
497,689 551,697
Less accumulated depreciation............................. 292,906 324,051
-------- -------
$204,783 227,646
======== =======
</TABLE>
Gold Kist owns a 54% interest in its corporate headquarters building through
its investment in GC Properties, a general partnership formed between Gold
Kist and Cotton States Mutual Insurance Company solely for the purpose of
acquiring the corporate headquarters building and related mortgage obligation.
A former Gold Kist chief executive officer is a director of the Cotton States
Insurance Group. Gold Kist's indirect 54% interest in the aforementioned
building and related accumulated depreciation, based on historical cost, is
included in property, plant and equipment in the accompanying consolidated
financial statements.
(4) NOTES PAYABLE AND LONG-TERM DEBT
On June 30, 1995, the Association entered into a $150 million unsecured
committed credit facility with five commercial banks. The facility includes a
five-year $50 million revolving credit commitment, a $50 million 364-day line
of credit commitment, and a $50 million seasonal line of credit commitment.
The five-year revolving credit agreement expires on June 30, 2000, but may be
extended twice for successive one-year periods with the consent of the banks.
The unused credit available under this facility at July 1, 1995 was $20
million. The
F-9
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
revolving credit facility fee and the commitment fees on the unused portion of
the revolving credit will be computed quarterly based on the Association's
ratio of funded debt to total capital and will not exceed .25% per annum. The
364-day line of credit provides short-term financing that will expire on June
29, 1996, of which $20 million was unused at July 1, 1995. The $50 million
seasonal line of credit becomes effective on December 1, 1995 and expires on
May 31, 1996. The 364-day and seasonal lines of credit are subject to a .10%
per annum facility fee. Borrowings under the $150 million facility will bear
variable interest rates at or below prime. Also, the facility permits
competitive bid interest rates by the participating banks.
At July 1, 1995, Gold Kist had other unused long-term loan commitments of
$13.0 million and additional uncommitted facilities to provide loans and
letters of credit from banks aggregating approximately $15.1 million. These
unsecured borrowings bear interest at rates below prime.
Subordinated loan certificates of $27.4 million at July 1, 1995 bore
interest from 3.85% to 6.70% with terms of one year and were unsecured.
Interest left on deposit represents amounts of interest payable, which at
the option of the holders of various classes of certificates, is left on
deposit with Gold Kist. Additional interest on these amounts accrues at the
same rates as the related certificates.
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Unsecured senior notes
payable:
9.375% interest notes, due
in semi-annual
installments of $5,500
with interest payable
semiannually............. $ 33,000 16,500
9.90% interest notes, due
in semi-annual
installments of $1,539
with interest payable
semiannually............. 15,384 10,766
9.35% interest note, due
in a single installment
in June 2001 with
interest payable
quarterly................ 20,000 20,000
Other long term debt:
Revolving credit agree-
ments with a commercial
bank (weighted average
rate of 5.0% at June 25,
1994 and 6.5% at July 1,
1995).................... 7,000 37,000
Subordinated capital
certificates of interest
with interest rates
ranging from 4.50% to
16.50% and with fixed
maturities ranging from
two to fifteen years,
unsecured (weighted
average interest rate of
7.7% at June 25, 1994 and
July 1, 1995)...............58,387 60,417
Tax exempt industrial
revenue bonds with
varying interest rates
due in quarterly and
annual installments
through 2015, secured by
property, plant and
equipment................ 6,263 12,701
Pro rata share of mortgage
loan, at 8.47% interest,
due in monthly
installments to June 30,
2004, secured by a
building (note 3)........ 2,673 2,497
Other..................... 2,515 4,612
-------- -------
145,222 164,493
Less current maturities... 35,405 25,834
-------- -------
$109,817 138,659
======== =======
</TABLE>
Based upon discounted cash flows of future payments, assuming interest rates
available to Gold Kist for issuance of debt with similar terms and remaining
maturities, the estimated fair value of the unsecured senior notes payable at
July 1, 1995 was approximately $51.7 million.
F-10
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
The terms of debt agreements specify minimum working capital, net worth and
current ratio. The debt agreements also place a limitation on equity
distribution, cash patronage refunds and additional loans, advances or
investments. The limitation provides for a carryover to 1996 of unused
amounts, $10.9 million as of July 1, 1995, and is increased by 50% of Gold
Kist's net margins (or minus 100% of a net loss) before any gains or losses on
disposals of capital assets or equity in unremitted earnings of any affiliate.
Annual required principal repayments on long-term debt for the five fiscal
years subsequent to July 1, 1995 are as follows:
<TABLE>
<S> <C>
Fiscal year:
1996.............................................................. $25,834
1997.............................................................. 20,734
1998.............................................................. 17,945
1999.............................................................. 16,577
2000.............................................................. 13,188
=======
</TABLE>
(5) PATRONS' AND OTHER EQUITY
Gold Kist's Articles of Incorporation provide for a class of common stock
and a class of preferred stock pursuant to the provisions of the Georgia
Cooperative Marketing Act. Each member is allocated one share of common stock,
$1.00 par value. The common shares are not marketable or transferable and no
dividends will be declared on these common shares. No issuance of preferred
stock has been authorized by Gold Kist.
Patronage reserves represent allocated undistributed member margins less
taxes paid on nonqualified equity. Patronage reserves do not bear interest and
are subordinated to all certificates outstanding and indebtedness of Gold
Kist. Patronage reserves may be revolved and paid at the discretion of the
Board of Directors.
Retained earnings include the cumulative net margins (losses) resulting from
nonmember and nonpatronage transactions, including noncooperative
subsidiaries. Also included are amounts related to the early redemption of
notified equity, representing the difference between the face value and the
redemption amounts.
(6) INCOME TAXES
As discussed in Note 1(f), the Company adopted SFAS 109 as of June 27, 1993.
The cumulative effect of this change in accounting for income taxes, which
resulted in a tax benefit of $5.3 million, was determined as of June 27, 1993
and was reflected in the consolidated statement of operations for the year
ended June 25, 1994. Prior years' financial statements have not been restated
to apply the provisions of SFAS 109.
The provisions for income tax expense, principally Federal, consist of the
following:
<TABLE>
<CAPTION>
1993 1994 1995
------- ------ ------
<S> <C> <C> <C>
Current expense........................................ $15,837 20,423 19,744
Deferred benefit....................................... (1,650) (5,562) (6,650)
------- ------ ------
$14,187 14,861 13,094
======= ====== ======
</TABLE>
Gold Kist's combined federal and state effective tax rates from operations
for 1993, 1994 and 1995 were 32%, 30% and 51%, respectively. A reconciliation
of income tax expense from operations computed by applying the Federal
corporate income tax rate of 34% in 1993 and 35% in 1994 and 1995 to margins
before income taxes, minority interest and cumulative effect of accounting
changes for the applicable year follows:
F-11
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1994 1995
------- ------ ------
<S> <C> <C> <C>
Computed expected income tax expense................. $14,855 17,526 8,955
Increase (decrease) in income tax expense resulting
from:
Income tax litigation............................... -- -- 5,520
Cash portion of nonqualified patronage refund....... (1,183) (1,420) (1,031)
Effect of state income taxes, net of Federal
benefit............................................ 1,428 1,050 447
Nonqualified equity redemptions..................... (575) (525) (490)
Target jobs credits................................. (347) (607) (499)
Other, net.......................................... 9 (1,163) 192
------- ------ ------
$14,187 14,861 13,094
======= ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at June 25,
1994 and July 1, 1995 are as follows:
<TABLE>
<CAPTION>
1994 1995
------- -------
<S> <C> <C> <C>
Deferred tax assets:
Postretirement benefits............................. $13,478 14,410
Insurance accruals.................................. 8,839 7,903
Equity in partnerships.............................. 723 4,175
Bad debt reserves................................... 2,386 2,573
State tax operating loss carryforwards.............. 1,913 1,984
Other............................................... 1,081 --
------- -------
Total gross deferred tax assets.................... 28,420 31,045
Less valuation allowance............................ (1,913) (1,984)
------- -------
Net deferred tax assets............................ 26,507 29,061
------- -------
Deferred tax liabilities:
Unrealized gain on marketable equity security....... -- (11,587)
Accelerated depreciation............................ (2,986) (969)
Deferred compensation............................... (4,103) (3,990)
Other............................................... -- (118)
------- -------
Total deferred tax liabilities..................... (7,089) (16,664)
------- -------
Net deferred tax assets............................ $19,418 12,397
======= =======
</TABLE>
The valuation allowance for deferred tax assets as of June 25, 1994 and July
1, 1995 was $1,913 and $1,984, respectively. The net change in the total
valuation allowance for the years ended 1994 and 1995 was an increase of $205
and $71, respectively.
The Association's management believes the existing net deductible temporary
differences comprising the total net deferred tax assets will reverse during
periods in which the Association generates net taxable income.
F-12
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
Deferred income taxes result from differences in the timing of reporting
income and expenses for financial statement and income tax reporting purposes.
The sources of deferred income taxes and their tax effects are as follows:
<TABLE>
<CAPTION>
1993
--------
<S> <C>
Depreciation expense............................................ $ (1,433)
Deferred compensation expense................................... 167
Insurance accruals.............................................. (1,839)
Equity in partnerships.......................................... 133
Other, net...................................................... 1,322
--------
$ (1,650)
========
</TABLE>
During 1993, the Internal Revenue Service (IRS) concluded its examination of
Gold Kist's 1987 through 1989 Federal income tax returns and issued a notice
of deficiency. In April 1994, the remaining issue, whether Gold Kist must
recognize taxable income related to the redemption of its qualified notified
equity at less than face amount, was litigated before the United States Tax
Court. An adverse decision was received from the Tax Court on June 26, 1995.
The Association plans to appeal the decision. The accompanying financial
statements reflect $5.5 million in additional income tax expense and $1.6
million in additional interest expense for the impact of the decision through
July 1, 1995.
(7) EMPLOYEE BENEFITS
(a) Pension Plans
-----------------
Gold Kist has noncontributory defined benefit pension plans covering
substantially all of its employees and directors and an affiliate's employees
(participants). The plan covering the salaried participants provides pension
benefits that are based on the employees' compensation during the years before
retirement or other termination of employment. The plan covering the hourly
participants provides pension benefits that are based on years of service.
Gold Kist's funding policy is to contribute within the guidelines prescribed
by Federal regulations. Plan assets consist principally of corporate equities
and bonds, and United States Government and Agency obligations.
Net periodic pension expense for 1993, 1994 and 1995 included the following
components:
<TABLE>
<CAPTION>
1993 1994 1995
------- ------ ------
<S> <C> <C> <C>
Service cost--benefits earned during the year....... $(3,422) (3,720) (3,429)
Interest cost on projected benefit obligations...... (6,247) (6,479) (6,949)
Actual return on plan assets........................ 11,116 3,236 11,393
Net amortization and deferral....................... (1,827) 5,989 (1,208)
------- ------ ------
Net periodic pension expense...................... $ (380) (974) (193)
======= ====== ======
</TABLE>
F-13
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
The following table sets forth the plans' funded status, amounts recognized
in the consolidated balance sheets at June 25, 1994 and July 1, 1995 and
economic assumptions:
<TABLE>
<CAPTION>
1994 1995
-------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested participants........................................ $ 69,662 74,529
Nonvested.................................................. 5,416 6,630
-------- -------
Total accumulated benefit obligations..................... $ 75,078 81,159
======== =======
Projected benefit obligations for services rendered to
date....................................................... $ 88,083 96,559
======== =======
Plan assets for benefits:
Plan assets at fair value.................................. $109,874 118,268
Prepaid pension cost included in other assets in consoli-
dated balance sheets...................................... (15,195) (16,556)
-------- -------
Net plan assets........................................... $ 94,679 101,712
======== =======
Plan assets in excess of projected benefit obligations...... 6,596 5,153
======== =======
Consisting of:
Unrecognized net asset existing at the date of adoption.... $ 10,972 9,721
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions........ (351) (1,136)
Prior service cost not yet recognized in net periodic pen-
sion cost................................................. (4,025) (3,432)
-------- -------
$ 6,596 5,153
======== =======
Economic assumptions:
Weighted-average discount rate............................. 8.25% 8.00%
Weighted-average expected long-term rate of return on plan
assets.................................................... 9.00% 9.25%
Weighted-average rate of compensation increase............. 6.00% 5.50%
</TABLE>
The unrecognized net asset existing at the date of adoption of Statement of
Financial Accounting Standards No. 87 is being amortized over the remaining
service lives of the participants.
(b) Other Postretirement Benefits
---------------------------------
Gold Kist provides health care and death benefits to substantially all
retired employees, covered dependents and their beneficiaries. Generally,
employees who have attained age 55 and who have 10 years of service are
eligible for these benefits. In addition, employees with less than 10 years of
service who retired before July 1, 1992 are eligible for these benefits. The
health care and death benefit plans are contributory and coverages increase
with increased years of service.
Postretirement health and death benefit expense for 1993, 1994 and 1995
included the following components:
<TABLE>
<CAPTION>
1993 1994 1995
------ ----- -----
<S> <C> <C> <C>
Service cost--benefits earned during the year......... $1,293 1,728 1,742
Interest cost......................................... 2,305 2,530 2,645
Net amortization and deferral......................... -- -- (18)
------ ----- -----
$3,598 4,258 4,369
====== ===== =====
</TABLE>
F-14
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
Gold Kist's postretirement benefit plans are not funded. The status of the
plans at June 25, 1994 and July 1, 1995 was as follows:
<TABLE>
<CAPTION>
1994 1995
------- ------
<S> <C> <C>
Actuarial present value of accumulated postretirement benefit
obligation:
Retirees...................................................... $12,896 15,528
Fully eligible active plan participants....................... 6,956 7,821
Other active plan participants................................ 13,029 14,016
------- ------
32,881 37,365
Unrecognized net gain from experience differences............. 3,207 1,341
------- ------
$36,088 38,706
======= ======
</TABLE>
The health care cost trend rate used to determine the accumulated
postretirement benefit obligation at June 25, 1994 was 11%, declining ratably
to 5.5% by the year 2003 and remaining at that level thereafter. The health
care cost trend rate used to determine the accumulated postretirement benefit
obligation at July 1, 1995 was 9%, declining ratably to 5% by the year 2003
and remaining at that level thereafter. The discount rates used to determine
the accumulated postretirement benefit obligation were 8.25% and 8.00% at June
25, 1994 and July 1, 1995, respectively. A 1% increase in the health care cost
trend rate for each year would increase the accumulated postretirement benefit
obligation for health care benefits at July 1, 1995 by approximately 15% and
net postretirement health care cost by 17%.
(8) CONTINGENT LIABILITIES AND COMMITMENTS
In January 1993, two Alabama member patrons of Gold Kist filed a lawsuit in
the nature of a derivative action against Gold Kist and Golden Poultry
Company, Inc., a majority-owned subsidiary of Gold Kist, and certain
directors, officers and employees of the companies. The lawsuit alleges that
the named officers, directors and employees violated their fiduciary duties by
creating Golden Poultry Company, Inc. and Carolina Golden Products Company
(Golden Poultry), and by permitting their continued operations. Among the
remedies requested are the transfer of Golden Poultry's operations to Gold
Kist, as well as unspecified actual damages. In March 1994, the court
certified that litigation as a class action. The Association has advanced the
payment of litigation expenses incurred by the Association's directors who are
defendants in the litigation. Gold Kist intends to defend the litigation
vigorously.
Gold Kist is a defendant in various legal and administrative proceedings
seeking alleged actual and punitive damages and specific performance to
correct certain alleged problems. Gold Kist management is of the opinion that
the ultimate resolution of these matters will not have a material adverse
impact on Gold Kist's financial position.
Gold Kist received proceeds of $20.0 million, $5.0 million and $4.9 million
during 1993, 1994 and 1995, respectively, for collateralized loans sold with
recourse to an insurance company, of which $20.3 million was outstanding at
July 1, 1995. No gain or loss was recognized on the sale of these loans. A
$207 thousand allowance has been recognized in the accompanying consolidated
financial statements for potential losses that may occur. As of July 1, 1995,
there have been no credit losses related to the loans guaranteed under this
agreement.
F-15
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
Gold Kist is a guarantor of amounts outstanding under a $55.0 million
secured loan agreement between a commercial bank and Young Pecan Company, a
pecan processing and marketing partnership in which Gold Kist holds a 25%
equity interest and 35% earnings (loss) allocation. At July 1, 1995, the
amounts outstanding under this facility were $50.9 million.
(9) INVESTMENTS
(a) Marketable Equity Security
------------------------------
As discussed in Note 1(e), Gold Kist adopted SFAS 115 at June 26, 1994,
changing the method of accounting for its marketable equity security from a
historical cost basis to a fair value approach. Pursuant to the provisions of
SFAS 115, the Association has classified its marketable equity security as
"available-for-sale." At July 1, 1995, the Association's marketable equity
security was carried at its fair value of $50.1 million, which represents a
gross unrealized gain of $30.1 million. The gross unrealized gain, net of
deferred income taxes of $11.6 million, has been reflected as a separate
component of patrons' and other equity. At June 25, 1994, the marketable
equity security was carried at its cost basis of $21.5 million.
Gains realized on sales and dividends totaled $169 thousand, $170 thousand
and $1.3 million and are included in miscellaneous, net for the years ended
June 26, 1993, June 25, 1994 and July 1, 1995, respectively.
(b) Golden Peanut Company
-------------------------
Gold Kist has a 33 1/3% interest in Golden Peanut Company, a Georgia general
partnership. Gold Kist's investment in the partnership amounted to $20.1
million and $15.5 million at June 25, 1994 and July 1, 1995, respectively. In
July 1995, Gold Kist made an additional investment of $2.8 million. The
partnership has a $450.0 million commercial paper facility of which $205.0
million was outstanding at June 30, 1995.
Summarized financial information of Golden Peanut Company is shown below:
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
1994 1995
-------- -------
<S> <C> <C>
Current assets............................................ $258,195 233,133
Property, plant and equipment, net........................ 33,465 34,385
-------- -------
Total assets............................................ $291,660 267,518
======== =======
Current liabilities....................................... $226,871 220,954
Accrued postretirement benefit costs...................... 4,477 5,103
Partners' equity.......................................... 60,312 41,461
-------- -------
Total liabilities and partners' equity.................. $291,660 267,518
======== =======
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1993 1994 1995
-------- ------- -------
<S> <C> <C> <C>
Net sales and other operating income............ $486,868 456,937 429,067
Costs and expenses.............................. 472,812 460,291 457,942
-------- ------- -------
Net income (loss)............................. $ 14,056 (3,354) (28,875)
======== ======= =======
</TABLE>
F-16
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
Golden Peanut Company's 1994 net loss includes a $3.9 million charge
resulting from the adoption of SFAS 106. Gold Kist has included its
proportionate share of Golden Peanut Company's adoption of SFAS 106 in equity
in earnings (loss) of partnership in the accompanying 1994 consolidated
statement of operations since the amount is not significant.
In 1993, 1994 and 1995, Gold Kist received $2.1 million in rental income
from Golden Peanut Company under an operating lease agreement for peanut
shelling and procurement facilities. Gold Kist received procurement
commissions, royalties and administrative service fees of $2.8 million, $2.7
million and $3.9 million in 1993, 1994 and 1995, respectively. In addition,
Gold Kist purchased $2.4 million, $5.4 million, and $3.1 million of inventory
from Golden Peanut Company in 1993, 1994 and 1995, respectively.
(10) MAJOR BUSINESS SEGMENTS
Gold Kist is an agricultural cooperative, with operations located primarily
in the southeastern United States, engaged in marketing products and
purchasing supplies and equipment for its patrons. Gold Kist also operates
non-cooperative businesses engaged in broiler operations, farm and home
retailing, and crop and equipment financing. Gold Kist's operations are
classified into industry segments as follows:
The Poultry segment includes cooperative integrated broiler production,
processing and marketing operations, as well as subsidiary broiler operations.
This segment has decentralized broiler, pork production and cornish game hen
facilities.
The Agri-Services segment purchases or manufactures feed, seed, fertilizers,
agricultural chemicals, animal health products, and other farm supply and
equipment items for sale through Gold Kist retail outlets and independent
dealers. The segment also provides crop procurement services.
F-17
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
The following table presents certain financial information as to industry
segments:
<TABLE>
<CAPTION>
AGRI- INTERSEGMENT
POULTRY SERVICES ELIMINATIONS CONSOLIDATED
---------- -------- ------------ ------------
YEAR ENDED JUNE 26, 1993
- ------------------------
<S> <C> <C> <C> <C>
Net sales volume................. $1,077,928 322,638 -- 1,400,566
========== ======= ======= =========
Net margins from operations...... $ 43,269 1,876 -- 45,145
========== ======= =======
General corporate expenses....... (5,607)
Other income, net................ 4,154
---------
Margins before income taxes and
minority interest............... $ 43,692
=========
Depreciation and amortization ex-
pense........................... $ 30,566 4,911 838(c) 36,315
========== ======= ======= =========
Capital expenditures............. $ 17,475 5,530 275(c) 23,280
========== ======= ======= =========
Identifiable assets at June 26,
1993............................ $ 352,562 202,219 110,321(c) 665,102
========== ======= ======= =========
<CAPTION>
YEAR ENDED JUNE 25, 1994
- ------------------------
<S> <C> <C> <C> <C>
Net sales volume................. $1,183,729 377,305 -- 1,561,034
========== ======= ======= =========
Net margins from operations...... $ 52,177 8,471 -- 60,648
========== ======= =======
General corporate expenses....... (6,270)
Other deductions, net............ (4,304)
---------
Margins before income taxes, mi-
nority interest and cumulative
effect of accounting change..... $ 50,074
=========
Depreciation and amortization ex-
pense........................... $ 31,234 5,134 883(c) 37,251
========== ======= ======= =========
Capital expenditures............. $ 32,655 3,772 805(c) 37,232
========== ======= ======= =========
Identifiable assets at June 25,
1994............................ $ 375,389 218,111 122,932(c) 716,432
========== ======= ======= =========
<CAPTION>
YEAR ENDED JULY 1, 1995
- -----------------------
<S> <C> <C> <C> <C>
Net sales volume................. $1,255,087 433,450 -- 1,688,537
========== ======= ======= =========
Net margins from operations...... $ 34,095 4,559 -- 38,654
========== ======= =======
General corporate expenses....... (7,451)
Other deductions, net............ (5,617)
---------
Margins before income taxes and
minority interest............... $ 25,586
=========
Depreciation and amortization ex-
pense........................... $ 31,551 5,582 952(c) 38,085
========== ======= ======= =========
Capital expenditures............. $ 43,423 17,959 380(c) 61,762
========== ======= ======= =========
Identifiable assets at July 1,
1995............................ $ 418,790 258,461 144,386(c) 821,637
========== ======= ======= =========
</TABLE>
- --------
(a) Net sales volume includes export sales amounting to $27,511, $37,731 and
$70,113 in 1993, 1994 and 1995, respectively, which have no significant
geographical concentration.
(b) Intersegment sales are generally priced at competitive market prices.
(c) Amounts relate to unallocated corporate assets.
F-18
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH
THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CON-
TAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESEN-
TATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR
ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES COV-
ERED BY THIS PROSPECTUS; NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A SOLICI-
TATION OF AN OFFER TO BUY, ANY OF THE SECURITIES COVERED BY THIS PROSPECTUS BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITA-
TION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROSPECTUS.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Gold Kist Inc............................................................ 5
Risk Factors............................................................. 5
Use of Proceeds.......................................................... 6
Selected Consolidated Financial Data..................................... 7
Management's Discussion and Analysis of Consolidated Results of
Operations and Financial Condition...................................... 8
Business................................................................. 12
Description of Subordinated Capital Certificates of Interest............. 15
Description of Subordinated Loan Certificates and Subordinated Large De-
nomination Loan Certificates............................................ 20
Experts.................................................................. 24
Qualified Independent Underwriter........................................ 25
Legal Opinion............................................................ 25
Independent Auditors' Reports............................................ F-1
Consolidated Financial Statements........................................ F-3
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(LOGO)
GOLD KIST INC.
FIFTEEN YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES D)
TEN YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES D)
SEVEN YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES A)
FIVE YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES C)
THREE YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES A)
TWO YEAR SUBORDINATED CAPITAL CERTIFICATES OF INTEREST (SERIES A)
ONE YEAR SUBORDINATED LOAN CERTIFICATES (SERIES C)
ONE YEAR SUBORDINATED LARGE DENOMINATION LOAN CERTIFICATES (SERIES A)
SIX MONTH SUBORDINATED LARGE DENOMINATION LOAN CERTIFICATES (SERIES A)
----------------
PROSPECTUS
----------------
, 1995
----------------
AGVESTMENTS, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
--------------------------------------------
<TABLE>
<S> <C>
Registration Fees.............................................. $ 12,350
Legal Fees and Expenses........................................ $ 15,000*
Accountants' Fees and Expenses................................. $ 15,000*
Consulting Fee................................................. $ 40,000
Blue Sky Fees and Expenses..................................... $ 3,000*
Printing Expenses.............................................. $ 15,000*
Miscellaneous.................................................. $ 3,000*
--------
Total...................................................... $103,350*
</TABLE>
- --------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
------------------------------------------
Article XX of the By-Laws of Gold Kist provides:
"INDEMNIFICATION
Each person who is or was a Director or Officer of Gold Kist and each person
who at Gold Kist's request is serving or has served as an officer or director
of another corporation, partnership, joint venture, trust, or other enterprise
(hereinafter referred to individually as the "Indemnitee") shall be
indemnified by Gold Kist to the full extent described in Sections 14-2-156(a)
through (e) of the Georgia Business Corporation Code, as amended from time to
time, against expenses (including attorneys' fees), judgments, fines, amounts
paid in settlement, and other liabilities actually and reasonably incurred by
him in connection with any threatened, pending or completed action, suit, or
proceeding (whether based on facts and circumstances now existing or hereafter
arising) in which the Indemnitee may be involved by reason of his being or
having been a Director or Officer of Gold Kist or of such other enterprise.
Such indemnification shall be made in accordance with the laws of the State of
Georgia and subject to the conditions prescribed therein, including without
limitation, any condition that the Indemnitee have met applicable standards of
conduct. In addition to the indemnification described above Gold Kist, at the
discretion of its disinterested Directors, may indemnify the Indemnitee
against amounts paid in settlement of any threatened or pending action, suit
or proceeding by or in the right of Gold Kist to secure a judgment in its
favor, subject to the same conditions set forth in Sections 14-2-156(b) and
(d) of the Georgia Business Corporation Code, as amended from time to time,
with respect to expenses incurred by him in connection with such an action,
suit or proceeding, and subject to any limitations set forth in Section 14-2-
156(f) of the Georgia Business Corporation Code, as amended from time to time.
In keeping with and not in limitation of the foregoing, the attorneys of Gold
Kist who are officers of the company shall be indemnified by Gold Kist against
any expenses and other liabilities incurred by them in connection with their
rendering of legal opinions or providing other services as counsel to Gold
Kist or its subsidiaries or affiliated companies. Gold Kist may purchase and
maintain insurance on behalf of any Indemnitee against any liability asserted
against him whether or not Gold Kist would have the power to indemnify the
Indemnitee against such liability under the laws of the State of Georgia. If
any expenses or other amounts are paid by way of indemnification, other than
by court order, by membership action or by insurance carrier, Gold Kist shall
provide notice of such payment to the members in accordance with the
provisions of the laws of the State of Georgia."
II-1
<PAGE>
The Georgia Business Corporation Code provides:
14-2-850. PART DEFINITIONS.
As used in this part, the term:
(1) "Corporation" includes any domestic or foreign predecessor entity of
a corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is or
was serving at the corporation's request as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other
enterprise. A director is considered to be serving an employee benefit plan
at the corporation's request if his duties to the corporation also impose
duties on, or otherwise involve services by, him to the plan or to
participants in or beneficiaries of the plan. Director includes, unless the
context requires otherwise, the estate or personal representative of a
director.
(3) "Expenses" include attorneys' fees.
(4) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses incurred with respect to a
proceeding.
(5) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative
and whether formal or informal.
14-2-851. AUTHORITY TO INDEMNIFY.
(a) Except as provided in subsections (d) and (e) of this Code section, a
corporation may indemnify or obligate itself to indemnify an individual made a
party to a proceeding because he is or was a director against liability
incurred in the proceeding if he acted in a manner he believed in good faith
to be in or not opposed to the best interests of the corporation and, in the
case of any criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose he believed in good faith to be in the interests of the participants
in and beneficiaries of the plan is conduct that satisfies the requirement of
subsection (a) of this Code section.
(c) The termination of a proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
set forth in subsection (a) of this Code section.
(d) A corporation may not indemnify a director under this Code section:
(1) In connection with a proceeding by or in the right of the corporation
in which the director was adjudged liable to the corporation; or
(2) In connection with any other proceeding in which he was adjudged
liable on the basis that personal benefit was improperly received by him.
(e) Indemnification permitted under this Code section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
14-2-852. MANDATORY INDEMNIFICATION.
Unless limited by its articles of incorporation, to the extent that a
director has been successful, on the merits or otherwise, in the defense of
any proceeding to which he was a party, or in defense of any claim,
II-2
<PAGE>
issue, or matter therein, because he is or was a director of the corporation,
the corporation shall indemnify the director against reasonable expenses
incurred by him in connection therewith.
14-2-853. ADVANCE FOR EXPENSES.
(a) A corporation may pay for or reimburse the reasonable expenses incurred
by a director who is a party to a proceeding in advance of final disposition
of the proceeding if:
(1) The director furnishes the corporation a written affirmation of his
good faith belief that he has met the standard of conduct set forth in
subsection (a) of Code Section 14-2-851; and
(2) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to indemnification under this
part.
(b) The undertaking required by paragraph (2) of subsection (a) of this Code
section must be an unlimited general obligation of the director but need not
be secured and may be accepted without reference to financial ability to make
repayment.
14-2-854. COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR EXPENSES.
Unless a corporation's articles of incorporation provide otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification or advances for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court after giving any notice the court considers necessary
may order indemnification or advances for expenses if it determines:
(1) The director is entitled to mandatory indemnification under Code
Section 14-2-852, in which case the court shall also order the corporation
to pay the director's reasonable expenses incurred to obtain court ordered
indemnification;
(2) The director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not he met the standard
of conduct set forth in subsection (a) of Code Section 14-2-851 or was
adjudged liable as described in subsection (d) of Code Section 14-2-851,
but if he was adjudged so liable his indemnification is limited to
reasonable expenses incurred unless the articles of incorporation or a
bylaw, contract, or resolution approved or ratified by the shareholders
pursuant to Code Section 14-2-856 provides otherwise; or
(3) In the case of advances for expenses, the director is entitled,
pursuant to the articles of incorporation, bylaws, or any applicable
resolution or agreement, to payment or reimbursement of his reasonable
expenses incurred as a party to a proceeding in advance of final
disposition of the proceeding.
14-2-855. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.
(a) A corporation may not indemnify a director under Code Section 14-2-851
unless authorized thereunder and a determination has been made in the specific
case that indemnification of the director is permissible in the circumstances
because he has met the standard of conduct set forth in subsection (a) of Code
Section 14-2-851.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under paragraph (1) of this
subsection, by majority vote of a committee duly designated by the board of
directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding;
(3) By special legal counsel:
(A) Selected by the board of directors or its committee in the manner
prescribed in paragraph (1) or (2) of this subsection; or
II-3
<PAGE>
(B) If a quorum of the board of directors cannot be obtained under
paragraph (1) of this subsection and a committee cannot be designated
under paragraph (2) of this subsection, selected by majority vote of
the full board of directors (in which selection directors who are
parties may participate); or
(4) By the shareholders, but shares owned by or voted under the control
of directors who are at the time parties to the proceeding may not be voted
on the determination.
(c) Authorization of indemnification or an obligation to indemnify and
evaluation as to reasonableness of expenses shall be made in the same manner
as the determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses shall be made
by those entitled under paragraph (3) of subsection (b) of this Code section
to select counsel.
14-2-856. SHAREHOLDER APPROVED INDEMNIFICATION.
(a) If authorized by the articles of incorporation or a bylaw, contract, or
resolution approved or ratified by the shareholders by a majority of the votes
entitled to be cast, a corporation may indemnify or obligate itself to
indemnify a director made a party to a proceeding including a proceeding
brought by or in the right of the corporation, without regard to the
limitations in other Code sections of this part;
(b) The corporation shall not indemnify a director under this Code section
for any liability incurred in a proceeding in which the director is adjudged
liable to the corporation or is subjected to injunctive relief in favor of the
corporation:
(1) For any appropriation, in violation of his duties, of any business
opportunity of the corporation;
(2) For acts or omissions which involve intentional misconduct or a
knowing violation of law;
(3) For the types of liability set forth in Code Section 14-2-832; or
(4) For any transaction from which he received an improper personal
benefit.
(c) Where approved or authorized in the manner described in subsection (a)
of this Code section, a corporation may advance or reimburse expenses incurred
in advance of final disposition of the proceeding only if:
(1) The director furnishes the corporation a written affirmation of his
good faith belief that his conduct does not constitute behavior of the kind
described in subsection (b) of this Code section; and
(2) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to indemnification under this
Code section.
14-2-857. INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS.
Unless a corporation's articles of incorporation provide otherwise:
(1) An officer of the corporation who is not a director is entitled to
mandatory indemnification under Code Section 14-2-852 and is entitled to
apply for court ordered indemnification under Code Section 14-2-854, in
each case to the same extent as a director; and
(2) A corporation may also indemnify and advance expenses to an officer,
employee, or agent who is not a director to the extent, consistent with
public policy, that may be provided by its articles of incorporation,
bylaws, general or specific action of its board of directors, or contract.
14-2-858. INSURANCE
A corporation may purchase and maintain insurance on behalf of an individual
who is or was a director, officer, employee, or agent of the corporation or
who, while a director, officer, employee, or agent of the corporation, is or
was serving at the request of the corporation as a director, officer, partner,
trustee, employee
II-4
<PAGE>
or agent of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise against liability
asserted against or incurred by him in that capacity or arising from his
status as a director, officer, employee, or agent, whether or not the
corporation would have power to indemnify him against the same liability under
Code Section 14-2-851 or Code Section 14-2-852.
14-2-859. APPLICATION OF PART.
(a) A provision treating a corporation's indemnification of or advance for
expenses to directors that is contained in its articles of incorporation,
bylaws, a resolution of its shareholders or board of directors, or in a
contract or otherwise, is valid only if and to the extent the provision is
consistent with this part. If articles of incorporation limit indemnification
or advances for expenses, indemnification and advance for expenses are valid
only to the extent consistent with the articles.
(b) This part does not limit a corporation's power to pay or reimburse
expenses incurred by a director in connection with his appearance as a witness
in a proceeding at a time when he has not been made a named defendant or
respondent to the proceeding."
The benefits of the indemnity for directors provided by Article XX of Gold
Kist's by-laws are contractually assured by agreements between Gold Kist and
the directors. There is currently in effect an insurance policy which provides
for reimbursement of Gold Kist for amounts paid in indemnification. The
overall policy limit is $30,000,000.
ITEM 16. EXHIBITS.
---------
See Index of Exhibits on Page II-6.
ITEM 17. UNDERTAKINGS.
-------------
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
II-5
<PAGE>
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(5) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(6) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
EXHIBITS--INDEX OF EXHIBITS
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
1 Underwriting Agreement Registration filed on Exhibit 1
with Agvestments, Inc., Form S-2 (Registration
dated October 12, 1992 No. 33-52268)
1(a) Designation of classes
of Securities of Gold
Kist Inc. to be offered
and sold pursuant to
underwriting agreement
with Agvestments, Inc.,
as amended
2 Agreement and Plan of Registration filed on Exhibit 2
Merger, dated June 20, Form S-2 (Registration
1986, and effective No. 33-9007)
June 30, 1986, between
Carolina Golden
Products, Inc., and
Golden Poultry Company,
Inc.
