<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 20, 1996
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
770-393-5000
(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
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM AMOUNT OF
CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Subordinated Capital Certificates
of Interest (Series D) 15
years............. $ 1,000,000 $ 500(1) $ 1,000,000 $ 345
Subordinated Capital Certificates
of Interest (Series D) 10
years............. $ 1,000,000 $ 500(1) $ 1,000,000 $ 345
Subordinated Capital Certificates
of Interest (Series C) 5
years.............. $ 2,000,000 $ 500(1) $ 2,000,000 $ 690
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............... $15,000,000 $ 500(1) $15,000,000 $ 5,175
Subordinated Large Denomination
Loan Certificates (Series A) 1
year............................ $20,000,000 $50,000(2) $20,000,000 $ 6,900
- --------------------------------------------------------------------------------------------
</TABLE>
Total....................... $44,000,000 $44,000,000 $15,180
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(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
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- -------------------------------------------------------------------------------
<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, NO. 33-55563, AND NO. 33-62869.
----------------
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>
SUBJECT TO COMPLETION, DATED SEPTEMBER 20, 1996
GOLD KIST INC.
$ 5,904,184--8.00%, FIFTEEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES D)
$ 6,154,885--7.75%, TEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES D)
$11,501,034--7.50%, SEVEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$11,455,969--7.25%, FIVE YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES C)
$13,262,802--6.40%, THREE YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$15,932,523--6.25%, TWO YEAR SUBORDINATED
[LOGO] CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$22,224,394--6.00%, ONE YEAR SUBORDINATED LOAN
CERTIFICATES (SERIES C)
$32,904,477--6.10%, ONE YEAR SUBORDINATED LARGE
DENOMINATION LOAN CERTIFICATES (SERIES A)
$13,203,694--5.60%, SIX MONTH SUBORDINATED
LARGE DENOMINATION LOAN CERTIFICATES (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 June 29, 1996,
Superior Indebtedness (as defined in the indenture under which each series will
be issued) amounted to approximately $519,254,000. 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.
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- --------------------------------------------------------------------------------
<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............................ $ 5,904,184 $ 236,167 $ 5,668,017
Ten Year (Series D)--Per Unit
(3).............................. $ 500
Total............................ $ 6,154,885 $ 184,647 $ 5,970,238
Seven Year (Series A)--Per Unit
(3).............................. $ 500
Total............................ $ 11,501,034 $ 287,526 $ 11,213,508
Five Year (Series C)--Per Unit
(3).............................. $ 500
Total............................ $ 11,455,969 $ 229,119 $ 11,226,850
Three Year (Series A)--Per Unit
(3).............................. $ 500
Total............................ $ 13,262,802 $ 132,628 $ 13,130,174
Two Year (Series A)--Per Unit
(3).............................. $ 500
Total............................ $ 15,932,523 $ 119,494 $ 15,813,029
SUBORDINATED LOAN CERTIFICATES
One Year (Series C)--Per Unit
(3).............................. $ 500
Total............................ $ 22,224,394 $ 111,122 $ 22,113,272
SUBORDINATED LARGE DENOMINATION
LOAN CERTIFICATES
One Year (Series A)--Per Unit
(4).............................. $ 50,000
Total............................ $ 32,904,477 $ 164,522 $ 32,739,955
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-- 3/4-1%; 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 $132,543,962 in face
amount of certificates would total $1,522,935.
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 $131,021,027 are before deducting the
expenses to be borne by Gold Kist of an estimated amount of $106,180. 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 a
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 , 1996
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<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.
In addition, the Commission maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
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 June 29, 1996,
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 (770) 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. ("Gold Kist" or the "Association") is a diversified
agricultural membership cooperative association, headquartered in Atlanta,
Georgia. Gold Kist serves approximately 29,000 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)........................................ $ 5,904,184
10 year maturity, Series D (Interest as indicated on the front
cover of this Prospectus)........................................ $ 6,154,885
7 year maturity, Series A (Interest as indicated on the front
cover of this Prospectus)........................................ $ 11,501,034
5 year maturity, Series C (Interest as indicated on the front
cover of this Prospectus)........................................ $ 11,455,969
3 year maturity, Series A (Interest as indicated on the front
cover of this Prospectus)........................................ $ 13,262,802
2 year maturity, Series A (Interest as indicated on the front
cover of this Prospectus)........................................ $ 15,932,523
Subordinated Loan Certificates
1 year maturity, Series C (Interest as indicated on the front
cover of this Prospectus)........................................ $ 22,224,394
Subordinated Large Denomination Loan Certificates
1 year maturity, Series A (Interest as indicated on the front
cover of this Prospectus)........................................ $ 32,904,477
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 27, JUNE 26, JUNE 25, JULY 1, JUNE 29,
1992 1993 1994 1995 1996
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Net sales volume......... $1,300,906 1,400,566 1,561,034 1,688,537 1,955,569
Net margins (loss)(A).... $ (20,614) 27,238 39,404 11,751 37,032
Ratio of net margins
(loss) to fixed
charges(B).............. 1.4 3.2 3.7 2.0 3.2
<CAPTION>
AS OF (000'S OMITTED)
---------------------------------------------------
JUNE 27, JUNE 26, JUNE 25, JULY 1, JUNE 29,
1992 1993 1994 1995 1996
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet
Data:
Total assets............. $ 676,698 665,102 716,432 821,637 975,960
Total liabilities........ $ 382,789 354,889 394,754 482,675 621,378
Patrons' and other
equity(A)............... $ 271,456 285,620 296,662 314,990 326,410
</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>
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
June 29, 1996, Superior Indebtedness (as defined in the indentures) amounted
to approximately $519,254,000 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 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.
AGRICULTURE AND AGRIBUSINESS INDUSTRY
Gold Kist's business is principally composed of operations in agriculture
and related agribusiness industries. The nature of agribusiness industry in
general, including poultry processing and marketing, is such that supply and
demand market forces exert significant influence upon the operations of firms
engaged in these businesses. Demand for the products produced, processed and
marketed by Gold Kist is often influenced by supplies and prices of
alternative products. Historically, weather has also had a significant impact
on the farm economy and the operating results of agribusinesses such as Gold
Kist. Additionally, as is common with other businesses involving perishable
commodities, the poultry and other operations of Gold Kist have demonstrated a
cyclical nature with varying levels of profits, and to a lesser extent losses,
over periods of years. Management is unable to predict whether, and to what
extent, such factors and conditions will affect the Association's operating
results in the future.
PENDING LITIGATION
In January 1993, certain Alabama member patrons of the Association filed a
lawsuit, subsequently certified as a class action, in the Circuit Court of
Jefferson County, Alabama, Tenth Judicial Circuit, against the Association and
Golden Poultry Company, Inc. ("Golden Poultry") and certain directors and
officers of the companies. (Ronald Pete Windham and Windham Enterprises, Inc.
on their behalf and on behalf of and for the
5
<PAGE>
use and benefit of Gold Kist, Inc. and its shareholders/members v. Harold O.
Chitwood, individually in his capacity as an officer of Gold Kist and a
Director of Golden Poultry; et al). After a jury verdict in favor of the
plaintiffs, the Court entered a Final Judgment and Decree on September 13,
1996, under which Gold Kist was directed to acquire the Golden Poultry stock
held by any current officers or directors of Gold Kist and their spouses and
minor children. The Court also ordered Gold Kist to cause the surrender of all
Golden Poultry stock options held by Gold Kist officers and directors or the
exercise of such options and purchase by Gold Kist of the resultant stock, to
redeem from eligible members approximately $21.2 million of notified equity of
Gold Kist, to pay $4.2 million in attorney's fees to the plaintiffs attorneys
and to establish a policy prohibiting officers and directors of Gold Kist from
future ownership of Golden Poultry stock. An appeal of the Final Judgment may
be filed on or before October 25, 1996, and could have the effect of staying
the Final Judgment pending the outcome of any appeal. See Note 8 of Notes to
Consolidated Financial Statements.
GOLD KIST INC.
Gold Kist Inc. is a diversified agricultural membership cooperative
association, headquartered in Atlanta, Georgia. Gold Kist serves approximately
29,000 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 (770) 393-
5000.
USE OF PROCEEDS
The maximum net proceeds to Gold Kist from the sale of the certificates
offered hereby are estimated to be $131,021,027 before deduction of expenses
estimated to be $106,180. The proceeds will be used in the following order of
priority. Approximately $40,775,000 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, 1997. 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
6
<PAGE>
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.