4(a)(1) Form of Indenture, dated Registration filed on Exhibit 4(a)(2)
as of December 1, 1977, Form S-1 (Registration
governing the terms of No. 2-59958)
the 9% Fifteen Year
Subordinated Capital
Certificates of
Interest, including
therein a table of
contents and cross-
reference sheet
4(a)(2) Form of First Registration filed on Exhibit 4(a)(2)
Supplemental Indenture, Form S-1 (Registration
dated as of September No. 2-69267)
1, 1979, amending the
terms of the Form of
Indenture, dated as of
December 1, 1977,
governing the terms of
the 9% Fifteen Year
Subordinated Capital
Certificates of
Interest
4(a)(3) Form of Indenture, dated Registration filed on Exhibit 4(a)(2)
as of September 1, Form S-1
1979, governing the (Registration No. 2-
terms of the Fifteen 65587)
Year Subordinated
Capital Certificates of
Interest (Series B),
including therein a
table of contents and
cross-reference sheet
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
4(a)(4) Form of First Registration filed on Exhibit 4(a)(4)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1980, governing the 69267)
terms of the Fifteen
Year Subordinated
Capital Certificates of
Interest (Series C)
4(a)(5) Form of Second Registration filed on Exhibit 4(a)(5)
Supplemental Indenture, Form S-2 (Registration
dated as of September No. 2-75938)
1, 1982, governing the
terms of the Fifteen
Year Subordinated
Capital Certificates of
Interest (Series D)
4(b)(1) Form of Indenture, dated Registration filed on Exhibit 4(b)(2)
as of December 1, 1977, Form S-1
governing the terms of (Registration No. 2-
the 8 1/2% Ten Year 59958)
Subordinated Capital
Certificates of
Interest, including
therein a table of
contents and cross-
reference sheet
4(b)(2) Form of First Registration filed on Exhibit 4(b)(2)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1979, amending the 69267)
terms of the Form of
Indenture dated as of
December 1, 1977
governing the terms of
the 8 1/2% Ten Year
Subordinated Capital
Certificates of
Interest
4(b)(3) Form of Indenture, dated Registration filed on Exhibit 4(b)(2)
as of September 1, Form S-1
1979, governing the (Registration No. 2-
terms of the Ten Year 65587)
Subordinated Capital
Certificates of
Interest (Series B),
including therein a
table of contents and
cross-reference sheet
4(b)(4) Form of First Registration filed on Exhibit 4(b)(4)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1980 governing the 69267)
terms of the Ten Year
Subordinated Capital
Certificates of
Interest (Series C)
4(b)(5) Form of Second Registration filed on Exhibit 4(b)(5)
Supplemental Indenture, Form S-2
dated as of September (Registration No. 2-
1, 1982, governing the 79538)
terms of the Ten Year
Subordinated Capital
Certificates of
Interest (Series D)
4(c) Form of Indenture, dated Registration filed on Exhibit 4(c)
September 1, 1985, Form S-2
governing the terms of (Registration No. 33-
the Seven Year 428)
Subordinated Capital
Certificates of
Interest (Series A)
including therein a
table of contents,
cross-reference sheet
and form of Seven Year
Subordinated Capital
Certificates of
Interest
4(d)(1) Form of Indenture, dated Registration filed on Exhibit 4(c)(2)
as of September 1, Form S-1
1979, governing the (Registration No. 2-
terms of the Five Year 65587)
Subordinated Capital
Certificates of
Interest (Series A),
including therein a
table of contents and
cross-reference sheet
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
4(d)(2) Form of First Registration filed on Exhibit 4(d)(2)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1980, governing the 69267)
terms of the Five Year
Subordinated Capital
Certificates of
Interest (Shares B)
4(d)(3) Form of Second Registration filed on Exhibit 4(d)(3)
Supplemental Indenture, Form S-2
dated as of September (Registration No. 2-
1, 1982, governing the 79538)
terms of the Five Year
Subordinated Capital
Certificates of
Interest (Series C)
4(e) Form of Indenture, dated Registration filed on Exhibit 4(f)(2)
as of September 1, Form S-2
1985, governing the (Registration No. 33-
terms of the Three Year 428)
Subordinated Capital
Certificates of
Interest (Series A),
including therein a
table of contents,
cross-reference sheet,
and form of Three Year
Subordinated Capital
Certificates of
Interest
4(f) Form of Indenture, dated Registration filed on Exhibit 4(g)
September 1, 1980, Form S-1
governing the terms of (Registration No. 2-
the Two Year 69267)
Subordinated Capital
Certificates of
Interest (Series A),
including therein a
table of contents and
cross-reference sheet
4(g)(1) Form of Indenture, dated Registration filed on Exhibit 4(h)(1)
as of September 1, Form S-2
1985, governing the (Registration No. 33-
terms of the One Year 428)
Subordinated Large
Denomination Loan
Certificates (Series
A), including therein a
table of contents,
cross-reference sheet,
and form of One Year
Subordinated Large
Denomination Loan
Certificates
4(g)(2) Form of Indenture, dated Registration filed on Exhibit 4(d)(2)
September 1, 1979, Form S-1
governing the terms of (Registration No. 2-
the One Year 66587)
Subordinated Loan
Certificates (Series
B), including therein a
table of contents and
cross-reference sheet
4(g)(3) Form of First Registration filed on Exhibit 4(f)(2)
Supplemental Indenture, Form S-1
dated as of September (Registration No. 2-
1, 1980, governing the 69267)
terms of the One Year
Subordinated Loan
Certificates (Series C)
4(h) Form of Indenture dated Registration filed on Exhibit 4(i)
as of September 1, Form S-2 (Registration
1985, governing the No. 33-428)
terms of the Six Month
Subordinated Large
Denomination Loan
Certificates (Series
A), including therein a
table of contents,
cross-reference sheet,
and form of Six Month
Subordinated Large
Denomination Loan
Certificates
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
4(i)(1) Specimen of Cumulative Registration filed on Exhibit 4(f)
Preferred Capital Form S-1 (Registration
Certificates of No. 2-59958)
Interest used for three
year (6.5%-8%), six
year (6.75%-8.5%), ten
year (7%-9%) and
fifteen year (9%),
fixed-maturity
certificates
4(i)(2) Specimen of Subordinated Annual Report on Form Exhibit B-4(h)(2)
Capital Certificates of 10-K for the Fiscal Year
Interest used for Ended June 30, 1982
Fifteen Year (Series B
and C), Ten Year
(Series B and C), Five
Year (Series A and B)
and Two Year (Series A)
4(i)(3) Specimen of Subordinated Annual Report on Form Exhibit B-4(h)(3)
Loan Certificates 10-K for the Fiscal Year
(Series B and C) Ended June 30, 1982
4(j) Specimen of 5% Registration filed on Exhibit 4(g)
Cumulative Preferred Form S-1 (Registration
Capital Certificates of No. 2-59958)
Interest with no fixed
maturities
4(k) Agreement to furnish Registration filed on Exhibit 4(h)
copies of constituent Form S-1 (Registration
instruments defining No. 2-59958)
the rights of the
holders of certain
industrial revenue
bonds
4(l)(1) Note Agreement with the Quarterly Report on Form Exhibit B-4(n)
Prudential Insurance 10-Q for the Fiscal
Company of America, Quarter Ended December
dated as of December 31, 1986
15, 1986
4(l)(2) Amendment dated June 30, Registration filed on Exhibit 4(l)(2)
1987 to Note Agreement Form S-2 (Registration
with the Prudential No. 33-24623)
Insurance Company of
America
4(l)(3) Note Agreement with the Quarterly Report on Form Exhibit B-4(q)(1)
Prudential Insurance 10-Q for the Fiscal
Company of America Quarter ended December
dated as of November 4, 31, 1988
1988
4(l)(4) Note Agreement with the Quarterly Report on Form Exhibit B-4(q)(2)
Pruco Life Insurance 10-Q for the Fiscal
Company dated as of Quarter ended December
November 4, 1988 31, 1988
4(l)(5) Amendment dated as of Registration filed on Exhibit 4(l)(5)
January 9, 1991, to Form S-2 (Registration
Note Agreements' with No. 33-42900)
the Prudential
Insurance Company of
America and with Pruco
Life Insurance Company
4(l)(6) Note Agreement with the Registration filed on Exhibit 4(l)(6)
Prudential Insurance Form S-2 (Registration
Company of America No. 33-42900)
dated as of June 3,
1991
4(l)(7) Amendment dated as of Registration filed on Exhibit 4(l)(7)
June 26, 1992, to Note Form S-2 (Registration
Agreements with No. 33-52268)
Prudential Insurance
Company of America
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
4(l)(8) Amendment dated as of Registration filed on Exhibit 4(l)(8)
July 14, 1993, to Note Form S-2 (Registration
Agreements in the No. 33-69204)
Prudential Insurance
Company of America and
Pruco Life Insurance
Company
4(m)(1) Credit Agreement dated
as of June 30, 1995,
with Various Banks and
Lending Institutions,
as Lenders and Trust
Company Bank, as agent
4(n)(1) Line of Credit Agreement Registration filed on Exhibit 4(n)
with CoBank, dated as Form S-2 (Registration
of February 22, 1991 No. 33-42900)
4(n)(2) Amendment dated as of Registration filed on Exhibit 4(n)(2)
March 1, 1992, to Line Form S-2 (Registration
of Credit Agreement No. 33-52268)
with CoBank
4(n)(3) Amendment dated as of Registration filed on Exhibit 4(n)(3)
December 18, 1992 to Form S-2 (Registration
Line of Credit No. 33-69204)
Agreement with CoBank
4(n)(4) Amendment dated of Registration filed on Exhibit 4(n)(4)
December 13, 1993 to Form S-2 (Registration
Line of Credit No. 33-55563)
Agreement with CoBank
4(o) Guaranty dated December Registration filed on Exhibit 4(o)
18, 1992 by Gold Kist Form S-2 (Registration
in favor of NationsBank No. 33-69204)
of Georgia, N.A.
5 Opinion of Alston & Bird
10(a) Form of Deferred Registration filed on Exhibit 11(d)
Compensation Agreement Form S-1 (Registration
between Gold Kist and No. 2-59958)
certain executive
officers
10(b)(1) Gold Kist Management Registration filed on Exhibit 10(b)
Bonus Program Form S-1 (Registration
No. 2-69267)
10(b)(2) Amended Gold Kist Registration filed on Exhibit 10(b)(2)
Management Bonus Form S-2 (Registration
Program No. 2-79538)
10(b)(3) Form of Gold Kist Registration filed on Exhibit 10(b)(3)
Supplemental Executive Form S-2 (Registration
Retirement Income Non- No. 33-9007)
Qualified Deferred
Compensation Plan and
Agreement between Gold
Kist Inc. and certain
executive officers and
Resolution of Gold Kist
Board of Directors
authorizing the
Supplemental Executive
Retirement Plan
10(b)(4) Resolution of Gold Kist Registration filed on Exhibit 10(b)(4)
Board of Directors Form S-2 (Registration
authorizing the Gold No. 33-9007)
Kist Special Award Plan
10(b)(5) Form of Gold Kist Registration filed on Exhibit 10(b)(5)
Executive's Change in Form S-2 (Registration
Control Agreement No. 33-31164)
between Gold Kist and
certain officers and
resolutions of Gold
Kist Board of Directors
authorizing the
Officers Contingency
Plan
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
10(b)(6) Form of Directors Change Registration filed on Exhibit 10(b)(6)
in Control Agreement Form S-2 (Registration
between Gold Kist and No. 33-36938)
Directors of Gold Kist
10(b)(7) Form of Directors Registration filed on Exhibit 10(b)(7)
Emeritus Life Benefits Form S-2 (Registration
Agreement No. 33-36938)
10(b)(8) Form of Directors Registration filed on Exhibit 10(b)(8)
Emeritus Agreement for Form S-2 (Registration
Medical Benefits No. 33-36938)
10(b)(9) Gold Kist Executive
Savings Plan, as
amended
10(b)(10) Gold Kist Investor
Savings Plan, as
amended
10(b)(11) Gold Kist Split Dollar
Life Insurance Plan
10(c)(1) Form of Membership, Registration filed on Exhibit 13(b)
Marketing, and/or Form S-1 (Registration
Purchasing Agreement of No. 2-59958)
Gold Kist Inc.,
Atlanta, Georgia
10(c)(2) Form of Membership, Registration filed on Exhibit 10(c)(2)
Marketing, and/or Form S-1 (Registration
Purchasing Agreement of No. 2-74205)
Gold Kist Inc.,
Atlanta, Georgia, as
revised October 17,
1980
10(c)(3) Form of Membership, Registration filed on Exhibit 10(c)(3)
Marketing and/or Form S-2 (Registration
Purchasing Agreement of No. 33-428)
Gold Kist Inc.,
Atlanta, Georgia, as
revised November 1,
1984
10(c)(4) Form of Membership, Registration filed on Exhibit 10(c)(4)
Marketing and/or Form S-2 (Registration
Purchasing Agreement of No. 33-24623)
Gold Kist Inc.,
Atlanta, Georgia, as
revised October 29,
1987
10(c)(5) Form of Membership, Registration filed on Exhibit 10(c)(5)
Marketing and/or Form S-2 (Registration
Purchasing Agreement of No. 33-42900)
Gold Kist Inc.,
Atlanta, Georgia,
revised as of August
21, 1991
10(d) CF Industries, Inc. Registration filed on Exhibit 13(j)
Member Product Purchase Form S-1 (Registration
Agreement No. 2-59958)
10(e)(1) General Partnership Registration filed on Exhibit 10(h)(1)
Agreement (GC Form S-2 (Registration
Properties) between No. 33-428)
Gold Kist Inc. and
Cotton States Mutual
Insurance Company,
dated as of July 1,
1984
10(e)(2) Lease from GC Registration filed on Exhibit 10(h)(2)
Properties, dated Form S-2 (Registration
December 11, 1984, for No. 33-428)
home office building
space
10(f)(1) General Partnership Annual Report on Form 10- Exhibit B-10(f)(1)
Agreement (Golden K for the Fiscal Year
Peanut Company) between ended June 30, 1987
Gold Kist and Archer-
Daniels-Midland
Company, dated as of
December 17, 1986
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
10(f)(2) Restated and Amended Registration filed on Exhibit 10(f)(2)
Partnership Agreement Form S-2 (Registration
(Golden Peanut Company) No. 33-31164)
between Gold Kist,
Inc., Archer-Daniels-
Midland Company and
Alimenta Processing
Corporation dated as of
March 1, 1989
10(f)(3) Amendment to Amended and Registration filed on Exhibit 10(f)(3)
Restated Partnership Form S-2 (Registration
Agreement (Golden No. 33-42900)
Peanut Company) between
Gold Kist, Inc.,
Archer-Daniels-Midland
Company and Alimenta
Processing Corporation
dated as of June 30,
1991
10(f)(4) Master Commercial Annual Report on Form 10- Exhibit B-10(f)(2)
Facilities Lease K for the Fiscal Year
Agreement between Gold ended June 30, 1987
Kist and Golden Peanut
Company dated as of
December 17, 1986
10(g) Agreement of Sale of Annual Report on Form 10- Exhibit B-10(g)
Valdosta, Georgia, Soy K for the Fiscal Year
Processing Plant, ended June 30, 1987
between Gold Kist and
Archer-Daniels-Midland
Company, dated July 2,
1987
10(h) Grain Procurement Annual Report on Form 10- Exhibit B-10(h)
Agreement between Gold K for the Fiscal Year
Kist and Archer- ended June 30, 1987
Daniels-Midland
Company, dated August
31, 1987
10(i) General Partnership Registration filed on Exhibit 10(i)
Agreement (Carolina Form S-2 (Registration
Golden Products No. 33-42900)
Company) between
AgriGolden, Inc., and
Golden Poultry Company,
Inc., dated as of
January 28, 1991
12 Computation of Ratio of
Net Margins to Fixed
Charges
23(a) Consent of Alston & Bird See Page II-15 of this
Registration Statement
23(b) Consent of KPMG Peat See Page II-16 of this
Marwick LLP Registration Statement
23(c) Consent of Ernst & Young See Page II-17 of this
LLP Registration Statement
23(d) Consent of See Page II-18 of this
Interstate/Johnson Lane Registration Statement
Corporation
</TABLE>
II-12
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT WITH DESIGNATION
DESIGNATION WHICH EXHIBIT OF SUCH
OF EXHIBIT WAS PREVIOUSLY EXHIBIT IN
IN THIS FILED WITH THAT
REPORT DESCRIPTION OF EXHIBIT COMMISSION DOCUMENT
----------- ---------------------- -------------- -----------
<C> <S> <C> <C>
25 Statements of eligibility
and qualification of
Trustee on Form T-1 with
respect to Fifteen Year
Subordinated Capital
Certificates of Interest
(Series D), Ten Year
Subordinated Capital
Certificates of Interest
(Series D), Seven Year
Subordinated Capital
Certificates of Interest
(Series A), Five Year
Subordinated Capital
Certificates of Interest
(Series C), Three Year
Subordinated Capital
Certificates of Interest
(Series A), Two Year
Subordinated Capital
Certificates of Interest
(Series A), One Year
Subordinated Loan
Certificates (Series C),
One Year Subordinated
Large Denomination Loan
Certificates (Series A),
and Six Month
Subordinated
Large Denomination Loan
Certificates (Series A)
27 Financial Data Schedule
</TABLE>
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-2 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF GEORGIA, ON THE 21ST DAY OF
SEPTEMBER, 1995.
Gold Kist Inc.
/s/ H. O. Chitwood
By: _________________________________
H. O. CHITWOOD,Chief Executive
Officer(Principal Executive
Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ H. O. Chitwood Chief Executive September 21,
- ------------------------------------- Officer (Principal 1995
H. O. CHITWOOD Executive Officer)
/s/ Peter J. Gibbons Vice President- September 21,
- ------------------------------------- Finance (Principal 1995
PETER J. GIBBONS Financial Officer)
/s/ W. F. Pohl, Jr. Controller September 21,
- ------------------------------------- (Principal 1995
W. F. POHL, JR. Accounting Officer)
/s/ W. P. Smith, Jr. Director September 16,
- ------------------------------------- 1995
W. P. SMITH, JR.
/s/ Fred K. Norris, Jr. Director September 15,
- ------------------------------------- 1995
FRED K. NORRIS, JR.
/s/ Dan Smalley Director September 15,
- ------------------------------------- 1995
DAN SMALLEY
/s/ Phil Ogletree, Jr. Director September 14,
- ------------------------------------- 1995
PHIL OGLETREE, JR.
/s/ James E. Brady, Jr. Director September 15,
- ------------------------------------- 1995
JAMES E. BRADY, JR.
/s/ A. Jack Nally Director September 16,
- ------------------------------------- 1995
A. JACK NALLY
/s/ W. Kenneth Whitehead Director September 18,
- ------------------------------------- 1995
W. KENNETH WHITEHEAD
/s/ H. Michael Davis Director September 20,
- ------------------------------------- 1995
H. MICHAEL DAVIS
/s/ Herbert A. Daniel, Jr. Director September 14,
- ------------------------------------- 1995
HERBERT A. DANIEL, JR.
II-14
<PAGE>
CONSENT OF COUNSEL
The consent of Alston & Bird to the use of their opinion as to the legality
of the securities covered by this Registration Statement and to the reference
to such firm under the caption "Legal Opinion" is contained in their opinion
filed as Exhibit 5 to the Registration Statement.
II-15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
1(a) Designation of classes of Securities of Gold Kist Inc.
to be offered and sold pursuant to underwriting
agreement with Agvestments, Inc., as amended
4(m)(1) Credit Agreement dated as of June 30, 1995, with
Various Banks and Lending Institutions and Trust
Company Bank, as Agent
5 Opinion of Alston & Bird
10(b)(9) Gold Kist Executive Savings Plan, as amended
10(b)(10) Gold Kist Director Savings Plan, as amended
10(b)(11) Gold Kist Split Dollar Life Insurance Plan
12 Computation of Ratios of Net Margins to Fixed Charges
23(a) Consent of Alston & Bird
23(b) Consent of KPMG Peat Marwick LLP
23(c) Consent of Ernst & Young LLP
23(d) Consent of Interstate/Johnson Lane Corporation
25 Statements of eligibility and qualification of Trustee
on Form T-1 with respect to Fifteen Year Subordinated
Capital Certificates of Interest (Series D), Ten Year
Subordinated Capital Certificates of Interest (Series
D), Seven Year Subordinated Capital Certificates of
Interest (Series A), Five Year Subordinated Capital
Certificates of Interest (Series C), Three Year
Subordinated Capital Certificates of Interest (Series
A), Two Year Subordinated Capital Certificates of
Interest (Series A), One Year Subordinated Loan
Certificates (Series C), One Year Subordinated Large
Denomination Loan Certificates (Series A), and Six
Month Subordinated Large Denomination Loan
Certificates (Series A)
27 Financial Data Schedule
</TABLE>
<PAGE>
[LETTERHEAD OF AGVESTMENTS, INC. APPEARS HERE]
August 15, 1995
Agvestments, Inc.
244 Perimeter Center Parkway, N.E.
P.O. Box 2210
Atlanta, Georgia 30301
SUBJECT: Written Notice of Designated Securities
---------------------------------------
Gentlemen:
Pursuant to Section 1 of a certain Amendment Agreement made and entered into on
the 7th day of March, 1977, between Gold Kist Inc. and Agvestments, Inc.,
("Agreement"), as amended, this letter is to serve as written designation of
certain classes of securities which Agvestments, Inc. is hereby authorized to
offer in accordance with the terms of the Agreement. Upon Gold Kist's receipt of
an effective Registration Statement under the Securities Act of 1933, as amended
and subject to the terms thereof and the terms of the Agreement, Agvestments,
Inc. is authorized to offer to the public the Securities described in the
attached and incorporated Exhibit A (said securities hereafter referred to as
"Designated Securities").
Upon notification of the effective date of the Registration Statement
registering the Designated Securities, Gold Kist will notify Agvestments of its
authority to proceed under this written designation.
Sincerely,
By: /s/ Peter J. Gibbons
----------------------------
Vice President, Finance
<PAGE>
EXHIBIT A
---------
Dated: August 15 , 19 95
------------- ---
Below are listed the class of securities noted as Designated Securities on the
attached Written Notice of Designated Securities.
Subordinated Capital Certificates of Interest
15 year maturity, (Series D)
10 year maturity, (Series D)
7 year maturity, (Series A)
5 year maturity, (Series C)
3 year maturity, (Series A)
2 year maturity, (Series A)
Subordinated Loan Certificates
1 year maturity, (Series C)
Subordinated Large Denomination Loan Certificates
1 year maturity, (Series A)
6 month maturity, (Series A)
all as described in the Offering Prospectus.
<PAGE>
EXECUTION COUNTERPART
---------------------
CREDIT AGREEMENT
Dated as of June 30, 1995
By and Among
GOLD KIST INC.,
as Borrower,
VARIOUS BANKS AND LENDING INSTITUTIONS,
as Lenders,
and
TRUST COMPANY BANK,
AS AGENT.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
------
<S> <C> <C>
ARTICLE 1 DEFINITIONS.................................. 1
Section 1.1 Definitions.................................. 1
Section 1.2 Accounting Terms............................. 15
Section 1.3 Use of Defined Terms......................... 15
ARTICLE 2. CREDIT FACILITIES............................ 16
Section 2.1 Syndicated Loans............................. 16
Section 2.2 Bid Rate Loans............................... 17
Section 2.3 Letters of Credit............................ 17
ARTICLE 3. GENERAL LOAN AND LETTER OF CREDIT TERMS...... 17
Section 3.1 Notes; Repayment of Principal................ 17
Section 3.2 Amount Limitations........................... 17
Section 3.3 Reduction of Commitments..................... 18
Section 3.4 Extension of Revolving Loan Maturity Date.... 18
Section 3.5 Interest Rates and Interest Periods.......... 19
Section 3.6 Funding Notices.............................. 19
Section 3.7 Disbursement of Funds........................ 21
Section 3.8 Interest..................................... 22
Section 3.9 Fees......................................... 24
Section 3.10 Voluntary Prepayments of Borrowings.......... 24
Section 3.11 Letters of Credit............................ 25
Section 3.12 Payments, etc................................ 30
Section 3.13 Interest Rate Not Ascertainable, etc......... 32
Section 3.14 Illegality................................... 32
Section 3.15 Increased Costs.............................. 33
Section 3.16 Funding Losses............................... 34
Section 3.17 Assumptions Concerning Funding of Fixed
Rate Advances................................ 35
Section 3.18 Apportionment of Payments.................... 35
Section 3.19 Sharing of Payments, Etc..................... 35
Section 3.20 Capital Adequacy............................. 36
Section 3.21 Use of Proceeds.............................. 36
ARTICLE 4. CONDITIONS TO LOAN CLOSING AND EXTENSIONS
OF LOANS..................................... 36
Section 4.1 Conditions Precedent to Initial
Loans........................................ 36
Section 4.2 Conditions to all Loans...................... 38
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 5. REPRESENTATIONS AND WARRANTIES................ 39
Section 5.1 Organization and Qualification................ 39
Section 5.2 Financial Statements.......................... 39
Section 5.3 Taxes......................................... 40
Section 5.4 Actions Pending............................... 40
Section 5.5 Title to Properties........................... 40
Section 5.6 Regulation U, Etc............................. 40
Section 5.7 ERISA......................................... 41
Section 5.8 Outstanding Debt.............................. 41
Section 5.9 Conflicting Agreements or Other
Matters....................................... 41
Section 5.10 Possession of Franchises, Licenses,
Etc........................................... 42
Section 5.11 Governmental Consent.......................... 42
Section 5.12 Disclosure.................................... 43
Section 5.13 Foreign Assets Control Regulations............ 43
Section 5.14 Labor Relations............................... 43
Section 5.15 Enforceability of Agreement................... 43
Section 5.16 Subsidiaries.................................. 44
Section 5.17 Insurance Coverage............................ 44
Section 5.18 Investments................................... 44
Section 5.19 Intercompany Loans; Dividends................. 44
ARTICLE 6. AFFIRMATIVE COVENANTS......................... 44
Section 6.1 Financial Statements.......................... 44
Section 6.2 Inspection of Property........................ 46
Section 6.3 Insurance..................................... 46
Section 6.4 Conduct of Business........................... 46
Section 6.5 Corporate Existence; Maintenance of
Properties.................................... 46
Section 6.6 Environmental Laws............................ 47
Section 6.7 Taxes......................................... 48
Section 6.8 Keeping of Books; Fiscal Year................. 48
Section 6.9 Compliance with Laws and Other Agreements..... 48
Section 6.10 Notice of Default............................. 48
Section 6.11 Notice of Litigation.......................... 49
Section 6.12 ERISA......................................... 49
Section 6.13 Use of Proceeds............................... 49
ARTICLE 7. NEGATIVE COVENANTS............................ 50
Section 7.1 Financial Covenants........................... 50
Section 7.2 Limitation on Restricted Payments............. 50
Section 7.3 Liens......................................... 50
Section 7.4 Restrictions on Loans, Advances, Investments
and Contingent Liabilities.................... 51
Section 7.5 Sale of Stock and Debt of
Subsidiaries.................................. 53
Section 7.6 Merger and Sale of Assets..................... 53
Section 7.7 Sale and Lease-Back........................... 54
Section 7.8 Sale or Discount of Receivables............... 54
Section 7.9 Commodity Contracts........................... 54
Section 7.10 Issuance of Stock by Restricted Subsidiaries.. 54
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 8. EVENTS OF DEFAULT AND REMEDIES............... 54
Section 8.1 Events of Default............................ 54
Section 8.2 Remedies on Default.......................... 57
ARTICLE 9. THE AGENT.................................... 58
Section 9.1 Appointment and Authorization................ 58
Section 9.2 Nature of Duties of the Agent................ 59
Section 9.3 Lack of Reliance on the Agent................ 59
Section 9.4 Certain Rights of the Agent.................. 60
Section 9.5 Liability of the Agent....................... 60
Section 9.6 Indemnification.............................. 61
Section 9.7 The Agent and Affiliates..................... 62
Section 9.8 Successor Agent.............................. 62
ARTICLE 10. MISCELLANEOUS................................ 63
Section 10.1 Notices...................................... 63
Section 10.2 Amendments, Etc.............................. 63
Section 10.3 No Waiver; Remedies Cumulative............... 63
Section 10.4 Payment of Expenses, Etc..................... 64
Section 10.5 Right of Setoff.............................. 65
Section 10.6 Benefit of Agreement......................... 66
Section 10.7 Governing Law; Submission to Jurisdiction,
Etc.......................................... 68
Section 10.8 Independent Nature of the Lenders' Rights.... 69
Section 10.9 Counterparts................................. 69
Section 10.10 Effectiveness; Survival...................... 69
Section 10.11 Severability................................. 70
Section 10.12 Independence of Covenants.................... 70
Section 10.13 Change in Accounting Principles,
Fiscal Year or Tax Laws...................... 70
Section 10.14 Headings Descriptive; Entire
Agreement.................................... 70
Section 10.15 Time is of the Essence....................... 71
Section 10.16 Usury........................................ 71
Section 10.17 Construction................................. 71
</TABLE>
iii
<PAGE>
EXHIBITS:
- --------
Exhibit A - Form of Bid Rate Note
Exhibit B - Form of Syndicated Note
Exhibit C - Form of Letter of Credit Application
Exhibit D - Form of Notice of Borrowing
Exhibit E - Form of Bid Rate Request
Exhibit F - Form of Bid Rate Quote
Exhibit G - Form of Bid Rate Acceptance
Exhibit H - Form of Notice of Continuation/Conversion
Exhibit I - Form of Special Counsel Opinion
Exhibit J - Form of General Counsel Opinion
Exhibit K - Form of Assignment and Acceptance
SCHEDULES:
- ---------
Schedule 1.1 - Subordinated Debt
Schedule 5.4 - Litigation
Schedule 5.6 - Margin Stock
Schedule 5.9 - Conflicting Agreements
Schedule 5.14 - Labor Relations
Schedule 5.16 - Subsidiaries
Schedule 7.3 - Liens
Schedule 7.4 - Investments
iv
<PAGE>
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT, dated as of June 30, 1995, is made and entered
into by and among GOLD KIST INC., a cooperative marketing association organized
and existing under the laws of the State of Georgia (the "Borrower"), various
--------
banks and other lending institutions as are, or may from time to time become,
parties hereto (collectively, the "Lenders" and individually, a "Lender"), and
------- ------
TRUST COMPANY BANK, a Georgia banking corporation ("Trust Company"), as agent
-------------
for the Lenders.
W I T N E S S E T H:
-------------------
WHEREAS, at the request of the Borrower, the Lenders have agreed to
provide certain credit facilities to the Borrower on the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the sum of $10.00 in hand paid by
the Lenders to the Borrower, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE 1.
----------
DEFINITIONS
-----------
Section 1.1. Definitions. In addition to the other terms defined
-----------
herein, the following terms used herein shall have the meanings herein specified
(to be equally applicable to both the singular and plural forms of the terms
defined herein):
"Advance" shall mean any principal amount advanced and remaining
-------
outstanding at any time by the Lenders under (a) the Revolving Credit
Commitment, (b) the 364-Day Line of Credit Com mitment, or (c) the Seasonal Line
of Credit Commitment.
"Affiliate" shall mean, with respect to any Person, a Person directly
---------
or indirectly controlling or controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, the power
(a) to vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (b) to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise. Additionally, for purposes of
this Agreement, Golden Peanut and Young Pecan shall be considered Affiliates of
the Borrower and its Subsidiaries notwithstanding anything else to the contrary
contained herein.
<PAGE>
"Agent" shall mean Trust Company, as agent for the Lenders hereunder
-----
and under the other Loan Documents, and each successor agent appointed in
accordance with Section 9.8 of this Agreement.
"Agreement" shall mean this Credit Agreement, either as originally
---------
executed or as it may be from time to time supplemented, amended, restated,
renewed, extended or otherwise modified.
"AgriGolden" shall mean AgriGolden, Inc., a corporation formed under
----------
the laws of the State of Georgia.
"Applicable Percentage" shall mean (a) with respect to the Revolving
---------------------
Loans, the letter of credit fee, the facility fee, and the commitment fee, on a
per annum basis, the percentage designated below under the applicable column
heading and corresponding to the ratio of Consolidated Funded Debt to Total
Capital:
<TABLE>
<CAPTION>
LETTER OF
CREDIT FEE
AND
CONSOLIDATED FUNDED REVOLVING FACILITY COMMITMENT
DEBT TO TOTAL CAPITAL LOANS FEE FEES
- -------------------------- ---------- --------- -----------
<S> <C> <C> <C>
Less than 25% 0.15% 0.10% 0.025%
Greater than or equal to
25% but less than 35% 0.25% 0.125% 0.025%
Greater than or equal to
35% but less than 50% 0.375% 0.125% 0.075%
Greater than 50% 0.50% 0.125% 0.125%
</TABLE>
The Applicable Percentage shall be determined quarterly (and the rate determined
at that time shall apply until the next quarterly determination) based upon the
ratio of Consolidated Funded Debt to Total Capital determined pursuant to the
financial statements delivered to the Lenders pursuant to Section 6.1(a) or
Section 6.1(b) hereof, as the case may be, with such Applicable Percentage to be
effective with respect to calculations based upon such
-2-
<PAGE>
financial statements as of the first day of the second fiscal quarter
immediately following the fiscal quarter for which such financial statements are
delivered; provided, however, that the Applicable Percentage from the Closing
Date until July 1, 1995 shall be 0.25% for Revolving Loans and the letter of
credit fee, 0.125% for the facility fee, and 0.025% for the commitment fee; or
(b) with respect to the 364-Day Loans and the Seasonal Loans, on a per
annum basis, 0.275%.
"Assignment and Acceptance" shall mean an assignment and acceptance
-------------------------
agreement entered into by a Lender and an Eligible Assignee in accordance with
the terms and conditions of this Agreement and substantially in the form of
Exhibit K attached hereto.
- ---------
"Base Rate" shall mean the higher of (a) the Prime Rate or (b) the Federal
--------- --
Funds Rate plus one-half of one percent (0.5%) per annum.
"Base Rate Advance" shall mean any Advance hereunder that bears interest
-----------------
based on the Base Rate.
"Base Rate Borrowing" shall mean any Borrowing hereunder that bears
-------------------
interest based on the Base Rate.
"Bid Rate" shall mean the rate of interest per annum offered by any Lender
--------
pursuant to the terms of Section 3.6(a)(ii) of this Agreement.
"Bid Rate Acceptance" has the meaning set forth in Section 3.6(a)(ii) of
-------------------
this Agreement.
"Bid Rate Advance" shall mean any Advance hereunder that bears interest
----------------
based on the Bid Rate.
"Bid Rate Loan" shall mean any Loan made by a Lender pursuant to Section
-------------
2.2 of this Agreement.
"Bid Rate Notes" shall mean, collectively, the promissory notes evidencing
--------------
the Bid Rate Loans in substantially the form of Exhibit A attached hereto.
---------
"Bid Rate Quote" has the meaning set forth in Section 3.6(a)(ii) of this
--------------
Agreement.
"Bid Rate Request" has the meaning set forth in Section
----------------
-3-
<PAGE>
3.6(a)(ii) of this Agreement.
"Borrowing" shall mean the incurrence by the Borrower under any Facility of
---------
Advances of one Type concurrently having the same Interest Period or the
continuation or conversion of an existing Borrowing or Borrowings in whole or in
part.
"Business Day" shall mean, (a) with respect to Eurodollar Borrowings, any
------------
day other than a Saturday or Sunday or a day on which commercial banks are
required or permitted to be closed for domestic and international business,
including dealings in Dollar deposits, in London, England, New York, New York,
and Atlanta, Georgia and (b) with respect to all other Borrowings and as used in
all other contexts, any day other than a Saturday or Sunday or a day on which
commercial banks are required or permitted to be closed for business in Atlanta,
Georgia or New York, New York.
"Capital Lease" shall mean any lease or rental of real or personal property
-------------
which, under GAAP, is or will be required to be capitalized on the balance sheet
of the Borrower or any Restricted Subsidiary, taken at the amount thereof
accounted for as indebtedness (net of interest expense) in accordance with such
principles.
"Carolina Golden" shall mean Carolina Golden Products Company, a general
---------------
partnership formed under the laws of the State of Georgia, with AgriGolden and
Golden Poultry acting as general partners.
"Closing Date" shall mean the date which this Agreement is originally
------------
dated.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
----
to time.
"Commitments" shall mean, at any time for any Lender, the sum of such
-----------
Lender's (a) Revolving Credit Commitment, (b) Seasonal Line of Credit Commitment
and (c) 364-Day Line of Credit Commitment.
"Consolidated Funded Debt" shall mean (a) Funded Debt of the Borrower and
------------------------
its Restricted Subsidiaries, plus (b) (i) 50% of the Funded Debt of Golden
----
Peanut if Archer-Daniels-Midland Company is a general partner of Golden Peanut
or (ii) 100% of the Funded Debt of Golden Peanut in all other cases, plus (c)
----
100% of the Funded Debt of Young Pecan, plus (d) the Funded Debt of any other
----
Person which (i) has been guaranteed by the Borrower or any Restricted
Subsidiary or (ii) is supported by a letter of credit issued for the account of
the Borrower or any Restricted Subsidiary, all
-4-
<PAGE>
consolidated in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, total interest
-----------------------------
expense for such period of the Borrower and its Restricted Subsidiaries
(including without limitation, interest expense attributable to Capital Leases
in accordance with GAAP, all commissions, discounts and other fees and charges
owed with respect to bankers acceptance financing, and total interest expense
(whether shown as interest expense or as loss and expenses on sale of
receivables) under a receivables purchase facility) determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Earnings" shall mean consolidated gross revenues of the
-------------------------
Borrower and its Restricted Subsidiaries before extraordinary items (but after
giving effect to the credit resulting from any tax loss carry forwards) less all
operating and non-operating expenses of the Borrower and its Restricted
Subsidiaries including all charges of a proper character (including current and
deferred taxes on income and current additions to reserves but excluding equity
losses of Golden Peanut and Young Pecan, if any), but not including in gross
revenues any gains (net of expenses and taxes applicable thereto) in excess of
losses resulting from the sale, conversion or other disposition of capital
assets (i.e., assets other than current assets), any gains resulting from the
- -
write-up of assets, any equity of the Borrower or any Restricted Subsidiary in
the unremitted earnings of any corporation which is not a Subsidiary or any
earnings of any Person acquired by the Borrower or any Restricted Subsidiary
through purchase, merger or consolidation or otherwise for any year prior to the
year of acquisition, or any deferred credit representing the excess of equity in
any Subsidiary at the date of acquisition over the cost of investment in such
Subsidiary; all determined in accordance with GAAP.
"Consolidated Net Earnings Available for Restricted Payments" shall mean an
-----------------------------------------------------------
amount equal to the sum of (a) $25,000,000 plus (b) 50% of Consolidated Net
----
Earnings (less 100% of cumulative net losses) for the period (taken as one
accounting period) commencing on December 31, 1994 and terminating at the end of
the last fiscal quarter preceding the date of any proposed Restricted Payment,
plus (c) the net proceeds of sale of preferred stock and other equity sold after
- ----
December 31, 1994.
"Consolidated Total Assets" shall mean all assets of the Borrower and its
-------------------------
Restricted Subsidiaries, consolidated in accordance with GAAP.
-5-
<PAGE>
"Crop Indebtedness" shall mean any Debt incurred by the Bor rower, any
-----------------
Restricted Subsidiary, Golden Peanut, Young Pecan or any other Person (if the
Borrower or any Restricted Subsidiary is liable, directly or contingently, for
the Debt of such Person), for the sole purpose of buying crops for resale (other
than as an ingredient), as reasonably identified in good faith by the Borrower
and so certified to the Agent.
"Crop Year" shall mean the twelve month period beginning July 1 for those
---------
crops harvested in that period.
"Current Debt" shall mean any indebtedness for money borrowed (including
------------
Crop Indebtedness, subordinated loan certificates, bankers acceptances,
commodity discount loans, and notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
but excluding the current portion of Funded Debt) payable on demand or within a
pe riod of one year from the date of the creation thereof; provided that any
--------
obligation (other than Crop Indebtedness which is not Long-term Crop
Indebtedness) shall be treated as Funded Debt, re gardless of its term, if such
obligation is renewable pursuant to the terms thereof or of a revolving credit
or similar agreement effective for more than one year after the date of creation
of such obligation, or may be payable out of the proceeds of a similar
obligation pursuant to the terms of such obligation or of any such agreement.
Any obligation secured by a Lien on, or payable out of the proceeds of
production from, property of the company or any Subsidiary shall be deemed to be
Funded Debt or Current Debt, as the case may be, of the Borrower or such
Subsidiary even though such obligation shall not be assumed by the Borrower or
such Sub sidiary.
"Debt" shall mean Funded Debt and Current Debt, as the case may be.
----
"Default" shall mean any event that, with notice or lapse of time or both,
-------
would constitute an Event of Default.
"Dollar" and the sign "$" shall mean lawful money of the United States of
------ -
America.
"EBIT" shall mean, for any period, an amount equal to (a) the sum for such
----
period of Consolidated Net Earnings plus, to the extent subtracted in
----
determining such Consolidated Net Earnings, provisions for taxes based on income
and Consolidated Interest Expense, minus (b) any items of gain or plus any items
----- ----
of loss, which were included in determining such Consolidated Net Earnings and
were (1) not realized in the ordinary course of business or (2) the result of
any sale of assets.
-6-
<PAGE>
"Eligible Assignee" shall mean (i) a commercial finance or asset based
-----------------
lending institution having total assets in excess of $1,000,000,000 or any
commercial finance or asset based lending Affiliate of any such Person or (ii)
any Lender or any Affiliate of any Lender.
"Environmental Laws" shall mean all federal, state, local and foreign
------------------
statutes and codes or regulations, rules or ordinances issued, promulgated, or
approved thereunder, now or hereafter in effect (including, without limitation,
those with respect to asbestos or asbestos containing material or exposure to
asbestos or asbestos containing material), relating to pollution or protection
of the environment and relating to public health and safety, relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including, without limitation, any Hazardous Substances,
petroleum, including crude oil or any fraction thereof, any petroleum product or
other waste, chemicals or substances regulated by any Environmental Law into the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), or (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of any Hazardous Substances, petroleum, including crude oil or any
fraction thereof, any petroleum product or other waste, chemicals or substances
regulated by any Environmental Law, and (iii) underground storage tanks and
related piping, and emissions, discharges and releases or threatened releases
therefrom, such Environmental Laws to include, without limitation, (i) the Clean
Air Act (42 U.S.C. (S) 7401 et seq.), (ii) the Clean Water Act (33 U.S.C. (S)
------
1251 et seq.), (iii) the Resource Conservation and Recovery Act (42 U.S.C. (S)
------
6901 et seq.), (iv) the Toxic Substances Control Act (15 U.S.C. (S) 2601 et
------ --
seq.), and (v) the Comprehensive Environmental Response Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act
(42 U.S.C. (S) 9601 et seq.).
------
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended.
"ERISA Affiliate" shall mean any trade or business (whether incorporated or
---------------
unincorporated) which is a member of a group de scribed in Section 414(c) of the
Code, of which the Borrower is also a member.
"Eurodollar Advance" shall mean any Advance hereunder which bears interest
------------------
based on LIBOR.
-7-
<PAGE>
"Eurodollar Borrowing" shall mean any Borrowing hereunder which bears
--------------------
interest based on LIBOR.
"Event of Default" shall have the meaning set forth in Article 8.
----------------
"Facility" shall mean the credit facilities established by the Lenders
--------
under Article 2 of this Agreement.
"Federal Funds Rate" shall mean for any period, a fluctuating interest rate
------------------
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with member banks of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"Fee Letter" shall mean the fee letter dated as of even date herewith
----------
addressed by Trust Company to the Borrower.
"Fixed Rate Advance" shall mean any Advance which is either a Eurodollar
------------------
Advance or a Bid Rate Advance.
"Funded Debt" shall mean, as to any Person, and include without
-----------
duplication:
(a) all Indebtedness for money borrowed, including, without limitation,
purchase money mortgages, leases capitalized in accordance with Financial
Accounting Standards Board Statement No. 13, outstandings under asset
securitization programs, conditional sales contracts and similar title retention
debt instruments (including any current maturities of such indebtedness) payable
more than one year from the date of calculation thereof or which is renewable
under any revolving or similar agreement, which under GAAP is shown on the
balance sheet as a liability (but excluding reserves for deferred income taxes
and other reserves to the extent such reserves do not constitute an obligation);
and
(b) Guarantees, endorsements (other than endorsements of negotiable
instruments for collection in the ordinary course of business) and other
contingent liabilities (whether direct or in direct) in connection with the
obligations, stock or dividends of any other Person; and
(c) obligations under any other contract in connection with
-8-
<PAGE>
any borrowing which, in effect, is substantially equivalent to a guarantee; and
(d) obligations with respect to any redeemable preferred stock which is
required or scheduled to be redeemed within one year from the date of
calculation; and
(e) Long-term Crop Indebtedness.
Any obligation secured by a Lien on, or payable out of the proceeds of
production from, property of the Borrower or any Subsidiary shall be deemed to
be Funded Debt or Current Debt, as the case may be, of the Borrower or such
Subsidiary even though such obligation shall not be assumed by the Borrower or
such Subsidiary.
"GAAP" shall mean generally accepted accounting principles as set forth in
----
statements from Auditing Standards No. 69 issued by the Auditing Standards Board
of the American Institute of Certified Public Accountants as well as statements
and pronouncements of the Financial Accounting Standards Board that are
applicable, in each case as such principles are supplemented and amended from
time to time.
"GC Properties" shall mean GC Properties, a general partnership formed
-------------
under the laws of the State of Georgia, with the Borrower and Cotton States
Insurance Companies acting as the general partners.
"GK Finance" shall mean GK Finance Corporation, a corporation organized and
----------
existing under the laws of the State of Delaware, which is a wholly-owned
Subsidiary of the Borrower.
"Golden Peanut" shall mean Golden Peanut Company, a general partnership
-------------
formed under the laws of the State of Georgia with the Borrower, Alimenta (USA),
Inc., a Florida corporation, and Archer-Daniels-Midland Company, a Delaware
corporation, acting as general partners.
"Golden Poultry" shall mean Golden Poultry Company, Inc., a corporation
--------------
organized and existing under the laws of the State of Georgia, which is a
Subsidiary of the Borrower.
"Guaranty" shall mean any contractual obligation, contingent or otherwise,
--------
of a Person with respect to any Indebtedness or other obligation or liability of
another Person, including without limitation, any such Indebtedness, obligation
or liability directly or indirectly guaranteed, endorsed, co-made or discounted
or sold
-9-
<PAGE>
with recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including contractual obligations (contingent or
otherwise) arising through any agreement to purchase, repurchase, or otherwise
acquire such Indebtedness, obligation or liability or any security therefor, or
any agreement to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other financial
condition, or to make any payment other than for value received. The amount of
any Guaranty shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which guaranty is made or, if not
so stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Hazardous Substances" shall have the meaning assigned to that term in the
--------------------
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Acts of 1986.
"Hedging Contracts" shall mean any forward contracts, futures contracts,
-----------------
foreign exchange contracts, currency swap agreements, interest rate exchange
agreements, interest rate cap agreements, interest rate collar agreements, and
other similar agreements and arrangements entered into by any Person designed to
protect against fluctuations in either foreign exchange rates or interest rates.
"Indebtedness" of any Person shall mean, without duplication (i) all
------------
obligations of such Person which in accordance with GAAP would be shown on the
balance sheet of such Person as a liability (including, without limitation,
obligations for borrowed money and for the deferred purchase price of property
or services, and obligations evidenced by bonds, debentures, notes or other
similar instruments); (ii) all rental obligations under leases required to be
capitalized under GAAP; (iii) all Guaranties of such Person (including
contingent reimbursement obligations under undrawn letters of credit); (iv)
Indebtedness of others secured by any Lien upon property owned by such Person,
whether or not assumed; and (v) obligations or other liabilities under Hedging
Contracts, or similar agreements or combinations thereof which are disclosed as
liabilities on the balance sheet of such Person in accordance with GAAP.
"Indemnitee" has the meaning set forth in Section 10.4 of this Agreement.
----------
"Interest Period" shall mean, (a) with respect to any Euro dollar
---------------
Borrowing, a period of 1, 2, 3 or 6 months, or (b) with
-10-
<PAGE>
respect to any Bid Rate Borrowing, such periods of time (expressed in days)
which are agreed upon between the Borrower and the Lender(s) providing the
relevant Loan(s), as the Borrower may elect as provided in this Agreement;
provided, that (i) the first day of an Interest Period must be a Business Day,
- -------- ----
(ii) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day, unless such
Business Day falls in the next calendar month, in which case the Interest Period
shall end on the next preceding Business Day, and (iii) the Borrower may not
elect an Interest Period which would extend beyond the Maturity Date which
relates to the Commitment under which the Borrower is borrowing.
"Letter of Credit" shall mean an irrevocable standby letter of credit
----------------
issued by Trust Company hereunder for the account of the Borrower.
"Letter of Credit Application" shall mean an application to Trust Company
----------------------------
for the issuance of a Letter of Credit in the form of Exhibit C, with such
---------
changes as the Borrower and Trust Company shall approve.
"Letter of Credit Liabilities" shall mean, at any time, the sum of (a) the
----------------------------
stated amounts of all Letters of Credit and (b) the aggregate unpaid principal
amount of all reimbursement obligations of the Borrower in respect of all
drawings made under all Letters of Credit.
"Letter of Credit Sublimit" shall mean $5,000,000.
-------------------------
"LIBOR" shall mean, with respect to any Interest Period, for any Eurodollar
-----
Advances, the rate per annum equal to the sum of the rate obtained by dividing
(a) the offered rate for deposits for a period comparable to the Interest Period
and in an amount comparable to the Agent's portion of such Eurodollar Advances,
appearing on Telerate Page 3750 as of 11:00 A.M. (London, England time) on the
day that is two Business Days prior to the first day of the Interest Period by
(b) a percentage equal to 1 minus the then stated maximum rate (stated as a
-----
decimal) of all reserve requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) applicable to any
member bank of the Federal Reserve System in respect of Eurocurrency liabilities
as defined in Regulation D (or against any successor category of liabilities as
defined in Regulation D). If the foregoing rate is unavailable from Telerate
for any reason, then such rate shall be determined by the Agent from any other
interest rate reporting service of recognized standing designated
-11-
<PAGE>
in writing by the Agent to the Borrower and the other Lenders. If two or more
rates appear on such Telerate page, then the rate per annum for that Interest
Period shall be the arithmetic average of such rates. In any case, such rate
shall be rounded, if necessary, to the next higher 1/16 of one percent if the
rate is not such a multiple.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
----
lien or charge of any kind (including any written agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).
"Loan" shall mean, collectively, the Syndicated Loans and the Bid Rate
----
Loans.
"Loan Documents" shall mean and include, as the context re quires, this
--------------
Agreement, the Notes and any and all other instru ments, agreements, documents
and writings contemplated hereby or executed in connection herewith.
"Long-term Crop Indebtedness" shall mean (a) whenever the Old Crop
---------------------------
Inventory Percentage is greater than 5% at the end of any calendar quarter, the
Modified Old Crop Inventory Percentage multiplied by the amount of Crop
----------
Indebtedness, or (b) whenever the Old Crop Inventory Percentage is less than 5%,
zero.
"Material Adverse Effect" shall mean any material adverse change in (i) the
-----------------------
business, results of operations, financial condition, assets or prospects of the
Borrower and the Subsidiaries, taken as a whole, or (ii) the ability of Borrower
or the Subsidiaries to perform their obligations under this Agreement.
"Maturity Date" shall mean, as the context requires, any or all of (a) the
-------------
Revolving Loan Maturity Date, (b) the Seasonal Loan Maturity Date, and (c) the
364-Day Loan Maturity Date.
"Modified Old Crop Inventory Percentage" shall mean for any particular Crop
--------------------------------------
Year the value of either the peanut or pecan crop, as applicable, remaining in
the inventory of the Borrower, any Restricted Subsidiary, Golden Peanut or Young
Pecan at the end of the Peanut Sale Cycle or the Pecan Sale Cycle for that
particular Crop Year divided by the total inventory value for either peanuts or
----------
pecans, expressed as a percentage.
"Multiemployer Plan" shall mean any Plan which is a "multi employer plan"
------------------
(as such term is defined in Section 4001 of ERISA).
-12-
<PAGE>
"Non-Issuing Lender" shall mean each Lender other than Trust Company.
------------------
"Notes" shall mean, collectively, the Syndicated Notes and the Bid Rate
-----
Notes, either as originally executed or as any of them may be from time to time
supplemented, modified, amended, renewed or extended, and shall not be deemed to
include any notes of the Borrower or any Subsidiary issued other than pursuant
to this Agreement.
"Notice of Borrowing" has the meaning set forth in Section 3.6(a)(i) of
-------------------
this Agreement.
"Notice of Continuation/Conversion" has the meaning set forth in Section
---------------------------------
3.6(b) of this Agreement.
"Officer's Certificate" shall mean a certificate signed in the name of the
---------------------
Borrower by its President, one of its Vice Presidents or its Treasurer.
"Old Crop Inventory Percentage" shall mean for any particular Crop Year the
-----------------------------
value of either the peanut or pecan crop, as applicable, remaining in the
inventory of the Borrower, any Restricted Subsidiary, Golden Peanut or Young
Pecan at the end of the Peanut Sale Cycle or the Pecan Sale Cycle for that
particular Crop Year divided by the total cost of procuring those crops,
------- --
expressed as a percentage.
"Payment Office" shall mean with respect to any payment of principal,
--------------
interest, fees or other amounts relating to any Loans, the office specified as
the "Payment Office" for the Agent and each Lender on the respective signature
pages of the Agent and the Lenders, or such other location as to which the Agent
or any Lender shall have given written notice to the Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Peanut Sale Cycle" shall mean the period of time from Sep tember 1 of any
-----------------
Crop Year to the last Business Day of January in the year which is two years
after such Crop Year.
"Pecan Sale Cycle" shall mean the period of time from October 1 of any Crop
----------------
Year to the last Business Day of January in the year which is two years after
such Crop Year.
"Person" shall mean and include an individual, a partnership, a joint
------
venture, a corporation, a trust, an unincorporated organization, a government or
any department or agency thereof and any other entity whatsoever.
"Plan" shall mean an "employee pension benefit plan" (as de fined in
----
Section 3 of ERISA), which is or has been established or maintained, or to which
contributions are or have been made, by the Borrower, any Subsidiary, or any
ERISA Affiliate.
"Prime Rate" shall mean the per annum rate of interest des ignated from
----------
time to time by Trust Company to be its prime rate, with any change in the rate
of interest resulting from a change in the Prime Rate to be effective as of the
opening of business of Trust Company on the day of such change; provided,
--------
however, that the Prime Rate is a reference rate and does not necessarily rep
- -------
resent the lowest or best rate charged to customers and that Trust Company may
make loans at a rate of interest at, above or below the Prime Rate.
"Pro Rata Share" shall mean, with respect to each of the Commitments of
--------------
each Lender, each Syndicated Loan to be made by, and each payment (including,
without limitation, any payment of prin cipal, interest or fees) to be made to
each Lender with respect to the Syndicated Loans, the percentage designated as
such Lender's Pro Rata Share of such Commitments, such Loans or such payments,
as applicable, set forth under the name of such Lender on the re spective
signature page for such Lender, in each case as such Pro Rata Share may change
from time to time as a result of assignments or amendments made pursuant to this
Agreement, and shall mean, with respect to each of the Bid Rate Loans
(including, without limitation, any payment of principal, interest or fees), the
per centage of each of the Lenders participating in such Loan deter mined by
dividing the amount of such Lender's Bid Rate Advance relating thereto by the
total amount of such Bid Rate Loan.
"Prudential Indebtedness" shall mean all of the indebtedness (whether now
-----------------------
in existence or arising in the future) between Pruco Life Insurance Company
and/or The Prudential Insurance Company of America, as lenders, and the
Borrower, as borrower.
"Reportable Event" shall mean an event described in Section 4043(b) of
----------------
ERISA with respect to which the 30-day notice require ment has not been waived
by the PBGC.
"Required Lenders" shall mean, at any time, any Lender or group of Lenders
----------------
holding at least 66 2/3% of the sum of the amount of committed funds under the
Commitments, whether or not advanced.
"Restricted Payments" has the meaning set forth in Section 7.2 of this
-------------------
Agreement.
-13-
<PAGE>
"Restricted Subsidiaries" shall mean all of the Borrower's Subsidiaries
-----------------------
except Golden Poultry.
"Revolving Credit Commitment" shall mean, at any time for any Lender, the
---------------------------
amount set forth opposite such Lender's name on the signature pages hereof under
the heading "Revolving Credit Com mitment", as the same may be increased or
decreased from time to time as a result of any reduction thereof pursuant to
Section 3.3 of this Agreement, any assignment thereof pursuant to Section 10.6
of this Agreement or any amendment thereof pursuant to Section 10.2 of this
Agreement.
"Revolving Loan Maturity Date" shall mean the fifth an niversary of the
----------------------------
Closing Date or such later date as provided for in Section 3.4 of this
Agreement.
"Revolving Loans" shall mean, collectively, the revolving credit loans made
---------------
to the Borrower by the Lenders pursuant to Section 2.1(a) of this Agreement.
"Seasonal Line of Credit Commitment" shall mean, at any time for any
----------------------------------
Lender, the amount set forth opposite such Lender's name on the signature pages
hereof under the heading "Seasonal Line of Credit Commitment", as the same may
be increased or decreased from time to time as a result of any reduction thereof
pursuant to Section 3.3 of this Agreement, any assignment thereof pursuant to
Section 10.6 of this Agreement or any amendment thereof pursuant to Section 10.2
of this Agreement.
"Seasonal Loan" shall mean, collectively, the revolving credit loans made
-------------
to the Borrower by the Lenders pursuant to Section 2.1(c) of this Agreement.
"Seasonal Loan Maturity Date" shall mean May 31, 1996.
---------------------------
"Shareholders' Equity" shall mean, with respect to any Person as at any
--------------------
date of determination, shareholders' equity of such Person determined on a
consolidated basis in conformity with GAAP.
"Subordinated Debt" shall mean all Indebtedness for money borrowed wherein
-----------------
the principal and premium, if any, and interest is subordinated and junior in
right of payment to the prior payment in full of all other Indebtedness of the
Borrower for money borrowed except other Subordinated Debt including, but not
limited to, the Subordinated Capital Certificates of Interest, Subordinated Loan
Certificates, Subordinated Large Denomination Loan Certificates, and 5%
Cumulative Preferred Capital Certificates of Interest,
-14-
<PAGE>
issued by the Borrower, an example of whose subordination provisions is annexed
hereto as Schedule 1.1.
------------
"Subsidiary", of any Person, shall mean any other Person at least a
----------
majority of the Voting Stock of which shall, at the time as of which any
determination is being made, be owned by the Borrower either directly or through
Subsidiaries.
"Syndicated Loan" shall mean any Loan made by a Lender pursuant to Section
---------------
2.1 of this Agreement.
"Syndicated Notes" shall mean, collectively, the promissory notes
----------------
evidencing the Syndicated Loans in substantially the form of Exhibit B attached
---------
hereto.
"Taxes" shall mean any present or future taxes, levies, imposts, duties,
-----
fees, assessments, deductions, withholdings or other charges of whatever nature,
including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions
to tax and similar liabilities with respect thereto.
"364-Day Line of Credit Commitment" shall mean, at any time for any Lender,
---------------------------------
the amount set forth opposite such Lender's name on the signature pages hereof
under the heading "364-Day Line of Credit Commitment", as the same may be
increased or decreased from time to time as a result of any reduction thereof
pursuant to Section 3.3 of this Agreement, any assignment thereof pursuant to
Section 10.6 of this Agreement or any amendment thereof pursuant to Section 10.2
of this Agreement.
"364-Day Loan Maturity Date" shall mean the date which is two days prior
--------------------------
to the first anniversary of the Closing Date.
"364-Day Loans" shall mean, collectively, the revolving credit loans made
-------------
to the Borrower by the Lenders pursuant to Section 2.1(b) of this Agreement.
"Total Capital" shall mean the sum of Funded Debt and Shareholders' Equity.
-------------
"Trust Company" has the meaning set forth in the preamble of this
-------------
Agreement.
"Type" shall mean, with respect to a Borrowing, a Borrowing consisting of
----
Base Rate Advances, Eurodollar Advances or Bid Rate Advances.
-15-
<PAGE>
"Voting Stock" shall mean, with respect to any Person, any shares of stock
------------
or other form of ownership interest of such Person having general voting power
under ordinary circumstances to elect a majority of the Board of Directors of
such Person (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).
"Young Pecan" shall mean Young Pecan Company, a general partnership formed
-----------
under the laws of the State of South Carolina with GK Pecans, Inc. and Y Pecans,
Inc., a South Carolina corpo ration, as general partners.
Section 1.2. Accounting Terms. All accounting terms not specifically
----------------
defined herein shall have the meanings generally at tributed to them under GAAP
applied on a basis consistent with the financial statements identified in
Section 5.2 and the income and expense statements, the balance sheet and the
statements of income and cash flow furnished to the Agent pursuant to Section
6.1.
Section 1.3. Use of Defined Terms. All defined terms used in the plural
--------------------
preceded by the definite article shall be taken to encompass all members of the
relevant class. Any defined term used in the singular preceded by "any" shall
be taken to indicate any number of the members of the relevant class.
ARTICLE 2.
----------
CREDIT FACILITIES
-----------------
Section 2.1. Syndicated Loans.
----------------
(a) Revolving Credit Commitment. Subject to and upon the terms and
---------------------------
conditions herein set forth, each Lender severally establishes in favor of the
Borrower from the period beginning on the Closing Date up to but excluding the
Revolving Loan Maturity Date, its Revolving Credit Commitment. Each Lender,
subject to and upon the terms and conditions set forth herein, from time to
time, agrees to make to the Borrower Revolving Loans in an aggregate amount
outstanding at any time not to exceed such Lender's Revolving Credit Commitment.
Subject to the terms and conditions contained in this Agreement, the Borrower
shall be entitled to borrow, repay and reborrow Revolving Loans; provided,
--------
however, that
- -------
-16-
<PAGE>
the Borrower may neither borrow nor reborrow should there exist a Default or an
Event of Default. Additionally, each Revolving Loan shall be in an aggregate
amount of $1,000,000 or integral multiples of $100,000 in excess thereof.
(b) 364-Day Line of Credit Commitment. Subject to and upon the terms and
---------------------------------
conditions herein set forth, each Lender severally establishes in favor of the
Borrower from the period beginning on the Closing Date up to but excluding the
364-Day Loan Maturity Date, its 364-Day Line of Credit Commitment. Each Lender,
subject to and upon the terms and conditions set forth herein, from time to
time, agrees to make to the Borrower 364-Day Loans in an aggregate amount
outstanding at any time not to exceed such Lender's 364-Day Line of Credit
Commitment. Subject to the terms and conditions contained in this Agreement, the
Borrower shall be entitled to borrow, repay and reborrow 364-Day Loans;
provided, however, that the Borrower may neither borrow nor reborrow should
- -------- -------
there exist a Default or an Event of Default. Additionally, each 364-Day Loan
shall be in an aggregate amount of $1,000,000 or integral multiples of $100,000
in excess thereof.
(c) Seasonal Line of Credit Commitment. Subject to and upon the terms and
----------------------------------
conditions herein set forth, each Lender severally establishes in favor of the
Borrower from the period beginning on December 1, 1995 up to but excluding the
Seasonal Loan Maturity Date, its Seasonal Line of Credit Commitment. Each
Lender, subject to and upon the terms and conditions set forth herein, from time
to time, agrees to make to the Borrower Seasonal Loans in an aggregate amount
outstanding at any time not to exceed such Lender's Seasonal Line of Credit
Commitment. Subject to the terms and conditions contained in this Agreement, the
Borrower shall be entitled to borrow, repay and reborrow Seasonal Loans;
provided, however, that the Borrower may neither borrow nor reborrow should
- -------- -------
there exist a Default or an Event of Default. Additionally, each Seasonal Loan
shall be in an aggregate amount of $1,000,000 or integral multiples of $100,000
in excess thereof.
Section 2.2. Bid Rate Loans. At any time prior to the termination of all
--------------
of the Commitments the Borrower may request that the Lenders make offers to
provide Bid Rate Loans, provided, however, that no Lender may offer to provide
-------- -------
Bid Rate Loans in excess of its applicable unused Commitment(s). The Lenders
may, but shall have no obligation to, make such offers and the Borrower may, but
shall have no obligation to, accept any such offers all as provided for in
Section 3.6 of this Agreement; provided, however, that the Borrower may not
-------- -------
request any Bid Rate Loans should there exist a Default or an Event of Default.
Additionally, each Bid Rate Loan shall be in an aggregate amount of $1,000,000
or integral multiples of $100,000 in excess thereof.
-17-
<PAGE>
Section 2.3. Letters of Credit. Subject to and upon the terms and
-----------------
conditions set forth in this Agreement, from the Closing Date to but excluding
the Revolving Loan Maturity Date, Trust Company shall issue Letters of Credit
for the account of the Bor rower up to the Letter of Credit Sublimit, and each
Non-Issuing Lender shall thereupon be deemed to have purchased a participation
in each such Letter of Credit as provided in Section 3.11; provided, however,
-------- -------
that the Borrower may not request any Letter of Credit should there exist a
Default or an Event of Default.
ARTICLE 3.
----------
GENERAL LOAN AND LETTER OF CREDIT TERMS
---------------------------------------
Section 3.1. Notes; Repayment of Principal.
-----------------------------
(a) The Borrower's obligations to pay the principal of, and interest on,
(i) the Syndicated Loans to each Lender shall be evidenced by the records of
the Agent and such Lender and by Syndicated Notes payable to such Lender and
(ii) the Bid Rate Loans to each Lender shall be evidenced by the records of the
Agent and such Lender and by a Bid Rate Note payable to such Lender.
(b) All outstanding principal amounts under the Loans shall be due and
payable in full on the earlier of (i) applicable Maturity Date or (ii) an
earlier date if the Loans are accelerated in accordance with the terms and
conditions of Article 8 of this Agreement.
Section 3.2. Amount Limitations. Notwithstanding any other term of this
------------------
Agreement or any other Loan Document to the contrary, at no time may:
(a) the aggregate amount of all outstanding Revolving Loans together with
the amount of all Letter of Credit Liabilities exceed the aggregate amount of
the Revolving Credit Commitments; or
(b) the aggregate amount of all outstanding 364-Day Loans exceed the
aggregate amount of the 364-Day Line of Credit Commitments; or
(c) the aggregate amount of all outstanding Seasonal Loans exceed the
aggregate amount of the Seasonal Line of Credit Commitments; or
-18-
<PAGE>
(d) the aggregate amount of all Letter of Credit Liabilities exceed the
Letter of Credit Sublimit; or
(e) the aggregate of (i) all Bid Rate Loans, (ii) all Syndicated Loans and
(iii) all Letter of Credit Liabilities exceed the aggregate amount of the
Commitments outstanding at that time.
Section 3.3. Reduction of Commitments.
------------------------
(a) Upon at least three Business Days' prior written notice to the Agent,
the Borrower shall have the right, without premium or penalty, to terminate the
Commitments, in part or in whole, provided that (i) any such termination shall
apply to proportionately and permanently reduce the Commitments of each of the
Lenders, (ii) any partial termination pursuant to this Section 3.3 shall be in
an amount of at least $5,000,000 and integral multiples of $1,000,000 in excess
thereof, and (iii) no such reduction shall be permitted without payment of all
costs required to be paid hereunder with respect to a prepayment.
(b) If the aggregate outstanding amount of the Loans exceeds the amount of
the Commitments as so reduced, or if any of the limits in Section 3.2 are
exceeded, the Borrower shall immediately repay the Loans by an amount equal to
such excess, together with all accrued but unpaid interest on such excess amount
and any amounts due under Section 3.16 of this Agreement.
Section 3.4. Extension of Revolving Loan Maturity Date. At any time
-----------------------------------------
prior to the date which is 90 days before either the first or second anniversary
of the Closing Date but not earlier than the day which is 120 days before such
date, the Borrower may request that the Lenders extend the Revolving Loan
Maturity Date for one additional year by giving written notice to the Agent.
Within three Business Days from the Agent's receipt of such notice from the
Borrower, the Agent shall notify each Lender of the requested extension. Within
45 days after receipt of notice from the Agent, each Lender shall notify the
Agent of its decision with respect to such extension (which decision is at the
option of the Lenders in their sole and absolute discretion). Not less than 30
days prior to the applicable anniversary of the Closing Date, the Agent shall
notify the Borrower of the decision of the Lenders with respect to such
extension. If all of the Lenders agree to an extension then the Revolving Loan
Maturity Date shall be extended by an additional year, provided, however, that
-------- -------
notwithstanding anything else contained in this Agreement to the contrary, the
Revolving Loan Maturity Date may only be extended for a total of two additional
one year periods. If any Lender elects not to extend the Revolving Period,
either (i) the Revolving Loan Maturity Date shall not be extended and the
Revolving Credit Commitments shall expire on the
-19-
<PAGE>
Revolving Loan Maturity Date or (ii) such Lender may assign its rights and
obligations under this Agreement and under such Lender's Revolving Credit Note
to an Eligible Assignee approved in writing by the Borrower (so long as no
Default or Event of Default exists hereunder) and by the Agent. Notwithstanding
anything to the contrary contained in the foregoing part of this Section 3.4,
the Lenders shall have no obligation to extend the Revolving Loan Maturity Date
and may extend the Revolving Loan Maturity Date on such terms and conditions as
the Lenders shall, in their sole and absolute discretion, determine.
Section 3.5. Interest Rates and Interest Periods. (a) Each Syndicated
-----------------------------------
Loan shall, at the option of the Borrower, be made or continued as, or converted
into, part of one or more Borrowings that shall consist entirely of Base Rate
Advances or Eurodollar Advances.
(b) There shall be no more than eight Eurodollar Borrowings outstanding
at any one time.
Section 3.6. Funding Notices.
---------------
(a) (i) Whenever the Borrower desires to make a Base Rate Borrowing or a
Eurodollar Rate Borrowing (other than one resulting from a continuation or
conversion pursuant to Section 3.6(b)), it shall give the Agent prior written
notice (or telephonic notice promptly confirmed in writing) of such Borrowing (a
"Notice of Borrowing"), such Notice of Borrowing to be given prior to 11:00 A.M.
-------------------
(Atlanta, Georgia time) (x) one Business Day prior to the requested date of such
Borrowing in the case of Base Rate Advances, and (y) three Business Days prior
to the requested date of such Borrowing in the case of Eurodollar Advances.
Notices received after 11:00 A.M. (Atlanta, Georgia time) shall be deemed
received on the next Business Day. Each Notice of Borrowing shall be
irrevocable, shall be substantially in the form of Exhibit D attached to this
---------
Agreement, and shall specify (A) the aggregate principal amount of the
Borrowing, (B) the date of Borrowing (which shall be a Business Day), (C)
whether the Borrowing is to consist of Base Rate Advances or Eurodollar Advances
and, in the case of Eurodollar Advances, the Interest Period to be applicable
thereto, and (D) whether the Borrowing is to be advanced under the Revolving
Loan Commitment, the Seasonal Loan Commitment, or the 364-Day Loan Commitment
(or a combination thereof).
(ii) Whenever the Borrower desires to make a Bid Rate Borrowing, it
shall give the Agent and each Lender notice that the
-20-
<PAGE>
Lenders are requested to provide informational quotes on Bid Rates (a "Bid Rate
--------
Request"), such Bid Rate Request must be given prior to 10:00 A.M. (Atlanta,
- -------
Georgia time) on the requested date of such Borrowing. No Bid Rate Request
shall be given within 5 Business Days of the giving of any other Bid Rate
Request. Notices received after 10:00 A.M. (Atlanta, Georgia time) shall be
deemed received on the next Business Day. Each Bid Rate Request shall be
substantially in the form of Exhibit E attached to this Agreement, and shall
---------
specify (A) the aggregate principal amount requested, (B) the date of the
Borrowing (which shall be a Business Day), (C) the relevant Interest Periods
(which shall not exceed 10 in a single Bid Rate Request), and (D) whether the
Borrowing is to be advanced under the Revolving Credit Commitment, the Seasonal
Line of Credit Commitment or the 364-Day Line of Credit Commitment (or a
combination thereof). Each Lender in its discretion may, but shall not be
obligated to, submit quotes to the Borrower in connection with such request;
provided however, that notwithstanding anything to the contrary contained in
- ----------------
this Agreement no Lender may submit a quote to make a Loan in excess of its
applicable unutilized Commitment. No later than 11:00 A.M. (Atlanta, Georgia
time) on the date of the requested Borrowing, any Lender which desires to submit
quotes to the Borrower in connection with a Bid Rate Request must provide the
Borrower with a written bid in substantially the form of Exhibit F attached to
---------
this Agreement which shall specify (x) the amount of principal offered, (y) the
rate of interest (expressed on a per annum basis) and (z) the Interest Period (a
"Bid Rate Quote"). The Borrower shall then be entitled, in its sole discretion,
--------------
to elect to incur all or any part of the Bid Rate Loans offered by one or more
of the Lenders in their Bid Rate Quotes. No later than 1:00 P.M. (Atlanta,
Georgia time) on the date of a requested Borrowing, the Borrower shall provide
the Agent and each Lender which submitted a Bid Rate Quote with a notice
indicating which Bid Rate Quotes, if any, it desires to accept in substantially
the form of Exhibit G attached to this Agreement (a "Bid Rate Acceptance"). If
--------- -------------------
the Borrower does not submit a Bid Rate Acceptance by the deadline of 1:00 P.M.
(Atlanta, Georgia time), it shall be deemed to have rejected all of the Bid Rate
Quotes. The Bid Rate Loans incurred by the Borrower in connection with such a
request for quotes shall not exceed, with respect to each Lender then providing
Bid Rate Quotes, (i) the then unutilized Commitment of such Lender with respect
to the requested Loan, and (ii) the amount bid by such Lender in connection with
such Lender's Bid Rate Quote.
(b) At the end of an Interest Period, if the Borrower desires to continue
outstanding a Borrowing consisting of Eurodollar Advances for a new Interest
Period or to convert a Borrowing consisting of Bid Rate Advances to Eurodollar
Advances, it shall give the Agent at least three Business Days' prior written
notice
-21-
<PAGE>
of each such Borrowing to be continued or converted as Eurodollar Advances.
Such notice (a "Notice of Continuation/Conversion") shall be given to the Agent
---------------------------------
prior to 11:00 A.M. (Atlanta, Georgia time) on the date specified. Each such
Notice of Continuation/Conversion shall be irrevocable, shall be in the form of
Exhibit H attached to this Agreement, and shall specify (i) the aggregate
- ---------
principal amount of the Advances to be continued or converted, (ii) the date of
such continuation or conversion, (iii) the specific Advances to be continued or
converted, and (iv) the Interest Period applicable thereto. If, upon the ex
piration of any Interest Period in respect of any Borrowing, the Borrower shall
have failed to deliver a Notice of Continuation/Conversion (or a Notice of
Continuation/Conversion was incomplete), then the Borrower shall be deemed to
have elected to convert such Borrowing to a Borrowing consisting of Base Rate
Advances. So long as the Borrower has knowledge that any Default or Event of
Default shall have occurred and be continuing, no Borrowing may be continued as
or converted to (upon expiration of the current Interest Period) Eurodollar
Advances unless the Agent and each of the Lenders shall have otherwise consented
in writing. If the Borrower has complied with the terms of this subsection (b)
then the Advances identified in the Notice of Continuation/Conversion shall be
continued or converted at the applicable interest rate based on LIBOR for the
relevant Interest Period.
(c) The Borrower may at any time convert a Base Rate Borrowing to a
Eurodollar Borrowing; provided, however, that the Borrower shall give the Agent
-------- -------
a Notice of Continuation/Conversion three Business Days prior to such a
conversion. In each case such Notice of Continuation/Conversion shall specify
the Interest Period selected by the Borrower for such Borrowing and the specific
Advances to be converted.
(d) Without in any way limiting the Borrower's obligation to confirm in
writing any telephonic notice, the Agent and the Lenders may act without
liability upon the basis of telephonic notice believed by the Agent or the
Lender in good faith to be from the Borrower prior to receipt of written
confirmation. In each such case, the Borrower hereby waives the right to
dispute the Agent's and the Lender's record of the terms of such telephonic
notice.
(e) The Agent shall promptly give each Lender notice by tele phone
(confirmed in writing) or by telecopy or facsimile transmission of the matters
covered by the notices given to the Agent pursuant to this Section 3.6.
-22-
<PAGE>
Section 3.7. Disbursement of Funds.
---------------------
(a) With respect to any Syndicated Loan, no later than 12:00 Noon
(Atlanta, Georgia time) on the date of each Borrowing pursuant to the
Commitments (other than one resulting from a continuation or conversion pursuant
to Section 3.6(b) or (c)), each Lender will make available its Pro Rata Share of
the amount of such Borrowing in immediately available funds at the Payment
Office of the Agent. The Agent will make available to the Borrower the
aggregate of the amounts (if any) so made available by the Lenders to the Agent
in a timely manner by crediting such amounts to the Borrower's demand deposit
account maintained with the Agent or at the Borrower's op tion, by effecting a
wire transfer of such amounts to the Borrower's account specified by the
Borrower, by the close of business on such Business Day. In the event that the
Lenders do not make such amounts available to the Agent by the time prescribed
above, but such amount is received later that day, such amount may be credited
to the Borrower in the manner described in the preceding sentence on the next
Business Day (with interest on such amount to begin accruing hereunder on such
next Business Day).
(b) With respect to any Bid Rate Loan, no later than 2:30 P.M. (Atlanta,
Georgia time) on the date of each Bid Rate Loan, each Lender participating in
such Bid Rate Loan will make available to the Borrower such Lender's share of
the amount of such Bid Rate Loan in immediately available funds by effecting a
wire transfer of such amounts to the Borrower's account specified by the
Borrower no later than the close of business on such Business Day.
(c) Unless the Agent shall have been notified by any Lender prior to the
date of a Borrowing which constitutes a Syndicated Loan that such Lender does
not intend to make available to the Agent such Lender's portion of the Borrowing
which constitutes a Syndicated Loan to be made on such date, the Agent may
assume that such Lender has made such amount available to the Agent on such date
and the Agent may make available to the Borrower a cor responding amount. If
such corresponding amount is not in fact made available to the Agent by such
Lender on the date of such Borrowing, the Agent shall be entitled to recover
such corresponding amount on demand from such Lender together with interest at
the Federal Funds Rate. If such Lender does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding amount to
the Agent together with interest at the rate specified for the Bor rowing which
includes such amount paid and any amounts due under Section 3.16 hereof.
Nothing in this subsection shall be deemed to relieve any Lender from its
obligation to fund its Commitments or
-23-
<PAGE>
its Bid Rate Advances hereunder or to prejudice any rights which the Borrower
may have against any Lender as a result of any default by such Lender hereunder.
(d) All Base Rate Borrowings and all Eurodollar Borrowings under the
Commitments shall be loaned by the Lenders on the basis of their Pro Rata Share
of the relevant Commitments. No Lender shall be responsible for any default by
any other Lender in its obligations hereunder, and each Lender shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Lender to fund its Commitment or its Bid Rate Advances
hereunder.
Section 3.8. Interest.
--------
(a) The Borrower agrees to pay interest in respect of all unpaid principal
amounts of the Syndicated Loans from the respective dates such principal amounts
were advanced to maturity (whether by acceleration, notice of prepayment or
otherwise) at rates per annum (on the basis of a 360-day year) equal to the
applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in effect from time
to time; and
(ii) For Eurodollar Advances--LIBOR plus the Applicable Percentage
----
during the applicable Interest Period.
(b) The Borrower agrees to pay interest in respect of all unpaid principal
amounts of the Bid Rate Loans made to the Borrower from the respective dates
such principal amounts were advanced to maturity (whether by acceleration,
notice of prepayment or otherwise) at times and at rates per annum equal to the
applicable rates agreed upon between the Borrower and the respective Lender and
evidenced by the Bid Rate Acceptance.
(c) Overdue principal and, to the extent not prohibited by applicable law,
overdue interest, in respect of any Loans and all other overdue amounts owing
hereunder, shall bear interest from each date that such amounts are overdue:
(i) in the case of overdue principal and interest with respect to all
Loans outstanding as Fixed Rate Advances, at the rate otherwise applicable
for the then-current Interest Period plus an additional two percent (2.0%)
----
per annum;
-24-
<PAGE>
thereafter at the rate in effect for Base Rate Advances plus an additional
----
two percent (2.0%) per annum; and
(ii) in the case of overdue principal and interest with respect to all
other Loans outstanding as Base Rate Advances, and all other obligations
hereunder, at a rate equal to the applicable Base Rate plus an additional
two percent (2.0%) per annum;
provided that no Loan shall bear interest after maturity (whether by non-payment
- --------
at scheduled due date, acceleration, notice of prepayment or otherwise) at a
rate per annum less than two percent (2.0%) per annum in excess of the rate of
interest applicable thereto at maturity.