7
<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 June 29, 1996 and "Consolidated Balance Sheet Data" as of
June 27, 1992, June 26, 1993, June 25, 1994, July 1, 1995, and June 29, 1996
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 July 1, 1995 and June 29, 1996 and for each of the years in
the three-year period ended June 29, 1996, and the report thereon of KPMG Peat
Marwick LLP, which is based partially upon the report of other auditors, are
included elsewhere herein. 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 27, JUNE 26, JUNE 25, JULY 1, JUNE 29,
1992 1993 1994 1995 1996
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales volume.......................... $1,300,906 1,400,566 1,561,034 1,688,537 1,955,569
========== ========= ========= ========= =========
Interest expense.......................... $ 18,545 17,163 13,924 17,525 21,065
========== ========= ========= ========= =========
Margins (loss) before cumulative effect of
accounting changes....................... $ (1,643) 27,238 34,065 11,751 37,032
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)........................ $ (20,614) 27,238 39,404 11,751 37,032
========== ========= ========= ========= =========
Ratio of net margins (loss) to fixed
charges (C).............................. 1.4 3.2 3.8 2.0 3.2
========== ========= ========= ========= =========
<CAPTION>
AS OF (000'S OMITTED)
---------------------------------------------------
JUNE 27, JUNE 26, JUNE 25, JULY 1, JUNE 29,
1992 1993 1994 1995 1996
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital........................... $ 108,045 140,629 139,847 146,585 184,457
========== ========= ========= ========= =========
Total assets.............................. $ 676,698 665,102 716,432 821,637 975,960
========== ========= ========= ========= =========
Long-term liabilities..................... $ 159,449 152,792 144,992 178,777 233,291
========== ========= ========= ========= =========
Total liabilities......................... $ 382,789 354,889 394,754 482,675 621,378
========== ========= ========= ========= =========
Patrons' and other equity (B)............. $ 271,456 285,620 296,662 314,990 326,410
========== ========= ========= ========= =========
Current ratio............................. 1.48 1.70 1.56 1.48 1.48
========== ========= ========= ========= =========
Ratio of long-term liabilities to total
capitalization........................... % 37.00 34.85 32.83 36.21 41.68
========== ========= ========= ========= =========
</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 $8,151,
$9,126, $10,113, $15,249 and $10,290 for 1991, 1992, 1993, 1994, 1995, and
1996, respectively.
8
<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 thirty-six year history. Although the
industry has been profitable since 1983 with the exception of a brief period
during 1992 and 1996, 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 five years. Low
broiler market prices were experienced 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. During 1996, broiler market prices
increased approximately 10% as compared to 1995 as a result of hot, dry
weather conditions that reduced meat production in the summer of 1995, as well
as lower than expected industry expansion and increased exports. According to
USDA estimates, the supply of broilers is expected to increase at a 5.5% rate
in 1996 and a 5.7% rate in 1997 as compared to the 6.7% average annual
increase between 1992 and 1995. In 1992, market prices increased for corn and
soybean meal 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. Average cash market prices for corn and
soybean meal increased 59% and 30%, respectively, during 1996 as compared to
1995 due to the weather reduced 1995 harvest and strong export demand.
Historically, weather has had a significant impact on the farm economy and
the operating results of the Association. 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. Inclement weather conditions in the summer of
1995 reduced the Southeastern cotton, peanut and corn harvest, which impacted
farm income. The weather reduced 1995 grain harvest in the Midwestern U.S.
boosted farm commodity prices; thus contributing to increased spring 1996
plantings in the Southeast and Delta regions. Also, favorable spring weather
contributed to the increase in sales of agricultural inputs in 1996.
Export sales for 1994, 1995 and 1996 were $37.7 million, $70.1 million and
$100.1 million, respectively. In 1995 and 1996, export sales increased
primarily as a result of the demand for poultry from Russia and the Far East.
Export sales of poultry products will be influenced by credit availability to
foreign countries, political and
9
<PAGE>
economic stability, particularly in Russia, 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 June 29, 1996.
RESULTS OF OPERATIONS
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 $42.5 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 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. 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. Net margins from operations for 1995 were $8.4 million. Net
margins from operations for 1995 were negatively affected by 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.
However, the impact of these items on 1995 net margins from operations was
partially offset by $3.9 million in patronage refunds from other cooperatives.
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 $9.5 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
10
<PAGE>
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 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.
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.
Fiscal 1996 Compared to Fiscal 1995
Net sales volume of approximately $2.0 billion for 1996 represented a 15.8%
or $267.0 million increase as compared to 1995. Net margins from operations,
before general corporate expenses and other deductions, were $80.3 million in
1996 as compared to $42.5 million in 1995. The increase in net margins from
operations was due primarily to increased margins in the Poultry segment.
The Poultry segment had net sales of $1.4 billion for 1996, an increase of
12.5% or $157.0 million as compared to 1995. The increase in net sales was due
primarily to a 5.0% increase in average selling prices and a 7.5% increase in
pounds of poultry sold. Market prices for poultry products strengthened in
1996 as a result of lower-than-expected U.S. broiler production and strong
export demand for poultry products. The increase in pounds sold was due to
changes in product mix requiring larger broilers for the production of deboned
poultry products. Poultry segment's net margins from operations for 1996 were
$70.2 million as compared to $34.1 million for 1995. The increase in net
margins was due primarily to higher selling prices for poultry products, which
was partially offset by increased feed ingredient costs. Although average cash
commodity prices for feed grains, such as corn and soybean meal increased 59%
and 30%, respectively, from a year ago, the Association's forward purchasing
and hedging strategies resulted in a relatively modest 8% increase in feed
ingredient costs for 1996. The Pork Division had a net operating margin of
$240,000 for 1996 as compared to a $3.7 million net loss for 1995.
The Agri-Services segment's 1996 net sales volume of $543.5 million
increased 25.4% or $110.0 million as compared to 1995. The increase in net
sales volume was due primarily to the marketing of Southeast cotton, as well
as increased sales of fertilizers, chemicals and seeds through the
Association's retail stores. A substantial portion of the agricultural sales
increase was attributed to facilities acquired in the Mississippi-Delta region
in 1995. The Agri-Services segment's net margins from operations for 1996 were
$10.1 million as compared to $8.4 million for 1995. The increase was due
primarily to patronage refunds from other cooperatives that totaled $9.3
million for 1996 as compared to $3.9 million in 1995. A substantial portion of
the patronage refunds were distributed by a major fertilizer cooperative. The
Retail Store Division had lower net operating margins in 1996 as a result of
losses in the Mississippi-Delta operations acquired in 1995. The Agri-Services
segment's net margins from operations reflects a $2.1 million net loss from an
agricultural equipment manufacturing operation that was sold in 1996.
11
<PAGE>
Distribution, administrative and general expenses for 1996 and 1995 were
$155.7 million and $131.4 million, respectively. The $24.3 million increase
reflects the growth in operations, as well as increased incentive compensation
expenses related to the increase in margins before income taxes. Increased
litigation related expenses also contributed to the overall increase in
distribution, administrative and general expenses.
The various components included in other income (deductions) represented a
deduction of $6.3 million for 1996 as compared to $9.5 million for 1995.
Interest income of $9.9 million for 1996 increased $1.2 million as a result of
increased crop financing for patrons and other customers. Interest expense for
1996 was $21.1 million as compared to $17.5 million in 1995. The increase was
due to a 55% increase in average borrowings, which was partially offset by
lower interest rates on short-term borrowings. Interest expense for 1995
included $1.6 million related to income tax litigation. Equity in loss of
partnership represents the Association's 33 1/3% pro rata share of the Golden
Peanut Company's 1996 loss. See Note 9(b) of Notes to Consolidated Financial
Statements. Miscellaneous, net for 1996 includes the Association's $422,000
pro rata share in the earnings of a partially-owned foreign affiliate whose
principal business activities include the marketing, purchasing and resale of
edible peanuts. In 1995, the Association recognized a loss of $1.7 million on
this investment. Miscellaneous, net for 1996 and 1995 includes $1.0 million
and $1.7 million, respectively, representing the Association's equity in the
earnings of a pecan processing and marketing enterprise in South Carolina. Net
rental income of approximately $1.8 million and $2.0 million, respectively,
was included in miscellaneous, net for 1996 and 1995.
In 1996 and 1995, the Association's combined federal and state effective
income tax rates were 33% and 51%, respectively. The effective tax rate for
1995 reflects $5.5 million of additional income 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. In August 1996, the Association
entered into a $250 million unsecured committed credit facility with nine
commercial banks. The new facility includes a five-year $125 million revolving
credit commitment and a $125 million 364-day line of credit commitment.
Subsequently, the Association had unused loan commitments of $140.0 million
and additional unused uncommitted facilities to provide loans and letters of
credit from banks aggregating approximately $83.1 million. 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 June 29, 1996, Gold Kist's current ratio,
senior funded debt to total capitalization and total funded debt to
capitalization, determined under the loan agreements, were 1.40:1, 31% and
44%, respectively. The loan agreements apply to the Association and its
subsidiaries, excluding Golden Poultry. At June 29, 1996, the Association was
in compliance with the agreements. See Note 4 of Notes to Consolidated
Financial Statements.
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
12
<PAGE>
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. Accounts receivable increased during 1994
primarily as a result of increased crop loans to patrons and financing
provided to independent agricultural products distributors, as well as
increased poultry sales. Inventories during 1994 increased as a result of
increased broiler production, higher poultry selling prices and increased
cotton production in the Southeast.
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 for 1995 included $43.4 million related to
expansion and improvements 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. Increases in accounts receivable and
inventories during 1995 reflected the growth in poultry production and sales,
the expansion of Agri-Services retail operations in the Mississippi Delta and
the increase in Southeast cotton production.
During 1996, the uses of cash included capital expenditures of $74.3 million
and $28.6 million for repayments of long-term debt, as well as increases in
operating assets. Increases in inventories reflected the impact of higher feed
ingredient prices on raw materials and live poultry and hog inventories and
the increase in poultry prices on marketable products inventories. Increased
receivables were primarily the result of increases in crop financing provided
to producers and the growth in retail store sales. The Association's expansion
into cotton procurement and marketing contributed to the increase in operating
assets. The funds for these activities were provided by borrowings of $131.5
million. Capital expenditures for 1996 included $54.9 million for expansion
and improvements in the poultry operations and $18.6 million in expenditures
to acquire retail operations and construct cotton ginning and warehousing
facilities.