(d) Interest on each Loan shall accrue from and including the date of such
Loan to but excluding the date of any repayment thereof; provided that, if a
--------
Loan is repaid on the same day made, one day's interest shall be paid on such
Loan. Interest on all outstanding Base Rate Advances shall be payable quarterly
in arrears on the last calendar day of each calendar quarter in each year.
Interest on all outstanding Eurodollar Advances and Bid Rate Advances shall be
payable on the last day of each Interest Period applicable thereto, and, in the
case of any Interest Period in excess of 90 days (in the case of Bid Rate
Advances) or three months (in the case of Eurodollar Advances), on each day
which occurs every 90 days or 3 months, as the case may be, after the initial
date of such Interest Period. Interest on all Loans shall be payable on any
conversion of any Advances comprising such Loans into Advances of another type,
prepayment (on the amount prepaid), at maturity (whether by acceleration, notice
of prepayment or otherwise) and, after maturity, on demand.
(e) The Agent, upon determining LIBOR for any Interest Period, shall
promptly notify the Borrower and the other Lenders. Any such determination
shall, absent manifest error, be final, conclusive and binding for all purposes.
A Lender submitting a Bid Rate Quote has no obligation to notify any other
Lender (except the Agent) of the interest rates charged to the Borrower.
Section 3.9. Fees.
----
(a) The Borrower shall pay the Agent, for the account of and distribution
of the respective Pro Rata Share to each Lender, a facility fee as follows:
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(i) with respect to the Revolving Loan Commitment, an amount equal to
the Applicable Percentage multiplied by the Revolving Loan Commitment;
(ii) with respect to the 364-Day Line of Credit Commitment, an amount
equal to 0.10% per annum multiplied by the 364-Day Line of Credit
Commitment; and
(iii) with respect to the Seasonal Line of Credit Commitment, an
amount equal to 0.10% per annum multiplied by the Seasonal Line of Credit
Commitment.
(b) The Borrower shall pay the Agent, for the account of and distribution
of the respective Pro Rata Share to each Lender, a commitment fee, with respect
to the Revolving Loan Commitment, in an amount equal to the Applicable
Percentage multiplied by the average daily unused portion of the Revolving Loan
-------------
Commitment.
(c) The Borrower shall pay the Agent the fees outlined in the Fee
Letter.
(d) All fees described in this Agreement, including, without limitation,
the fees described in this Section 3.9, shall be payable in arrears on the last
day of each fiscal quarter, except for the fees described in the Fee Letter
which shall be payable in accordance with the terms described therein.
Section 3.10. Voluntary Prepayments of Borrowings.
-----------------------------------
(a) The Borrower may, at its option, prepay Borrowings in whole or in
part, in amounts aggregating $1,000,000 or any greater amount in integral
multiples of $100,000. Those Borrowings may be prepaid by paying the principal
amount to be prepaid, together with interest accrued and unpaid thereon to the
date of prepayment, and all compensation payments pursuant to Section 3.16 if
such prepayment is made on a date other than the last day of an Interest Period
applicable thereto. Each such optional prepayment shall be applied in
accordance with Section 3.10(c) below.
(b) The Borrower shall give written notice to the Agent of any intended
prepayment of the Loans (i) not less than one Business Day prior to any
prepayment of Base Rate Advances, and (ii) not less than three Business Days
prior to any prepayment of Eurodollar Advances or Bid Rate Advances. Such
notice, once given, shall be
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irrevocable. Upon receipt of such notice of prepayment pursuant to the first
sentence of this paragraph (b), the Agent shall promptly notify each Lender of
the contents of such notice and of such Lender's share of such prepayment.
(c) The Borrower, when providing notice of prepayment pursu ant to Section
3.10(b) shall designate the specific Borrowing or Borrowings which are to be
prepaid, provided that (i) if any prepayment of Fixed Rate Advances made
pursuant to a single Borrowing of the Revolving Loans, 364-Day Loans, or
Seasonal Loans shall reduce the outstanding Advances made pursuant to such
Borrowing to an amount less than $1,000,000, such Borrowing shall immediately be
converted into Base Rate Advances; and (ii) each prepayment made pursuant to a
single Borrowing shall be applied pro rata among the Loans comprising such
Borrowing, unless such prepayment is a prepayment of a Bid Rate Loan in which
case such prepayment shall be applied only to the affected Lenders. All
voluntary prepayments shall be applied to the payment of any unpaid interest and
other charges or fees before application to principal.
Section 3.11 Letters of Credit. (a) Maturity. Each Letter of Credit
----------------- --------
shall have an expiration date not later than 10 Business Days prior to the
Revolving Loan Maturity Date. Letters of Credit may be issued for general
corporate purpose of the Borrower in the ordinary course of business, but in no
event for the support, security or payment of any Funded Debt of the Borrower or
any other Person.
(b) Manner of Issuance. The Borrower shall forward a completed Letter of
------------------
Credit Application in the appropriate form to the Agent prior to 1:00 P.M.
(Atlanta, Georgia time) at least one Business Day before the requested date of
issuance of a Letter of Credit, and the Agent shall promptly give each Non-
Issuing Lender written or telephonic notice of the contents of such Letter of
Credit Application. Provided that the Borrower has complied with the conditions
of this Section 3.11, Trust Company shall issue the requested Letter of Credit
on the requested date for the benefit of the requested Beneficiary. Upon
request, Trust Company will also provide a copy of any issued Letter of Credit
to the Borrower.
(c) Fees.
----
(i) Standby Letters of Credit. With respect to each Letter of Credit,
--------------------------
the Borrower shall pay Trust Company for the account of each Lender,
quarterly in arrears with respect to fees accrued for such quarter, a fee
equal to the Applicable Percentage per annum (based on a year of 360 days
and computed for the actual number of days elapsed) on such Lender's Pro
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Rata Share of the daily average aggregate amount available to be drawn under
outstanding Letters of Credit during such quarter.
(ii) Administrative Fees. In addition to the foregoing fees payable to
--------------------
the Lenders, the Borrower shall pay to Trust Company such other
administrative fees as Trust Company customarily charges in respect of
standby letter of credit transactions, together with all telecommunication
fees and expenses incurred by Trust Company in connection with the issuance
or honoring of any Letter of Credit issued for the Borrower's account.
(d) Drawings Under Letters of Credit.
--------------------------------
(i) Upon receipt of any draft upon, or other notice of drawing under, a
Letter of Credit, the Agent shall promptly give the Borrower and each Non-
Issuing Lender written or telephonic notice of the contents of such draft,
of the Letter of Credit against which it is drawn and of the date upon which
Trust Company proposes to honor such draft.
(ii) Subject to the following sentence, the Borrower shall pay to Trust
Company for the ratable account of the Lenders the amount of each authorized
drawing under a Letter of Credit on the date that the Borrower receives
notice from Trust Company of the payment of such drawing. If the Borrower
does not otherwise pay the amount of any draw when due pursuant to the
preceding sentence, the amount thereof shall be deemed to be a Base Rate
Advance under the Revolving Loan Commitment effective as of the date due,
without the requirement to comply with any other provisions of this
Agreement relating to the making of Advances.
(e) Additional Provisions.
---------------------
(i) Limitation on Trust Company's Duty to Issue. Trust Company shall
have no obligation to issue any Letter of Credit if the aggregate undrawn
face amount of Letters of Credit outstanding, after giving effect to the
issuance of such Letter of Credit, would exceed the Letter of Credit
Sublimit or any limit imposed on such Letter of Credit would otherwise cause
a violation of, any applicable law or any regulatory directive,
interpretation or request to which Trust Company or such Non-Issuing Lender
is subject.
(ii) Borrower's Obligation Absolute. Without limitation
------------------------------
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<PAGE>
of or prejudice to any right or remedy available to the Borrower, the obligation
of the Borrower to reimburse Trust Company, for the account of the Lenders, for
each authorized drawing under a Letter of Credit shall be irrevocable, shall not
be subject to any qualification or exception whatsoever and shall be binding in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(B) the existence of any claim, set-off, defense or right which
the Borrower may have at any time against a beneficiary of any Letter
of Credit or any transferee of any Letter of Credit (or any person for
whom any such transferee may be acting), Trust Company, the Non-
Issuing Lenders or any other Person, whether in connection with this
Agreement, or any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (other than the defense of
payment in accordance with this Agreement or a defense based on the
negligence or willful misconduct of Trust Company or the Non-Issuing
Lenders;)
(C) any draft, certificate or any other document presented under
any Letter of Credit (but not including the Letter of Credit itself)
proving to be forged, fraudulent, invalid or insufficient (unless, in
each case, manifestly so) in any respect or any statement therein
being untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement or the
other Loan Documents;
(E) any failure of Trust Company to provide notice to the
Borrower of any drawing under any Letter of Credit; or
(F) the occurrence or continuance of any Default or Event of
Default.
(f) Limitation of Liability With Respect To Letters of Credit.
----------------------------------------------------------
(i) As among the Borrower, the Non-Issuing Lenders and Trust Company,
the Borrower assumes all risks of the acts and omissions of, or misuse of
any Letter of Credit by, the beneficiaries of such Letter of Credit. Without
limiting the
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foregoing, Trust Company and the Non-Issuing Lenders shall not be
responsible for:
(A) the validity, accuracy, genuineness or legal effect of any
draft, demand, application or other documents submitted by any Person
in accordance with the terms of any Letter of Credit (but not including
the Letter of Credit itself), even if such document should in fact
prove to be in any and all respects invalid, insufficient, inaccurate,
fraudulent or forged;
(B) the validity, genuineness or sufficiency of any instruments
transferring or assigning or purporting to transfer or assign a Letter
of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part which may prove to be invalid or ineffective for any
reason;
(C) failure of the beneficiary of a Letter of Credit to comply
fully with the conditions required in order to draw upon such Letter of
Credit to the extent that the documents presented in connection with a
drawing manifestly comply with the terms of the Letter of Credit;
(D) the misapplication by the beneficiary of a Letter of Credit
of the proceeds of any drawing under such Letter of Credit; or
(E) any consequences arising from causes beyond the control of
Trust Company or the Non-Issuing Lenders, including, without
limitation, any act or omission, rightfully or wrongfully of any
present or future governmental authority.
None of the above circumstances shall affect, impair or prevent the vesting of
any of Trust Company's and the Non-Issuing Lenders' rights or powers under this
Section.
(ii) In furtherance and extension, and not in limitation, of the
specified provisions set forth above, any action taken or omitted by Trust
Company under or in connection with any Letter of Credit or any related
documents, if taken or omitted in accordance with the Uniform Customs and
Practice for Documentary Credit (1994 Revision, Publication No. 500 of the
International Chamber of Commerce No. 500) (or any successor publication)
and the Uniform Commercial Code, as applicable, shall not expose Trust
Company or any Non-Issuing Lender to
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any liability to the Borrower or relieve the Borrower of any of its
obligations hereunder.
(g) Participation.
-------------
(i) Simultaneously with the issuance by Trust Company of any Letter of
Credit, each Non-Issuing Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Trust Company, without recourse
or warranty, an undivided interest and participation in such Letter of
Credit, (including, without limitation, all obligations of the Borrower with
respect thereto), equal to such Non-Issuing Lender's Pro Rata Share of such
Letter of Credit and Trust Company shall be deemed to have purchased a
participation in an amount equal to its retained interest in such Letter of
Credit equal to its Pro Rata Share. Following a request from any Lender,
Trust Company shall within a reasonable period of time provide such Lender
with a participation certificate which certificate shall indicate the total
amount of such Lender's participation in such Letter of Credit.
(ii) Each Non-Issuing Lender hereby agrees that it shall pay to Trust
Company, prior to 1:00 P.M. (Atlanta, Georgia time) on the date of payment
of each Letter of Credit drawing, as the case may be, such Non-Issuing
Lender's Pro Rata Share of such Letter of Credit drawing. Should the
Borrower reimburse Trust Company in full any Letter of Credit drawing on the
date thereof, any amount paid by a Non-Issuing Lender to Trust Company
pursuant to this Section 3.11 with respect to such drawing shall, to the
extent of such Non-Issuing Lender's Pro Rata Share of such payment by the
Borrower, promptly be refunded by Trust Company to such Non-Issuing Lender.
(iii) The obligation of each Non-Issuing Lender to pay to Trust
Company its Pro Rata Share of each Letter of Credit drawing, shall be
irrevocable and unconditional, shall not be subject to any qualification or
exception whatsoever and shall be binding in accordance with the terms and
conditions of this Agreement under all circum stances, including, without
limitation, the following circumstances:
(A) any lack of validity or enforceability of this Agreement;
(B) the existence of any claim, set-off, defense or other right
which the Borrower or any Lender may have at
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<PAGE>
any time against the other, the Issuing Lender, any Non-Issuing Lender
or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transactions;
(C) any draft or any other document presented under this
Agreement proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement;
(E) the occurrence or continuance of any Default.
(iv) If any Non-Issuing Lender shall fail to pay the amount of its
participation in a Letter of Credit drawing on the date such amount is due
in accordance with subparagraph (b) above, Trust Company shall be deemed to
have advanced funds on behalf of such Non-Issuing Lender. Each such advance
shall be secured by such Non-Issuing Lender's participation interest, and
Trust Company shall be subrogated to such Non-Issuing Lender's rights
hereunder in respect thereof. Such advance may be repaid by application by
Trust Company or any payment which such Non-Issuing Lender is otherwise
entitled to receive under this Agreement. Any amount not paid by such Non-
Issuing Lender to Trust Company hereunder shall bear interest for the first
day such amount was not paid at the Federal Funds Rate and for each day
thereafter from the day after such payment was due until such payment shall
be paid in full at a rate per annum equal to the Base Rate plus an
additional two percent (2%).
(h) Conflict. Notwithstanding anything to the contrary contained
--------
herein, in any Letter of Credit or any Letter of Credit Application, in the
event of conflicting terms or provisions between this Agreement and any
Letter of Credit or any Letter of Credit Application, the terms and
provisions of this Agreement shall control.
Section 3.12. Payments, etc.
-------------
(a) Except as otherwise specifically provided herein, all payments under
this Agreement and the other Loan Documents shall be made without defense, set-
off or counterclaim to the Agent, not
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later than 11:00 A.M. (Atlanta, Georgia time) on the date when due and shall be
made in Dollars in immediately available funds at the Agent's Payment Office.
(b) (i) All such payments shall be made free and clear of and without
deduction or withholding for any Taxes in respect of this Agreement, the Notes
or other Loan Documents, or any payments of principal, interest, fees or other
amounts payable hereunder or thereunder (but excluding any Taxes imposed on the
overall net income of the Lenders pursuant to the laws of the jurisdiction in
which the principal executive office or appropriate Lending Office of such
Lender is located). If any Taxes are so levied or imposed, the Borrower agrees
(A) to pay the full amount of such Taxes, and such additional amounts as may be
necessary so that every net payment of all amounts due hereunder and under the
Notes and other Loan Documents, after withholding or deduction for or on account
of any such Taxes (including additional sums payable under this Agreement), will
not be less than the full amount provided for herein had no such deduction or
withholding been required, (B) to make such withholding or deduction and (C) to
pay the full amount deducted to the relevant authority in accordance with
applicable law. The Borrower will furnish to the Agent and each Lender, within
30 days after the date the payment of any Taxes is due pursuant to applicable
law, certified copies of tax receipts evidencing such payment by the Borrower.
The Borrower will indemnify and hold harmless the Agent and each Lender and
reimburse the Agent and each Lender upon written request for the amount of any
Taxes so levied or imposed and paid by the Agent or the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or illegally asserted. A
certificate as to the amount of such payment by such Lender or the Agent, absent
manifest error, shall be final, conclusive and binding for all purposes.
(ii) Each Lender that is organized under the laws of any jurisdiction
other than the United States of America or any State thereof (including the
District of Columbia) agrees to furnish to the Borrower and the Agent, prior
to the time it becomes a Lender hereunder, two copies of either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 or any successor forms thereto (wherein such Lender claims entitlement
to complete exemption from or reduced rate of U.S. Federal withholding tax
on interest paid by the Borrower hereunder) and to provide to the Borrower
and the Agent a new Form 4224 or Form 1001 or any successor forms thereto if
any previously delivered form is found to be incomplete or incorrect in any
material respect or upon the obsolescence of any previously delivered form;
provided,
--------
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<PAGE>
however, that no Lender shall be required to furnish a form under this
-------
paragraph (ii) if it is not entitled to claim an exemption from or a reduced
rate of withholding under applicable law. A Lender that is not entitled to
claim an exemption from or a reduced rate of withholding under applicable
law, promptly upon written request of the Borrower, shall so inform the
Borrower in writing.
(c) Whenever any payment to be made hereunder or under any Note shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall be payable at the applicable rate
during such extension.
(d) On other than Bid Rate Loans, which shall be negotiated from time to
time, all computations of interest and fees shall be made on the basis of a year
of 360 days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest or fees are
payable (to the extent computed on the basis of days elapsed), except that
interest on Base Rate Advances shall be computed on the basis of a year of 360
days for the actual number of days. Interest on Base Rate Advances shall be
calculated based on the Base Rate from and including the date of such Loan to
but excluding the date of the repayment or conversion thereof. Interest on
Eurodollar Advances shall be calculated as to each Interest Period from and
including the first day thereof to but excluding the last day thereof. Each
determination by the Agent or the Bid Lender of an interest rate or fee
hereunder shall be made in good faith and, except for manifest error, shall be
final, conclusive and binding for all purposes.
(e) Payment by the Borrower to the Agent in accordance with the terms of
this Agreement shall, as to the Borrower, constitute payment to the Lenders
under this Agreement.
Section 3.13. Interest Rate Not Ascertainable, etc. In the event that the
------------------------------------
Agent, in the case of LIBOR, shall have determined (which determination shall be
made in good faith and, absent mani fest error, shall be final, conclusive and
binding upon all par ties) that on any date for determining LIBOR for any
Interest Period, by reason of any changes arising after the date of this
Agreement affecting the London interbank market, or the Agent's position in such
markets, adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of LIBOR then, and in
any such event, the Agent
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shall forthwith give notice to the Borrower and to the Lenders of such
determination and a summary of the basis for such determination. Until the
Agent notifies the Borrower that the circumstances giving rise to the suspension
described herein no longer exist, the obligations of the Lenders to make or
permit portions of the Revolving Loans, 364-Day Loans, or Seasonal Loans to
remain outstanding past the last day of the then current Interest Periods as
Eurodollar Advances, as the case may be, shall be suspended, and such affected
Advances shall bear the same interest as Base Rate Advances.
Section 3.14. Illegality.
----------
(a) In the event that any Lender shall have determined (which
determination shall be made in good faith and, absent manifest error, shall be
final, conclusive and binding upon all parties) at any time that the making or
continuance of any Eurodollar Advance has become unlawful by compliance by such
Lender in good faith with any applicable law, governmental rule, regulation,
guideline or order (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful), then, in any such event, the
Lender shall give prompt notice (by telephone confirmed in writing) to the
Borrower and to the Agent of such determination and a summary of the basis for
such determination (which notice the Agent shall promptly transmit to the other
Lenders).
(b) Upon the giving of the notice to the Borrower referred to in
subsection (a) above, (i) the Borrower's right to request and such Lender's
obligation to make Eurodollar Advances as the case may be, shall be immediately
suspended, and such Lender shall make an Advance as part of the requested
Borrowing of Eurodollar Advances as the case may be, as a Base Rate Advance,
provided, the Borrower does not negotiate a Bid Rate Loan, which Base Rate
Advance shall, for all other purposes, be considered part of such Borrowing, and
(ii) if any affected Eurodollar Advances are then outstanding, the Borrower
shall immediately, or if permitted by applicable law, no later than the date
permitted thereby, upon at least one Business Day's written notice to the Agent
and the affected Lender, convert each such Advance into a Base Rate Advance,
provided that if more than one Lender is affected at any time, then all affected
Lenders must be treated the same pursuant to this Section 3.14(b).
Section 3.15. Increased Costs.
---------------
(a) If, by reason of (x) after the date hereof, the introduction of or any
change (including, without limitation, any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation, or (y) the
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compliance with any guideline or request from any central bank or other
governmental authority or quasi-governmental authority exercising control over
banks or financial institutions generally (whether or not having the force of
law):
(i) any Lender (or its applicable lending office) shall be subject to
any tax, duty or other charge with respect to its Fixed Rate Advances or its
obligation to make Fixed Rate Advances, or the basis of taxation of payments
to any Lender of the principal of or interest on its Fixed Rate Advances or
its obligation to make Fixed Rate Advances shall have changed (except for
changes in the tax on the overall net income of such Lender or its
applicable lending office imposed by the jurisdiction in which such Lender's
principal executive office or applicable lending office is located); or
(ii) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender's applicable lending office shall be
imposed or deemed applicable or any other condition affecting its Fixed Rate
Advances or its obligation to make Fixed Rate Advances shall be imposed on
any Lender or its applicable lending office or the London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Fixed Rate Advances
(except to the extent already included in the determination of the applicable
Bid Rate for Bid Rate Advances or the applicable LIBOR for Eurodollar Advances),
or there shall be a reduction in the amount received or receivable by such
Lender or its applicable lending office, then the Borrower shall from time to
time (subject, in the case of certain Taxes, to the applicable provisions of
Section 3.12(b)), upon written notice from and demand by such Lender on the
Borrower (with a copy of such notice and demand to the Agent), pay to the Agent
for the account of such Lender within five Business Days after the date of such
notice and demand, additional amounts sufficient to indemnify such Lender
against such increased cost. A certificate as to the amount of such increased
cost, submitted to the Borrower and the Agent by such Lender in good faith and
accompanied by a statement prepared by such Lender describing in reasonable
detail the basis for and calculation of such increased cost, shall, except for
manifest error, be final, conclusive and binding for all purposes.
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<PAGE>
(b) If any Lender shall advise the Agent that at any time, because of the
circumstances described in clauses (x) or (y) in Section 3.15(a) or any other
circumstances beyond such Lender's reasonable control arising after the date of
this Agreement affecting such Lender or the London interbank market or such
Lender's position in such market, the LIBOR or the Bid Rate, as the case may be,
as determined by the Agent, will not adequately and fairly reflect the cost to
such Lender of funding its Fixed Rate Advances, then, and in any such event:
(i) the Agent shall forthwith give notice to the Borrower and to the
other Lenders of such advice;
(ii) the Borrower's right to request and such Lender's obligation to
make or permit portions of the Loans to remain outstanding past the last
day of the then current Interest Periods as Bid Rate Advances or Eurodollar
Advances, as the case may be, shall be immediately suspended; and
(iii) such Lender shall make a Loan as part of the re quested
Borrowing of Bid Rate Advances or Eurodollar Advances, as the case may be,
as a Base Rate Advance, which such Base Rate Advance shall, for all other
purposes, be considered part of such Borrowing.
Section 3.16. Funding Losses. The Borrower shall compensate each Lender,
--------------
upon its written request to the Borrower (which request shall set forth the
basis for requesting such amounts in reasonable detail and which request shall
be made in good faith and, absent manifest error, shall be final, conclusive and
binding upon all of the parties hereto), for all losses, expenses and li
abilities (including, without limitation, any interest paid by such Lender to
lenders of funds borrowed by it to make or carry its Fixed Rate Advances, in
either case to the extent not recovered by such Lender in connection with the
re-employment of such funds and including loss of anticipated profits), which
the Lender may sustain: (i) if for any reason (other than a default by such
Lender) a borrowing of, or conversion to or continuation of, Fixed Rate Advances
to the Borrower does not occur on the date specified therefor in a Notice of
Borrowing or Notice of Conversion/Continuation (whether or not withdrawn), (ii)
if any repayment (including mandatory prepayments and any conversions) of any
Fixed Rate Advances to the Borrower occurs on a date which is not the last day
of an Interest Period applicable thereto, or (iii), if, for any reason, the
Borrower defaults in its obligation to repay its Fixed Rate Advances when
required by the terms of this Agreement.
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Section 3.17. Assumptions Concerning Funding of Fixed Rate Advances.
-----------------------------------------------------
Calculation of all amounts payable to a Lender under this Article 3
shall be made as though that Lender had actually funded its relevant Fixed Rate
Advances through the purchase of deposits in the relevant market bearing
interest at the rate applicable to such Fixed Rate Advances in an amount equal
to the amount of the Fixed Rate Advances and having a maturity comparable to the
relevant Interest Period and, in the case of Eurodollar Advances, through the
transfer of such Eurodollar Advances from an offshore office of that Lender to a
domestic office of that Lender in the United States of America; provided
--------
however, that each Lender may fund each of its Fixed Rate Advances in any manner
it sees fit and the foregoing assumption shall be used only for calculation of
amounts payable under this Article 3.
Section 3.18. Apportionment of Payments. Aggregate principal and interest
-------------------------
payments in respect of Loans and payments in respect of facility fees and
commitment fees shall be apportioned among all outstanding Commitments and Loans
to which such payments relate, proportionately to the Lenders' respective pro
rata portions of such Commitments and outstanding Loans. The Agent shall
promptly distribute to each Lender at its payment office set forth beside its
name on the appropriate signature page hereof or such other address as any
Lender may request its share of all such payments received by the Agent.
Section 3.19. Sharing of Payments, Etc. If any Lender shall obtain any
------------------------
payment or reduction (including, without limitation, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code) of the Obligations (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) in excess of its pro rata portion of
payments or reductions on account of such obligations obtained by all the
Lenders, such Lender shall forthwith (i) notify each of the other Lenders and
the Agent of such receipt, and (ii) purchase from the other Lenders such
participations in the affected obligations as shall be necessary to cause such
purchasing Lender to share the excess payment or reduction, net of costs
incurred in connection therewith, ratably with each of them, provided that if
all or any portion of such excess payment or reduction is thereafter recovered
from such purchasing Lender or additional costs are incurred, the purchase shall
be rescinded and the purchase price restored to the extent of such recovery or
such additional costs, but without interest unless the Lender obligated to
return such funds is required to pay interest on such funds. The Borrower agrees
that any Lender so purchasing a participation from another Lender pursuant to
this Section 3.19 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of
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<PAGE>
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.
Section 3.20. Capital Adequacy. Without limiting any other provision of
----------------
this Agreement, in the event that any Lender shall have determined that any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy not currently in effect or fully applicable as
of the Closing Date, or any change therein or in the interpretation or
application thereof after the Closing Date, or compliance by such Lender with
any request or directive regarding capital adequacy not currently in effect or
fully applicable as of the Closing Date (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) from a central
bank or governmental authority or body having jurisdiction, does or shall have
the effect of reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder to a level below that which such Lender
could have achieved but for such law, treaty, rule, regulation, guideline or
order, or such change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then within 10 Business Days after written notice and demand by
such Lender (with copies thereof to the Agent), the Borrower shall from time to
time pay to such Lender additional amounts sufficient to compensate such Lender
for such reduction (but, in the case of outstanding Base Rate Advances, without
du plication of any amounts already recovered by such Lender by reason of an
adjustment in the applicable Base Rate). Each certificate as to the amount
payable under this Section 3.20 (which certificate shall set forth the basis for
requesting such amounts in reasonable detail), submitted to the Borrower by any
Lender in good faith, shall, absent manifest error, be final, conclusive and
binding for all purposes.
Section 3.21. Use of Proceeds. The Borrower shall use the proceeds of all
---------------
Loans only (i) to refinance Indebtedness outstanding under existing revolving
credit and lines of credit facilities, (ii) to fund capital expenditures and
working capital needs, and (iii) other general corporate purposes.
ARTICLE 4.
----------
CONDITIONS TO LOAN CLOSING AND EXTENSIONS OF LOANS
--------------------------------------------------
Section 4.1. Conditions Precedent to Initial Loans. At the time of
-------------------------------------
making of the initial Loans hereunder on the Closing Date, the following
conditions shall have been satisfied in a manner
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<PAGE>
satisfactory to the Agent and the Lenders:
(a) Opinion of the Borrower's Counsel. The Borrower shall have delivered
---------------------------------
to the Lenders, at the Borrower's expense, a favorable written opinion from (i)
Messrs. Alston & Bird, special counsel for the Borrower, dated as of and
delivered on the date of execution of this Agreement, satisfactory to the Agent
and substantially in the form of Exhibit I attached hereto, and (ii) Jack L.
---------
Lawing, Esq., Vice President, Law and Corporate Secretary of the Borrower,
dated as of and delivered on the date of execution of this Agreement,
satisfactory to the Agent and substantially in the form of Exhibit J attached
---------
hereto.
(b) No Defaults. The Borrower shall be in full compliance with all the
-----------
terms and conditions of this Agreement, and no Default or Event of Default shall
have occurred, and the Borrower shall have delivered to the Lenders a
certificate from an authorized officer of the Borrower certifying such matters
as the Lenders shall reasonably request.
(c) Accuracy of Representations and Warranties. The representations and
------------------------------------------
warranties set forth herein shall be true and correct, and the Borrower shall
have delivered to the Lenders a certificate from an authorized officer of the
Borrower certifying such matters related to the representations and warranties
as the Lenders shall reasonably request.
(d) Corporate Action and Authority; Incumbency Certificate. The Borrower
------------------------------------------------------
shall have delivered to the Lenders (i) a copy of the organizational papers of
the Borrower, certified as true and correct by the Secretary of State of the
State of Georgia, (ii) certificates from the Secretaries of State of those
States in which the Borrower is legally required to qualify to transact business
as a foreign corporation, certifying the Borrower's good standing as a
corporation in such States, and (iii) a copy of the Borrower's bylaws and the
resolutions passed by the Board of Directors of the Borrower authorizing the
execution and delivery of and the performance of the obligations under the Loan
Documents, each certified by the Secretary or Assistant Secretary of the
Borrower, on behalf of and under the seal of the Borrower, to be true and
correct. The Borrower also shall have delivered to the Lenders a certificate,
dated as of and delivered on the date of the execution of this Agreement and
signed on behalf of and under the seal of the Borrower by the Secretary or
Assistant Secretary of the Borrower, certifying the names of the officers of the
Borrower authorized to execute and deliver the Loan Documents and to request
Borrowings under this Agreement, together with the original, not photocopied,
signatures of such officers.
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<PAGE>
(e) Delivery of Notes. The Borrower shall have executed and delivered
-----------------
to the Lenders the Notes.
(f) Delivery of Credit Agreement. The Borrower shall have executed and
----------------------------
delivered to the Lenders the Agreement.
(g) Insurance Summary. Borrower shall have delivered to the Agent a
-----------------
certificate of insurance in a form satisfactory to the Lenders which provides a
listing of all the Borrower's insurance policies and the amount of coverage
provided thereby.
(h) Proceedings. All corporate and other proceedings taken or to be taken
-----------
in connection with the transactions contemplated hereby and all Loan Documents
and other documents incident thereto shall be satisfactory in form and
substance to the Lenders, and the Lenders shall have received all such
counterpart originals or certified or other copies of such documents as the
Lenders may reasonably request.
(i) Payoff of Existing Loan Facility. The Agent shall have received a
--------------------------------
payoff letter related to that certain Revolving Credit and Term Loan Agreement,
originally dated as of December 30, 1986 and as amended to the date hereof, by
and among the Borrower, Trust Company, as agent, and various lenders.
(j) Other Matters. Borrower shall have delivered to the Agent such other
-------------
certificates, reports, agreements, documents or other materials as the Lenders
shall reasonably request.
Section 4.2. Conditions to all Loans. At the time of the making of all
-----------------------
Loans (before as well as after giving effect to such Loans and to the proposed
use of the proceeds thereof), the following conditions shall have been satisfied
or shall exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by the Borrower contained herein
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of the date
of such Loans;
(c) since the date of the most recent financial statements described in
Section 6.1, there shall have been no change which has had or could reasonably
be expected to have a Material Adverse Effect;
(d) there shall be no action or proceeding instituted or
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<PAGE>
pending before any court or other governmental authority or, to the knowledge of
the Borrower, threatened (i) which reasonably could be expected to have a
Material Adverse Effect, or (ii) seeking to prohibit or restrict the Borrower's
ownership or operation of any portion of its business or assets, or to compel
the Borrower to dispose of or hold separate all or any portion of its businesses
or assets, where such portion or portions of such business(es) or assets, as the
case may be, constitute a material portion of the total businesses or assets of
the Borrower or any Subsidiary;
(e) the Loans to be made and the use of proceeds thereof shall not
contravene, violate or conflict with, or involve the Agent or any Lender in a
violation of, any law, rule, injunction, or regulation, or determination of any
court of law or other governmental authority applicable to the Borrower; and
(f) The Agent shall have received such other documents or legal opinions
as the Agent or any Lender may reasonably request, all in form and substance
reasonably satisfactory to the Agent.
Each request for a Borrowing and the acceptance by the Borrower of the
proceeds thereof shall constitute a representation and warranty by the Borrower,
as of the date of the Loans comprising such Borrowing, that the applicable
conditions specified in Sections 4.1 and 4.2 have been satisfied.
ARTICLE 5.
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents, warrants and covenants to the Lenders that:
Section 5.1 Organization and Qualification. The Borrower is an
------------------------------
agricultural membership cooperative duly incorporated and existing in good
standing under the Cooperative Marketing Act of the State of Georgia, each
Subsidiary is duly incorporated and existing in good standing under the law of
the jurisdiction in which it is incorporated, the Borrower and each of its
Subsidiaries have the corporate power to own their respective properties and to
carry on their respective businesses as now being conducted, and the Borrower
and each of its Subsidiaries is duly qualified as a foreign corporation to do
business and in good standing in every jurisdiction in which the nature of its
business conducted or property owned by it legally requires such qualification,
except to the extent failure to so qualify does not result in a Material Adverse
Effect on the Borrower and the Subsidiaries.
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<PAGE>
Section 5.2. Financial Statements. The Borrower has furnished the Lenders
--------------------
with the following financial statements, identified by a principal financial
officer of the Borrower: (i) consolidated balance sheets of the Borrower and its
Subsidiaries as at June 30, in the years of 1992 through 1994, and consolidated
statements of income and cash flow of the Borrower and its Subsidiaries for such
years, all certified by KPMG Peat Marwick; and (ii) unaudited consolidated
balance sheets of the Borrower and its Subsidiaries as at March 31, 1993, 1994
and 1995 and unaudited consolidated statements of income and cash flow for the
nine-month periods ended on such dates, prepared by the Borrower. Such
financial statements (including any related schedules and/or notes) are true and
correct in all material respects (subject, as to interim statements, to changes
resulting from audits and year end adjustments), have been prepared in
accordance with GAAP consistently followed throughout the periods involved and
show all liabilities, direct and contingent, of the Borrower and its
Subsidiaries required to be shown in accordance with such principles. The
balance sheets fairly present the condition of the Borrower and its Subsidiaries
as at the dates thereof, and the statements of income and cash flow fairly
present the results of the operations of the Borrower and its Subsidiaries for
the periods indicated. There has been no Material Adverse Effect to the
business, condition or operations (financial or otherwise) of the Borrower and
its Subsidiaries taken as a whole since June 30, 1994.
Section 5.3. Taxes. The Borrower has and each of its Subsidiaries has
-----
filed all federal, state and other income tax returns which, to the best
knowledge of the officers of the Borrower, are required to be filed, and each
has paid all taxes as shown on said returns and all assessments received by it
to the extent that such taxes have become due or except such as are being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP. Federal, state and other income
tax returns of the Borrower and its Subsidiaries have been examined and reported
on by the taxing authorities or closed by applicable statutes and satisfied for
all fiscal years prior to and including the fiscal year ended on June 30, 1986.
Section 5.4. Actions Pending. Except as specified in Schedule 5.4, there
--------------- ------------
is no action, suit, investigation or proceeding pending or, to the knowledge of
the Borrower after due inquiry, threatened against the Borrower or any of its
Subsidiaries or any properties or rights of the Borrower or any of its
Subsidiaries, by or before any court, arbitrator or administrative or
governmental
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<PAGE>
body, which might result in any material adverse change in the business,
condition or operations of the Borrower and its Subsidiaries taken as a whole.
Section 5.5. Title to Properties. The Borrower has and each of its
-------------------
Restricted Subsidiaries has good and marketable title to its respective real
properties (other than properties which it leases) and good title to all of its
other respective properties and assets, including the properties and assets
reflected in the balance sheet as at June 30, 1994 hereinabove described (other
than properties and assets disposed of in the ordinary course of business),
subject to no Lien of any kind except Liens permitted by Section 7.3. Each of
the Borrower and its Restricted Subsidiaries enjoys peaceful and undisturbed
possession under all leases necessary in any material respect for the operation
of its respective properties and assets, none of which contains any unusual or
burdensome provisions which might have a Material Adverse Effect on the
operation of such properties and assets. All such leases are valid and
subsisting and in full force and effect.
Section 5.6. Regulation U, Etc. Except as disclosed on Schedule 5.6
----------------- ------------
attached hereto, neither the Borrower nor any Subsidiary owns or has any present
intention of acquiring any "margin stock" as defined in Regulation U (12 CFR
Part 221) of the Board of Governors of the Federal Reserve System (herein called
"margin stock"). Each Borrowing will be used solely for the purposes specified
in Section 3.21 of this Agreement. None of such proceeds will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of such
Regulation U. Neither the Borrower nor any agent acting on its behalf has taken
or will take any action which might cause this Agreement or any of the Notes to
violate Regulations G, T, U, or X or (to the best knowledge of the Borrower) any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the Securities Exchange Act of 1934, as amended, in each case as in
effect now or as the same may hereafter be in effect.
Section 5.7. ERISA. No accumulated funding deficiency (as defined in
-----
section 302 of ERISA and section 412 of the Code), whether or not waived, exists
with respect to any Plan (other than a Multiemployer Plan). No liability to the
PBGC has been or is expected by the Borrower to be incurred with respect to any
Plan (other than a Multiemployer Plan) by the Borrower or any of its
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<PAGE>
Subsidiaries which is or would be materially adverse to the Borrower and its
Subsidiaries taken as a whole. Neither the Borrower nor any of its subsidiaries
has incurred or presently expects to incur any withdrawal liability under Title
IV of ERISA with respect to any Multiemployer Plan which is or would be
materially adverse to the Borrower and its Subsidiaries taken as a whole. The
Borrower has delivered to the Lenders a list of all employee benefit plans
established or maintained by the Borrower and each Subsidiary, or as to which
the Borrower or any Subsidiary is a party in interest or a disqualified person.
The execution and delivery of this Agreement and the Borrowings hereunder will
not involve any prohibited transaction within the meaning of ERISA or in
connection with which a tax could be imposed pursuant to section 4975 of the
Code or a violation of section 406 or section 407 of ERISA.
Section 5.8. Outstanding Debt. There exists no default under the
----------------
provisions of any instrument evidencing Indebtedness of the Borrower or any
Restricted Subsidiary or of any other agreement relating thereto.
Section 5.9. Conflicting Agreements or Other Matters. Neither the Borrower
---------------------------------------
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction which could have a Material
Adverse Effect on its business, property or assets, or financial condition.