The Association, including its non-cooperative subsidiaries, plans capital
expenditures of approximately $140.0 million in 1997 that primarily include
expenditures for expansion and technological advances in poultry production
and processing and to a lesser extent, Agri-Services segment improvements. In
addition, planned capital expenditures include other asset improvements and
necessary replacements. Management intends to finance the planned 1997 capital
expenditures with existing cash balances and net margins adjusted for non-cash
items and additional long-term borrowings, as needed. In 1997, management
expects cash expenditures to approximate $28.0 million for equity
distributions. The Association believes cash on hand and cash equivalents at
June 29, 1996 and cash expected to be provided from operations, in addition to
borrowings available under existing credit arrangements and proceeds from the
sale of Subordinated Capital Certificates of Interest, will be sufficient to
maintain cash flows adequate for the Association's projected growth and
operational objectives during 1997.
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, fertilizers and cotton. 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 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. Management believes SFAS 121 will not 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
13
<PAGE>
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.
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.
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 Gold Kist Farms(R) and
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 Gold Kist Farms(R) and 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 25, JULY 1, JUNE 29,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Broiler Products
Volume.................................... $1,152,252 $1,226,104 $1,380,649
Percentage (%)............................ 73.8 72.6 70.6
</TABLE>
Gold Kist also markets hogs raised by members and non-members in Alabama,
Georgia and North Carolina.
14
<PAGE>
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 96 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.
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
June 29, 1996, 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 25, JULY 1, JUNE 29,
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Fertilizer and Chemicals
Volume............................................. $211,218 $268,625 $306,247
Percentage (%)..................................... 13.5 15.9 15.7
</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 1996, the Association conducted cotton ginning and storage
operations in Georgia. Cotton ginning and storage facilities are operated at
Statesboro, Marven, Byromville and DeSoto, Georgia. A central storage
warehouse is operated in Moultrie, Georgia. The Association provides ginning
and storage services to members and markets 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 and Alimenta Processing
Corporation are partners in Golden Peanut Company, a general partnership
formed to operate a peanut procuring, processing, and marketing
15
<PAGE>
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.
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
June 29, 1996, Gold Kist had export sales of $100.1 million of which the
primary export product (poultry) was $89.3 million. During that period, export
sales of poultry were mainly to customers in Russia, Eastern Europe, the Far
East, South Africa, Central and South America 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. All
material export sales transactions are denominated in United States dollars.
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 SunTrust Bank, Atlanta, 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
16
<PAGE>
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
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 June 29, 1996, there were the following aggregate
principal amounts of the series offered hereby outstanding: Fifteen Year--
$10,194,000; Ten Year--$8,902,000; Seven Year--$11,446,000; Five Year--
$12,693,000; Three Year--$6,538,000; and Two Year--$8,335,000. 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.
17
<PAGE>
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 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, 1997, 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, 1997 and ending on June
30, 1997. (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 7.25%, purchased on January 1, 1997, and redeemed at the request
of the holder on June 15, 1997, the redemption price would equal:
<TABLE>
<C> <C> <S>
$1,000.00 (Principal amount)
plus 32.77 (165 days' accrued interest at 7.25% per annum)
---------
$1,032.77
less 72.50 (1 year's simple interest at 7.25% per annum)
---------
$ 960.27 (Total Redemption Price)
</TABLE>
18
<PAGE>
B. For a Five Year Certificate in the principal amount of $5,000, bearing
interest at 7.25% (paid quarterly at the election of the holder), purchased on
January 1, 1997 and redeemed at the request of the holder on June 15, 1997,
the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
(75 days' accrued interest at 7.25% per annum. Interest
plus 74.49 previously paid on April 1, 1996 equals $84.38)
---------
$5,074.49
less 362.50 (1 year's simple interest at 7.25% per annum)
---------
$4,711.99 (Total Redemption Price)
</TABLE>
C. For a Five Year Certificate in the principal amount of $5,000 bearing
interest at 7.25% (accumulated quarterly at the election of the holder),
purchased on January 1, 1997, and redeemed at the request of the holder on
June 15, 1999, the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
(2 1/4 years, 75 days' accrued interest at 7.25% per annum
plus 956.23 accumulated and compounded quarterly)
---------
$5,956.23
less 362.50 (1 year's simple interest at 7.25% per annum)
---------
$5,593.73 (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
19
<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 June 29, 1996, Superior
Indebtedness amounted to approximately $519,254,000, 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 Notes 8 and 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
SunTrust Bank, Atlanta 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.)
20
<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 $19,000,000 revolving credit line and a $19,000,000
committed 364 day credit line both of which can be used for seasonal advances,
and a $5,000,000 letter of credit facility with the SunTrust Bank, Atlanta,
under which varying amounts are outstanding from time to time. Any such
indebtedness to the SunTrust Bank, Atlanta would constitute Superior
Indebtedness as defined in the Indenture. Gold Kist also maintains deposit
accounts with the SunTrust Bank, Atlanta, and from time to time the Bank
provides other banking and trust services to Gold Kist in the ordinary course
of its business. SunTrust Bank, Atlanta 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 SunTrust Bank, Atlanta, 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 SunTrust Bank, Atlanta, 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.
21
<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 June 29, 1996, there were the following aggregate principal amounts of the
series offered hereby outstanding: One Year Loan Certificates -- $13,539,000,
One Year Jumbo Loan Certificates -- $17,035,000, 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.
22
<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, 1997, and redeemed at
the request of the holder on February 15, 1997, 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, 1997 and redeemed at the request of the holder on
June 15, 1997, the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
(75 days' accrued interest at 6.00% per annum. Interest
plus 61.64 previously paid on April 1, 1997 equals $75.00)
---------
$5,061.64
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.
23
<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 June 29, 1996, Superior Indebtedness amounted to
approximately $519,254,000, 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 Notes 8 and 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
SunTrust Bank, Atlanta 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
24
<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 $19,000,000 revolving credit line and a $19,000,000
committed 364 day credit line both of which can be used for seasonal advances,
and a $5,000,000 letter of credit facility with the SunTrust Bank, Altanta,
under which varying amounts are outstanding from time to time. Any such
indebtedness to the SunTrust Bank, Atlanta would constitute Superior
Indebtedness as defined in the Indenture. Gold Kist also maintains deposit
accounts with the SunTrust Bank, Atlanta, and from time to time the Bank
provides other banking and trust services to Gold Kist in the ordinary course
of its business. SunTrust Bank, Atlanta 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
July 1, 1995, and June 29, 1996, and for each of the years in the three-year
period ended June 29, 1996 included herein or incorporated by
25
<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 June 25, 1994 and July 1, 1995 consolidated
financial statements refer to changes in accounting for income taxes and for
certain investments in debt and equity securities.
The combined consolidated financial statements of Golden Peanut Company and
Subsidiaries and Alimenta Commodities, LLC at June 30, 1996 and 1995, and for
each of the three years in the period ended June 30, 1996 (not included
separately herein), 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. The combined consolidated
financial statements audited by Ernst & Young LLP reflect certain amounts
which have been included in the consolidated financial statements of Gold Kist
Inc. as of June 29, 1996 and July 1, 1995 and for each of the three years in
the period ended June 29, 1996, 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.
26
<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 July 1, 1995 and June 29, 1996, 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 June 29, 1996.
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
combined consolidated financial statements of Golden Peanut Company and
Subsidiaries, a partnership investment, and Alimenta Commodities, LLC, a
limited liability corporation, investments accounted for using the equity
method of accounting, as described in Note 9(b) to the consolidated financial
statements. The combined consolidated financial statements of Golden Peanut
Company and Subsidiaries and Alimenta Commodities, LLC, 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 and Subsidiaries and
Alimenta Commodities, LLC, 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 the other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the 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 July 1, 1995 and June 29, 1996, and the results of their operations and
their cash flows for each of the years in the three-year period ended June 29,
1996, 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 6, 1996, except
for the first paragraph
of note 8 as to which
the date is September 13, 1996
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partnership Committee
Golden Peanut Company and
Alimenta Commodities, LLC
We have audited the combined consolidated balance sheets of Golden Peanut
Company and Subsidiaries (the "Partnership") and Alimenta Commodities, LLC
("LLC") (since April 1, 1996, date of inception), (collectively, the
"Companies"), as of June 30, 1996 and 1995, and the related combined
consolidated statements of operations, partners' equity, and cash flows for
each of the three years in the period ended June 30, 1996 (not presented
separately herein). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements 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 combined consolidated financial position of
Golden Peanut Company and Subsidiaries and Alimenta Commodities, LLC at June
30, 1996 and 1995, and the combined consolidated results of their operations
and their cash flows for each of the three years in the period ended June 30,
1996, in conformity with generally accepted accounting principles.
As discussed in Note 8 to the combined consolidated financial statements, in
1994 the Partnership changed its method of accounting for postretirement
benefits other than pensions.
ERNST & YOUNG LLP
Atlanta, Georgia
September 6, 1996
F-2
<PAGE>
GOLD KIST INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 1, 1995 JUNE 29, 1996
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 16,597 20,562
Receivables, principally trade, including notes
receivable of $43.8 million in 1995 and $68.9
million in 1996, less allowance for doubtful
accounts of $5,877 in 1995 and $7,726 in 1996..... 189,180 242,411
Inventories (note 2)............................... 226,988 270,367
Other current assets............................... 17,718 39,204
-------- -------
Total current assets.............................. 450,483 572,544
Investments (note 9)................................ 93,039 104,728
Property, plant and equipment, net (note 3)......... 227,646 255,728
Other assets........................................ 50,469 42,960
-------- -------
$821,637 975,960
======== =======
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of long-term
debt (note 4):
Short-term borrowings............................. $ 70,800 112,800
Subordinated loan certificates.................... 27,363 30,574
Current maturities of long-term debt.............. 25,834 27,089
-------- -------
123,997 170,463
Accounts payable................................... 117,952 126,340
Accrued compensation and related expenses.......... 28,817 32,590
Patronage refund and other equity payable in cash.. 8,863 24,043
Interest left on deposit (note 4).................. 10,493 12,119
Other current liabilities.......................... 13,776 22,532
-------- -------
Total current liabilities......................... 303,898 388,087
Long-term debt, excluding current maturities (note
4).................................................. 138,659 188,948
Accrued postretirement benefit costs (note 7(b)).... 36,929 40,271
Other liabilities................................... 3,189 4,072
-------- -------
Total liabilities................................. 482,675 621,378
-------- -------
Minority interest................................... 23,972 28,172
Patrons' and other equity (note 5):
Common stock, $1.00 par value--Authorized 500
shares; issued and outstanding 62 in 1995 and 36
in 1996........................................... 62 36
Patronage reserves................................. 216,854 209,140
Unrealized gain on marketable equity security (note
9(a)).............................................. 18,531 20,978
Retained earnings.................................. 79,543 96,256
-------- -------
Total patrons' and other equity................... 314,990 326,410
Commitments and contingent liabilities (notes 7 and
8)
-------- -------
$821,637 975,960
======== =======
</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 25, 1994 JULY 1, 1995 JUNE 29, 1996
------------- ------------ -------------
<S> <C> <C> <C>
Net sales volume...................... $1,561,034 1,688,537 1,955,569
Cost of sales......................... 1,385,239 1,522,063 1,731,448
---------- --------- ---------
Gross margins........................ 175,795 166,474 224,121
Distribution, administrative and
general expenses...................... 121,417 131,410 155,664
---------- --------- ---------
Net operating margins................ 54,378 35,064 68,457
---------- --------- ---------
Other income (deductions):
Interest income...................... 6,752 8,779 9,946
Interest expense..................... (13,924) (17,525) (21,065)
Equity in loss of partnership (note
9(b))................................ (1,110) (9,625) (1,181)
Gain on sale of investments.......... -- 3,070 --
Miscellaneous, net................... 3,978 5,823 5,962
---------- --------- ---------
(4,304) (9,478) (6,338)
---------- --------- ---------
Margins before income taxes, minority
interest and cumulative effect of
accounting change................... 50,074 25,586 62,119
Income taxes (note 6)................. 14,861 13,094 20,757
---------- --------- ---------
Margins before minority interest and
cumulative effect of accounting
change.............................. 35,213 12,492 41,362
Minority interest..................... (1,148) (741) (4,330)
---------- --------- ---------
Margins before cumulative effect of
accounting change.................... 34,065 11,751 37,032
Cumulative effect of change in
accounting for income taxes (note 6).. 5,339 -- --
---------- --------- ---------
Net margins.......................... $ 39,404 11,751 37,032
========== ========= =========
</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 25, 1994, JULY 1, 1995 AND JUNE 29, 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
REVOLVING UNREALIZED
FUND AND GAIN ON
CUMULATIVE MARKETABLE
COMMON PREFERRED PATRONAGE EQUITY RETAINED
TOTAL STOCK CERTIFICATES RESERVES SECURITY EARNINGS
-------- ------ ------------ --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
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 -- 216,854 18,531 79,543
Net margins for 1996... 37,032 -- -- 21,700 -- 15,332
Nonqualified patronage
refund and other
equity payable in
cash.................. (24,212) -- -- (24,212) -- --
Redemptions and other
changes............... (3,847) (26) -- (5,202) -- 1,381
Change in value of
marketable equity
security (note 9(a)).. 2,447 -- -- -- 2,447 --
-------- --- ------- ------- ------ ------
June 29, 1996........... $326,410 36 -- 209,140 20,978 96,256
======== === ======= ======= ====== ======
</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 25, 1994 JULY 1, 1995 JUNE 29, 1996
------------- ------------ -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net margins.......................... $ 39,404 11,751 37,032
Non-cash items included in net
margins:
Depreciation and amortization....... 37,251 38,085 40,063
Cumulative effect of changes in
accounting principle................ (5,339) -- --
(Gains) losses on sales of assets... (201) (3,459) 101
Equity in loss of partnership....... 1,110 9,625 1,181
Deferred income tax benefit......... (5,562) (6,650) (2,250)
Other............................... 3,208 1,943 (1,515)
Changes in operating assets and
liabilities:
Receivables......................... (26,943) (28,466) (53,231)
Inventories......................... (23,963) (28,521) (43,379)
Other current assets................ 152 (3,382) (20,561)
Accounts payable and accrued
expenses............................ 21,765 15,117 20,917
Interest left on deposit............ (4,052) 1,153 1,626
-------- ------- -------
Net cash provided by (used in)
operating activities............... 36,830 7,196 (20,016)
-------- ------- -------
Cash flows from investing activities:
Acquisitions of investments.......... (762) (5,093) (4,356)
Acquisitions of property, plant and
equipment............................ (37,232) (61,762) (74,262)
Proceeds from disposal of
investments.......................... 1,279 8,942 200
Proceeds from sales of loans......... 5,040 4,925 10,052
Other................................ (5,883) (7,179) 2,406
-------- ------- -------
Net cash used in investing
activities......................... (37,558) (60,167) (65,960)
-------- ------- -------
Cash flows from financing activities:
Short-term borrowings, net........... 11,491 60,286 45,211
Proceeds from long-term debt......... 26,668 49,752 86,296
Principal payments of long-term
debt................................. (30,130) (36,676) (28,557)
Patronage refunds and other equity
paid in cash......................... (22,717) (19,464) (13,009)
-------- ------- -------
Net cash provided by (used in)
financing activities............... (14,688) 53,898 89,941
-------- ------- -------
Net change in cash and cash
equivalents........................ (15,416) 927 3,965
Cash and cash equivalents at beginning
of year............................... 31,086 15,670 16,597
-------- ------- -------
Cash and cash equivalents at end of
year.................................. $ 15,670 16,597 20,562
======== ======= =======
Supplemental disclosure of cash flow
data:
Cash paid during the years for:
Interest (net of amounts
capitalized)........................ $ 18,575 18,792 18,327
======== ======= =======
Income taxes........................ $ 23,352 21,144 20,676
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 25, 1994, JULY 1, 1995 AND JUNE 29, 1996
(DOLLAR AMOUNTS IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Gold Kist ("Gold Kist" or "Association") Inc. is a diversified agricultural
membership cooperative association, headquartered in Atlanta, Georgia. Gold
Kist serves approximately 29,000 active farmer members and other cooperative
associations located principally in the southeastern United States. Gold Kist
operates broiler and pork production facilities 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 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 1995 consolidated financial
statements to conform to the presentation in the 1996 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.
F-7
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Marketable products consist primarily of dressed and further processed
poultry and cotton. 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
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 1995, 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 and 1996 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 1994, 1995 and 1996, 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
F-8
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
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.
(g)Fair Value of Financial Instruments
Gold Kist's financial instruments include cash and cash equivalents,
accounts receivables and payables and accrued expenses, notes receivable
and debt. Because of the short maturity of cash equivalents, accounts
receivables and payables and accrued expenses, certain short-term debt
which matures in less than one year, and long-term debt with variable
interest rates 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 and June 29, 1996 unless
otherwise specified (see notes 1(e) and 4).
(h)Fiscal Year
Gold Kist employs a 52/53 week fiscal year. The consolidated financial
statements for 1994, 1995 and 1996 reflect 52, 53 and 52 weeks,
respectively. Fiscal 1997 will be a 52 week year.
(i)Use of Estimates
Management of Gold Kist has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from these estimates.
(2) INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1995 1996
-------- -------
<S> <C> <C>
Merchandise for sale..................................... $ 85,054 83,886
Live poultry and hogs.................................... 76,211 95,682
Marketable products--poultry............................. 30,532 40,047
Marketable products--cotton.............................. -- 11,258
Raw materials and supplies............................... 35,191 39,494
-------- -------
$226,988 270,367
======== =======
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows:
<CAPTION>
1995 1996
-------- -------
<S> <C> <C>
Land and land improvements............................... $ 31,809 33,268
Buildings................................................ 166,806 188,845
Machinery and equipment.................................. 325,270 368,118
Construction in progress................................. 27,812 16,833
-------- -------
551,697 607,064
Less accumulated depreciation............................ 324,051 351,336
-------- -------
$227,646 255,728
======== =======
</TABLE>
F-9
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(4) NOTES PAYABLE AND LONG-TERM DEBT
At June 29, 1996, Gold Kist had a $150 million unsecured committed credit
facility with five commercial banks. The facility included 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. As of June
29, 1996, borrowings of $50 million and $40 million, respectively, were
outstanding under the revolving credit and 364-day line-of-credit commitments.
At June 29, 1996, Gold Kist had other borrowings of $112.8 million outstanding
under uncommitted loans and letters of credit facilities. At June 29, 1996,
the Company classified $50 million of borrowings under the $50 million
revolving credit and borrowings of $40 million under the uncommitted loan
facilities as long-term debt. On August 8, 1996, Gold Kist refinanced these
loans under a five-year $125 million revolving credit commitment.