Neither the Borrower nor any of its Subsidiaries is in default of any agreement
to which it is a party which could have a Material Adverse Effect on its
business, property or assets, or financial condition. Neither the execution or
delivery of this Agreement or the other Loan Documents, nor fulfillment of or
compliance with the terms and provisions hereof and thereof, will conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien upon any of the properties or assets of the Borrower or any of its
Subsidiaries pursuant to, the charter or bylaws of the Borrower or any of its
Subsidiaries, any award of any arbitrator or any agreement (including any
agreement with stockholders), instrument, order, judgment, decree, statute, law,
rule or regulation to which the Borrower or any of its Subsidiaries is subject.
Neither the Borrower nor any of its Subsidiaries is a party to, or otherwise
subject to any provision contained in, any instrument evidencing indebtedness of
the Borrower or any of its Subsidiaries, any agreement relating thereto or any
other contract or agreement (including its charter) which limits the amount of,
or otherwise imposes restrictions on the incurring of, Indebtedness of the
Borrower of the type to be evidenced by the Notes, except as set forth in the
agreements listed on Schedule 5.9 attached hereto. Except where failure or non-
------------
compliance would not have a Material
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<PAGE>
Adverse Effect on its business, property or assets, or financial condition, each
of the Borrower and its Subsidiaries has obtained all permits, licenses and
other authorizations which are required under, and is in compliance with,
federal, state and local laws and regulations relating to pollution,
reclamation, or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into air, water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants, contaminants
or hazardous or toxic materials or wastes. Each of the Borrower and its
Subsidiaries is in material compliance with all laws and regulations relating to
equal employment opportunity and employee health and safety in all jurisdictions
in which the Borrower and each Subsidiary is presently doing business.
Section 5.10. Possession of Franchises, Licenses, Etc. The Borrower and
---------------------------------------
its Subsidiaries possess all franchises, certificates, licenses, permits and
other authorizations from governmental entities or regulatory authorities, and
all patents, trademarks, service marks, trade names, copyrights, licenses and
other rights, free from burdensome restrictions, that are necessary in any
material respect for the ownership, maintenance and operation of their
respective business, properties and assets, and neither the Borrower nor any of
its Subsidiaries is in violation of any thereof in any material respect.
Section 5.11. Governmental Consent. Neither the nature of the Borrower
--------------------
or any of its Subsidiaries nor any of their respective businesses or properties,
nor any relationship between the Borrower or any Subsidiary and any other
Person, nor any circumstance in connection with the execution and delivery of
the Loan Documents and the consummation of the transactions contemplated thereby
is such as to require any authorization, consent, approval, exemption or other
action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the date of closing with the
Securities and Exchange Commission and/or state Blue Sky authorities) in
connection with the execution and delivery of this Agreement and the other Loan
Documents or fulfillment of or compliance with the terms and provisions hereof
or thereof.
Section 5.12. Disclosure. Neither this Agreement nor any other document,
----------
certificate or statement furnished to the Lenders or the Agent by or on behalf
of the Borrower in connection herewith contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained
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<PAGE>
herein and therein not misleading. There is no fact known to the Borrower or
any of its Subsidiaries which would have a Material Adverse Effect or in the
future may (so far as the Borrower can now foresee) have a Material Adverse
Effect on the business, property or assets, or financial condition of the
Borrower or any of its Subsidiaries which has not been set forth in this
Agreement or in the other documents, certificates and statements furnished to
the Lenders or the Agent by or on behalf of the Borrower prior to the date
hereof in connection with the transactions contemplated hereby.
Section 5.13. Foreign Assets Control Regulations. Neither the borrowing
----------------------------------
by the Borrower hereunder nor its use of the proceeds thereof will violate the
Foreign Assets Control Regulations, the Cuban Assets Control Regulations or the
Iranian Assets Control Regulations of the United States Treasury Department (31
CFR Subtitle B, Chapter V) or any similar law or regulation.
Section 5.14. Labor Relations. Except as set forth on Schedule 5.14
--------------- -------------
attached hereto, neither the Borrower nor any of its Subsidiaries is a party to
any collective bargaining agreement, and there are no material grievances,
disputes or controversies with any union or any other organization of the
Borrower's employees, or threats of strikes, work stoppages or delays or any
asserted pending demands for collective bargaining by any union or organization.
Additionally, the hours worked and payment made to employees of the Borrower and
its Subsidiaries have not been in violation in any material respect of the Fair
Labor Standards Act or any other applicable law dealing with such matters. All
payments due from the Borrower and its Subsidiaries, or for which any claim may
be made against the Borrower and its Subsidiaries, on account of wages and
employee health and welfare insurance and other benefits have been paid or
accrued as liabilities on the books of the Borrower and its Subsidiaries in all
instances where the failure to pay or accrue such liabilities would reasonably
be expected to have a Material Adverse Effect on the Borrower and its
Subsidiaries.
Section 5.15. Enforceability of Agreement. This Agreement is the legal,
---------------------------
valid and binding agreement of the Borrower enforceable against the Borrower in
accordance with its terms, and the Notes, and all other Loan Documents, when
executed and delivered, will be similarly legal, valid, binding and enforceable,
except as the en forceability of the Notes and other Loan Documents may be
limited by bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditor's rights and remedies in general and by general principles of
equity, whether considered in a proceeding at law or in equity.
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<PAGE>
Section 5.16. Subsidiaries. Schedule 5.16 attached hereto correctly sets
------------ -------------
forth the name of each Subsidiary of the Borrower and the jurisdiction of its
organization. All the outstanding shares of stock or other ownership rights of
each such Subsidiary have been validly issued and are fully paid and non-
assessable and all such outstanding shares or other ownership rights, except as
noted on such Exhibit, are owned by the Borrower or an Affiliate free of any
Lien or claim.
Section 5.17. Insurance Coverage. Each property of the Borrower or any of
------------------
its Subsidiaries is insured for the benefit of the Borrower or a Subsidiary of
the Borrower in amounts deemed adequate by the Borrower's management against
risks usually insured against by Persons operating businesses similar to those
of the Borrower or its Subsidiaries in the localities where such properties are
located.
Section 5.18. Investments. Except for Investments permitted by Section 7.4
-----------
of this Agreement, the Borrower has no other Investments.
Section 5.19. Intercompany Loans; Dividends. There are no restrictions on
-----------------------------
the power of any Restricted Subsidiary to repay any intercompany loan or to pay
dividends on its capital stock.
ARTICLE 6.
----------
AFFIRMATIVE COVENANTS
---------------------
The Borrower covenants and agrees that so long as it may borrow under this
Agreement or so long as any Loan or other Indebtedness remains outstanding to
the Lenders that:
Section 6.1. Financial Statements. The Borrower shall deliver to the
--------------------
Lenders in duplicate:
(a) As soon as practicable and in any event within 45 days after the end
of each quarterly period (other than the last quarterly period) in each fiscal
year, unaudited consolidated and consolidating and business segment statements
of income and cash flow of the Borrower and its Subsidiaries for the period from
the beginning of the current fiscal year to the end of such quarterly period,
and an unaudited consolidated and consolidating and business segment balance
sheet of the Borrower and its Subsidiaries as at the end of such quarterly
period, setting forth, with respect to such
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consolidated statements of income and cash flow and such consolidated balance
sheet, in comparative form, figures for the corresponding period in the
preceding fiscal year, all in reasonable detail and certified by the chief
financial officer of the Borrower;
(b) As soon as practicable and in any event within 90 days after the end
of each fiscal year, a consolidating and consolidated and business segment
statements of income and cash flow of the Borrower and its Subsidiaries for such
year, and a consolidating and consolidated and business segment balance sheet of
the Borrower and its Subsidiaries as at the end of such year, setting forth,
with respect to such consolidated statements of income and cash flow and such
consolidated balance sheet, in comparative form, corresponding figures from the
preceding annual audit, all in reasonable detail and reasonably satisfactory in
scope to the Agent, and, in the case of such consolidated financial statements,
certified to the Borrower by independent public accounts of recognized national
standing selected by the Borrower (and acceptable to the Agent), whose
certificate shall be in scope and substance satisfactory to the Agent, and, as
to the consolidating statements, certified by the chief financial officer of the
Borrower. In addition to any other information requested by the Agent pursuant
to the preceding sentence, together with each delivery of financial statements
required by Section 6.1 above, the Borrower will deliver to the Lenders a
certificate of such accountants stating that, in making the audit necessary to
the certification of such financial statements, they have obtained no knowledge
of any Event of Default or Default, or, if any Event of Default or Default
exists, specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason of their failure
to obtain knowledge of any Event of Default or Default that would not be
disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards;
(c) Promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as the Borrower shall send to
its public stockholders and copies of all registration statements (without
exhibits) and all reports which it files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to the functions of
the Securities and Exchange Commission);
(d) Promptly upon receipt thereof, a copy of each other report submitted
to the Borrower or any Subsidiary by
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<PAGE>
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Borrower or any Subsidiary; and
(e) With reasonable promptness, such other financial data as the Agent
or any Lender may reasonably request in writing.
Together with each delivery of financial statements required by Section 6.1, the
Borrower will deliver to the Lenders an Officer's Certificate (i) demonstrating
(with computations in reasonable detail) compliance by the Borrower and its
Subsidiaries as at the end of the quarterly period or fiscal year to which such
financial statement relates with the provisions of Section 7.1 and stating that
there exists no Event of Default or Default, or, if any Event of Default or
Default exists, specifying the nature and period of existence thereof and what
action the Borrower proposes to take with respect thereto and (ii) specifying
the details of insurance as required pursuant to Section 6.3 hereof. The
Borrower also covenants that forthwith upon the chief executive officer,
principal financial officer, or principal accounting officer of the Borrower
obtaining actual knowledge of any Event of Default or Default, it will deliver
to the Agent an Officer's Certificate specifying the nature and period of
existence thereof and what action the Borrower proposes to take with respect
thereto. Each Lender is hereby authorized to deliver a copy of any financial
statement delivered to it pursuant to this Section 6.1 to any regulatory body
having jurisdiction over such Lender and to which such financial statement is
required to be delivered.
Section 6.2. Inspection of Property. The Borrower shall permit any
----------------------
Person designated in writing by the Agent or any Lender, at the Agent's or such
Lender's expense, to visit and inspect any of the properties of the Borrower and
any of its Subsidiaries, to examine the corporate books and financial records of
the Borrower and its Subsidiaries and make copies thereof or extracts therefrom,
and to discuss the affairs, finances and accounts of any of such corporations
with the principal officers of the Borrower and its independent public
accountants, all at such reasonable times and as often as the Agent or any
Lender may reasonably request.
Section 6.3. Insurance. The Borrower covenants that it and each
---------
subsidiary will at all times maintain insurance in such amounts and against such
liabilities and hazards as customarily is maintained by other companies
operating similar businesses and, together with each delivery of financial
statements under Section 6.1, it will deliver to the Lenders an Officer's
Certificate
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<PAGE>
specifying the details of such insurance then in effect.
Section 6.4. Conduct of Business. The Borrower covenants that it will
-------------------
and will cause each Restricted Subsidiary to remain substantially in the
respective area or field of business in which the Borrower and each Restricted
Subsidiary is engaged as of the date of this Agreement except that the Borrower
and its Restricted Subsidiaries may (a) enter other fields or areas of business
or (b) may exit existing fields or areas of business, to the extent that such
fields or areas do not exceed ten percent (10%) of the Borrower's Shareholders'
Equity.
Section 6.5. Corporate Existence; Maintenance of Properties. The Borrower
----------------------------------------------
shall (a) do or cause to be done all things necessary to preserve and keep in
full force and effect the corporate or other form of existence as the case may
be, rights and franchises of the Borrower and its Subsidiaries, (b) will cause
its properties and the properties of its Subsidiaries used or useful in the
conduct of their respective businesses to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, placements,
betterments and improvements thereto, all as in the judgment of the Borrower may
be necessary so that the businesses carried on in connection therewith may be
properly and advantageously conducted at all times, (c) will maintain possession
and ownership, all franchises, certificates, licenses, permits and other
authorizations from governmental entities or regulatory authorities, and all
patents, trademarks, service marks, trade names, copyrights, licenses and other
rights that are necessary in any material respect to the ownership, maintenance
and operation of its business, properties, and assets, and (d) will and will
cause each of its Subsidiaries to qualify, and remain qualified to conduct
business in each jurisdiction where the nature of the business or ownership of
property by the Borrower, or such Subsidiary, as the case may be, may legally
require such qualification, except where the failure to so qualify would not
have a material adverse effect on the Borrower and the Subsidiaries.
Section 6.6. Environmental Laws. The Borrower and its Subsidiaries
------------------
shall:
(a) Comply in all material respects with and use best efforts to ensure
compliance by all tenants and subtenants with all applicable Environmental Laws,
and shall obtain and comply with, and use reasonable efforts to ensure that all
tenants and subtenants obtain and comply with, any and all approvals,
registrations or permits required thereunder.
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(b) Promptly report to the Lenders (i) the introduction of any Hazardous
Substances onto any facility owned or operated by the Borrower or a Subsidiary
thereof except for the use or storage thereof in the ordinary course of business
in compliance with all Environmental Laws, and (ii) the initiation of any
regulatory action against the Borrower or any Subsidiary thereof or in
connection with any such facility relating to any release of Hazardous
Substances which regulatory action the Borrower determines is likely to have a
material adverse effect on either the Borrower's or a Subsidiary's financial
condition.
(c) Defend, indemnify, and hold harmless the Lender, its employees,
agents, and officers from and against any and all penalties, fines, liabilities,
damages, costs, or expenses of whatever kind or nature asserted against the
Lender, except to the extent that such claims, demands, penalties, fines,
liabilities, damages, costs or expenses result from the gross negligence or
willful misconduct of the Lender or any of its employees, agents or officers,
arising out of, or in any way related to, (i) the presence, disposal, release,
or threatened release of any Hazardous Substances on any property at any time
owned or occupied by the Borrower or the Subsidiaries; (ii) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Substances; (iii) any lawsuit brought or
threatened, reasonable settlement reached, or government order relating to such
Hazardous Substances, and/or (iv) any violation of laws, orders, regulations,
requirements, or demands of government authorities, which are based upon or in
any way related to such Hazardous Substances, including, without limitation,
attorney and consultant fees, inves tigation and laboratory fees, court costs,
and litigation ex penses.
Section 6.7. Taxes. The Borrower shall and shall cause each of its
-----
Subsidiaries to pay and discharge, or cause to be paid and discharged, before
the same shall become delinquent, all taxes, assessments and other governmental
charges levied or imposed upon it or upon its income, profits or properties,
provided that neither the Borrower nor any of its Subsidiaries shall be required
to pay or cause to be paid or discharged any such tax assessment, or charge
whose amount or validity is being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being maintained
and, provided further, that the Borrower shall, and shall cause each of its
Subsidiaries to, pay all such taxes, assessments and charges forthwith upon the
commencement of
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proceedings to foreclose any Lien which may have attached as security therefor.
Section 6.8. Keeping of Books; Fiscal Year. The Borrower covenants that
-----------------------------
it will keep, and cause each of its Subsidiaries to keep, in accordance with
GAAP, proper books of record and account, containing complete and accurate
entries of all financial and business transactions of the Borrower and each Sub
sidiary. Additionally, the Borrower will, and will cause each of its
Subsidiaries to, keep the same fiscal year end as the one evidenced in the
financial statements delivered under Section 5.2.
Section 6.9. Compliance with Laws and Other Agreements. The Borrower
-----------------------------------------
shall, and shall cause each Subsidiary to, conduct its business operations and
obtain all necessary permits and licenses in substantial compliance with (i) all
applicable federal, state and local laws, rules and regulations and (ii) all
agreements, indentures and mortgages to which it is a party or by which it or
any of its properties is bound, unless the Borrower's or a Subsidiary's failure
to so comply would not have a material adverse effect on the Borrower or any
Subsidiary.
Section 6.10. Notice of Default. The Borrower shall notify the Lender of
-----------------
the occurrence of any Event of Default and of any default under any material
agreement, which shall be defined for the purposes of this Section 6.10 as any
agreement related to Indebtedness in excess of $500,000, or obligation with any
other Person, to which it or a Subsidiary is a party or by which it or a
Subsidiary or any of its or a Subsidiary's properties are bound, said notices to
be given immediately upon the Borrower's obtaining actual knowledge thereof;
provided, however, the failure of the Borrower to give such notice shall not
affect the right and power of the Lender to exercise any or all of the remedies
on default specified herein.
Section 6.11. Notice of Litigation. The Borrower shall notify the Lender
--------------------
of any action, suit or proceeding instituted by any Person against it or a
Subsidiary (i) where the uninsured claim for money damages is in excess of
$1,000,000 or (ii) which would cause the aggregate of uninsured claims for money
damages in all actions, suits or proceedings against it or a Subsidiary arising
out of one set of related facts or circumstances to exceed $2,000,000 or (iii)
which otherwise might have a material adverse impact on its or any Subsidiary's
assets or business operations, said notice to be given within 30 calendar days
of the first notice to the Borrower or any Subsidiary of the institution of such
action, suit or proceeding and to specify the amount of damages being claimed or
other relief being sought, the nature of the claim, the Person instituting the
action, suit or proceeding, and
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any other significant features of the claim.
Section 6.12. ERISA. Promptly (and in any event within 30 days) after the
-----
Borrower or any of its Subsidiaries knows or has reason to know that a
Reportable Event with respect to any Plan has occurred, that any Plan is or may
be terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA, or that the Borrower or any of its Subsidiaries will or may incur any
material liability to or on account of a Plan under Section 4062, 4063, 4064,
4201 or 4204 of ERISA, the Borrower will deliver to the Lender, so long as the
Lender shall hold any Note, a certificate of the chief financial officer of the
Borrower setting forth information as to such occurrence and what action, if
any, the Borrower is required or proposes to take with respect thereto, together
with any notices concerning such occurrences which are required to be filed with
or by the Borrower, the PBGC or the plan administrator of any such Plan, as the
case may be. The Borrower shall furnish, at the request of any Lender, so long
as such Lender shall hold any Note, a copy of each annual report (Form 5500
Series) of any Plan received or prepared by the Borrower or any of its
Subsidiaries. Each annual report and any notice required to be delivered
hereunder shall be delivered no later than 10 days after the later of the date
such report or notice is filed with the Internal Revenue Service or the PBGC or
the date such report or notice is received by the Borrower or any of its
Subsidiaries, as the case may be.
Section 6.13. Use of Proceeds. The Borrower shall use the proceeds of all
---------------
Loans only in the manner set forth in Section 3.21 of this Agreement.
ARTICLE 7.
----------
NEGATIVE COVENANTS
------------------
The Borrower covenants and agrees that, so long as it may borrow under
this Agreement or so long as any Indebtedness remains Outstanding under the
Notes:
Section 7.1. Financial Covenants.
-------------------
(a) Consolidated Funded Debt to Leverage Ratio. The Borrower shall not
------------------------------------------
permit the ratio of Consolidated Funded Debt to Total Capital to exceed 0.55 to
1.0, calculated on a quarterly basis.
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(b) Interest Coverage Ratio. The Borrower shall not permit the ratio of
-----------------------
EBIT to Consolidated Interest Expense, to be less than 1.50 to 1.0, calculated
quarterly for the fiscal quarter then ending and the preceding seven fiscal
quarters.
Section 7.2. Limitation on Restricted Payments. The Borrower covenants
---------------------------------
that it will not pay or declare any dividend or make any other distribution on
or on account of any class of its stock or other equity or make cash
distributions of equity (including cash patronage refunds), or make interest
payments on equity, or redeem, purchase or otherwise acquire, directly or
indirectly, any shares of its stock or other equity, or redeem, purchase or
otherwise acquire, directly or indirectly, any Subordinated Debt, including, but
not limited to, its Subordinated Capital Certificates of Interest, Subordinated
Loan Certificates and Cumulative Preferred Certificates of Interest (except
required redemptions as provided in the indentures pursuant to which such
Subordinated Debt was issued), or make any loans, advances or investments in
Golden Poultry or permitted under subparagraph (q) of Section 7.4 of this
Agreement or permit any Restricted Subsidiary to do any of the above (all of the
foregoing being herein called "Restricted Payments") except out of Consolidated
-------------------
Net Earnings Available for Restricted Payments. There shall not be included in
Restricted Payments: (x) dividends paid, or distributions made, in stock of the
Borrower or (y) exchanges of stock of one or more classes of the Borrower,
except to the extent that cash or other value is involved in such exchange. The
term "equity" as used in this Section 7.2 shall include the Borrower's common
stock, preferred stock, if any, other equity certificates, and notified equity
accounts of patrons.
Section 7.3. Liens. Create, assume or suffer to exist any Lien upon any
-----
of its property or assets whether now owned or hereafter acquired, except:
(a) Liens existing prior to the date of this Agreement, as set forth on
Schedule 7.3 attached hereto;
- ------------
(b) Liens for taxes not yet due, and Liens for taxes or Liens imposed by
ERISA which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained;
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves are
being maintained;
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(d) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obli gations (exclusive of obligations
for the payment of borrowed money); and
(e) Other Liens otherwise prohibited by this Section 7.3 provided the
aggregate of such Liens does not exceed five percent (5%) of Consolidated Total
Assets.
Section 7.4. Restrictions on Loans, Advances, Investments and Contingent
-----------------------------------------------------------
Liabilities. Make or permit to remain outstanding any loan or advance to, or
- -----------
extend credit other than credit extended in the normal course of business to any
Person which is not an Affiliate of the Borrower, or guarantee, endorse or
otherwise be or become contingently liable, directly or indirectly, in
connection with the obligations, stock or dividends of, or own, purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any Person, except that the Borrower or any
Subsidiary may:
(a) make or permit to remain outstanding loans, advances, indemnities, or
guarantees to any Subsidiary;
(b) acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary;
(c) own, purchase or acquire prime commercial paper and certificates of
deposit in United States commercial banks (whose long-term debt is rated "A" or
better by Moody s Investors Service or Standard and Poor's Corporation), in each
case due within one year from the date of purchase and payable in the United
States in Dollars;
(d) own, purchase and acquire obligations of the United States Government
or any agency thereof;
(e) own, purchase and acquire obligations guaranteed by the United States
Government;
(f) own, purchase and acquire repurchase agreements of United States
commercial banks (whose long-term debt is rated
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"A" or better by Moody's Investors Service or Standard and Poor's Corporation)
for terms of less than one year in respect of the foregoing certificates and
obligations;
(g) own, purchase and acquire tax-exempt securities maturing within one
year from the date of purchase and rated "A" or better by Moody's Investors
Service or Standard and Poor's Corporation;
(h) own, purchase and acquire adjustable rate preferred stocks rated "A"
or better by Moody's Investors Service or Standard and Poor's Corporation;
(i) endorse negotiable instruments for collection in the ordinary course
of business;
(j) make or permit to remain outstanding travel and other like advances to
officers and employees in the ordinary course of business;
(k) make or permit to remain outstanding investments as a general partner
in Golden Peanut in amount not to exceed $27,500,000;
(l) make or permit to remain outstanding equity investments in Golden
Poultry in an amount not to exceed $21,000,000;
(m) make or permit to remain outstanding equity investments in an amount
not to exceed $26,950,000 in and to Carolina Golden and/or AgriGolden;
(n) make or permit to remain outstanding loans made by GK Finance to
parties other than the Borrower or a Subsidiary in an amount not to exceed
$25,000,000 at any one time;
(o) make or permit to remain outstanding investments in the Archer-Daniels
Midland Company existing on the date hereof plus increases due to normal
dividend reinvestment plans, stock splits, stock dividends or similar
arrangements;
(p) make or permit to remain outstanding investments described on
Schedule 7.4 attached hereto;
- ------------
(q) make additional loans or advances to, or guarantee, endorse or
otherwise be or become contingently liable in connection with the obligations,
stock, or dividends of, or own, purchase or acquire stock, obligations or
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securities of, any other Person, provided that the aggregate principal amount of
such additional loans and advances, plus the aggregate amount of such additional
contingent liabilities plus the aggregate amount of the additional investment
(at original cost) in such stock, obligations and securities be limited to
amounts available out of Consolidated Net Earnings Available for Restricted
Payments, and further provided that no Subsidiary shall make any loans or
advances to, or acquire any stock, obligations or securities of, the Borrower,
except as provided in subparagraph (n) above; and
(r) make or permit to remain outstanding investments in GC Properties.
Section 7.5. Sale of Stock and Debt of Subsidiaries. Sell or otherwise
--------------------------------------
dispose of, or part with control of, any shares of stock or Indebtedness of any
Restricted Subsidiary, except to the Borrower or another Subsidiary, and except
that all shares of stock and Indebtedness of any Restricted Subsidiary at the
time owned by or owed to the Borrower and all Restricted Subsidiaries may be
sold as an entirety for a cash consideration which represents the fair value (as
determined in good faith by the Board of Directors of the Borrower) at the time
of sale of the shares of stock and Indebtedness so sold, provided that the
assets of such Restricted Subsidiary do not constitute a substantial part of the
consolidated assets of the Borrower and all Subsidiaries and that the earnings
of such Restricted Subsidiary shall not have constituted a substantial part of
Consolidated Net Earnings for any of the three fiscal years then most recently
ended, and further provided that, at the time of such sale, such Restricted
Subsidiary shall not own, directly or indirectly, any shares of stock or
Indebtedness of any other Subsidiary (unless all of the shares of stock and
Indebtedness of such other Subsidiary owned, directly or indirectly, by the
Borrower and all Subsidiaries are simultaneously being sold as permitted by this
Section 7.5).
As used in Section 7.4, Section 7.5, Section 7.6 and Section 8.1(j), a
"substantial part of" the consolidated assets of the Borrower and all
Subsidiaries shall mean assets which, as a whole, (x) constitute more than 10%
of Consolidated Total Assets or (y) contributed more than 15% of Consolidated
Net Earnings for any one or more of the three prior fiscal years of the
Borrower.
Section 7.6. Merger and Sale of Assets. Enter into any transaction of
-------------------------
merger, consolidation, pooling of interest, joint venture, syndicate or other
combination with any other Person except for Golden Peanut and Young Pecan or
sell, lease, transfer,
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contribute as capital, or otherwise dispose of all or a substantial part of the
consolidated assets of the Borrower and all Subsidiaries or assets which shall
have contributed a substantial part of Consolidated Net Earnings for any of the
three fiscal years then most recently ended, in any single transaction or series
of related transactions, to any Person, except that:
(a) any Subsidiary may merge with the Borrower, provided that the Borrower
shall be the continuing or surviving corporation, or with any one or more other
Subsidiaries,
(b) any Subsidiary may sell, lease or otherwise dispose of any of its
assets to the Borrower or another Subsidiary, and
(c) any Subsidiary may sell or otherwise dispose of all or substantially
all of its assets subject to the conditions specified in Section 7.5 with
respect to a sale of the stock of such Subsidiary.
Section 7.7. Sale and Lease-Back. Enter into any arrangement, with any
-------------------
Person or under which such other Person is a party, providing for the leasing by
the Borrower or any Restricted Subsidiary of real or personal property, used by
the Borrower or any Restricted Subsidiary in the operations of the Borrower or
any Restricted Subsidiary, which has been or is sold or transferred by the
Borrower or any Restricted Subsidiary to any other Person to whom funds have
been or are to be advanced by such other Person on the security of such rental
obligations of the Borrower or such Restricted Subsidiary except to the extent
that the total amount of such arrangements involve, at any one time, assets or
property which constitute an amount equal to or less than ten percent (10%) of
Consolidated Total Assets.
Section 7.8. Sale or Discount of Receivables. Sell with recourse or
-------------------------------
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable except for the sale of accounts receivable which
sales shall not exceed $35,000,000 at any one time outstanding.
Section 7.9. Commodity Contracts. The Borrower covenants that it will
-------------------
not, nor will it permit any Subsidiary to, purchase or sell commodity futures
contracts except in bona fide hedging transactions in commodities that represent
production inputs or products to be marketed, or in commodities needed in
operations to meet manufacturing or market demands.
Section 7.10. Issuance of Stock by Restricted Subsidiaries. The Borrower
--------------------------------------------
covenants that it will not permit any
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Restricted Subsidiary (either directly or indirectly by the issuance of rights
or options for, or securities convertible into, such shares) to issue, sell or
dispose of any shares of its stock of any class (other than directors'
qualifying shares, if any) except to the Borrower or another Subsidiary.
ARTICLE 8.
----------
EVENTS OF DEFAULT AND REMEDIES
------------------------------
Section 8.1. Events of Default. Any one or more of the following
-----------------
shall constitute an Event of Default hereunder:
(a) The Borrower fails to pay when due any payment of principal due on
any of the Notes; or
(b) The Borrower fails to pay within five (5) days of the due date
therefor any payment of (i) interest due on any of the Notes or (ii) any fees
provided for herein; or
(c) The Borrower or any Subsidiary defaults in any payment of principal or
interest on any other obligation for money borrowed (or any obligation under a
Capital Lease, any obligation under a conditional sale or other title retention
agreement, any obligation issued or assumed as full or partial payment for
property whether or not secured by a purchase money mortgage, or any obligation
under notes payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto, or the Borrower or any
Subsidiary fails to perform or observe any other agreement, term or condition
contained in any agreement under which any such obligation is created (or if any
other event thereunder or any such agreement shall occur and be continuing), and
in each case the effect of such failure or other event is to cause or to permit
the holder or holders of such obligation (or a trustee on behalf of such holder
or holders) to cause such obligation to become due prior to any stated maturity;
or
(d) Any representation or warranty contained herein or deemed to have been
made hereunder or made by or furnished in writing on behalf of the Borrower in
connection herewith shall be false or misleading in any material respect as of
the date made or deemed to have been made or the Borrower fails to perform or
observe any covenant contained in Sections 6.1 or
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7.1 of this Agreement; or
(e) The Borrower fails to perform or observe any covenant, term or
condition contained in this Agreement (other than those contained in Sections
6.1 or 7.1) and such failure shall continue for more than 30 calendar days after
the earlier of (i) the date which the Borrower obtains knowledge thereof or (ii)
the Borrower is given notice thereof; or
(f) The Borrower or any Subsidiary fails to (i) make any payment relating
to any Indebtedness which exceeds $1,000,000 in the aggregate or (ii) fails to
observe or otherwise breaches any covenants contained in any agreement related
to such Indebtedness which causes or permits an acceleration of such
Indebtedness; or
(g) The Borrower or any Subsidiary shall make or take any action to make
an assignment for the benefit of creditors, petition or take any action to
petition any tribunal for the appointment of a custodian, receiver or any
trustee for it or a substantial part of its assets, or shall commence or take
any action to commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or debtor relief law
or statute of any jurisdiction, whether now or hereafter in effect including,
without limitation, the Bankruptcy Code; or, if there shall have been filed any
such petition or application, or any such proceeding shall have been commenced
against it, in which an order for relief is entered which remains unstayed and
in effect for more than 60 days; or the Borrower or any Subsidiary by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
custodian, receiver or any trustee for it or any substantial part of any of its
properties, or shall suffer to exist any such custodianship, receivership or
trusteeship; or
(h) The Borrower or any Subsidiary shall have concealed, removed, or
permitted to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them, or made or suffered a
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or shall have made any transfer of its
property to or for the benefit of a creditor at a time when other creditors
similarly situated have not been paid while the Borrower or such Subsidiary is
insolvent; or shall have suffered or permitted, while insolvent, any creditor to
obtain a Lien upon any of its
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property through legal proceedings or distraint which is not vacated or bonded
within 60 calendar days from the date thereof; or
(i) Any order, judgment or decree is entered in any proceedings against
the Borrower decreeing the dissolution of the Borrower and such order, judgment
or decree remains unstayed and in effect for more than 60 days; or
(j) Any order, judgment or decree is entered in any proceedings against
the Borrower or any Subsidiary decreeing a split-up of the Borrower or such
Subsidiary which requires the divestiture of assets representing a substantial
part, or the divestiture of the stock of a Subsidiary whose assets represent a
substantial part, of the consolidated assets of the Borrower and its
Subsidiaries (determined in accordance with GAAP) or which requires the
divestiture of assets or stock of a Subsidiary which shall have contributed a
substantial part of Consolidated Net Earnings for any of the three fiscal years
then most recently ended, and such order, judgment or decree remains unstayed
and in effect for more than 30 days; or
(k) A final judgment in an amount in excess of $10,000,000 is rendered
against the Borrower or any subsidiary and, within 30 days after entry thereof,
such judgment is not discharged or execution thereof stayed pending appeal, or
within 30 days after the expiration of any such stay, such judgment is not
discharged or provided for in accordance with a court approved order; or
(l) Either (i) any single employer Plan or Multiemployer Plan fails to
maintain the minimum funding standard required by Section 412 of the Code for
any plan year or a waiver of such standard is sought or granted under Section
412(d) of the Code, or (ii) any single employer Plan or Multiemployer Plan
subject to Title IV of ERISA is or has been terminated or the subject of
termination proceedings under ERISA, or (iii) the Borrower or a Subsidiary of
the Borrower or an ERISA Affiliate has incurred a liability to or on account of
any Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA, or (iv) the
Borrower or a Subsidiary of the Borrower has engaged in a prohibited
transaction, and there results from any of the events specified in clauses (i)
through (iv) above a liability to the PBGC or any Plan, or a liability, penalty
or tax under ERISA or Section 4975 of the Code, as the case may be, equal to or
greater than $1,000,000
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that is not paid within 10 days of the due date therefor; or
(m) A default or event of default occurs under any of the agreements
evidencing the Prudential Indebtedness; or
(n) Any Person and its Affiliates acquires or possesses, directly or
indirectly, (1) the power (A) to vote 40% or more of the securities having
ordinary voting power for the election of directors of the Borrower or (B) to
direct or cause the direction of the management and policies of the Borrower,
whether through the ownership of voting securities, by contract or otherwise or
(2) 40% of the outstanding securities of the Borrower.
Section 8.2. Remedies on Default.
-------------------
(a) Upon the occurrence of an Event of Default (other than an Event of
Default described in Section 8.1(g)) and during the continuation thereof, the
Agent shall, at the request of the Required Lenders and at their option, (i)
terminate all Obligations of the Lenders to the Borrower, including, without
limitation, all obligations to extend Loans under this Agreement, (ii) declare
the Notes, including, without limitation, principal, accrued interest and costs
of collection (including, without limitation reasonable attorneys' fees if
collected by or through an attorney at law or in any judicial proceedings)
immediately due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are expressly waived, and (iii) demand that the
Borrower deposit, and upon receipt of such demand the Borrower shall deposit,
cash with the Agent in an amount equal to the amount of any Letters of Credit
that are outstanding, and such amounts shall be held by the Agent as cash
collateral to secure the Borrower's obligations to reimburse Trust Company for
drawings under such Letters of Credit.
(b) Upon the occurrence of an Event of Default under Section 8.1(g), (i)
all obligations of the Lenders to the Borrower, including, without limitation,
all obligations to extend Loans under this Agreement, shall terminate and (ii)
the Notes, including, without limitation, principal, accrued interest and costs
of collection (including, without limitation, reasonable attorneys' fees if
collected by or through an attorney at law or in bankruptcy or in any other
judicial proceedings) shall be immediately due and payable, without presentment,
demand, protest, or any other notice of any kind, all of which are expressly
waived, and (iii) the Borrower shall deposit, cash with the Agent in an amount
equal to the amount of any Letters of Credit that are
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outstanding, and such amounts shall be held by the Agent as cash collateral to
secure the Borrower's obligations to reimburse Trust Company for drawings under
such Letters of Credit.
(c) Upon the occurrence of an Event of Default and acceleration of the
Notes as provided in (a) or (b) above, the Lenders and the Agent, or any of
them, may pursue any remedy available under this Agreement, under the Notes, or
under any other Loan Document, or available at law or in equity, all of which
shall be cumulative. The order and manner in which the rights and remedies of
the Lenders under the Loan Documents and otherwise may be exercised shall be
determined by the Required Lenders.
(d) All payments with respect to this Agreement received by the Agent and
the Lenders, or any of them, after the occurrence of an Event of Default and
acceleration of the Notes, shall be applied first to the costs and expenses
(including attorneys' fees and disbursements) incurred by the Agent, acting as
the Agent, and the Lenders as a result of the Default, and thereafter paid pro
rata to the Lenders in the same proportion that the aggregate of the unpaid
principal amount owing on the Notes to each Lender, plus accrued and unpaid
interest thereon, bears to the aggregate of the unpaid principal amount owing on
all the Notes to all Lenders, plus accrued and unpaid interest thereon.
Regardless of how each Lender may treat the payments for the purpose of its own
accounting, for the purpose of computing the Borrower's obligations hereunder
and under the Notes, payments shall be applied first, to the costs and expenses
-----
incurred by the Agent, acting as the Agent, and the Lenders as a result of the
Default, as set forth above, second, to the payment of accrued and unpaid fees
------
of the Agent and the Lenders, third, to the payment of accrued and unpaid
-----
interest on the Notes, to and including the date of such application (ratably
according to the accrued and unpaid interest on the Loans), fourth, to the
------
ratable payment of the unpaid principal of the Notes, and fifth, to the payment
-----
of all other amounts then owing to the Agent or the Lenders under the Loan
Documents. No application of the payments will cure any Event of Default or
prevent acceleration, or continued acceleration, of amounts payable under the
Loan Documents or prevent the exercise, or continued exercise, of rights or
remedies of the Lenders hereunder or under applicable law.
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ARTICLE 9.
----------
THE AGENT
---------
Section 9.1. Appointment and Authorization. Each Lender hereby
-----------------------------
designates Trust Company as the Agent to act as herein specified. Each Lender
hereby irrevocably authorizes, and each holder of any Note by the acceptance of
a Note shall be deemed irrevocably to authorize, the Agent to take such action
on its behalf under the provisions of this Agreement and the Notes and any
other instruments and agreements referred to herein and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its agents or employees.
Section 9.2. Nature of Duties of the Agent. The Agent shall have no
-----------------------------
duties or responsibilities except those expressly set forth in this Agreement.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted by it as such hereunder or in
connection herewith, unless caused by its or their gross negligence or willful
misconduct. Without limiting in any way the standard of care established by the
immediately preceding sentence, in performing its duties and responsibilities
set forth in this Agreement, the Agent shall act in accordance with its
customary banking practices. The Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement except as
expressly set forth herein.
Section 9.3. Lack of Reliance on the Agent.
-----------------------------
(a) Each Lender agrees that, independently and without reliance upon the
Agent, any other Lender, or the directors, officers, agents or employees of the
Agent or of any other Lender, each Lender, to the extent it deems appropriate,
has made and shall continue to make (i) its own independent investigation of the
financial condition and affairs of the Borrower and its Subsidiaries in
connection with the taking or not taking of any action in connection with this
Agreement and the other Loan Documents, including the decision to enter into
this Agreement, and (ii) its own appraisal of the creditworthiness of the
Borrower and its Subsidiaries, and, except as expressly provided in this
Agreement, the Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or
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other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement or the Notes or the
financial condition of the Borrower or its Subsidiaries or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or the Notes, or the financial
condition of the Borrower or its Subsidiaries, or the existence or possible
existence of any Default or Event of Default.