On August 9, 1996, the Association entered into a $250 million unsecured
committed credit facility with nine commercial banks. The new facility
includes a five-year $125 million revolving credit commitment and a $125
million 364-day line of credit commitment. The five-year revolving credit
agreement expires on August 9, 2001, but may be extended twice for successive
one-year periods with the consent of the banks. The 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 .20% per annum. The 364-day line of credit
provides short-term financing that will expire in August 1997 and may be
extended with the consent of the banks. The 364-day line of credit is subject
to a .16% per annum facility fee. Borrowings under the $250 million facility
will bear variable interest rates at or below prime. Also, the facility
permits competitive bid interest rates by the participating banks.
At June 29, 1996, Gold Kist had other unused long-term loan commitments of
$20 million and additional uncommitted facilities to provide loans and letters
of credit from banks aggregating approximately $94 million. These unsecured
borrowings bear interest at rates below prime.
Subordinated loan certificates of $27.4 million at July 1, 1995 bore
interest at rates of 3.5% to 6.7% with terms of one year and were unsecured.
At June 29, 1996, subordinated loan certificates outstanding were $30.6
million bearing interest at rates of 5.5% to 6.4%.
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.
F-10
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Unsecured senior notes payable:
9.375% interest notes, due in semi-annual installments of
$5,500
with interest payable semiannually......................... $ 16,500 11,000
9.90% interest notes, due in semi-annual installments of
$1,539
with interest payable semiannually......................... 10,766 9,230
9.35% interest note, due in a single installment in June
2001 with
interest payable quarterly................................. 20,000 20,000
Other long term debt:
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
July 1, 1995 and 7.2% at June 29, 1996).................... 60,417 59,431
Revolving credit agreements with commercial banks (weighted
average
rate of 6.5% at July 1, 1995 and 5.7% at June 29, 1996).... 37,000 50,000
Borrowings under uncommitted lines of credit (weighted
average rate of
5.8% at June 29, 1996)..................................... -- 40,000
Tax exempt industrial revenue bonds with varying interest
rates due in
quarterly and annual installments through 2016, secured by
property,
plant and equipment........................................ 12,701 18,500
Pro rata share of mortgage loan, at 8.47% interest, due in
monthly installments
to June 30, 2004, secured by a building (note 3)........... 2,497 2,306
Other....................................................... 4,612 5,570
-------- --------
164,493 216,037
Less current maturities...................................... 25,834 27,089
-------- --------
$138,659 188,948
======== ========
</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 and June 29, 1996 was approximately $51.7 million and $43.0
million, respectively.
The terms of debt agreements specify minimum working capital, net worth and
current ratio requirements. 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 1997 of unused
amounts, $4.6 million as of June 29, 1996, 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 June 29, 1996 are as follows:
Fiscal year:
<TABLE>
<CAPTION>
1997............................................................ $ 27,089
<S> <C>
1998............................................................ 14,744
1999............................................................ 12,147
2000............................................................ 5,927
2001............................................................ 25,187
========
</TABLE>
F-11
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(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), Gold Kist 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.
The provisions for income tax expense, principally Federal, consist of the
following:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------ ------
Current expense..................................... $20,423 19,744 23,007
<S> <C> <C> <C>
Deferred benefit.................................... (5,562) (6,650) (2,250)
------- ------ ------
$14,861 13,094 20,757
======= ====== ======
</TABLE>
The deferred income tax effect of the unrealized gain on marketable equity
security has been charged as a component of patrons' and other equity for 1995
and 1996.
Gold Kist's combined federal and state effective tax rates from operations
for 1994, 1995 and 1996 were 30%, 51% and 33%, respectively. A reconciliation
of income tax expense from operations computed by applying the Federal
corporate income tax rate of 35% in 1994, 1995 and 1996 to margins before
income taxes, minority interest and cumulative effect of accounting changes
for the applicable year follows:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------ ------
<S> <C> <C> <C>
Computed expected income tax expense.............. $17,526 8,955 21,742
Increase (decrease) in income tax expense
resulting from:
Income tax litigation............................ -- 5,520 --
Cash portion of nonqualified patronage refund.... (1,420) (1,031) (986)
Effect of state income taxes, net of Federal
benefit.......................................... 1,050 447 970
Nonqualified equity redemptions.................. (525) (490) (886)
Target jobs credits.............................. (607) (499) (11)
Other, net....................................... (1,163) 192 (72)
------- ------ ------
$14,861 13,094 20,757
======= ====== ======
</TABLE>
F-12
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at July 1,
1995 and June 29, 1996 are as follows:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits................................. $ 14,410 15,589
Insurance accruals...................................... 7,903 8,059
Equity in partnerships.................................. 4,175 2,618
Bad debt reserves....................................... 2,573 3,156
State tax operating loss carryforwards.................. 1,984 1,406
Other................................................... -- 1,426
-------- --------
Total gross deferred tax assets........................ 31,045 32,254
Less valuation allowance................................ (1,984) (1,406)
-------- --------
Net deferred tax assets................................ 29,061 30,848
-------- --------
Deferred tax liabilities:
Unrealized gain on marketable equity security........... (11,587) (13,116)
Accelerated depreciation................................ (969) (1,245)
Deferred compensation................................... (3,990) (3,371)
Other................................................... (118) --
-------- --------
Total deferred tax liabilities......................... (16,664) (17,732)
-------- --------
Net deferred tax assets................................ $ 12,397 13,116
======== ========
</TABLE>
The net change in the total valuation allowance for the years ended 1995 and
1996 was an increase of $71 and a decrease of $578, 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.
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 has appealed the decision to the Eleventh Circuit Court of
Appeals. The accompanying financial statements reflect the impact of the Tax
Court decision through June 29, 1996.
(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.
F-13
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Net periodic pension expense for 1994, 1995 and 1996 included the following
components:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Service cost--benefits earned during the year.... $ 3,720 3,429 4,092
Interest cost on projected benefit obligations... 6,479 6,949 7,426
Actual return on plan assets..................... (3,236) (11,393) (27,724)
Net amortization and deferral.................... (5,989) 1,208 16,799
------- ------- -------
Net periodic pension expense.................... $ 974 193 593
======= ======= =======
</TABLE>
The following table sets forth the plans' funded status, amounts recognized
in the consolidated balance sheets at July 1, 1995 and June 29, 1996 and
economic assumptions:
<TABLE>
<CAPTION>
1995 1996
-------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested participants..................................... $ 74,529 88,287
Nonvested............................................... 6,630 7,088
-------- -------
Total accumulated benefit obligations.................. $ 81,159 95,375
======== =======
Projected benefit obligations for services rendered to
date..................................................... $ 96,559 111,251
======== =======
Plan assets for benefits:
Plan assets at fair value............................... $118,268 145,148
Prepaid pension cost included in other assets in
consolidated balance sheets............................ (16,556) (18,179)
-------- -------
Net plan assets........................................ $101,712 126,969
======== =======
Plan assets in excess of projected benefit obligations... $ 5,153 15,718
======== =======
Consisting of:
Unrecognized net asset existing at the date of
adoption................................................ $ 9,721 8,318
Unrecognized net gain/(loss) from past experience
different from that assumed and effects of changes in
assumptions............................................. (1,136) 13,824
Prior service cost not yet recognized in net periodic
pension cost............................................ (3,432) (6,424)
-------- -------
$ 5,153 15,718
======== =======
Actuarial assumptions:
Weighted-average discount rate.......................... 8.00% 8.00%
Weighted-average expected long-term rate of return on
plan assets............................................. 9.25% 9.50%
Weighted-average rate of compensation increase.......... 5.50% 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.
F-14
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(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 1994, 1995 and
1996 included the following components:
<TABLE>
<CAPTION>
1994 1995 1996
------ ----- -----
<S> <C> <C> <C>
Service cost--benefits earned during the year...... $1,728 1,742 2,029
Interest cost...................................... 2,530 2,645 2,998
Net amortization and deferral...................... -- (18) 80
------ ----- -----
Net postretirement health and death benefit
expense........................................... $4,258 4,369 5,107
====== ===== =====
</TABLE>
Gold Kist's postretirement benefit plans are not funded. The status of
the plans at July 1, 1995 and June 29, 1996 was as follows:
<TABLE>
<CAPTION>
1995 1996
------- ------
<S> <C> <C>
Actuarial present value of accumulated postretirement
benefit obligation:
Retirees.............................................. $15,528 18,010
Fully eligible active plan participants............... 7,821 10,188
Other active plan participants........................ 14,016 16,571
------- ------
37,365 44,769
Unrecognized net gain (loss) from experience
differences........................................... 1,341 (2,737)
------- ------
$38,706 42,032
======= ======
</TABLE>
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 2001 and remaining at that level thereafter.
The health care cost trend rate used to determine the accumulated
postretirement benefit obligation at June 29, 1996 was 8%, declining
ratably to 5% by the year 2001 and remaining at that level thereafter.
The discount rate used to determine the accumulated postretirement
benefit obligation was 8.00% at July 1, 1995 and June 29, 1996,
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 June 29, 1996 by approximately 12% and net
postretirement health care cost by 14%.
(8) CONTINGENT LIABILITIES AND COMMITMENTS
In January 1993, certain Alabama member patrons of the Association filed a
lawsuit in the Circuit Court of Jefferson County, Alabama, Tenth Judicial
Circuit against the Association and Golden Poultry and certain directors and
officers of the companies. (Ronald Pete Windham and Windham Enterprises, Inc.
on their behalf and on behalf of and for the use and benefit of Gold Kist,
Inc. and its shareholders/members v. Harold O. Chitwood, individually in his
capacity as an officer of Gold Kist and a Director of Golden Poultry; et al).
The lawsuit alleged that the named defendants violated their fiduciary duties
by diverting corporate opportunities from the Association to Golden Poultry
and Carolina Golden Products Company in connection with the creation of Golden
Poultry and Carolina Golden Products Company and by permitting their continued
operations. In
F-15
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
March 1994, the Court certified the Windham litigation as a class action. In
September 1995, Golden Poultry and Carolina Golden Products Company were
dismissed from the litigation. On October 25, 1995, the jury in the Windham
case returned verdicts in favor of the plaintiffs in the litigation. On July
2, 1996, the Jefferson County, Alabama Circuit Court Judge entered an Order in
the case directing Gold Kist to acquire the approximately 27% of Company
shares currently owned by investors so that all of the issued and outstanding
stock of the Company would be owned by Gold Kist. The Court denied the
plaintiffs' demands for additional allocations and cash distributions to the
class members. On September 13, 1996, subsequent to Motions for
Reconsideration filed by the plaintiffs and Gold Kist, the Court entered a
Final Judgment and Decree amending its July 2, 1996 Order. The Final Judgment
and Decree relieves Gold Kist of the requirement to acquire the 27% of Golden
Poultry common stock not already owned by Gold Kist. This Final Judgment and
Decree requires Gold Kist to acquire or redeem all Golden Poultry common stock
and/or stock options held or issued to Gold Kist officers and directors. Gold
Kist is further ordered, with its consent, to revolve $21.2 million of
notified equity for the years 1976 through 1983 within four calendar months of
the date of the Order and requires Gold Kist to pay $4.2 million in fees and
expenses to the plaintiffs' attorneys. An appeal of the Final Judgment may be
filed on or before October 25, 1996, and could have the effect of staying the
Final Judgment pending the outcome of any appeal. The redemption of notified
equity and the fees and expenses awarded to plaintiffs' attorneys have been
reflected in the accompanying consolidated financial statements.
Gold Kist is also party to other various legal and administrative
proceedings, all of which management believes constitute ordinary routine
litigation incident to the business conducted by Gold Kist, or are not
material in amount.
Gold Kist received proceeds of $20.0 million, $5.0 million, $4.9 million and
$10.2 million during 1993, 1994, 1995 and 1996, respectively, for
collateralized loans sold with recourse to an insurance company, of which
$26.4 million was outstanding at June 29, 1996. No gain or loss was recognized
on the sale of these loans. A $264 thousand allowance has been recognized in
the accompanying consolidated financial statements for potential losses that
may occur. As of June 29, 1996, there have been no credit losses related to
the loans guaranteed under this agreement.
Gold Kist is a guarantor of amounts outstanding under a $65.0 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 June 29, 1996, the
amounts outstanding under this facility were $60.6 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 June 29, 1996,
the Association's marketable equity security was carried at its fair
value of $54.8 million, which represents a gross unrealized gain of
$34.1 million. The 1996 gross unrealized gain, net of deferred income
taxes of $13.1 million, has been reflected as a separate component of
patrons' and other equity. At July 1, 1995, the marketable equity
security was carried at its fair value of $50.1 million, which
represents a gross unrealized gain of $30.1 million. The 1995 gross
unrealized gain, net of deferred income taxes of $11.6 million, has been
reflected as a separate component of patrons' and other equity.
F-16
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Gains realized on sales and dividends totaled $170 thousand, $1.3
million and $494 thousand and are included in miscellaneous, net for the
years ended June 25, 1994, July 1, 1995 and June 29, 1996, 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 $15.5 million and $17.2 million at July 1, 1995 and June 29, 1996,
respectively. In July 1995, Gold Kist made an additional investment of
$2.8 million. The partnership has a $450.0 million commercial paper
facility supported by lines-of-credit with various banks totaling $220.0
million. At June 30, 1996, borrowings of $105.0 million were outstanding
under the commercial paper facility. Summarized financial information of
Golden Peanut Company, excluding Alimenta Commodities, LLC, is shown
below:
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
1995 1996
--------- -------
<S> <C> <C>
Current assets.......................................... $ 233,133 154,587
Property, plant and equipment, net...................... 34,385 31,071
--------- -------
Total assets........................................... $ 267,518 185,658
========= =======
Current liabilities..................................... $ 220,954 128,892
Accrued postretirement benefit costs.................... 5,103 5,308
Partners' equity........................................ 41,461 51,458
--------- -------
Total liabilities and partners' equity................. $ 267,518 185,658
========= =======
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1994 1995 1996
-------- ------- -------
<S> <C> <C> <C>
Net sales and other operating income.......... $456,937 429,067 411,938
Costs and expenses............................ 460,291 457,942 415,479
-------- ------- -------
Net loss..................................... $ (3,354) (28,875) (3,541)
======== ======= =======
</TABLE>
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 loss of partnership in the accompanying 1994 consolidated
statement of operations since the amount is not significant.
In 1994, 1995 and 1996, 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
$2.7 million, $3.9 million and $3.1 million in 1994, 1995 and 1996,
respectively. In addition, Gold Kist purchased $5.4 million, $3.1
million and $2.6 million of inventory from Golden Peanut Company in
1994, 1995 and 1996, 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.
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 ELIMINATION CONSOLIDATED
---------- -------- ------------ ------------
<S> <C> <C> <C> <C>
YEAR ENDED JUNE 25, 1994
Net sales volume................ $1,183,729 377,305 -- 1,561,034(a)
========== ======= ======= =========
Net margins from operations..... $ 52,177 8,471 -- 60,648
========== ======= =======
General corporate expenses...... (6,270)
Other deductions, net........... (4,304)
---------
Margins before income taxes,
minority interest and
cumulative effect of accounting
change......................... $ 50,074
=========
Depreciation and amortization
expense......................... $ 31,234 5,134 883(b) 37,251
========== ======= ======= =========
Capital expenditures............ $ 32,655 3,772 805(b) 37,232
========== ======= ======= =========
Identifiable assets at June 25,
1994............................ $ 375,389 218,111 122,932(b) 716,432
========== ======= ======= =========
YEAR ENDED JULY 1, 1995
Net sales volume................ $1,255,087 433,450 -- 1,688,537(a)
========== ======= ======= =========
Net margins from operations..... $ 34,095 8,420 -- 42,515
========== ======= =======
General corporate expenses...... (7,451)
Other deductions, net........... (9,478)
---------
Margins before income taxes and
minority interest............... $ 25,586
========== ======= ======= =========
Depreciation and amortization
expense......................... $ 31,551 5,582 952(b) 38,085
========== ======= ======= =========
Capital expenditures............ $ 43,423 17,959 380(b) 61,762
========== ======= ======= =========
Identifiable assets at July 1,
1995............................ $ 418,790 258,461 144,386(b) 821,637
========== ======= ======= =========
YEAR ENDED JUNE 29, 1996
Net sales volume................ $1,412,083 543,486 -- 1,955,569(a)
========== ======= ======= =========
Net margins from operations..... $ 70,191 10,077 -- 80,268
========== ======= ======= =========
General corporate expenses...... (11,811)
Other deductions, net........... (6,338)
---------
Margins before income taxes and
minority interest............... $ 62,119
=========
Depreciation and amortization
expense......................... $ 32,303 7,124 636(b) 40,063
========== ======= ======= =========
Capital expenditures............ $ 54,899 18,582 781(b) 74,262
========== ======= ======= =========
Identifiable assets at June 29,
1996............................ $ 498,722 300,827 176,411(b) 975,960
========== ======= ======= =========
</TABLE>
(a) Net sales volume includes export sales amounting to $37,731, $70,113 and
$100,089 in 1994, 1995 and 1996, respectively, which have no significant
geographical concentration.
(b)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
Risk Factors............................................................. 5
Gold Kist Inc............................................................ 6
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
----------------
,1996
----------------
AGVESTMENTS, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fees.............................................. $ 15,180
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...................................................... $106,180*
</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 while serving as a director or officer of Gold
Kist, is serving or has served as an officer, director or trustee 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 permitted for a director under
Sections 14-3-850 through 14-3-855 of the Georgia Nonprofit 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 a director, officer or trustee 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 an officer or
director 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 under which expenses
associated therewith could be idemnified. 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. In the event that any of the provisions of this
Article (including any provision within a single section, subsection,
paragraph, sentence or clause) is held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable, the remaining provisions of this
Article are severable and shall remain enforceable to the fullest extent
permitted by law."
II-1
<PAGE>
The Georgia Nonprofit Corporation Code provides:
14-3-850. 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 business or
nonprofit 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, the
director 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 counsel 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.
14-3-851. AUTHORITY TO INDEMNIFY DIRECTOR INVOLVED IN LEGAL PROCEEDING.
(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 the individual is or was a director against
liability incurred in the proceeding if the individual 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, the individual had no
reasonable cause to believe the individual's conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose the director 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
described in 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 the director was
adjudged liable on the basis that personal benefit was improperly received
by the director.
(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.
14-3-852. INDEMNIFICATION FOR REASONABLE EXPENSES OF SUCCESSFUL DEFENSE.