Section 9.4. Certain Rights of the Agent.
---------------------------
(a) If the Agent shall request instructions from the Required Lenders with
respect to any act or action (including the failure to act) in connection with
this Agreement, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions from the
Required Lenders and the Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Lender shall have any
right of action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders; provided, however, that the Agent shall not be required to act
-------- -------
or not act in accordance with any instructions of the Required Lenders if to do
so would expose the Agent to significant liability or would be contrary to any
Loan Document or to applicable law.
(b) The Agent may assume that no Event of Default has occurred and is
continuing, unless the Agent has received notice from the Borrower stating the
nature of the Event of Default, or has received notice from a Lender stating the
nature of the Event of Default and that such Lender considers the Event of
Default to have occurred and to be continuing.
(c) If the Agent may not, pursuant to Section 9.4(b), assume that no Event
of Default has occurred and is continuing, the Agent shall give notice thereof
to the Lenders
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and shall act or not act upon the instructions of the Required Lenders, provided
--------
that the Agent shall not be required to act or not act if to do so would expose
the Agent to significant liability or would be contrary to any Loan Document or
to applicable law, and provided further, that if the Required Lenders fail, for
-------- -------
five days after the receipt of notice from the Agent, to instruct the Agent,
then the Agent, in its discretion, may act or not act as it deems advisable for
the interests of the Lenders.
Section 9.5. Liability of the Agent. Neither the Agent nor any of its
----------------------
respective directors, officers, agents, or employees shall be liable for any
action taken or not taken by them under or in connection with the Loan
Documents, except for their own gross negligence or willful misconduct. Without
------
limitation on the foregoing, the Agent and its respective directors, officers,
agents, and employees:
(a) may treat the payee of any Note as the holder thereof until the Agent
receives notice of the assignment or transfer thereof in form satisfactory to
the Agent, signed by the payee and may treat each Lender as the owner of that
Lender's interest in the obligations due to the Lenders for all purposes of this
Agreement until the Agent receives notice of the assignment or transfer
thereof, in form satisfactory to the Agent, signed by that Lender;
(b) may consult with legal counsel, in-house legal counsel, independent
public accountants, in-house accountants and other professionals, or other
experts selected by it with reasonable care, or with legal counsel, independent
public accountants, or other experts for the Borrower, and shall not be liable
for any action taken or not taken by it or them in good faith in accordance with
the advice of such legal counsel, independent public accountants, or experts;
(c) will not be responsible to any Lender for any statement, warranty, or
representation made in any of the Loan Documents or in any notice, certificate,
report, request, or other statement (written or oral) in connection with any of
the Loan Documents;
(d) except to the extent expressly set forth in the Loan Documents, will
have no duty to ascertain or inquire as to the performance or observance by the
Borrower or any other Person of any of the terms, conditions, or covenants of
any of the Loan Documents or to inspect the property, books, or records of the
Borrower or any Subsidiary or other Person;
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(e) will not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, effectiveness, sufficiency, or value of
any Loan Document any other instrument or writing furnished pursuant thereto or
in connection therewith;
(f) will not incur any liability by acting or not acting in reliance upon
any Loan Document, notice, consent, certificate, document, statement, telecopier
message or other instrument or writing believed by it or them to be genuine and
to have been signed, sent or made by the proper Person; and
(g) will not incur any liability for any arithmetical error in computing
any amount payable to or receivable from any Lender hereunder, including,
without limitation, payment of principal and interest on the Notes, Loans, and
other amounts; provided that promptly upon discovery of such an error in
--------
computation, the Agent, the Lenders, and (to the extent applicable) the Borrower
shall make such adjustments as are necessary to correct such error and to
restore the parties to the position that they would have occupied had the error
not occurred.
Section 9.6. Indemnification. Each Lender shall, ratably in accordance
---------------
with the respective outstanding principal amount of its Loans, indemnify and
hold the Agent and its directors, officers, the Agents, and employees harmless
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever (including, without limitation, attorneys' fees and
disbursements) that may be imposed on, incurred by, or asserted against it or
them in any way relating to or arising out of the failure by the Borrower to pay
the obligations due to the Lenders hereunder or under the Notes or any action
taken or not taken by it as the Agent thereunder, except for the Agent's gross
------
negligence or willful misconduct. Without limitation of the foregoing, each
Lender shall reimburse the Agent upon demand for that Lender's ratable share of
any cost or expense incurred by the Agent in connection with the negotiation,
preparation, execution, delivery, administration, amendment, waiver,
refinancing, restructuring, reorganization (including a bankruptcy
reorganization), or enforcement of the Loan Documents, to the extent that the
Borrower is required to pay that cost or expense but fails to do so upon demand.
Section 9.7. The Agent and Affiliates. Trust Company (and each successor
------------------------
Agent) has the same rights and powers under the
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Loan Documents as any other Lender and may exercise the same as though it were
not the Agent; and the term the "Lender" or the "Lenders" includes Trust Company
in its individual capacity. Trust Company (and each successor Agent) and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of banking, trust or other business with the Borrower and any Affiliate of
the Borrower, as if it were not the Agent and without any duty to account
therefor to the Lenders. Trust Company (and each successor Agent) need not
account to any other Lender for any monies received by it for reimbursement of
its costs, expenses and fees as the Agent hereunder, or for any monies received
by it in its capacity as a Lender hereunder, except as otherwise provided
herein. This Agreement shall not be deemed to constitute a joint venture or
partnership between the Lenders.
Section 9.8. Successor Agent. The Agent may resign as such at any time
---------------
by written notice to the Borrower and the Lenders, to be effective upon a
successor's acceptance of appointment as the Agent. In such event, the Required
Lenders shall appoint a successor Agent or Agents, who must be from among the
Lenders, subject to the Borrower's written approval so long as no Default or
Event of Default exists hereunder; provided, that the Agent shall be entitled to
--------
appoint a successor Agent from among the Lenders, subject to acceptance of
appointment by that successor Agent, if the Required Lenders (with the
Borrower's written approval, if required) have not appointed a successor Agent
within 30 calendar days after the date the Agent gave notice of resignation or
was removed. Upon a successor's acceptance of appointment as the Agent, the
successor will thereupon succeed to and become vested with all the rights,
powers, privileges, and duties of the Agent under the Loan Documents, and the
resigning the Agent will thereupon be discharged from its duties and obligations
thereafter arising under the Loan Documents.
ARTICLE 10.
-----------
MISCELLANEOUS
-------------
Section 10.1. Notices. All notices, requests and other communications to
-------
any party hereunder shall be in writing (including bank wire, telecopy or
similar teletransmission or writing) and shall be given to such party at its
address or applicable teletransmission number set forth on the signature pages
hereof, or such other address or applicable teletransmission number as such
party may hereafter specify by notice to the Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and
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the appropriate answerback is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, (iii) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and the appropriate
confirmation is received, or (iv) if given by any other means (including,
without limitation, by air courier), when delivered or received at the address
specified in this Section; provided that notices to the Agent shall not be
--------
effective until received.
Section 10.2. Amendments, Etc. No amendment or waiver of any provision of
----------------
this Agreement or the other Loan Documents, nor consent to any departure by any
Loan Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided that no amendment, waiver or consent shall, unless in
--------
writing and signed by all the Lenders do any of the following: (i) waive any of
the conditions specified in Section 4.1 or 4.2, (ii) increase the Commitments or
other con tractual obligations to the Borrower under this Agreement, (iii)
reduce the principal of, or interest on, the Notes or any fees hereunder, (iv)
postpone any date fixed for the payment in respect of principal of, or interest
on, the Notes or any fees hereunder, (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
number or identity of the Lenders which shall be required for the Lenders or any
of them to take any action hereunder, (vi) modify the definition of "Required
Lenders", or (vii) modify this Section 10.2. Notwithstanding the foregoing, no
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Lenders required hereinabove to take such action, affect the
rights or duties of the Agent under this Agreement or under any other Loan
Document.
Section 10.3. No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Agent, any Lender or any holder of a Note in exercising any right or
remedy hereunder or under any other Loan Document, and no course of dealing
between any Borrower and the Agent, any Lender or the holder of any Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy hereunder or under any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right or remedy hereunder
or thereunder. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent, any Lender or the
holder of any
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Note would otherwise have. No notice to or demand on Borrower not required
hereunder or under any other Loan Document in any case shall entitle Borrower to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent, the Lenders or the holder of any
Note to any other or further action in any circumstances without notice or
demand.
Section 10.4. Payment of Expenses, Etc. The Borrower shall:
-------------------------
(i) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses of the
Agent in the administration (both before and after the execution hereof and
including reasonable expenses actually incurred relating to advice of
counsel as to the rights and duties of the Agent and the Lenders with
respect thereto) of, and in connection with the preparation, execution and
delivery of, preservation of rights under, enforcement of, and, after a
Default or Event of Default, refinancing, renegotiation or restructuring of,
this Agreement and the other Loan Documents and the documents and
instruments referred to therein, and any amendment, waiver or consent
relating thereto (including, without limitation, the reasonable fees
actually incurred and disbursements of counsel for the Agent), and in the
case of enforcement of this Agreement or any Loan Document after an Event of
Default, all such reasonable, out-of-pocket costs and expenses (including,
without limitation, the reasonable fees actually incurred and disbursements
of counsel), for any of the Lenders;
(ii) subject, in the case of certain Taxes, to the applicable
provisions of Section 3.12(b), pay and hold each of the Lenders harmless
from and against any and all present and future stamp, documentary, and
other similar Taxes with respect to this Agreement, the Notes and any other
Loan Documents, any collateral described therein, or any payments due
thereunder, and save each Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay
such Taxes; and
(iii) indemnify the Agent and each Lender, and their respective
officers, directors, employees, representatives and agents from, and hold
each of them harmless against, any and all costs, losses,
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liabilities, claims, damages or expenses incurred by any of them (whether
or not any of them is designated a party thereto) (an "Indemnitee") arising
-----------
out of or by reason of any investigation, litigation or other proceeding
related to any actual or proposed use of the proceeds of any of the Loans
or any Persons's entering into and performing of the Agreement, the Notes,
or the other Loan Documents, including, without limitation, the reasonable
fees actually incurred and disbursements of counsel (including foreign
counsel) incurred in connection with any such investigation, litigation or
other proceeding; provided, however, the Borrower shall not be obligated to
-------- -------
indemnify any Indemnitee for any of the foregoing arising out of such
Indemnitee's gross negligence or willful misconduct;
(iv) without limiting the indemnities set forth in subsection (iii)
above, indemnify each Indemnitee for any and all expenses and costs
(including without limitation, remedial, removal, response, abatement,
cleanup, investigative, closure and monitoring costs), losses, claims
(including claims for contribution or indemnity and including the cost of
investigating or defending any claim and whether or not such claim is
ultimately defeated, and whether such claim arose before, during or after
Borrower's ownership, operation, possession or control of its business,
property or facilities or before, on or after the date hereof, and
including also any amounts paid incidental to any compromise or settlement
by the Indemnitee or Indemnitees to the holders of any such claim),
lawsuits, liabilities, obligations, actions, judgments, suits,
disbursements, encumbrances, liens, damages (including without limitation
damages for contamination or destruction of natural resources), penalties
and fines of any kind or nature whatsoever (including without limitation in
all cases the reasonable fees actually incurred, other charges and
disbursements of counsel in connection therewith) incurred, suffered or
sustained by that Indemnitee based upon, arising under or relating to
Environmental Laws based on, arising out of or relating to in whole or in
part, the existence or exercise of any rights or remedies by any Indemnitee
under this Agreement, any other Loan Document or any related documents (but
excluding those incurred, suffered or sustained by any Indemnitee as a
result of any action taken by or on behalf of the Lenders with
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respect to any Subsidiary of the Borrower (or the assets thereof) owned
or controlled by the Lenders.
If and to the extent that the obligations of the Borrower under this Section
10.4 are unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.
Section 10.5. Right of Setoff. In addition to and not in limitation of all
---------------
rights of offset that any Lender or other holder of a Note may have under
applicable law, each Lender or other holder of a Note shall, upon the occurrence
of any Event of Default and whether or not such Lender or such holder has made
any demand or any Borrower's obligations are matured, have the right to
appropriate and apply to the payment of Borrower's obligations hereunder and
under the other Loan Documents, all deposits of the Borrower (general or
special, time or demand, provisional or final) then or thereafter held by and
other indebtedness or property then or thereafter owing by such Lender or other
holder to the Borrower, whether or not related to this Agreement or any
transaction hereunder. Each Lender shall promptly notify the Borrower of any
offset hereunder.
Section 10.6. Benefit of Agreement.
--------------------
(a) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto,
provided that the Borrower may not assign or transfer any of its interest
hereunder without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the account
of, any of its branch offices or the office of an Affiliate of such Lender.
(c) Each Lender may assign all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion of any of its
Commitments and the Loans at the time owing to it and the Notes held by it) to
any Eligible Assignee; provided, however, that (i) the Agent and the Borrower
-------- -------
must give their prior written consent to such assignment (which consent shall
not be unreasonably withheld or delayed) unless such assignment is an Affiliate
of the assigning Lender, (ii) the amount of the Commitments, in the case of
assignment of the Commitments, or Loans, in the case of assignment of Loans, of
the assigning Lender subject to each assignment (determined as of the date the
assignment and
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acceptance with respect to such assignment is delivered to the Agent), shall not
be less than $5,000,000, and (iii) the parties to each such assignment shall
execute and deliver to the Agent an Assignment and Acceptance, together with a
Note or Notes subject to such assignment and, unless such assignment is to an
Affiliate of such Lender, a processing and recordation fee of $3,000. The
Borrower shall not be responsible for such processing and recordation fee or any
costs or expenses incurred by any Lender or the Agent in connection with such
assignment. From and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof, the assignee thereunder shall be a party hereto and to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement. Notwithstanding the
foregoing, the assigning Lender must retain after the consummation of such
Assignment and Acceptance, a minimum aggregate amount of Commitments or Loans,
as the case may be, of $10,000,000; provided, however, no such minimum amount
-------- -------
shall be required with respect to any such assignment made at any time there
exists an Event of Default hereunder. Within five (5) Business Days after
receipt of the notice and the Assignment and Acceptance, the Borrower, at its
own expense, shall execute and deliver to the Agent, in exchange for the
surrendered Note or Notes, a new Note or Notes to the order of such assignee in
a principal amount equal to the applicable Commitments or Loans assumed by it
pursuant to such Assignment and Acceptance and new Note or Notes to the
assigning Lender in the amount of its retained Commitment or Commitments or
amount of its retained Loans. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the date of the surrendered Note or Notes which
they replace, and shall otherwise be in substantially the form attached hereto.
(d) Each Lender may, without the consent of the Borrower or the Agent,
sell participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitments in the Loans owing to it and the Notes held by it), provided,
--------
however, that (i) no Lender may sell a participation in its aggregate
- -------
Commitments or Loans (after giving effect to any permitted assignment hereof) in
an amount in excess of fifty percent (50%) of such aggregate Commitments or
Loans, provided, however, sales of participations to an
-------- -------
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Affiliate of such Lender shall not be included in such calculation; provided,
--------
however, no such maximum amount shall be applicable to any such participation
- -------
sold at any time there exists an Event of Default hereunder, (ii) such Lender's
obligations under this Agreement shall remain unchanged, (iii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and (iv) the participating bank or other entity shall not be
entitled to the benefit (except through its selling Lender) of the cost
protection provisions contained in Article 3 of this Agreement, and (v) the
Borrower and the Agent and other Lenders shall continue to deal solely and
directly with each Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents, and such Lender
shall retain the sole right to enforce the obligations of the Borrower relating
to the Loans and to approve any amendment, modification or waiver of any
provisions of this Agreement. Any Lender selling a participation hereunder
shall provide prompt written notice to the Borrower of the name of such
participant.
(e) Any Lender or participant may, in connection with the assignment or
participation or proposed assignment or participation, pursuant to this Section,
disclose to the assignee or participant or proposed assignee or participant any
information relating to the Borrower or the Subsidiaries furnished to such
Lender by or on behalf of the Borrower or any Subsidiary. With respect to any
disclosure of confidential, non-public, proprietary information, such proposed
assignee or participant shall agree to use the information only for the purpose
of making any necessary credit judgments with respect to this credit facility
and not to use the information in any manner prohibited by any law, including
without limitation, the securities laws of the United States. The proposed
participant or assignee shall agree not to disclose any of such information
except (i) to directors, employees, auditors or counsel to whom it is necessary
to show such information, each of whom shall be informed of the confidential
nature of the information and shall agree to use the information and to hold the
information as confidential all in the same manner described above, (ii) in any
statement or testimony pursuant to a subpoena or order by any court,
governmental body or other agency asserting jurisdiction over such entity, or as
otherwise required by law (provided prior notice is given to the Borrower and
the Agent unless otherwise prohibited by the subpoena, order or law), and (iii)
upon the request or demand of any regulatory agency or authority with proper
jurisdiction. The proposed participant or assignee shall further agree to
return all
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documents or other written material and copies thereof received from any Lender,
the Agent or the Borrower relating to such confidential information unless
otherwise properly disposed of by such entity.
(f) Any Lender may at any time assign all or any portion of its rights in
this Agreement and the Notes issued to it to a Federal Reserve Bank; provided
--------
that no such assignment shall release the Lender from any of its obligations
hereunder.
Section 10.7. Governing Law; Submission to Jurisdiction, Etc.
----------------------------------------------
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE
STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE
NOTES OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE SUPERIOR COURT OF FULTON
COUNTY, GEORGIA, OR ANY OTHER COURT OF THE STATE OF GEORGIA OR OF THE UNITED
STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY,
AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER
AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING.
(d) Nothing herein shall affect the right of the Agent, any Lender, any
holder of a Note or any party to serve
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process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Borrower in any other jurisdiction.
(e) Any controversy or disagreement regarding any of the Loan Documents
may be settled by arbitration if unanimously agreed upon by the Borrower, the
Agent and each Lender (with it being understood that each of such parties shall
be entitled to make such a decision in its sole and absolute discretion).
Notwithstanding anything to the contrary contained in this Agreement, in no
event shall arbitration be a condition precedent to any right of legal action or
right of equity. Any such arbitration (if selected by the Borrower, the Agent,
and the Lenders) shall be conducted in a manner which is acceptable to all of
such parties.
Section 10.8. Independent Nature of the Lenders' Rights. The amounts
-----------------------------------------
payable at any time hereunder to each Lender shall be a separate and independent
debt, and each Lender shall be entitled to protect and enforce its rights
pursuant to this Agreement and its Notes, and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such
purpose.
Section 10.9. Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 10.10. Effectiveness; Survival.
-----------------------
(a) This Agreement shall become effective on the date (the "Effective
Date") on which all of the parties hereto shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered the same
to the Agent or, in the case of the Lenders, shall have given to the Agent
written or telecopy notice (actually received) that the same has been signed and
mailed to them.
(b) The obligations of the Borrower under Sections 3.12(b), 3.15, 3.16,
3.20, and 10.4 hereof shall survive after the payment in full of the Notes after
the final Maturity Date. All representations and warranties made herein, in the
certificates, reports, notices, and other documents delivered pursuant to this
Agreement shall survive the execution and delivery of this Agreement, the other
Loan Documents, and such other agreements and documents, the making of the Loans
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<PAGE>
hereunder, and the execution and delivery of the Notes.
Section 10.11. Severability. In case any provision in or obligation under
------------
this Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable, in whole or in part, in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 10.12. Independence of Covenants. All covenants hereunder shall be
-------------------------
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant, shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
Section 10.13. Change in Accounting Principles, Fiscal Year or Tax Laws. If
--------------------------------------------------------
(i) any change in the preparation of the financial statements referred to in
Section 5.1 or 6.1 hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions) (other
than changes mandated by FASB 106) results in a material change in the method of
calculation of financial covenants, standards or terms found in this Agreement,
(ii) there is any change in the Borrower's fiscal quarter or fiscal year, or
(iii) there is a material change in federal tax laws which materially affects
the Borrower's or any of the Subsidiaries' ability to comply with the financial
covenants, standards or terms found in this Agreement, the Borrower and the
Required Lenders agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes with the desired result that
the criteria for evaluating Borrower's or any of the Subsidiaries' financial
condition shall be the same after such changes as if such changes had not been
made. Unless and until such provisions have been so amended, the provisions of
this Agreement shall govern.
Section 10.14. Headings Descriptive; Entire Agreement. The headings of
--------------------------------------
the several sections and subsections of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement. This Agreement, the other Loan Documents, and
the
-78-
<PAGE>
agreements and documents required to be delivered pursuant to the terms of this
Agreement constitute the entire agreement among the parties hereto and thereto
regarding the subject matters hereof and thereof and supersede all prior
agreements, representations and understandings related to such subject matters.
Section 10.15. Time is of the Essence. Time is of the essence in
----------------------
interpreting and performing this Agreement and all other Loan Documents.
Section 10.16. Usury. It is the intent of the parties hereto not to violate
-----
any federal or state law, rule or regulation pertaining either to usury or to
the contracting for or charging or collecting of interest, and the Borrower and
the Lenders agree that, should any provision of this Agreement or of the Notes,
or any act performed hereunder or thereunder, violate any such law, rule or
regulation, then the excess of interest contracted for or charged or collected
over the maximum lawful rate of interest shall be applied to the outstanding
principal indebtedness due to the Lenders by the Borrower under this Agreement.
Section 10.17. Construction. Should any provision of this Agreement require
------------
judicial interpretation, the parties hereto agree that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against one party by reason of the rule of construction
that a document is to be more strictly construed against the party who it self
or though its agents prepared the same, it being agreed that the Borrower, the
Agent, the Lenders and their respective agents have participated in the
preparation hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Atlanta, Georgia, by their duly authorized
officers as of the day and year first above written.
Address: GOLD KIST INC.
- -------
244 Perimeter Center
Parkway, N.E.
Atlanta, GA 30346
Telecopy No.: 404/393-5421 By: /s/ Peter J. Gibbons
--------------------------------
Attention: Mr. Stephen O. West Name: Peter J. Gibbons
Title: Vice President - Finance
Attest: /s/ Jack L. Lawing
----------------------------
Name: Jack L. Lawing
Title:
[CORPORATE SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
-79-
<PAGE>
Address: TRUST COMPANY BANK, INDIVIDUALLY
- -------
AS A LENDER AND AS THE AGENT
25 Park Place, 23rd Floor
Center Code 120
Atlanta, Georgia 30302
Telecopy No.: 404/588-8833
Attention: Mr. David W. Penter By: /s/ David W. Penter
-----------------------------
Name: David W. Penter
Title: Vice President
By: /s/ Jarrette A. White
-----------------------------
Name: Jarrette A. White
Title: Vice President
REVOLVING CREDIT COMMITMENT $10,000,000 20.00%
SEASONAL LINE OF CREDIT COMMITMENT $10,000,000 20.00%
364-DAY LINE OF CREDIT COMMITMENT $10,000,000 20.00%
PAYMENT OFFICE:
25 Park Place, 23rd Floor
Center Code 120
Atlanta, Georgia 30302
[SIGNATURES CONTINUED ON NEXT PAGE]
-80-
<PAGE>
Address: COBANK
- -------
67 Hunt Street
Agawam, MA 01001
Telecopy No.: 413/789-3009
Attention: Porter C. Little By: /s/ Porter C. Little
----------------------------
Name: Porter C. Little
Title: Vice President
REVOLVING CREDIT COMMITMENT $10,000,000 20.00%
SEASONAL LINE OF CREDIT COMMITMENT $10,000,000 20.00%
364-DAY LINE OF CREDIT COMMITMENT $10,000,000 20.00%
PAYMENT OFFICE:
Drawer CS 198552
Atlanta, GA 30384-8552
[SIGNATURES CONTINUED ON NEXT PAGE]
-81-
<PAGE>
Address: WACHOVIA BANK OF GEORGIA, N.A.
- -------
191 Peachtree Street, N.E.
Atlanta, GA 30303-1763
Telecopy No.: 404/332-5016
Attention: John Seeds By: /s/ John T. Seeds
------------------------------
Name: John T. Seeds
Title: Vice President
REVOLVING CREDIT COMMITMENT $10,000,000 20.00%
SEASONAL LINE OF CREDIT COMMITMENT $10,000,000 20.00%
364-DAY LINE OF CREDIT COMMITMENT $10,000,000 20.00%
PAYMENT OFFICE:
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
[SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE>
Address: COOPERATIEVE CENTRALE
- -------
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
245 Park Avenue NEW YORK BRANCH
New York, NY 10167
Telecopy No.: 212/916-7880
Attention: Richard J. Beard By: /s/ Michel De Konkaly Thege
------------------------------
Name: Michel De Konkaly Thege
Title:
By: /s/ Mark L. Laponte
-----------------------------
Name: Mark L. Laponte
Title: Vice President
REVOLVING CREDIT COMMITMENT $10,000,000 20.00%
SEASONAL LINE OF CREDIT COMMITMENT $10,000,000 20.00%
364-DAY LINE OF CREDIT COMMITMENT $10,000,000 20.00%
PAYMENT OFFICE:
245 Park Avenue
New York, New York 10167
[SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE>
Address: DG BANK DEUTSCHE
- -------
GENOSSENSCHAFTSBANK
303 Peachtree St., N.E. CAYMAN ISLANDS BRANCH
Suite 2900
Atlanta, GA 30308
Telecopy No.: 404/524-4006
Attention: William J. Barlett By: /s/ John W. Somers
----------------------------
Name: John W. Somers
Title: Senior Vice President
and Manager
By: /s/ William J. Bartlett
-----------------------------
Name: William J. Bartlett
Title: Assistant Vice
President
REVOLVING CREDIT COMMITMENT $10,000,000 20.00%
SEASONAL LINE OF CREDIT COMMITMENT $10,000,000 20.00%
364-DAY LINE OF CREDIT COMMITMENT $10,000,000 20.00%
PAYMENT OFFICE:
DG Bank New York Branch
DG Bank Building
609 Fifth Avenue
New York, NY 10017-1021
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<PAGE>
[LETTERHEAD OF ALSTON & BIRD APPEARS HERE]
September 22, 1995
The Board of Directors
of Gold Kist Inc.
Post Office Box 2210
Atlanta, Georgia 30303
Re: Registration Statement on Form S-2 with respect to
Five Classes of Subordinated Capital Certificates of
Interest and Two Classes of Subordinated Loan Certificates
----------------------------------------------------------
Gentlemen:
This opinion is given to you in connection with the filing by Gold Kist
Inc. ("Gold Kist") with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, of a registration statement on Form S-2 (the
"Registration Statement") with respect to Gold Kist's Fifteen Year
Subordinated Capital Certificates of Interest (Series D) in the principal amount
of $2,800,000, Ten Year Subordinated Capital Certificates of Interest (Series D)
in the principal amount of $1,000,000, Seven Year Subordinated Capital
Certificates of Interest (Series A) in the principal amount of $4,000,000, Three
Year Subordinated Capital Certificates of Interest (Series A) in the principal
amount of $3,000,000, Two Year Subordinated Capital Certificates of Interest
(Series A) in the principal amount of $5,000,000, One Year Subordinated Loan
Certificates (Series C) in the principal amount of $10,000,000, and One Year
Subordinated Large Denomination Loan Certificates (Series A) in the principal
amount of $10,000,000 (hereinafter referred to collectively as the
"Certificates").
We have examined copies of the Articles of Incorporation of Gold Kist,
as restated and amended through the date hereof, the Bylaws of Gold Kist, as
amended through the date hereof, resolutions of the Board of Directors of Gold
Kist, the Indentures under which the Certificates are to be issued, including
the forms of the Certificates, and the Certificate of an officer of Gold Kist.
Based upon the foregoing, we are of the opinion that when the
consideration for the Certificates, as determined by the Board of Directors,
shall have been received by Gold
<PAGE>
Securities and Exchange Commission
Page 2
September 22, 1995
Kist, the Certificates, upon proper execution, authentication by the Trustee and
delivery, will be legally issued, fully paid and nonassessable and will
constitute binding obligations of Gold Kist entitled to the benefits of the
Indentures under which such Certificates are issued, respectively, except as
enforceability of the certificates might be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting the rights of
creditors generally and the availability of equitable remedies, whether
considered in a proceeding in equity or at law.
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Opinion" in the Prospectus forming part of the Registration Statement.
We also consent to the use of this opinion as an exhibit to the
Applications for Registration of the Certificates which may be filed with the
Securities Commissioners of the various states of the United States of America.
Very truly yours,
ALSTON & BIRD
By: /s/ Alexander W. Patterson
-----------------------------
Alexander W. Patterson
<PAGE>
AMENDMENT NO. 1
TO THE GOLD KIST INC.
EXECUTIVE SAVINGS PLAN
THIS AMENDMENT NO. 1 is made this 28th day of October, 1994, by Gold
----
Kist Inc. (the "Company").
WITNESSETH:
WHEREAS the Company has adopted the Gold Kist Inc. Executive Savings Plan
(the "Plan") effective June 1, 1994; and
WHEREAS the Company seeks to clarify certain eligibility provisions
inadvertently omitted from Plan.
NOW, THEREFORE, the Plan is amended as set forth below.
ITEM ONE
Section 3.2 of the Plan is amended by adding the following language:
Notwithstanding any provisions in this Plan to the contrary, should any
Participant after execution and delivery of a Deferral Election (the
"Current Deferral Election") refuse or otherwise fail to cooperate fully
(as determined in the sole judgment of the Committee) in the process of
obtaining a life insurance policy or policies insuring the Participant to
be owned by the Company to fund its obligations under the Plan in whole or
in part, such Participant's participation in the Plan with respect to the
Current Deferral Election shall be rescinded and terminated, all amounts
deferred with respect to the Current Deferral Election shall be paid to
such Participant and such Participant shall be deemed ineligible for
further participation in the Plan.
<PAGE>
ITEM TWO
This amendment shall be effective June 1, 1994, as if it were originally
included in the Plan.
IN WITNESS WHEREOF, Gold Kist Inc. has caused this Amendment No. 1 to be
executed as of the day and year first above written.
GOLD KIST INC.
By: /s/ Harold O. Chitwood
------------------------------------
Chief Executive Officer and Chairman,
Management Executive Committee
[Corporate Seal]
ATTEST:
/s/ Jack L. Lawing
- --------------------------------
Secretary
<PAGE>
GOLD KIST INC.
EXECUTIVE SAVINGS PLAN
_____________________________________
Effective June 1, 1994
_____________________________________
GOLD KIST INC.
244 Perimeter Center Parkway, N.E.
Atlanta, Georgia 30346
<PAGE>
GOLD KIST INC.
EXECUTIVE SAVINGS PLAN
TABLE OF CONTENTS
Page
----
ARTICLE 1 ESTABLISHMENT AND PURPOSE...... 1
ARTICLE 2 DEFINITIONS
2.1 Adjustment Date................ 1
2.2 Affiliate...................... 1
2.3 Authorized Leave of Absence.... 1
2.4 Beneficiary.................... 1
2.5 Bonus.......................... 1
2.6 Code........................... 1
2.7 Committee...................... 2
2.8 Company........................ 2
2.9 Deferral Account............... 2
2.10 Deferral Election(s)........... 2
2.11 Early Retirement............... 2
2.12 Effective Date................. 2
2.13 Employee....................... 2
2.14 ERISA.......................... 2
2.15 Fiscal Year.................... 2
2.16 Interest....................... 2
2.17 Normal Retirement.............. 3
2.18 Participant.................... 3
2.19 Participating Company.......... 3
2.20 Plan........................... 3
2.21 Plan Administrator............. 3
2.22 Plan Year...................... 3
2.23 Retirement..................... 3
2.24 Salary......................... 3
2.25 Severance...................... 3
2.26 Surviving Spouse............... 3
2.27 Termination of Employment...... 3
2.28 Total Disability............... 4
2.29 Unforeseeable Emergency........ 4
ARTICLE 3 ELIGIBILITY AND PARTICIPATION.. 4
3.1 Eligibility.................... 4
3.2 Participation.................. 4
3.3 Deferral Elections............. 5
3.4 Payment Election............... 5
i
<PAGE>
ARTICLE 4 RETIREMENT BENEFITS................ 6
4.1 Eligibility........................ 6
4.2 Payment Method, Timing and Amount.. 6
4.3 Payment to Beneficiary............. 6
ARTICLE 5 DEATH BENEFIT...................... 7
5.1 Eligibility........................ 7
5.2 Payment Method, Timing and Amount.. 7
ARTICLE 6 SEVERANCE BENEFITS................. 8
6.1 Eligibility........................ 8
6.2 Payment Method, Timing and Amount.. 8
6.3 Payment to Beneficiary............. 8
ARTICLE 7 HARDSHIP........................... 8
7.1 Eligibility........................ 8
7.2 Payment Method, Timing and Amount.. 9
ARTICLE 8 ADJUSTMENTS........................ 9
8.1 Accounts........................... 9
8.2 Adjustments to Deferral Accounts... 9
ARTICLE 9 ADMINISTRATION..................... 10
9.1 Committee.......................... 10
9.2 Claims for Benefits................ 10
9.3 Beneficiary Designation............ 10
ARTICLE 10 AMENDMENT AND TERMINATION.......... 11
10.1 Right to Amend or Terminate Plan... 11
10.2 Notice............................. 12
ARTICLE 11 GENERAL PROVISIONS................. 12
11.1 No Right to Continued Employment... 12
11.2 Payment on Behalf of Payee......... 12
11.3 Nonalienation...................... 12
11.4 No Trust or Funding Created........ 12
11.5 Binding Effect..................... 13
11.6 Merger or Consolidation............ 13
11.7 Entire Plan........................ 13
11.8 Miscellaneous...................... 13
ii
<PAGE>
GOLD KIST INC.
--------------
EXECUTIVE SAVINGS PLAN
----------------------
ARTICLE 1 - ESTABLISHMENT AND PURPOSE
-------------------------------------
The Plan is established for the benefit of selected key employees and shall
be known as the "Gold Kist Inc. Executive Savings Plan." The purpose of the
Plan is to provide deferred compensation benefits to selected key employees upon
termination of employment, disability or death in order to recruit and retain
such employees. The Company intends that the Plan be an unfunded arrangement
for both tax and ERISA Title I purposes and that participating employees will be
unsecured general creditors of the Company as to the benefits provided under the
Plan.
ARTICLE 2 - DEFINITIONS
-----------------------
The following words and phrases as used in the Plan have the following
meanings:
2.1 ADJUSTMENT DATE: The last day of each calendar year, the date of
commencement of payment of any benefit pursuant to the Plan and any other date
specified by the Committee upon or as of which accounts are adjusted as set
forth in Article 8.
2.2 AFFILIATE: Either (a) any employer that is a corporation included
with Gold Kist Inc. in a "controlled group of corporations," as defined in Code
section 414(b), or an unincorporated business included with Gold Kist Inc. in a
group of trades or businesses under "common control," as defined by regulations
prescribed by the Secretary of the Treasury under Code section 414(c) or (b) any
other employer, whether incorporated or unincorporated, which is not described
in the foregoing clause (a) but which Gold Kist Inc. has an ownership interest
in to any extent.
2.3 AUTHORIZED LEAVE OF ABSENCE: Either (a) a leave of absence authorized
by the Company provided that the Employee returns within the period specified,
or (b) an absence required to be considered an Authorized Leave of Absence by
applicable law.
2.4 BENEFICIARY: The beneficiary or beneficiaries designated by a
Participant pursuant to Article 9 to receive the benefits, if any, payable on
behalf of the Participant under the Plan after the death of such Participant,
or, when there has been no such designation or an invalid designation, the
individual or entity, or the individuals or entities, who will receive such
amount pursuant to Section 9.3(b).
2.5 BONUS: A bonus which is awarded and payable by the Company to the
Employee for service during the Fiscal Year and which is not earned until
actually awarded.
2.6 CODE: the Internal Revenue Code of 1986, as amended from time to
time.
1
<PAGE>
2.7 COMMITTEE: The Committee provided for in Article 9 and responsible
for administering the Plan.
2.8 COMPANY: Gold Kist Inc., a Georgia corporation, or any entity which
succeeds to its rights and obligations with respect to the Plan and any other
Affiliate of Gold Kist Inc. which is a Participating Company.
2.9 DEFERRAL ACCOUNT: With respect to Deferral Elections, the separate
bookkeeping account kept to record the Participant's Salary Deferrals and Bonus
Deferrals under such Deferral Elections and Interest accrued on the account,
adjusted as of each Adjustment Date or other date as provided in Article 8.
2.10 DEFERRAL ELECTION(S): The Participant's irrevocable written election,
made in accordance with Section 3.3 and in such form as specified by the
Committee, to forego the receipt of a stipulated whole percent of Salary or
Bonus. Amounts so foregone are called either "Salary Deferral(s)" or "Bonus
Deferral(s)," as the case may be.
2.11 EARLY RETIREMENT: Termination of Employment, other than on account of
death, on or after the date the Participant attains age 55 but prior to the date
the Participant attains age 65.
2.12 EFFECTIVE DATE: The "Effective Date," the date the provisions of this
Plan become effective, is June 1, 1994.
2.13 EMPLOYEE: A person who is a common law employee of the Company or an
Affiliate.
2.14 ERISA: The Employee Retirement Income Security Act of 1974, as now in
effect or as hereafter amended. All citations to sections of ERISA are to such
sections as they may from time to time be amended or renumbered.
2.15 FISCAL YEAR: The fiscal year of the Gold Kist Inc..
2.16 INTEREST: With respect to each Adjustment Date or other applicable
date, the dollar amount of interest to be credited to the Participant's Deferral
Account as provided in Article 8. Prior to the beginning of each Plan Year, the
Committee shall announce the annual rate of interest ("Announced Interest
Rate") applicable with respect to the next Plan Year. If the Committee shall
fail to announce such annual rate of interest, the last Announced Interest Rate
shall apply. Provided, however, the minimum annual rate of interest ("Minimum
Interest Rate") with respect to each Plan Year shall be the prime lending rate
as quoted in the Wall Street Journal's Money Rate Section on December 31 (or the
last business day) preceding such Plan Year.
2
<PAGE>
2.17 NORMAL RETIREMENT: Termination of Employment, other than on account
of death, on the date the Participant attains age 65.
2.18 PARTICIPANT: As of any date, any individual who commenced
participation in the Plan as provided in Article 3 and who is either (a) an
Employee or (b) a former Employee of the Company who is eligible for a benefit
under the Plan.
2.19 PARTICIPATING COMPANY: Gold Kist Inc. or an Affiliate which by action
of its board of directors or equivalent governing body and with the written
consent of the Board of Directors ("Board") of Gold Kist Inc., has adopted the
Plan; provided that the Board may, subject to the foregoing proviso, waive the
requirement that such board of directors or equivalent governing body effect
such adoption. The term "Participating Company" shall be construed as if the
Plan were solely the Plan of such Participating Company, unless the context
plainly requires otherwise. Notwithstanding the foregoing, (i) if a Participant
is employed by an Affiliate as defined in clause (a) of Section 2.2 of this
Plan, then the obligation to pay benefits hereunder that are attributable to
Salary and Bonus Deferrals made while the Participant is employed by such
Affiliate shall be the obligation of Gold Kist Inc. as well as such Affiliate;
and (ii) if a Participant is employed by an Affiliate as defined in clause (b)
of Section 2.2 of this Plan, then the obligation to pay benefits hereunder that
are attributable to Salary and Bonus Deferrals made while the Participant is
employed by such Affiliate shall be the obligation solely of such Affiliate, and
not a joint obligation of Gold Kist Inc. or any other Affiliate.