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 the director was a party, or in defense of any claim,
II-2
<PAGE>
issue, or matter therein, because the director is or was a director of the
corporation, the corporation shall indemnify the director against reasonable
expenses incurred by the director in connection therewith.
14-3-853. ADVANCE OR REIMBURSEMENT OF LITIGATION 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 the director has met the standard of conduct set
forth in subsection (a) of Code Section 14-3-851; and
(2) The director furnishes the corporation a written undertaking,
executed personally or on the director's behalf, to repay any advances if
it is ultimately determined that the director is not entitled to
indemnification under this part.
(b) The undertaking required by paragraph (2) of subsection (a) 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.
14-3-854. COURT ORDERED INDEMNIFICATION AND ADVANCES OF 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 of 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 in the amount it considers proper if
it determines:
(1) The director is entitled to mandatory indemnification under Code
Section 14-3-852, 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 14-3-851 or was
adjudged liable as described in subsection (d) of Code Section 14-3-851,
but if the director was adjudged so liable, indemnification is limited to
reasonable expenses incurred unless the articles or bylaws provide
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 the director's
reasonable expenses incurred as a party to a proceeding in advance of final
disposition of the proceeding.
14-3-855. DETERMINATION OF RIGHT, AND AUTHORIZATION OF PAYMENT OF
INDEMNIFICATION REQUIRED.
(a) A corporation may not indemnify a director under Code Section 14-3-851
unless authorized thereunder and a determination has been made in the specific
case that indemnification of the director is permissible in the circumstances
because the director has met the standard of conduct set forth in subsection
(a) of Code Section 14-3-851.
(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 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 in
which selection directors who are parties may participate; or
(4) By the members, but directors who are at the time parties to the
proceeding may not vote as members 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."
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.
(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-4
<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-5
<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-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(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-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(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-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(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
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
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 Registration filed on Exhibit 10(b)(9)
Savings Plan, as Form S-2 (Registration
amended No. 33-62869)
10(b)(10) Gold Kist Investor Registration filed on Exhibit 10(b)(9)
Savings Plan, as Form S-2 (Registration
amended No. 33-62869)
10(b)(11) Gold Kist Split Dollar Registration filed on Exhibit 10(b)(9)
Life Insurance Plan Form S-2 (Registration
No. 33-62869)
</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>
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
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
</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(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
10(j) Credit Agreement dated
as of August 9, 1996,
with Various Banks and
Lending Institutions,
as Lenders and SunTrust
Bank, Atlanta, as Agent
10(k)(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)
10(k)(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
10(k)(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
10(k)(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
10(l) 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.
12 Computation of Ratio 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
</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>
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-12
<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 AMENDMENT TO ITS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF GEORGIA, ON THE
19TH DAY OF SEPTEMBER, 1996.
Gold Kist Inc.
/s/ G.O. Coan
By: _________________________________
G. O. COAN ,Chief Executive
Officer(Principal Executive
Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO ITS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ G. O. Coan Chief Executive September 19,
- ------------------------------------- Officer (Principal 1996
G. O. COAN Executive Officer)
/s/ Peter J. Gibbons Vice President- September 19,
- ------------------------------------- Finance (Principal 1996
PETER J. GIBBONS Financial Officer)
/s/ W. F. Pohl, Jr. Controller September 19,
- ------------------------------------- (Principal 1996
W. F. POHL, JR. Accounting Officer)
/s/ W. P. Smith, Jr. Director September 17,
- ------------------------------------- 1996
W. P. SMITH, JR.
/s/ Fred K. Norris, Jr. Director September 17,
- ------------------------------------- 1996
FRED K. NORRIS, JR.
/s/ Dan Smalley Director September 17,
- ------------------------------------- 1996
DAN SMALLEY
/s/ Phil Ogletree, Jr. Director September 17,
- ------------------------------------- 1996
PHIL OGLETREE, JR.
/s/ James E. Brady, Jr. Director September 17,
- ------------------------------------- 1996
JAMES E. BRADY, JR.
/s/ A. Jack Nally Director September 17,
- ------------------------------------- 1996
A. JACK NALLY
/s/ W. Kenneth Whitehead Director September 17,
- ------------------------------------- 1996
W. KENNETH WHITEHEAD
/s/ H. Michael Davis Director September 17,
- ------------------------------------- 1996
H. MICHAEL DAVIS
/s/ Herbert A. Daniel, Jr. Director September 17,
- ------------------------------------- 1996
HERBERT A. DANIEL, JR.
II-13
<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
5 Opinion of Alston & Bird
10(j) Credit Agreement dated as of August 9, 1996, with
Various Banks, as Lender, and SunTrust Bank, Atlanta,
as Agent
12 Computation of Ratios of Net Margins to Fixed Charges
23(a) Consent of Alston and 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 Suboridinated 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>
EXHIBIT 1(a)
[LETTERHEAD OF GOLD KIST APPEARS HERE]
August 15, 1996
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 Amended 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
PJG:sr
Attachment
[1017/S-1]
<PAGE>
EXHIBIT A
---------
Dated: August 15, 1996
Below are listed the class of securities noted as Designated Securities on the
attached Written Notice or 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 months maturity, (Series A)
all as described in the Offering Prospectus.
<PAGE>
EXHIBIT 5
[LETTERHEAD OF ALSTON & BIRD APPEARS HERE]
September 20, 1996
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
Four 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
$1,000,000, Ten Year Subordinated Capital Certificates of Interest (Series D) in
the principal amount of $1,000,000, Five Year Subordinated Capital Certificates
of Interest (Series C) in the principal amount of $2,000,000, 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 $15,000,000, and One Year Subordinated Large Denomination
Loan Certificates (Series A) in the principal amount of $20,000,000 (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 Kist, the Certificates, upon proper execution, authentication
by the Trustee and delivery,
<PAGE>
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>
EXHIBIT 10(j)
CREDIT AGREEMENT
DATED AS OF AUGUST 9, 1996
BY AND AMONG
GOLD KIST INC.,
AS BORROWER,
VARIOUS BANKS AND LENDING INSTITUTIONS,
AS LENDERS,
AND
SUNTRUST BANK, ATLANTA,
AS AGENT.
<PAGE>
TABLE OF CONTENTS
Page
----
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.................................... 15
Section 2.1 Syndicated Loans..................................... 16
Section 2.2 Bid Rate Loans....................................... 16
ARTICLE 3. GENERAL LOAN TERMS................................... 16
Section 3.1 Notes; Repayment of Principal........................ 17
Section 3.2 Amount Limitations................................... 17
Section 3.3 Reduction of Commitments............................. 17
Section 3.4 Extension of Revolving Loan Maturity Date and
364-Day 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................................................. 23
Section 3.10 Voluntary Prepayments of Borrowings.................. 24
Section 3.11 [Intentionally Left Blank]........................... 24
Section 3.12 Payments, etc........................................ 24
Section 3.13 Interest Rate Not Ascertainable, etc................. 26
Section 3.14 Illegality........................................... 26
Section 3.15 Increased Costs...................................... 27
Section 3.16 Funding Losses....................................... 28
Section 3.17 Assumptions Concerning Funding of Fixed Rate Advances 28
Section 3.18 Apportionment of Payments............................ 28
Section 3.19 Sharing of Payments, Etc............................. 29
Section 3.20 Capital Adequacy..................................... 29
Section 3.21 Use of Proceeds...................................... 30
-i-
<PAGE>
ARTICLE 4. CONDITIONS TO LOAN CLOSING AND EXTENSIONS
OF LOANS............................................. 30
Section 4.1 Conditions Precedent to Initial Loans................ 30
Section 4.2 Conditions to all Loans.............................. 31
ARTICLE 5. REPRESENTATIONS AND WARRANTIES....................... 32
Section 5.1 Organization and Qualification....................... 32
Section 5.2 Financial Statements................................. 32
Section 5.3 Taxes................................................ 33
Section 5.4 Actions Pending...................................... 33
Section 5.5 Title to Properties.................................. 33
Section 5.6 Regulation U, Etc.................................... 33
Section 5.7 ERISA................................................ 34
Section 5.8 Outstanding Debt..................................... 34
Section 5.9 Conflicting Agreements or Other Matters.............. 34
Section 5.10 Possession of Franchises, Licenses, Etc.............. 35
Section 5.11 Governmental Consent................................. 35
Section 5.12 Disclosure........................................... 35
Section 5.13 Foreign Assets Control Regulations................... 35
Section 5.14 Labor Relations...................................... 36
Section 5.15 Enforceability of Agreement.......................... 36
Section 5.16 Subsidiaries......................................... 36
Section 5.17 Insurance Coverage................................... 36
Section 5.18 Investments.......................................... 36
Section 5.19 Intercompany Loans; Dividends........................ 36
ARTICLE 6. AFFIRMATIVE COVENANTS................................ 37
Section 6.1 Financial Statements................................. 37
Section 6.2 Inspection of Property............................... 38
Section 6.3 Insurance............................................ 38
Section 6.4 Conduct of Business.................................. 38
Section 6.5 Corporate Existence; Maintenance of Properties....... 39
Section 6.6 Environmental Laws................................... 39
Section 6.7 Taxes................................................ 40
Section 6.8 Keeping of Books; Fiscal Year........................ 40
Section 6.9 Compliance with Laws and Other Agreements............ 40
Section 6.10 Notice of Default.................................... 40
Section 6.11 Notice of Litigation................................. 40
-ii-
<PAGE>
Section 6.12 ERISA................................................ 41
Section 6.13 Use of Proceeds...................................... 41
ARTICLE 7. NEGATIVE COVENANTS................................... 41
Section 7.1 Financial Covenants.................................. 41
Section 7.2 Limitation on Restricted Payments.................... 42
Section 7.3 Liens................................................ 42