2.20 PLAN: The Gold Kist Inc. Executive Savings Plan as contained herein
and as it may be amended from time to time hereafter.
2.21 PLAN ADMINISTRATOR: The Committee.
2.22 PLAN YEAR: The calendar year.
2.23 RETIREMENT: A Participant's Normal Retirement or Early Retirement.
2.24 SALARY: With respect to a Participant, cash base salary payable by
the Company to the Participant for services rendered by the Participant to the
Company.
2.25 SEVERANCE: Termination of Employment both (i) other than on account
of Retirement or death and (ii) prior to attaining age 65.
2.26 SURVIVING SPOUSE: The survivor of a deceased Participant to whom such
deceased Participant was legally married immediately before the Participant's
death.
2.27 TERMINATION OF EMPLOYMENT: A termination of employment with the
Company as determined by the Committee in accordance with reasonable standards
and policies adopted by the Committee; provided, however, that a Termination of
Employment shall occur on the earlier of (a) or (b) where:
3
<PAGE>
(a) is the date as of which an Employee quits, is discharged,
terminates employment in connection with a disability (excluding Total
Disability), Retires or dies, and
(b) is the first day of absence of an Employee who fails to return to
employment at the expiration of an Authorized Leave of Absence or the cessation
of Total Disability.
A Participant shall not be considered as terminating his employment during his
Total Disability. A Participant shall be deemed to have terminated his
employment upon cessation of his Total Disability if he does not resume active
employment with the Company.
2.28 TOTAL DISABILITY: A Participant shall be under a "Total Disability"
if, in the determination of the Committee in the exercise of its sole and
absolute discretion based upon competent medical evidence, the Participant's
physical or mental condition prevents the Participant from performing the
material duties of the Participant's regular occupation.
2.29 UNFORESEEABLE EMERGENCY: A severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. Examples of what are not
considered to be Unforeseeable Emergencies include the need to send a
Participant's child to college or the desire to purchase a home. The
determination of whether a Participant has an Unforeseeable Emergency shall be
determined by the Committee in the exercise of its sole and absolute discretion.
ARTICLE 3 - ELIGIBILITY AND PARTICIPATION
-----------------------------------------
3.1 ELIGIBILITY. An Employee shall be eligible to become a Participant in
the Plan if the Employee:
(A) is a member of the Company's "select group of management or
highly compensated employees," as defined in Sections 201(2), 301(a)(3) and
401(a) of ERISA; and
(B) is designated by the Committee as eligible.
3.2 PARTICIPATION. An Employee who is eligible to become a
Participant shall become a Participant upon execution and delivery of a Deferral
Election. A Participant shall continue his participation until the date the
Participant is no longer entitled to a benefit under this Plan.
4
<PAGE>
3.3 DEFERRAL ELECTIONS.
(A) PROCEDURES.
(1) An eligible Employee shall have until December 31st of each year
to execute and deliver to the Committee a Deferral Election providing for the
deferral of a stipulated whole percent of Salary and/or Bonus to be earned
during the following calendar year and which, but for such Deferral Election,
would be paid to the Employee.
(2) In the year in which this Plan is first implemented, an eligible
Employee shall have 30 days following the Effective Date to execute and deliver
to the Committee a Deferral Election providing for the deferral of a stipulated
whole percent of Salary and/or Bonus to be earned after delivery of such
Deferral Election and during the calendar year of such implementation and which,
but for such Deferral Election, would be paid to the Employee.
(3) In the first year in which an Employee first becomes eligible to
participate in the Plan, such eligible Employee shall have 30 days following the
date the Employee becomes eligible to execute and deliver to the Committee a
Deferral Election providing for the deferral of a stipulated whole percent of
Salary and/or Bonus to be earned after delivery of such Deferral Election and
during the calendar year such Employee first becomes eligible to participate in
the Plan and which, but for such Deferral Election, would be paid to the
Employee.
(B) CONDITIONS. No Deferral Election shall be valid until accepted by
the Committee in the exercise of its sole and absolute discretion. Maximum
Salary Deferrals and Bonus Deferrals for a Plan Year shall be 100% of Salary
and/or Bonus less any amounts which must be withheld from wages for income or
employment tax purposes. Minimum annual Salary Deferrals shall be $1,200.
3.4 PAYMENT ELECTION.
(A) A Participant may elect to have the Retirement Benefit under Article 4
and the Death Benefit under Article 5 paid in either (i) a lump sum or (ii) in
ten (10) equal annual installments. A separate Payment Election shall be made
for the Retirement Benefit and the Death Benefit. If no such election is made,
such benefits shall be paid in ten (10) equal annual installments.
(B) A Participant shall make such election on such form as specified by the
Committee and shall have the right to change such election from time to time,
provided, however, only such election made more than two years prior to the
commencement of payment of benefits shall be effective. Provided, further, no
payment election, or change thereof, shall be effective unless received by the
Committee prior to the Participant's death or Retirement.
5
<PAGE>
ARTICLE 4 - RETIREMENT BENEFITS
--------------------------------
4.1 ELIGIBILITY. Upon the earliest to occur of (i) a Participant's
Retirement or (ii) a Participant's attainment of age 65, the Company shall pay
the Participant the "Retirement Benefit" described in this Article 4.
4.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Retirement benefit shall be either a lump sum or ten (10) equal
annual installments, as based on the Participant's Payment Election. Payment
shall be made, in the case of a lump sum, or shall commence, in the case of
annual installments, on the first day of the second month following the month of
the Participant's Retirement or the Participant's attainment of age 65,
whichever shall apply. Such Retirement benefit shall be in lieu of all other
benefits under the Plan.
(B) The lump sum shall equal the Participant's Deferral Account adjusted as
provided in Subsection 8.2(a).
(C) The ten (10) equal annual installments shall be based on the
Participant's Deferral Account adjusted as provided in Subsection 8.2(a) and the
interest rate applicable to the Participant's Deferral Account in accordance
with Section 2.16 during the Plan Year in which the Participant's Retirement
occurs.
Example - At the commencement of payment of his Retirement Benefit,
-------
Participant's Deferral Account balance (including deferrals and interest) is
$100,000 and the interest rate applicable at such time is 10%. The
Participant's equal annual installments are determined by calculating the
level annuity payments in advance, payable for 10 periods, with interest at
10% and with a principal balance of $100,000. The resulting equal annual
installments are in the amount of $14,795.
4.3 PAYMENT TO BENEFICIARY. If a Participant entitled to a
Retirement Benefit under this Article 4 dies before the payment of the full
benefit is made, then the Retirement Benefit shall be paid to the Participant's
Beneficiary. In the event the Participant's Retirement Benefit is being paid in
ten (10) equal annual installments, the Participant's Beneficiary may make a
written request to the Committee to receive, in lieu of all other payments, a
lump sum payment equal to the present value of the remaining installments
calculated with a discount rate equal to the Announced Interest Rate applicable
to the Participant's Deferral Account during the Plan Year in which the
Participant's Retirement occurred. The Committee's decision on such request
shall be based on the sole and absolute discretion of the Committee.
6
<PAGE>
Example - Participant retires and elects to receive his Retirement Benefit in
-------
10 equal annual installments of $100,000 per installment when the applicable
interest rate is 10%. After receiving 6 installments, Participant dies and
his Beneficiary requests a lump sum payment of the remaining 4 installments.
Assuming the Committee grants the Beneficiary's request for a lump sum payment
which is made on the next installment due date, the lump sum will be
$348,685 (the present value of 4 payments of $100,000 each, discounted at
10%).
ARTICLE 5 - DEATH BENEFIT
-------------------------
5.1 ELIGIBILITY. Upon a Participant's death prior to his attainment of
age 65, Retirement or Severance, the Company shall pay the Participant's
Beneficiary the "Death Benefit" described in this Article 5.
5.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Death Benefit shall be either a lump sum or ten (10) equal annual
installments, as based on the Participant's Payment Election. Payment shall be
made, in the case of a lump sum, or shall commence, in the case of annual
installments, on the first day of the second month following the month of the
Participant's Death. Such Death Benefit shall be in lieu of all other benefits
under the Plan.
(B) The lump sum shall equal the Participant's "Enhanced Deferral Account"
as described in Subsection (d) below.
(C) The ten (10) equal annual installments shall be based on the
Participant's "Enhanced Deferral Account" as described in Subsection (d) below,
and the interest rate applicable to the Participant's Deferral Account in
accordance with Section 2.16 during the Plan Year in which the Participant's
death occurs.
(D) A Participant's Enhanced Deferral Account shall be equal to (i) the
Participant's Deferral Account adjusted as provided in Subsection 8.2(a)
multiplied by (ii) the following enhancement factor:
Participant's Age at Death Enhancement Factor
-------------------------- ------------------
Less than age 50 2.00
Age 50 or greater but less than age 55 1.75
Age 55 or greater but less than age 60 1.50
Age 60 or greater but less than age 65 1.25
Example - At the commencement of payment of the Death Benefit to the
-------
Participant's Beneficiary (based on the Participant's prior effective election
to have such benefit paid in a lump sum), the Participant's Deferral Account
7
<PAGE>
balance (including deferrals and interest) is $100,000 and the Participant's
age at the time of death is age 49. The Death Benefit payable to the
Participant's Beneficiary is $200,000 (actual Deferral Account balance of
$100,000 times the Enhancement Factor of 2.0).
(E) In the event the Death Benefit is payable in ten (10) equal annual
installments, the Participant's Beneficiary may make a written request to the
Committee, prior to commencement of payment of the first installment, to
receive, in lieu of all other payments, a lump sum payment equal to the
Participant's "Enhanced Deferral Account" as described in Subsection (d) above.
The decision on such request shall be based on the sole and absolute discretion
of the Committee.
ARTICLE 6 - SEVERANCE BENEFITS
------------------------------
6.1 ELIGIBILITY. Upon a Participant's Severance, the Company shall pay
the Participant the "Severance Benefit" described in this Article 6.
6.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Severance Benefit shall be a lump sum. Payment shall be made on
the first day of the second month following the month of the Participant's
Severance. Such Severance Benefit shall be in lieu of all other benefits under
the Plan.
(B) Except as provided in Subsection (c) below, the lump sum shall be equal
to the Participant's Deferral Account adjusted as provided in Subsection 8.2(a).
(C) If the Participant's Severance is on account of his voluntary
Termination of Employment, the lump sum shall be equal to the Participant's
Deferral Account adjusted as provided in Subsection 8.2(b).
6.3 PAYMENT TO BENEFICIARY. If a Participant entitled to a Severance
Benefit under this Article 6 dies after his Severance but before the payment of
the benefit is made, then the benefit shall be paid to the Participant's
Beneficiary.
ARTICLE 7 - HARDSHIP
--------------------
7.1 ELIGIBILITY. A Participant who has an Unforeseeable Emergency may be
entitled to receive the "Hardship Benefit" described in this Article 7 upon (i)
application to the Committee, (ii) submission of such evidence of such
Unforeseeable Emergency as required by the Committee and (iii) the Committee's
determination that the Participant has an Unforeseeable Emergency. In making
such determination the Committee is instructed not to grant payment to the
extent that the Participant's hardship is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise, (ii) by liquidation of
the Participant's assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship or (iii) cessation of deferrals under
this Plan.
8
<PAGE>
7.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Hardship Benefit shall be a lump sum. Payment shall be made on
such date as determined by the Committee.
(B) The lump sum shall be equal to the lesser of (i) the Participant's
Deferral Account adjusted as provided in Subsection 8.2(b) or (ii) the amount
determined by the Committee, in the exercise of its sole and absolute judgment,
to satisfy the Participant's Unforeseeable Emergency.
ARTICLE 8 - ADJUSTMENTS
-----------------------
8.1 ACCOUNTS. The Committee shall establish and cause to be maintained
with respect to each Participant, a Deferral Account and shall adjust each
account as provided in this Article 8.
8.2 ADJUSTMENTS TO DEFERRAL ACCOUNTS.
(A) Except as provided in Subsection (b) below, as of each Adjustment Date,
a Participant's Deferral Account shall be adjusted as follows:
(1) Salary Deferrals. There shall be credited the Participant's
Salary Deferrals, if any, made since the last Adjustment Date.
(2) Bonus Deferrals. There shall be credited the Participant's Bonus
Deferrals, if any, made since the last Adjustment Date.
(3) Hardship Benefit. There shall be debited any Hardship Benefit
paid to the Participant as provided in Article 7.
(4) Interest. There shall be credited Interest for the period since
the last Adjustment Date. Interest shall calculated on the balance in the
Deferral Account after adjustment pursuant to paragraphs (1), (2) and (3) above
at such rate to yield an effective annual rate equal to the Minimum Interest
Rate or the Announced Interest Rate, whichever is greater.
(B) With respect to a Severance Benefit payable pursuant to Subsection
6.2(c) or a Hardship Benefit payable pursuant to Article 7, the Participant's
Deferral Account shall be determined in the manner specified in Subsection (a)
above but by modifying the crediting of Interest pursuant to paragraph (3) of
Subsection (a) above by substituting for the "Announced Interest Rate" as it
appears therein the words "Announced Interest Rate minus two percent (2%)."
9
<PAGE>
ARTICLE 9 - ADMINISTRATION
--------------------------
9.1 COMMITTEE. The Committee shall be the Gold Kist Pension Committee.
The Committee shall have general responsibility for administration of the Plan
(including but not limited to complying with reporting and disclosure
requirements, and establishing and maintaining Plan records). In the exercise
of its sole and absolute discretion, the Committee shall interpret the Plan's
provisions and determine the eligibility of individuals for benefits.
9.2 CLAIMS FOR BENEFITS. For claims procedure purposes, the "Claims
Manager" shall be the Vice President, Human Resources of Gold Kist Inc..
(A) If for any reason a claim for benefits under this Plan is denied by the
Company, the Claims Manager shall deliver to the claimant a written explanation
setting forth the specific reasons for the denial, pertinent references to the
section of the Plan on which the denial is based, such other data as may be
pertinent and information on the procedures to be followed by the claimant in
obtaining a review of the claim, all written in a manner calculated to be
understood by the claimant. For this purpose:
(1) The claimant's claim shall be deemed filed when presented orally
or in writing to the Claims Manager.
(2) The Claims Manager's explanation shall be in writing delivered to
the claimant within ninety (90) days of the date the claim is filed.
(B) The claimant shall have sixty (60) days following receipt of the denial
of the claim to file with the Claims Manager a written request for review of the
denial. For such review, the claimant or the claimant's representative may
submit pertinent documents and written issues and comments.
(C) The Claims Manager shall decide the issue on review and furnish the
claimant with a copy within sixty (60) days of receipt of the claimant's request
for review of the claim. The decision on review shall be in writing and shall
include specific reasons for the decision written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent
provisions of the Plan on which the decision is based. If a copy of the
decision is not so furnished to the claimant within such sixty (60) days, the
claim shall be deemed denied on review. The Claims Manager's decision shall be
final and binding upon all parties for purposes of administrative review under
this Plan.
9.3 BENEFICIARY DESIGNATION.
10
<PAGE>
(A) Every Participant shall file with the Committee a written designation,
in such form as specified by the Committee, of one or more persons as the
Beneficiary who shall be entitled to receive the benefits, if any, payable under
the Plan after the Participant's death. A Participant may from time to time
revoke or change such Beneficiary designation without the consent of any prior
Beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of any date prior to such receipt. All decisions of
the Committee concerning the effectiveness of any Beneficiary designation, and
the identity of any Beneficiary, shall be final. If a Beneficiary shall die
after the death of the Participant and prior to receiving the payment(s) that
would have been made to such Beneficiary had such Beneficiary's death not
occurred, and no contingent Beneficiary has been designated, then for the
purposes of the Plan the payment(s) that would have been received by such
Beneficiary shall be made to the Beneficiary's estate.
(B) If no Beneficiary designation is in effect at the time of a
Participant's death, the benefits, if any, payable under the Plan after the
Participant's death shall be made to the Participant's Surviving Spouse, if any,
or if the Participant has no Surviving Spouse, to the Participant's estate. If
the Committee is in doubt as to the right of any person to receive such
benefits, the Committee may direct the Company to withhold payment, without
liability for any interest thereon, until the rights thereto are determined, or
the Committee may direct the Company to pay any such amount into any court of
appropriate jurisdiction and such payment shall be a complete discharge of the
liability of the Company therefor.
ARTICLE 10 - AMENDMENT AND TERMINATION
--------------------------------------
10.1 RIGHT TO AMEND OR TERMINATE PLAN.
(A) Subject to Subsection (c), the Board of Directors of Gold Kist Inc.
reserves the right at any time to amend or terminate the Plan, in whole or in
part, and for any reason and without the consent of any Participant or
Beneficiary.
(B) The Committee may adopt any ministerial and non substantive amendment
which may be necessary or appropriate to facilitate the administration,
management and interpretation of the Plan, provided the amendment does not
materially affect the currently estimated cost to the Company of maintaining the
Plan.
(C) In no event shall an amendment or termination reduce the Company's
obligations under Deferral Elections made before such amendment or termination;
provided, however, that this restriction shall not apply to any benefit that has
not actually accrued of the date of such amendment or termination (such as the
right to an enhanced death benefit, if the Participant is still living on the
date of such amendment or termination, or the right to make future deferrals
under the Plan), nor shall this restriction prevent the Company from discharging
its obligations under this Plan by providing for an immediate payout of the
benefits actually accrued under this Plan as of the date of such amendment or
termination.
11
<PAGE>
10.2 NOTICE. Notice of any termination or material amendment of the Plan
shall be given by the Board of Directors of Gold Kist Inc. or by the Committee,
whichever adopts the amendment, to each Participant.
ARTICLE 11 - GENERAL PROVISIONS
-------------------------------
11.1 NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in the Plan shall
give any Participant the right to be retained in the employment of the Company
or affect the right of the Company to dismiss any Participant. The adoption and
maintenance of the Plan shall not constitute a contract between any Company and
Participant or consideration for, or an inducement to or condition of, the
employment of any Participant.
11.2 PAYMENT ON BEHALF OF PAYEE. If the Committee shall find that any
person to whom any amount is payable under the Plan is unable to care for such
person's affairs because of illness or accident, or is a minor, or has died,
then any payment due such person or such person's estate (unless a prior claim
therefor has been made by a duly appointed legal representative) may, if the
Committee so elects, be paid to such person's spouse, a child, a relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge
of the liability of the Plan and the Company therefor.
11.3 NONALIENATION. No interest, expectancy, benefit, payment, claim or
right of any Participant or Beneficiary under the Plan shall be (a) subject in
any manner to any claims of any creditor of the Participant or Beneficiary, (b)
subject to the debts, contracts, liabilities or torts of the Participant or
Beneficiary or (c) subject to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind.
If any person shall attempt to take any action contrary to this Section, such
action shall be null and void and of no effect, and the Committee and the
Company shall disregard such action and shall not in any manner be bound thereby
and shall suffer no liability on account of its disregard thereof. If the
Participant, Beneficiary, or any other beneficiary hereunder shall become
bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber, or
charge any right hereunder, then such right or benefit shall, in the discretion
of the Committee, cease and terminate, and in such event the Committee may hold
or apply the same or any part thereof for the benefit of the Participant or
Beneficiary or the spouse, children, or other dependents of the Participant or
Beneficiary, or any of them, in such manner and in such amounts and proportions
as the Committee may deem proper.
11.4 NO TRUST OR FUNDING CREATED. The obligations of the Company to make
payments hereunder shall constitute a liability of the Company to a Participant
or Beneficiary, as the case may be. Such payments shall be made from the
12
<PAGE>
general funds of the Company, and the Company shall not be required to establish
or maintain any special or separate fund, or purchase or acquire life insurance
on a Participant's life, or otherwise to segregate assets to assure that such
payment shall be made, and neither a Participant nor a Beneficiary shall have
any interest in any particular asset of the Company by reason of its obligations
hereunder. Nothing contained in the Plan shall create or be construed as
creating a trust of any kind or any other fiduciary relationship between the
Company and a Participant or any other person. The rights and claims of a
Participant or a Beneficiary to a benefit provided hereunder shall
have no greater or higher status than the rights and claims of any other
general, unsecured creditor of the Company.
11.5 BINDING EFFECT. Obligations incurred by the Company pursuant to this
Plan shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and the Participant and the Participant's Beneficiary.
11.6 MERGER OR CONSOLIDATION. In the event of a merger or a consolidation
by the Company with another corporation, or the acquisition of substantially all
of the assets or outstanding stock of the Company by another corporation, then
and in such event the obligations and responsibilities of the Company under this
Plan shall be assumed by any such successor or acquiring corporation, and all of
the rights, privileges and benefits of the Participants and Beneficiaries
hereunder shall continue.
11.7 ENTIRE PLAN. This document, any written amendments hereto and the
Deferral Elections contain all the terms and provisions of the Plan and shall
constitute the entire Plan, any other alleged terms or provisions being of no
effect.
11.8 MISCELLANEOUS. Where appropriate in this Plan, words used in the
singular shall include the plural, and words used in the masculine shall include
the feminine or neuter. This Plan and all rights hereunder are governed by
ERISA and, to the extent that state law is applicable, the laws of the State of
Georgia shall govern this Plan.
IN WITNESS WHEREOF, Gold Kist Inc. has caused this Plan to be executed this
22nd day of July, 1994.
- ---- ----
GOLD KIST INC.
[Corporate Seal] By: /s/ Harold O. Chitwood
-------------------------------------
Chief Executive Officer and Chairman,
Management Executive Committee
ATTEST:
/s/ Jack L. Lawing
- ------------------
Secretary
13
<PAGE>
SALARY DEFERRAL ELECTION UNDER THE
GOLD KIST INC. EXECUTIVE SAVINGS PLAN
Gold Kist Inc. maintains the Executive Savings Plan to help eligible
employees accumulate benefits for retirement. As an eligible employee, You may
elect to make deferrals and receive benefits as set forth in the Plan.
You and the Participating Company agree as follows:
1. YOU AGREE TO DEFER SALARY. You elect to defer the receipt of the
-------------------------
following annual percent of SALARY AND/OR BONUS which You earn during the
________ calendar year(s) and which, but for this Deferral Election, would be
paid to You:
______________________
Salary %
______________________
Bonus %
______________________
2. THE COMPANY PROMISES TO PAY BENEFITS. The Participating Company
------------------------------------
promises to pay benefits as provided in the Plan, subject to all terms and
conditions provided in the Plan.
3. INCORPORATION OF PLAN. The Plan and all its provisions are
---------------------
incorporated herein by reference and shall govern the rights and obligations
hereunder, including the meanings of any capitalized terms which are defined in
the Plan.
4. ENTIRE AGREEMENT. This Deferral Election and the Plan constitute the
----------------
entire agreement between You and the Participating Company with respect to the
deferrals made hereunder and the benefits based thereon.
-----------------------
Your Signature
-----------------------
Your Printed Name
Date:
-----------------
Received and approved by the Committee:
By:
---------------------
Date:
--------------------
<PAGE>
BENEFICIARY DESIGNATION UNDER THE
GOLD KIST INC. EXECUTIVE SAVINGS PLAN
You and the Participating Company have entered into one or more Deferral
Elections under the Executive Savings Plan.
As a Participant in the Plan, You hereby name the following person or
persons, entity or entities (herein called "Designated Beneficiary(ies)") to
receive such amounts, if any, that are payable under the Plan after your death
(herein called "Survivor Benefits"):
PRIMARY BENEFICIARY
Social Security
Name and Relationship Address Number
- -------------------------------------------------------------------------------
1.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If your Survivor Benefits, if any, are to be paid to more than one
Designated Beneficiary, such Survivor Benefits shall be divided equally between
or among such Designated Beneficiaries.
If any Primary Beneficiary(ies) named above is (are) not in existence at
your death, then You name the following Contingent Beneficiary(ies) to receive
the benefit that such Primary Beneficiary(ies) would have received:
CONTINGENT BENEFICIARY
Social Security
Name and Relationship Address Number
Contingent Beneficiary to Primary Beneficiary No. _____:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Contingent Beneficiary to Primary Beneficiary No. _____:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Contingent Beneficiary to Primary Beneficiary No. _____:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Contingent Beneficiary to Primary Beneficiary No. _____:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If a Primary Beneficiary dies before You do and there is no Contingent
Beneficiary named to take such Primary Beneficiary's share, then the Survivor
Benefits will be paid to your Surviving Spouse, if any, and if not to your
estate.
If a Designated Beneficiary dies after You do but before all Survivor
Benefit payments have been made to such Designated Beneficiary, then the
remaining payments will be made to the Designated Beneficiary's estate.
This Beneficiary Designation Form shall remain in effect until revoked by
You in writing or until superseded by your execution and delivery of a
substitute Beneficiary Designation Form. No such revocation or substitute
Beneficiary Designation Form will be effective until it is actually received by
the Committee.
Survivor Benefit payments will have federal and state tax consequences and
such consequences may depend on the identity of the beneficiary of such payments
(for example, whether the beneficiary is your spouse); and You acknowledge that
You have been advised to consult an independent, professional tax advisor before
completing this Beneficiary Designation Form.
-----------------------
Your Signature
-----------------------
Your Printed Name
Date:
-----------------
Received by the Committee:
By:
---------------------
Date:
--------------------
<PAGE>
PAYMENT ELECTION UNDER THE
GOLD KIST INC. EXECUTIVE SAVINGS PLAN
You and the Participating Company have entered into one or more Deferral
Elections under the Executive Savings Plan.
PAYMENT ELECTION - RETIREMENT BENEFIT
-------------------------------------
As a Participant in the Plan, I hereby elect pursuant to Section 3.4 of the
Plan to have any Retirement Benefit under Article 4 paid in the following
manner:
[ ] Lump sum
[ ] Equal annual installments for 10 years
[ ] I do not wish to make an election at this time. I understand that
if I do not make a valid election pursuant to the terms of the
Plan, benefits will be paid in equal annual installments for 10
years.
PAYMENT ELECTION - DEATH BENEFIT
--------------------------------
As a Participant in the Plan, I hereby elect pursuant to Section 3.4 of the
Plan to have any Death Benefit under Article 5 paid in the following manner:
[ ] Lump sum
[ ] Equal annual installments for 10 years
[ ] I do not wish to make an election at this time. I understand that
if I do not make a valid election pursuant to the terms of the
Plan, benefits will be paid in equal annual installments for 10
years.
-----------------------
Your Signature
-----------------------
Your Printed Name
Date:
-----------------
Received by the Committee:
By:
---------------------
Date:
--------------------
<PAGE>
GOLD KIST INC.
DIRECTOR SAVINGS PLAN
_____________________________________
Effective June 1, 1994
_____________________________________
GOLD KIST INC.
244 Perimeter Center Parkway, N.E.
Atlanta, Georgia 30346
<PAGE>
GOLD KIST INC.
DIRECTOR SAVINGS PLAN
TABLE OF CONTENTS
Page
----
ARTICLE 1 ESTABLISHMENT AND PURPOSE................. 1
ARTICLE 2 DEFINITIONS
2.1 Adjustment Date...................... 1
2.2 Beneficiary.......................... 1
2.3 Code................................. 1
2.4 Committee............................ 1
2.5 Company.............................. 1
2.6 Deferral Account..................... 1
2.7 Deferral Election(s)................. 1
2.8 Director............................. 2
2.9 Director Fees........................ 2
2.10 Effective Date....................... 2
2.11 Fiscal Year.......................... 2
2.12 Interest............................. 2
2.13 Participant.......................... 2
2.14 Plan................................. 2
2.15 Plan Year............................ 2
2.16 Surviving Spouse..................... 2
2.17 Termination of Directorship.......... 2
2.18 Unforeseeable Emergency.............. 2
ARTICLE 3 ELIGIBILITY AND PARTICIPATION.............. 3
3.1 Eligibility.......................... 3
3.2 Participation........................ 3
3.3 Deferral Elections................... 3
3.4 Payment Election..................... 3
ARTICLE 4 AGE 65 BENEFIT............................. 4
4.1 Eligibility.......................... 4
4.2 Payment Method, Timing and Amount.... 4
4.3 Payment to Beneficiary............... 4
ARTICLE 5 DEATH BENEFIT.............................. 5
5.1 Eligibility.......................... 5
5.2 Payment Method, Timing and Amount.... 5
ARTICLE 6 TERMINATION OF DIRECTORSHIP BENEFIT........ 6
6.1 Eligibility.......................... 6
6.2 Payment Method, Timing and Amount.... 6
6.3 Payment to Beneficiary............... 6
i
<PAGE>
ARTICLE 7 HARDSHIP................................... 6
7.1 Eligibility.......................... 6
7.2 Payment Method, Timing and Amount.... 6
ARTICLE 8 ADJUSTMENTS................................ 7
8.1 Accounts............................. 7
8.2 Adjustments to Deferral Accounts..... 7
ARTICLE 9 ADMINISTRATION.............................. 7
9.1 Committee............................ 7
9.2 Beneficiary Designation.............. 7
ARTICLE 10 AMENDMENT AND TERMINATION................... 8
10.1 Right to Amend or Terminate Plan..... 8
10.2 Notice............................... 8
ARTICLE 11 GENERAL PROVISIONS.......................... 9
11.1 No Right to Continued Employment..... 9
11.2 Payment on Behalf of Payee........... 9
11.3 Nonalienation........................ 9
11.4 No Trust or Funding Created.......... 9
11.5 Binding Effect....................... 10
11.6 Merger or Consolidation.............. 10
11.7 Entire Plan.......................... 10
11.8 Miscellaneous........................ 10
ii
<PAGE>
GOLD KIST INC.
--------------
DIRECTOR SAVINGS PLAN
---------------------
ARTICLE 1 - ESTABLISHMENT AND PURPOSE
-------------------------------------
The Plan is established for the benefit of eligible directors and shall be
known as the "Gold Kist Inc. Director Savings Plan." The purpose of the Plan is
to provide deferred compensation benefits to eligible directors. The Company
intends that the Plan be an unfunded arrangement for tax purposes and that
participating directors will be unsecured general creditors of the Company as to
the benefits provided under the Plan.
ARTICLE 2 - DEFINITIONS
-----------------------
The following words and phrases as used in the Plan have the following
meanings:
2.1 ADJUSTMENT DATE: The last day of each calendar year, the date of
commencement of payment of any benefit pursuant to the Plan and any other date
specified by the Committee upon or as of which accounts are adjusted as set
forth in Article 8.
2.2 BENEFICIARY: The beneficiary or beneficiaries designated by a
Participant pursuant to Article 9 to receive the benefits, if any, payable on
behalf of the Participant under the Plan after the death of such Participant,
or, when there has been no such designation or an invalid designation, the
individual or entity, or the individuals or entities, who will receive such
amount pursuant to Section 9.3(b).
2.3 CODE: the Internal Revenue Code of 1986, as amended from time to
time.
2.4 COMMITTEE: The Committee provided for in Article 9 and responsible
for administering the Plan.
2.5 COMPANY: Gold Kist Inc., a Georgia corporation, or any entity which
succeeds to its rights and obligations with respect to the Plan.
2.6 DEFERRAL ACCOUNT: With respect to Deferral Elections, the separate
bookkeeping account kept to record the Participant's Director Fee Deferrals
under such Deferral Elections and Interest accrued on the account, adjusted as
of each Adjustment Date or other date as provided in Article 8.
2.7 DEFERRAL ELECTION(S): The Participant's irrevocable written election,
made in accordance with Section 3.3 and in such form as specified by the
Committee, to forego the receipt of a stipulated whole percent of Director Fees.
2.8 DIRECTOR: A person who is serving as either a Director or Director
Emeritus in accordance with the By-Laws of Gold Kist Inc.
1
<PAGE>
2.9 DIRECTOR FEES: The annual retainer and meeting fees for services as a
Director of Gold Kist Inc.
2.10 EFFECTIVE DATE: The "Effective Date," the date the provisions of this
Plan become effective, is June 1, 1994.
2.11 FISCAL YEAR: The fiscal year of the Gold Kist Inc..
2.12 INTEREST: With respect to each Adjustment Date or other applicable
date, the dollar amount of interest to be credited to the Participant's Deferral
Account as provided in Article 8. Prior to the beginning of each Plan Year, the
Committee shall announce the annual rate of interest ("Announced Interest
Rate") applicable with respect to the next Plan Year. If the Committee shall
fail to announce such annual rate of interest, the last Announced Interest Rate
shall apply. Provided, however, the minimum annual rate of interest ("Minimum
Interest Rate") with respect to each Plan Year shall be the prime lending rate
as quoted in the Wall Street Journal's Money Rate Section on December 31 (or the
last business day) preceding such Plan Year.
2.13 PARTICIPANT: As of any date, any individual who commenced
participation in the Plan as provided in Article 3 and who is either (a) a
Director or (b) a former Director of the Company who is eligible for a benefit
under the Plan.
2.14 PLAN: The Gold Kist Inc. Director Savings Plan as contained herein
and as it may be amended from time to time hereafter.
2.15 PLAN YEAR: The calendar year.
2.16 SURVIVING SPOUSE: The survivor of a deceased Participant to whom such
deceased Participant was legally married immediately before the Participant's
death.
2.17 TERMINATION OF DIRECTORSHIP: The date on which a Participant, other
than on account of death, ceases to be a Director without achieving Director
Emeritus status and which occurs prior to such Director attaining age 65.
2.18 UNFORESEEABLE EMERGENCY: A severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. Examples of what are not
considered to be Unforeseeable Emergencies include the need to send a
Participant's child to college or the desire to purchase a home. The
determination of whether a Participant has an Unforeseeable Emergency shall be
determined by the Committee in the exercise of its sole and absolute discretion.
2
<PAGE>
ARTICLE 3 - ELIGIBILITY AND PARTICIPATION
-----------------------------------------
3.1 ELIGIBILITY. Any Director or Director Emeritus under age sixty-five
(65) shall be eligible to become a Participant in the Plan.
3.2 PARTICIPATION. A Director shall become a Participant upon execution
and delivery of a Deferral Election. A Participant shall continue his
participation until the date the Participant is no longer entitled to a benefit
under this Plan.
3.3 DEFERRAL ELECTIONS.
(A) PROCEDURES.
(1) A Director shall have until December 31st of each year to execute
and deliver to the Committee a Deferral Election providing for the deferral of a
stipulated whole percent of Director Fees to be earned during the following
calendar year and which, but for such Deferral Election, would be paid to the
Director.
(2) In the year in which this Plan is first implemented, a Director
shall have 30 days following the Effective Date to execute and deliver to the
Committee a Deferral Election providing for the deferral of a stipulated whole
percent of Director Fees to be earned after delivery of such Deferral Election
and during the calendar year of such implementation and which, but for such
Deferral Election, would be paid to the Director.
(3) In the first year in which a new Director first becomes eligible
to participate in the Plan, such Director shall have 30 days following the date
the Director becomes eligible to execute and deliver to the Committee a Deferral
Election providing for the deferral of a stipulated whole percent of Director
Fees to be earned after delivery of such Deferral Election and during the
calendar year such Director first becomes eligible to participate in the Plan
and which, but for such Deferral Election, would be paid to the Director.
(B) CONDITIONS. No Deferral Election shall be valid until accepted by the
Committee in the exercise of its sole and absolute discretion. Maximum Director
Fee Deferrals for a Plan Year shall be 100% of Director Fees.
3.4 PAYMENT ELECTION.
(A) A Participant may elect to have the Age 65 Benefit under Article 4 and
the Death Benefit under Article 5 paid in either (i) a lump sum or (ii) in ten
(10) equal annual installments. A separate Payment Election shall be made for
the Age 65 Benefit and the Death Benefit. If no such election is made, such
benefits shall be paid in ten (10) equal annual installments.
(B) A Participant shall make such election on such form as specified by the
Committee and shall have the right to change such election from time to time,
provided, however, only such election made more than two years prior to the
commencement of payment of benefits shall be effective.
3
<PAGE>
ARTICLE 4 - AGE 65 BENEFIT
---------------------------
4.1 ELIGIBILITY. Upon a Participant's attainment of age sixty-five (65),
the Company shall pay the Participant the "Age 65 Benefit" described in this
Article 4.
4.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Age 65 Benefit shall be either a lump sum or ten (10) equal annual
installments, as based on the Participant's Payment Election. Payment shall be
made, in the case of a lump sum, or shall commence, in the case of annual
installments, on the first day of the second month following the month of the
Participant's attainment of age 65. Such Age 65 Benefit shall be in lieu of all
other benefits under the Plan.
(B) The lump sum shall equal the Participant's Deferral Account adjusted as
provided in Subsection 8.2(a).
(C) The ten (10) equal annual installments shall be based on the
Participant's Deferral Account adjusted as provided in Subsection 8.2(a) and the
interest rate applicable to the Participant's Deferral Account in accordance
with Section 2.16 during the Plan Year in which the Participant's Retirement
occurs.
Example - At the commencement of payment of his Age 65 Benefit, Participant's
-------
Deferral Account balance (including deferrals and interest) is $100,000 and
the interest rate applicable at such time is 10%. The Participant's equal
annual installments are determined by calculating the level annuity payments
in advance, payable for 10 periods, with interest at 10% and with a principal
balance of $100,000. The resulting equal annual installments are in the
amount of $14,795.
4.3 PAYMENT TO BENEFICIARY. If a Participant entitled to an Age 65
Benefit under this Article 4 dies before the payment of the full benefit is
made, then the Age 65 Benefit shall be paid to the Participant's Beneficiary.
In the event the Participant's Age 65 Benefit is being paid in ten (10) equal
annual installments, the Participant's Beneficiary may make a written request to
the Committee to receive, in lieu of all other payments, a lump sum payment
equal to the present value of the remaining installments calculated with a
discount rate equal to the Announced Interest Rate applicable to the
Participant's Deferral Account during the Plan Year in which the Participant's
attainment of age sixty-five (65) occurred. The Committee's decision on such
request shall be based on the sole and absolute discretion of the Committee.
Example - Participant elects to receive his Age 65 Benefit in 10 equal annual
-------
installments of $100,000 per installment when the applicable interest rate is
4
<PAGE>
10%. After receiving 6 installments, Participant dies and his Beneficiary
requests a lump sum payment of the remaining 4 installments. Assuming the
Committee grants the Beneficiary's request for a lump sum payment which is
made on the next installment due date, the lump sum will be $348,685 (the
present value of 4 payments of $100,000 each, discounted at 10%).
ARTICLE 5 - DEATH BENEFIT
-------------------------
5.1 ELIGIBILITY. Upon a Participant's death either prior to his
attainment of age sixty-five (65) or prior to his Termination of Directorship,
the Company shall pay the Participant's Beneficiary the "Death Benefit"
described in this Article 5.
5.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Death Benefit shall be either a lump sum or ten (10) equal annual
installments, as based on the Participant's Payment Election. Payment shall be
made, in the case of a lump sum, or shall commence, in the case of annual
installments, on the first day of the second month following the month of the
Participant's Death. Such Death Benefit shall be in lieu of all other benefits
under the Plan.
(B) The lump sum shall equal the Participant's "Enhanced Deferral Account"
as described in Subsection (d) below.
(C) The ten (10) equal annual installments shall be based on the
Participant's "Enhanced Deferral Account" as described in Subsection (d) below,
and the interest rate applicable to the Participant's Deferral Account in
accordance with Section 2.16 during the Plan Year in which the Participant's
death occurs.
(D) A Participant's Enhanced Deferral Account shall be equal to (i) the
Participant's Deferral Account adjusted as provided in Subsection 8.2(a)
multiplied by (ii) the following enhancement factor:
<TABLE>
<CAPTION>
Participant's Age at Death Enhancement Factor
- ---------------------------------------- ------------------
<S> <C>
Less than age 50 2.00
Age 50 or greater but less than age 55 1.75
Age 55 or greater but less than age 60 1.50
Age 60 or greater but less than age 65 1.25
</TABLE>
Example - At the commencement of payment of the Death Benefit to the
-------
Participant's Beneficiary (based on the Participant's prior effective election
to have such benefit paid in a lump sum), the Participant's Deferral Account
balance (including deferrals and interest) is $100,000 and the Participant's
age at the time of death is age 49. The Death Benefit payable to the
Participant's Beneficiary is $200,000 (actual Deferral Account balance of
$100,000 times the Enhancement Factor of 2.0).
5
<PAGE>
(E) In the event the Death Benefit is payable in ten (10) equal annual
installments, the Participant's Beneficiary may make a written request to the
Committee, prior to commencement of payment of the first installment, to
receive, in lieu of all other payments, a lump sum payment equal to the
Participant's "Enhanced Deferral Account" as described in Subsection (d) above.
The decision on such request shall be based on the sole and absolute discretion
of the Committee.
ARTICLE 6 - TERMINATION OF DIRECTORSHIP BENEFIT
-----------------------------------------------
6.1 ELIGIBILITY. Upon a Participant's Termination of Directorship, the
Company shall pay the Participant the "Termination of Directorship Benefit"
described in this Article 6.
6.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Termination of Directorship Benefit shall be a lump sum. Payment
shall be made on the first day of the second month following the month of the
Participant's Termination of Directorship. Such Termination of Directorship
Benefit shall be in lieu of all other benefits under the Plan.
(B) The lump sum shall be equal to the Participant's Deferral Account
adjusted as provided in Subsection 8.2.
6.3 PAYMENT TO BENEFICIARY. If a Participant entitled to a Termination of
Directorship Benefit under this Article 6 dies after his Termination of
Directorship but before the payment of the benefit is made, then the benefit
shall be paid to the Participant's Beneficiary.
ARTICLE 7 - HARDSHIP
--------------------
7.1 ELIGIBILITY. A Participant who has an Unforeseeable Emergency may be
entitled to receive the "Hardship Benefit" described in this Article 7 upon (i)
application to the Committee, (ii) submission of such evidence of such
Unforeseeable Emergency as required by the Committee and (iii) the Committee's
determination that the Participant has an Unforeseeable Emergency. In making
such determination the Committee is instructed not to grant payment to the
extent that the Participant's hardship is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise, (ii) by liquidation of
the Participant's assets, to the extent the liquidation of such assets would not
itself cause severe financial hardship or (iii) cessation of deferrals under
this Plan.
7.2 PAYMENT METHOD, TIMING AND AMOUNT.
(A) The Hardship Benefit shall be a lump sum. Payment shall be made on
such date as determined by the Committee.
6
<PAGE>
(B) The lump sum shall be equal to the lesser of (i) the Participant's
Deferral Account adjusted as provided in Subsection 8.2 or (ii) the amount
determined by the Committee, in the exercise of its sole and absolute judgment,
to satisfy the Participant's Unforeseeable Emergency.
ARTICLE 8 - ADJUSTMENTS
-----------------------
8.1 ACCOUNTS. The Committee shall establish and cause to be maintained
with respect to each Participant, a Deferral Account and shall adjust each
account as provided in this Article 8.
8.2 ADJUSTMENTS TO DEFERRAL ACCOUNTS. As of each Adjustment Date, a
Participant's Deferral Account shall be adjusted as follows:
(1) Director Fee Deferrals. There shall be credited the Participant's
Director Fee Deferrals, if any, made since the last Adjustment Date.
(2) Hardship Benefit. There shall be debited any Hardship Benefit
paid to the Participant as provided in Article 7.
(3) Interest. There shall be credited Interest for the period since
the last Adjustment Date. Interest shall calculated on the balance in the
Deferral Account after adjustment pursuant to paragraphs (1) and (2) above at
such rate to yield an effective annual rate equal to the Minimum Interest Rate
or the Announced Interest Rate, whichever is greater.
ARTICLE 9 - ADMINISTRATION
--------------------------
9.1 COMMITTEE. The Committee shall be the Gold Kist Pension Committee.
The Committee shall have general responsibility for administration of the Plan
(including but not limited to complying with reporting and disclosure
requirements, and establishing and maintaining Plan records). In the exercise
of its sole and absolute discretion, the Committee shall interpret the Plan's
provisions and determine the eligibility of individuals for benefits.
Nothwithstanding the foregoing, any discretionary decision concerning the
payment of benefits under this Plan (such as Hardship under Article 7) shall be
made by the Compensation Committee of the Board of Directors.
9.2 BENEFICIARY DESIGNATION.
(A) Every Participant shall file with the Committee a written designation,
in such form as specified by the Committee, of one or more persons as the
Beneficiary who shall be
7
<PAGE>
entitled to receive the benefits, if any, payable under the Plan after the
Participant's death. A Participant may from time to time revoke or change such
Beneficiary designation without the consent of any prior Beneficiary by filing a
new designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of any date prior to such receipt. All decisions of the Committee
concerning the effectiveness of any Beneficiary designation, and the identity of
any Beneficiary, shall be final. If a Beneficiary shall die after the death of
the Participant and prior to receiving the payment(s) that would have been made
to such Beneficiary had such Beneficiary's death not occurred, and no contingent
Beneficiary has been designated, then for the purposes of the Plan the
payment(s) that would have been received by such Beneficiary shall be made to
the Beneficiary's estate.
(B) If no Beneficiary designation is in effect at the time of a
Participant's death, the benefits, if any, payable under the Plan after the
Participant's death shall be made to the Participant's Surviving Spouse, if any,
or if the Participant has no Surviving Spouse, to the Participant's estate. If
the Committee is in doubt as to the right of any person to receive such
benefits, the Committee may direct the Company to withhold payment, without
liability for any interest thereon, until the rights thereto are determined, or
the Committee may direct the Company to pay any such amount into any court of
appropriate jurisdiction and such payment shall be a complete discharge of the
liability of the Company therefor.
ARTICLE 10 - AMENDMENT AND TERMINATION
--------------------------------------
10.1 RIGHT TO AMEND OR TERMINATE PLAN.
(A) Subject to Subsection (c), the Board of Directors of Gold Kist Inc.
reserves the right at any time to amend or terminate the Plan, in whole or in
part, and for any reason and without the consent of any Participant or
Beneficiary.
(B) The Committee may adopt any ministerial and non substantive amendment
which may be necessary or appropriate to facilitate the administration,
management and interpretation of the Plan, provided the amendment does not
materially affect the currently estimated cost to the Company of maintaining the
Plan.
(C) In no event shall an amendment or termination reduce the Company's
obligations under Deferral Elections made before such amendment or termination;
provided, however, that this restriction shall not apply to any benefit that has
not actually accrued of the date of such amendment or termination (such as the
right to an enhanced death benefit, if the Participant is still living on the
date of such amendment or termination, or the right to make future deferrals
under the Plan), nor shall this restriction prevent the Company from discharging
its obligations under this Plan by providing for an immediate payout of the
benefits actually accrued under this Plan as of the date of such amendment or
termination.
10.2 NOTICE. Notice of any termination or material amendment of the Plan
shall be given by the Board of Directors of Gold Kist Inc. or by the Committee,
whichever adopts the amendment, to each Participant.
8
<PAGE>
ARTICLE 11 - GENERAL PROVISIONS
-------------------------------
11.1 NO RIGHT TO CONTINUED DIRECTORSHIP. Nothing contained in the Plan
shall give any Participant the right to be retained as a director of the
Company. The adoption and maintenance of the Plan shall not constitute a
contract between any Company and Participant or consideration for, or an
inducement to or condition of, the services of any Participant.
11.2 PAYMENT ON BEHALF OF PAYEE. If the Committee shall find that any
person to whom any amount is payable under the Plan is unable to care for such
person's affairs because of illness or accident, or is a minor, or has died,
then any payment due such person or such person's estate (unless a prior claim
therefor has been made by a duly appointed legal representative) may, if the
Committee so elects, be paid to such person's spouse, a child, a relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge
of the liability of the Plan and the Company therefor.
11.3 NONALIENATION. No interest, expectancy, benefit, payment, claim or
right of any Participant or Beneficiary under the Plan shall be (a) subject in
any manner to any claims of any creditor of the Participant or Beneficiary, (b)
subject to the debts, contracts, liabilities or torts of the Participant or
Beneficiary or (c) subject to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind.
If any person shall attempt to take any action contrary to this Section, such
action shall be null and void and of no effect, and the Committee and the
Company shall disregard such action and shall not in any manner be bound thereby
and shall suffer no liability on account of its disregard thereof. If the
Participant, Beneficiary, or any other beneficiary hereunder shall become
bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber, or
charge any right hereunder, then such right or benefit shall, in the discretion
of the Committee, cease and terminate, and in such event the Committee may hold
or apply the same or any part thereof for the benefit of the Participant or
Beneficiary or the spouse, children, or other dependents of the Participant or
Beneficiary, or any of them, in such manner and in such amounts and proportions
as the Committee may deem proper.
11.4 NO TRUST OR FUNDING CREATED. The obligations of the Company to make
payments hereunder shall constitute a liability of the Company to a Participant
or Beneficiary, as the case may be. Such payments shall be made from the
general funds of the Company, and the Company shall not be required to establish
or maintain any special or separate fund, or purchase or acquire life insurance
on a Participant's life, or otherwise to segregate assets to assure that such
payment shall be made, and neither a Participant nor a Beneficiary shall have
any interest in any particular asset of the Company by reason of its obligations
hereunder. Nothing contained in the Plan shall create or be construed as
creating a trust of any kind or any other fiduciary relationship between the
Company and a Participant or any other person. The rights and claims of a
Participant or a Beneficiary to a benefit provided hereunder
9
<PAGE>
shall have no greater or higher status than the rights and claims of any other
general, unsecured creditor of the Company.
11.5 BINDING EFFECT. Obligations incurred by the Company pursuant to this
Plan shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and the Participant and the Participant's Beneficiary.
11.6 MERGER OR CONSOLIDATION. In the event of a merger or a consolidation
by the Company with another corporation, or the acquisition of substantially all
of the assets or outstanding stock of the Company by another corporation, then
and in such event the obligations and responsibilities of the Company under this
Plan shall be assumed by any such successor or acquiring corporation, and all of
the rights, privileges and benefits of the Participants and Beneficiaries
hereunder shall continue.
11.7 ENTIRE PLAN. This document, any written amendments hereto and the
Deferral Elections contain all the terms and provisions of the Plan and shall
constitute the entire Plan, any other alleged terms or provisions being of no
effect.
11.8 MISCELLANEOUS. Where appropriate in this Plan, words used in the
singular shall include the plural, and words used in the masculine shall include
the feminine or neuter. The laws of the State of Georgia shall govern this
Plan.
IN WITNESS WHEREOF, Gold Kist Inc. has caused this Plan to be executed this
22nd day of July , 1994.
- ------- -----------
GOLD KIST INC.
[Corporate Seal] By: /s/ Harold O. Chitwood
----------------------------------
Chief Executive Officer and Chairman,
Management Executive Committee
ATTEST:
/s/ Jack L. Lawing
- -------------------------------
Secretary
10
<PAGE>
DIRECTOR FEE DEFERRAL ELECTION UNDER THE
GOLD KIST INC. DIRECTOR SAVINGS PLAN
Gold Kist Inc. maintains the Director Savings Plan to help eligible
Directors accumulate benefits for retirement. As a Director, You may elect to
make deferrals and receive benefits as set forth in the Plan.
You and the Company agree as follows:
1. YOU AGREE TO DEFER DIRECTOR FEES. You elect to defer the receipt of
--------------------------------
the following annual percent of DIRECTOR FEES which You earn during the
________ calendar year(s) and which, but for this Deferral Election, would be
paid to You:
____________________________
Director Fees %
____________________________
2. THE COMPANY PROMISES TO PAY BENEFITS. The Company promises to pay
------------------------------------
benefits as provided in the Plan, subject to all terms and conditions provided
in the Plan.
3. INCORPORATION OF PLAN. The Plan and all its provisions are
---------------------
incorporated herein by reference and shall govern the rights and obligations
hereunder, including the meanings of any capitalized terms which are defined in
the Plan.
4. ENTIRE AGREEMENT. This Deferral Election and the Plan constitute the
----------------
entire agreement between You and the Company with respect to the deferrals made
hereunder and the benefits based thereon.
---------------------------
Your Signature
---------------------------
Your Printed Name
Date:
---------------------
Received and approved by the Committee:
By:
---------------------------
Date:
-------------------------
<PAGE>
BENEFICIARY DESIGNATION UNDER THE
GOLD KIST INC. DIRECTOR SAVINGS PLAN
You and the Company have entered into one or more Deferral Elections under
the Director Savings Plan.
As a Participant in the Plan, You hereby name the following person or
persons, entity or entities (herein called "Designated Beneficiary(ies)") to
receive such amounts, if any, that are payable under the Plan after your death
(herein called "Survivor Benefits"):
PRIMARY BENEFICIARY
Social Security
Name and Relationship Address Number
_______________________________________________________________________________
1.
_______________________________________________________________________________
_______________________________________________________________________________
2.
_______________________________________________________________________________
_______________________________________________________________________________
3.
_______________________________________________________________________________
_______________________________________________________________________________
4.
_______________________________________________________________________________
_______________________________________________________________________________
If your Survivor Benefits, if any, are to be paid to more than one
Designated Beneficiary, such Survivor Benefits shall be divided equally between
or among such Designated Beneficiaries.
If any Primary Beneficiary(ies) named above is (are) not in existence at
your death, then You name the following Contingent Beneficiary(ies) to receive
the benefit that such Primary Beneficiary(ies) would have received:
CONTINGENT BENEFICIARY
Social Security
Name and Relationship Address Number
Contingent Beneficiary to Primary Beneficiary No. _____:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Contingent Beneficiary to Primary Beneficiary No. _____:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE>
Contingent Beneficiary to Primary Beneficiary No. _____:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Contingent Beneficiary to Primary Beneficiary No. _____:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
If a Primary Beneficiary dies before You do and there is no Contingent
Beneficiary named to take such Primary Beneficiary's share, then the Survivor
Benefits will be paid to your Surviving Spouse, if any, and if not to your
estate.
If a Designated Beneficiary dies after You do but before all Survivor
Benefit payments have been made to such Designated Beneficiary, then the
remaining payments will be made to the Designated Beneficiary's estate.
This Beneficiary Designation Form shall remain in effect until revoked by
You in writing or until superseded by your execution and delivery of a
substitute Beneficiary Designation Form. No such revocation or substitute
Beneficiary Designation Form will be effective until it is actually received by
the Committee.
Survivor Benefit payments will have federal and state tax consequences and
such consequences may depend on the identity of the beneficiary of such payments
(for example, whether the beneficiary is your spouse); and You acknowledge that
You have been advised to consult an independent, professional tax advisor before
completing this Beneficiary Designation Form.
---------------------------
Your Signature
---------------------------
Your Printed Name
Date:
---------------------
Received by the Committee:
By:
---------------------------
Date:
-------------------------
2
<PAGE>
PAYMENT ELECTION UNDER THE
GOLD KIST INC. DIRECTOR SAVINGS PLAN
You and the Company have entered into one or more Deferral Elections under
the Director Savings Plan.
PAYMENT ELECTION - AGE 65 BENEFIT
---------------------------------
As a Participant in the Plan, I hereby elect pursuant to Section 3.4 of the
Plan to have any Age 65 Benefit under Article 4 paid in the following manner:
[ ] Lump sum
[ ] Equal annual installments for 10 years
[ ] I do not wish to make an election at this time. I understand that
if I do not make a valid election pursuant to the terms of the
Plan, benefits will be paid in equal annual installments for 10
years.
PAYMENT ELECTION - DEATH BENEFIT
--------------------------------
As a Participant in the Plan, I hereby elect pursuant to Section 3.4 of the
Plan to have any Death Benefit under Article 5 paid in the following manner:
[ ] Lump sum
[ ] Equal annual installments for 10 years
[ ] I do not wish to make an election at this time. I understand that
if I do not make a valid election pursuant to the terms of the
Plan, benefits will be paid in equal annual installments for 10
years.
---------------------------
Your Signature
---------------------------
Your Printed Name
Date:
---------------------
Received by the Committee:
By:
---------------------------
Date:
-------------------------
<PAGE>
AMENDMENT NO. 1
To The Gold Kist Inc.
Director Savings Plan
THIS AMENDMENT NO. 1 is made this 28th day of October, 1994, by Gold
------
Kist Inc. (the "Company").
WITNESSETH:
WHEREAS the Company has adopted the Gold Kist Inc. Director Savings Plan
(the "Plan") effective June 1, 1994; and
WHEREAS the Company seeks to clarify certain eligibility provisions
inadvertently omitted from Plan.
NOW, THEREFORE, the Plan is amended as set forth below.
ITEM ONE
Section 3.2 of the Plan is amended by adding the following language:
Notwithstanding any provisions in this Plan to the contrary, should any
Participant after execution and delivery of a Deferral Election (the
"Current Deferral Election") refuse or otherwise fail to cooperate fully
(as determined in the sole judgment of the Committee) in the process of
obtaining a life insurance policy or policies insuring the Participant to
be owned by the Company to fund its obligations under the Plan in whole or
in part, such Participant's participation in the Plan with respect to the
Current Deferral Election shall be rescinded and terminated, all amounts
deferred with respect to the Current Deferral Election shall be paid to
such Participant and such Participant shall be deemed ineligible for
further participation in the Plan .
<PAGE>
ITEM TWO
This amendment shall be effective June 1, 1994, as if it were originally
included in the Plan.
IN WITNESS WHEREOF, Gold Kist Inc. has caused this Amendment No. 1 to be
executed as of the day and year first above written.
GOLD KIST INC.
By: /s/ Harold O. Chitwood
--------------------------------
Chief Executive Officer and Chairman,
Management Executive Committee
[Corporate Seal]
ATTEST:
/s/ Jack L. Lawing
- -------------------------
Secretary
2
<PAGE>
GOLD KIST INC.
SPLIT DOLLAR LIFE INSURANCE PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
-------------------------
This Plan is established for the benefit of selected key Employees and
Directors and shall be known as the "Gold Kist Inc. Split Dollar Life Insurance
Plan." The purpose of the Plan is to provide Company-financed split dollar life
insurance benefits in order to recruit and to retain selected key Employees and
Directors for the Company.
ARTICLE II
DEFINITIONS
-----------
The following words and phrases as used in the Plan have the following
meanings:
2.1 "Affiliate" means either (a) any employer that is a corporation
---------
included with Gold Kist Inc. in a "controlled group of corporations," as defined
in Code section 414(b), or an unincorporated business included with Gold Kist
Inc. in a group of trades or businesses under "common control," as defined by
regulations prescribed by the Secretary of the Treasury under Code section
414(c) or (b) any other employer, whether incorporated or unincorporated, which
is not described in the foregoing clause (a) but which Gold Kist Inc. has an
ownership interest in to any extent.
2.2 "Agreement" means a Split Dollar Insurance Agreement in the form
---------
approved by the Company.
<PAGE>
2.3 "Board" (or "Board of Directors") means the present and any
-----
succeeding Board of Directors of Gold Kist Inc. or the Executive Committee of
said Board which shall have the authority of said Board with respect to the
Plan.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
2.5 "Company" means Gold Kist Inc., a Georgia corporation, or any
-------
entity which succeeds to its rights and obligations with respect to the Plan and
any other Affiliate of Gold Kist Inc. which is a Participating Company.
2.6 "Director" means a person who is either a Director or Director
--------
Emeritus in accordance with the by-laws of the Company.
2.7 "Employee" means an employee of the Company or an Affiliate (a) who
--------
is designated in writing by the Plan Administrator to participate in the Plan
and (b) on whose life the Company is able to purchase a Policy on terms and at a
cost that are acceptable to the Company in its sole discretion.
2.8 "Participant" means either an Employee or Director or, if the
-----------
Employee or Director so elects and the Company consents, either the trustee or
trustees of a trust established by the Employee or Director or an individual or
individuals designated by the Employee or Director.
2.9 "Participating Company" means Gold Kist Inc. or an Affiliate which
---------------------
by action of its board of directors or equivalent governing body and with the
written consent of the Board of Directors ("Board") of Gold Kist Inc., has
adopted the Plan; provided that the Board may, subject to the foregoing proviso,
waive the requirement that such board of directors or equivalent governing body
effect such adoption. The term "Participating Company" shall be construed as if
the Plan were solely the Plan of such Participating Company, unless the context
plainly requires otherwise. Notwithstanding the foregoing, (i) if a Participant
is employed by or a Director of an Affiliate as defined in clause (a) of Section
2.2 of this Plan, then the obligation to provide benefits hereunder while the
Participant is employed by such Affiliate shall be the obligation of Gold Kist
Inc. as well as such Affiliate; and (ii) if a Participant is employed by or a
Director an Affiliate as defined in clause (b) of Section 2.2 of this Plan, then
the obligation to provide benefits hereunder while the Participant is employed
by such Affiliate shall be the obligation solely of such Affiliate, and not a
joint obligation of Gold Kist Inc. or any other Affiliate.
2
<PAGE>
2.10 "Plan" means the "Gold Kist Inc. Split Dollar Life Insurance Plan"
----
as set forth herein and as amended from time to time.
2.11 "Plan Administrator" means the Chief Executive Officer of Gold Kist
------------------
Inc. or such other person(s) as he shall designate in writing.
2.12 "Plan Year" means the calendar year; provided that records with
---------
respect to each individual policy under the Plan shall be maintained on the
basis of the applicable policy year.
2.13 "Policy" means a life insurance policy issued by an insurance
------
company designated by the Company on the life of the Employee or Director or a
joint life insurance policy on the life of the Employee or Director and another
individual designated by the Employee or Director and approved by the Company.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 Agreements. In order to participate in the Plan, a Participant
----------
shall enter into an Agreement with the Company and execute an assignment of the
Policy as collateral (the "Collateral Assignment") in favor of the Company on
such terms as shall be determined by the Company in its sole discretion. The
Agreement and the Collateral Assignment are hereby incorporated into and made a
part of the Plan.
3.2 Policy. Each Agreement shall provide for the purchase of a Policy
------
from an insurance company. Both the identity of the insurance company and the
terms of the Policy shall be determined by the Company in its sole discretion.
3.3 Benefits. All benefits paid under the Plan in respect of a
--------
Participant shall be determined by the terms of the applicable Agreement.
3.4 Multiple Agreements. The Company and a Participant may enter into
-------------------
more than one Agreement pursuant to the Plan.
3
<PAGE>
ARTICLE IV
ADMINISTRATION
--------------
4.1 In General. The Plan shall be administered by the Plan
----------
Administrator, who shall be the Plan's named fiduciary.
4.2 Expenses. The expenses incident to the operation of the Plan,
--------
including the compensation of attorneys, advisors, actuaries, and such other
persons providing technical and clerical assistance as may be required, shall be
paid by the Company. Notwithstanding the foregoing, "expenses" shall not be
deemed to include sales commissions, mortality charges, insurance company
administrative expenses or similar charges that customarily would be charged
internally to each Policy.
4.3 Powers of the Plan Administrator. In addition to any implied powers
--------------------------------
and duties that may be needed to carry out the provisions of the Plan, the
Agreement and the Collateral Assignment, the Plan Administrator shall have the
following specific powers and duties in his sole discretion:
(a) To make and enforce such rules and regulations as he shall deem
necessary or proper for the efficient administration of the Plan;
(b) To interpret the Plan and to decide any and all matters arising
hereunder, including the right to remedy possible ambiguities, inconsistencies,
or omissions; provided that all such interpretations and decisions shall be
applied in a uniform and nondiscriminatory manner to all persons similarly
situated;
(c) To compute the amount of benefits that shall be payable to any
Participant in accordance with the provisions of the Plan;
(d) To appoint other persons to carry out such ministerial
responsibilities under the Plan as he may determine; and
4
<PAGE>
(e) To employ one or more persons to render advice with respect to
any of his responsibilities under the Plan.
4.4 Finality. To the extent permitted by applicable law, determinations
--------
by the Plan Administrator and any interpretation, rule or decision adopted by
the Plan Administrator under the Plan, the Agreement, or the Collateral
Assignment or in carrying out or administering the Plan shall be final and
binding for all purposes and upon all interested persons, their heirs and
personal representatives.
4.5 Benefit Claims Procedure. A claim for a benefit under the Plan by
------------------------
any person shall be filed in the manner and governed by the procedures set forth
in the Agreement.
ARTICLE V
AMENDMENTS
----------
5.1 Amendment and Termination.
-------------------------
(a) The Board of Directors of Gold Kist Inc. reserves the right at any
time to amend or terminate the Plan, in whole or in part, and for any reason and
without the consent of any Participant.
(b) The Plan Administrator may adopt any ministerial and non
substantive amendment which may be necessary or appropriate to facilitate the
administration, management and interpretation of the Plan, provided the
amendment does not materially affect the currently estimated cost to the Company
of maintaining the Plan.
5.2 Merger or Consolidation. In the event of a merger or a
-----------------------
consolidation by the Company with another corporation, or the acquisition of
substantially all of the assets or outstanding stock of the Company by another
corporation, then and in such event the obligations and responsibilities of the
Company under this Agreement shall be assumed by any such successor or acquiring
corporation, and all of the rights, privileges and benefits of the Participant
under this Agreement shall continue.
5
<PAGE>
ARTICLE VI
MISCELLANEOUS
-------------
6.1 Incapacity. If the Company determines that any person entitled to
----------
benefits hereunder is unable to care for his affairs because of illness or
accident, any payment due (unless a duly qualified guardian or other legal
representative has been appointed) may be paid for the benefit of such person to
his spouse, parent, brother, sister or other party deemed by the Plan
Administrator to have incurred expenses for such person or may be paid to a
trust for the benefit of such person where the Plan Administrator determines in
its sole discretion that such trust provides for the primary benefit of such
person.
6.3 Required Information. Any person eligible to receive benefits
--------------------
hereunder shall furnish to the Plan Administrator any information or proof
requested by the Plan Administrator and reasonably required for the proper
administration of the Plan. Failure on the part of any person to comply with
any such request within a reasonable period of time shall be sufficient grounds
for delay in the payment of any benefits due under the Plan until such
information or proof is received by the Plan Administrator. If any person
claiming benefits under the Plan makes a false statement that is material to
such person's claim for benefits, the Company may offset against future payments
any amount paid to such person to which such person was not entitled under the
provisions of the Plan.
6.4 Policy Claims. Any claim for benefits under a Policy shall be
-------------
subject to and governed by the terms of the Policy.
6.5 No Right To Employment. Nothing in this Plan or any Agreement shall
----------------------
be deemed to constitute a contract of employment or to give any Employee the
right to be retained in the service of the Company or an Affiliate or to
interfere with the right of the Company or an Affiliate to discharge any
Employee at any time without regard to the effect that such discharge may have
upon the Employee under the Plan.
6.6 Withholding Taxes. The Plan Administrator may make any appropriate
-----------------
arrangements to deduct from all amounts paid under the Plan any taxes required
to be withheld by any government or government agency. The Employee shall pay
all taxes on amounts paid under the Plan to the extent that no taxes are
withheld, irrespective of whether withholding is required.
6
<PAGE>
6.7 Gender and Number. In order to shorten and to improve the
-----------------
understandability of the Plan document by eliminating usage of such phrases as
"his or her" and "Affiliate or Affiliates," any masculine terminology herein
shall also include the feminine and neuter, and the definition of any term
herein in the singular shall also include the plural, except when otherwise
indicated by the context.
6.8 Headings. Any headings used in this instrument are for convenience
--------
of reference only and are to be ignored in the construction of any provision
hereof.
6.9 Severability. If any provision of the Plan shall be held illegal or
------------
invalid for any reason, such illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
such illegal or invalid provision had never been inserted herein.
6.10 Governing Law. The Plan shall be construed, administered and
-------------
regulated in accordance with the laws of the State of Georgia, except to the
extent that such laws are preempted by Federal law.
6.11 Effective Date. The Plan shall be effective as of March 1, 1995.
--------------
Gold Kist Inc.
By: /s/ Harold O. Chitwood
-------------------------------------
Chairman and Chief Executive Officer
[Corporate Seal]
Attest:
By: /s/ Jack L. Lawing
-----------------------
Secretary
7
<PAGE>
EXHIBIT 12
GOLD KIST INC.
RATIO OF NET MARGINS TO FIXED CHARGES
For the Five Years Ended July 1, 1995
(Dollars Amounts in Thousands)
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fixed Charges:
Debt interest 18,437 18,838 17,163 13,924 17,525
Interest portion of rents 3,703 5,334 5,189 5,390 89,325
Interest decrease (see below) -- -- -- -- --
------- ------- ------- ------- -------
Total 22,140 24,172 22,352 19,314 26,850
======= ======= ======= ======= =======
Margins (loss) before income taxes,
minority interest, and cumulative
affect of change in accounting
principle 49,905 (4,041) 43,692 50,074 25,586
Deduct: Equity in Gain (Loss) of less than
50% owned affiliates 25,985 8,732 5,593 (453) (21)
Add: Earnings distributed by less than
50% owned partnership 8,284 22,695 11,404 1,770 653
Deduct: Interest decrease (see below) -- -- -- -- --
------- ------- ------- ------- -------
$33,204 $ 9,922 $49,503 $52,297 $26,260
Fixed charges 22,140 24,172 22,352 19,314 26,850
------- ------- ------- ------- -------
Subtotal 55,344 34,094 71,855 71,611 53,110
Divided by fixed charges 22,140 24,172 22,352 19,314 26,850
------- ------- ------- ------- -------
Ratio 2.50 1.41 3.21 3.71 1.98
======= ======= ======= ======= =======
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Gold Kist Inc.:
We consent to the use of our reports included herein or incorporated herein
by reference and to the references to our firm under the headings "Selected
Consolidated Financial Data" and "Experts" in the Prospectus. Our reports
refer to changes in accounting for income taxes and for certain investments in
debt and equity securities.
KPMG Peat Marwick LLP
Atlanta, Georgia
September 22, 1995
II-16
<PAGE>
The Board of Directors
Gold Kist Inc.:
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
August 10, 1995, with respect to the consolidated financial statements and
schedule of Golden Peanut Company and Subsidiaries, incorporated by reference
in the Registration Statement (Form S-2) and related prospectus of Gold Kist
Inc. for the registration of subordinated capital and loan certificates.
Ernst & Young LLP
Atlanta, Georgia
September 21, 1995
II-17
<PAGE>
CONSENT OF QUALIFIED INDEPENDENT UNDERWRITER
We consent to the reference to our firm under the caption "Qualified
Independent Underwriter" in the Prospectus.
Interstate/Johnson Lane Corporation
September 21, 1995
II-18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of a
Trustee Pursuant to Section 305(b)(2) [ ]
TRUST COMPANY BANK
(Exact name of trustee as specified in its charter)
GEORGIA BANKING CORPORATION 58-0466330
(Jurisdiction of incorporation or organization (I.R.S. Employer
if not a U.S. national bank) Identification No.)
25 PARK PLACE, N.E.
ATLANTA, GEORGIA 30303
(Address of principal executive offices) (Zip code)
T.J. DONALDSON
TRUST COMPANY BANK
58 EDGEWOOD AVE.
ROOM 400
ATLANTA, GEORGIA 30303
(404) 588-7831
(Name, address and telephone number of agent for service)
-----------------------
GOLD KIST INC.
(Exact name of obligor as specified in its charter)
GEORGIA 58-0255560
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
244 PERIMETER CENTER PARKWAY, N.E.
ATLANTA, GEORGIA 30346
(Address of principal executive offices) (Zip code)
-----------------------
DEBT SECURITIES
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE--
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Finance,
State of Georgia,
Atlanta, Georgia
Federal Reserve Bank of Atlanta
104 Marietta Street, N.W.
Atlanta, Georgia
Federal Deposit Insurance Corporation
Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee.
No responses are included for items 3 through 12. Responses to those
items are not required because, as provided in item 13, the obligor is not in
default on any securities issued under indentures under which Trust Company Bank
is a trustee.
ITEM 13. DEFAULTS BY THE OBLIGOR.
(A) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE
SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH
DEFAULT.
There is not and has not been any such default.
(B) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY
OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN
ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE
FOR MORE THAN ONE OUTSTANDING SERIES OF SECURITIES UNDER THE
INDENTURE, STATE WHETHER THERE HAS BEEN A DEFAULT UNDER ANY SUCH
INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR SERIES AFFECTED, AND
EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
There has not been any such default.
No responses are included for items 14 and 15. Responses to those items
are not required because, as provided in item 13, the obligor is not in default
on any securities issued under indentures under which Trust Company Bank is a
trustee.
<PAGE>
ITEM 16. LIST OF EXHIBITS.
The additional exhibits listed below are filed herewith. Exhibits, if
any, identified in parentheses are on file with the Commission and are
incorporated herein by reference as exhibits hereto pursuant to Rule 7a-29 under
the Trust Indenture Act of 1939 and Rule 24 of the Commission's Rules of
Practice.
EXHIBIT
NUMBER
- -------
1 - A copy of the Articles of Amendment and Restated Articles of
Incorporation of the trustee as now in effect. (Exhibit 1 to
Form T-1, Registration No. 22-21018)
2 - A copy of the certificate of authority of the trustee to
commence business. (Included in Exhibit 1)
3 - A copy of the authorization of the trustee to exercise trust
powers. (Included in Exhibit 1)
4 - A copy of the existing bylaws of the trustee. (Exhibit 4 to
Form T-1, Registration No. 33-49283)
5 - Not applicable.
6 - Consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended.
7 - A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising
or examining authority.
8 - Not applicable.
9 - Not applicable.
NOTE
In answering any item in this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor or the underwriters and the trustee disclaims responsibility for the
accuracy and completeness of such information.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
trustee, Trust Company Bank, a corporation organized and existing under the laws
of the State of Georgia, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of Atlanta, and State of Georgia, on the day of September, 1995.
----
TRUST COMPANY BANK
By: /s/ T.J. Donaldson
---------------------------
T.J. Donaldson
Group Vice President
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issue of Debt
Securities by Gold Kist Inc., we hereby consent that reports of examination by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
TRUST COMPANY BANK
By: /s/ T.J. Donaldson
------------------------
T.J. Donaldson
Group Vice President
Dated: September , 1995
--
<PAGE>
EXHIBIT 7
TRUST COMPANY BANK of Atlanta, Georgia and Foreign and
Domestic subsidiaries, at the close of business, June 30, 1995, a state banking
institution organized and operating under the banking laws of this state and a
member of the Federal Reserve System. Published in accordance with a call made
by the State Banking Authorities.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN THOUSANDS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin............ $ 816,403
Interest-bearing balances..................................... 3,637
Securities
Held-to-maturity securities................................... 0
Available-for-sale securities................................. 2,281,834
Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBF's:
Federal funds sold............................................ 769,374
Securities purchased under agreements to resell............... 198,525
Loans and lease financing receivables:
Loans and leases, net of unearned income............ 7,125,629
LESS: Allowance for loan and lease losses........... 132,466
Loans and leases, net of unearned income, allowance, and
reserve..................................................... 6,993,163
Assets held in trading accounts................................. 1,502
Premises and fixed assets (including capitalized leases)........ 87,290
Other real estate owned......................................... 6,903
Investments in unconsolidated subsidiaries and associated
companies..................................................... 13,983
Customers' liability to this bank on acceptances outstanding.... 182,024
Intangible assets............................................... 4,482
Other assets.................................................... 132,396
-----------
Total assets.................................................... $11,491,516
===========
LIABILITIES
Deposits:
In domestic offices............................................. $ 5,532,579
Noninterest-bearing................................. 2,201,255
Interest-bearing.................................... 3,331,324
In foreign offices, Edge and Agreement subsidiaries and IBF's... 885,762
Noninterest-bearing................................. 0
Interest-bearing.................................... 885,762
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBF's:
Federal funds purchased....................................... 1,938,300
Securities sold under agreements to repurchase................ 634,815
Trading Liabilities............................................. 0
Other borrowed money
With original maturity of one year or less.................... 218,461
With original maturity of more than one year.................. 2,232
Mortgage indebtedness and obligations under capitalized leases.. 2,173
Bank's liability on acceptances executed and outstanding........ 182,024
Subordinated notes and debentures............................... 75,000
Other liabilities............................................... 610,178
-----------
Total liabilities............................................... 10,081,524
===========
EQUITY CAPITAL
Common stock.................................................... 21,600
Surplus......................................................... 478,400
Undivided profits and capital reserves.......................... 418,315
Net unrealized holding gains (losses) on available-for-sale
securities...................................................... 491,677
-----------
Total equity capital............................................ 1,409,992
-----------
Total liabilities and equity capital............................ $11,491,516
===========
</TABLE>
I, Russell L. Hunter, Senior Vice President of the above named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
the State Banking Authority and is true to the best of my knowledge and belief.
Russell L. Hunter
We, the undersigned directors, attest to the correctness of this report of
condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the official
instructions by the Board of Governors of the Federal Reserve System and the
State Banking Authority and is true and correct.
R.W. Courts II
Robert R. Long
J. Hicks Lanier
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 16,597
<SECURITIES> 0
<RECEIVABLES> 195,057
<ALLOWANCES> 5,877
<INVENTORY> 226,988
<CURRENT-ASSETS> 450,483
<PP&E> 551,697
<DEPRECIATION> 324,051
<TOTAL-ASSETS> 821,637
<CURRENT-LIABILITIES> 303,898
<BONDS> 138,659
<COMMON> 62
0
0
<OTHER-SE> 314,928
<TOTAL-LIABILITY-AND-EQUITY> 821,637
<SALES> 1,688,537
<TOTAL-REVENUES> 1,710,070
<CGS> 1,525,924
<TOTAL-COSTS> 1,525,924
<OTHER-EXPENSES> 9,625
<LOSS-PROVISION> 2,382
<INTEREST-EXPENSE> 17,525
<INCOME-PRETAX> 25,586
<INCOME-TAX> 13,094
<INCOME-CONTINUING> 11,751
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,751
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