Section 7.4 Restrictions on Loans, Advances, Investments
and Contingent Liabilities........................... 43
Section 7.5 Sale of Stock and Debt of Subsidiaries............... 45
Section 7.6 Merger and Sale of Assets............................ 45
Section 7.7 Sale and Lease-Back.................................. 45
Section 7.8 Sale or Discount of Receivables...................... 46
Section 7.9 Commodity Contracts.................................. 46
Section 7.10 Issuance of Stock by Restricted Subsidiaries......... 46
ARTICLE 8. EVENTS OF DEFAULT AND REMEDIES....................... 46
Section 8.1 Events of Default.................................... 46
Section 8.2 Remedies on Default.................................. 48
ARTICLE 9. THE AGENT............................................ 50
Section 9.1 Appointment and Authorization........................ 50
Section 9.2 Nature of Duties of the Agent........................ 50
Section 9.3 Lack of Reliance on the Agent........................ 50
Section 9.4 Certain Rights of the Agent.......................... 51
Section 9.5 Liability of the Agent............................... 51
Section 9.6 Indemnification...................................... 52
Section 9.7 The Agent and Affiliates............................. 53
Section 9.8 Successor Agent...................................... 53
ARTICLE 10. MISCELLANEOUS........................................ 53
Section 10.1 Notices.............................................. 53
Section 10.2 Amendments, Etc...................................... 54
Section 10.3 No Waiver; Remedies Cumulative....................... 54
Section 10.4 Payment of Expenses, Etc............................. 54
Section 10.5 [Intentionally Left Blank]........................... 56
-iii-
<PAGE>
Section 10.6 Benefit of Agreement................................. 56
Section 10.7 Governing Law; Submission to Jurisdiction, Etc....... 58
Section 10.8 Independent Nature of the Lenders' Rights............ 59
Section 10.9 Counterparts......................................... 59
Section 10.10 Effectiveness; Survival.............................. 59
Section 10.11 Severability......................................... 59
Section 10.12 Independence of Covenants............................ 59
Section 10.13 Change in Accounting Principles,
Fiscal Year or Tax Laws.............................. 59
Section 10.14 Headings Descriptive; Entire Agreement............... 60
Section 10.15 Time is of the Essence............................... 60
Section 10.16 Usury................................................ 60
Section 10.17 Construction......................................... 60
EXHIBITS:
- ---------
Exhibit A - Form of Bid Rate Note
Exhibit B - Form of Syndicated Note
Exhibit C - [Intentionally Left Blank]
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 5.3 - Audits
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 August 9, 1996, 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 SUNTRUST
------- ------
BANK, ATLANTA (formerly known as Trust Company Bank), a Georgia banking
corporation ("SunTrust"), 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
or (b) the 364-Day Line of Credit Com mitment.
"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 SunTrust, 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 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>
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 45% 0.375% 0.15% 0.050%
Greater than or equal to 45% 0.50% 0.20% 0.075%
</TABLE>
(b) with respect to the 364-Day Loans, 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:
-2-
<PAGE>
<TABLE>
Consolidated Funded 364-Day Facility Commitment
Debt to Total Capital Loans Fee Fees
- --------------------- -------- --------- -----------
<S> <C> <C> <C>
Less than 25% 0.175% 0.075% 0.020%
Greater than or equal to
25% but less than 35% 0.275% 0.10% 0.025%
Greater than or equal to
35% but less than 45% 0.40% 0.125% 0.035%
Greater than or equal to 45% 0.525% 0.175% 0.050%
</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 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 (i) with respect to the Revolving Loans, the Applicable Percentage from the
Closing Date until October 1, 1996 shall be 0.375% for Revolving Loans, 0.15%
for the facility fee, and 0.050% for the commitment fee and (ii) with respect to
the 364-Day Loans, the Applicable Percentage from the Closing Date until October
1, 1996 shall be 0.40% for 364-Day Loans, 0.125% for the facility fee, and
0.035% for the commitment fee. Notwithstanding the foregoing, in the event that
the financial statements required to be delivered pursuant to Section 6.1(a) and
Section 6.1(b), as applicable, and the related compliance certificate required
to be delivered in connection therewith, are not delivered when due, then (x) if
such financial statements and certificate are delivered after the date such
financial statements and certificate were required to be delivered and the
Applicable Percentage increases from that previously in effect as a result of
the delivery of such financial statements, then the Applicable Percentage during
the period from the date upon which such financial statements were required to
be delivered until the date upon which they actually are delivered shall be the
Applicable Percentage as so increased and (y) if such financial statements and
certificate are delivered after the date such financial statements and
certificate were required to be delivered and the Applicable Percentage
decreases from that previously in effect as a result of the delivery of such
financial statements, then such decrease in the Applicable Percentage shall not
become applicable until the date upon which the financial statements and
certificate actually are delivered.
"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.
- ---------
-3-
<PAGE>
"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 3.6(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.
-4-
<PAGE>
"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 and (b) 364-Day Line of Credit
Commitment.
"Consolidated Current Assets" shall mean the current assets of the Borrower
---------------------------
and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Current Liabilities" shall mean the current liabilities of
--------------------------------
the Borrower and its Restricted Subsidiaries, determined on a consolidated basis
in accordance with GAAP.
"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 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 Lease Expense" shall mean, for any period, the total rental
--------------------------
obligations under operating leases for such period of the Borrower and its
Restricted Subsidiaries 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
-5-
<PAGE>
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) $30,000,000 plus (b) 50% of Consolidated Net
----
Earnings (less 100% of cumulative net losses) for the period (taken as one
accounting period) commencing on July 1, 1996 and terminating at the end of the
last fiscal quarter preceding the date of any proposed Restricted Payment.
"Consolidated Net Worth" shall mean the net worth of the Borrower and its
----------------------
Restricted Subsidiaries, consolidated in accordance with GAAP.
"Consolidated Total Assets" shall mean all assets of the Borrower and its
-------------------------
Restricted Subsidiaries, consolidated in accordance with GAAP.
"Crop Indebtedness" shall mean any Debt incurred by the Borrower, 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
period 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, regardless 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 Subsidiary.
"Debt" shall mean Funded Debt and Current Debt, as the case may be.
----
-6-
<PAGE>
"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.
"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 described in Section 414(c) of the
Code, of which the Borrower is also a member.
-7-
<PAGE>
"Eurodollar Advance" shall mean any Advance hereunder which bears interest
------------------
based on LIBOR.
"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 SunTrust 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 con tracts 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 indirect) in connection with the
obligations, stock or dividends of any other Person; and
(c) obligations under any other contract in connection with any
borrowing which, in effect, is substantially equivalent to a guarantee (other
than obligations of Young Pecan and Golden Peanut which do not constitute Long-
term Crop Indebtedness); and
-8-
<PAGE>
(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) obligations outstanding under the 364-Day Loans, to the extent
that such obligations exceed eighty percent (80%) of the Borrower's inventory
balance as of the date of such calculation; and
(f) 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 with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable, including contractual obligations
(contingent or otherwise)
-9-
<PAGE>
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 Eurodollar Borrowing,
---------------
a period of 1, 2, 3 or 6 months, or (b) with 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, (iii) any Interest Period in respect of a Eurodollar Borrowing
which begins on a day for which there is no numerically corresponding day in the
calender month at the end of such Interest Period shall expire on the last
Business Day of such calender month and (iv) 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.
"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
-10-
<PAGE>
(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 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 Documents" shall mean and include, as the context requires, this
--------------
Agreement, the Notes and any and all other instruments, agreements, documents
and writings contemplated hereby or executed in connection herewith.
"Loans" shall mean, collectively, the Syndicated Loans and the Bid Rate
-----
Loans.
"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 364-Day Loan Maturity Date or (c) the
maturity date of a Bid Rate Loan.
"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.
-11-
<PAGE>
"Multiemployer Plan" shall mean any Plan which is a "multiemployer plan"
------------------
(as such term is defined in Section 4001 of ERISA).
"1995 Credit Agreement" shall mean that certain Credit Agreement, dated as
---------------------
of June 30, 1995, by and among the Borrower, the Agent, SunTrust, CoBank,
Wachovia Bank of Georgia, N.A., Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch and DG Bank Deutsche
Genossenschaftsbank Cayman Islands Branch, as from time to time supplemented,
modified or amended.
"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 September 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.
-12-
<PAGE>
"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 defined 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 designated from time
----------
to time by SunTrust 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 SunTrust on the day of such change; provided, however,
-------- -------
that the Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate charged to customers and that SunTrust 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 principal, 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 respective
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
percentage of each of the Lenders participating in such Loan determined 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 requirement 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 Commitments, whether or not advanced.
"Restricted Payments" has the meaning set forth in Section 7.2 of this
-------------------
Agreement.
"Restricted Subsidiaries" shall mean all of the Borrower's Subsidiaries
-----------------------
except Golden Poultry; provided, however, that if the Borrower acquires all of
the remaining outstanding common stock of Golden Poultry, then Golden Poultry
shall be deemed to be a Restricted Subsidiary.
-13-
<PAGE>
"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 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 or Section 3.6(a)(ii) 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 anniversary of the
----------------------------
Closing Date or such later date as provided for in Section 3.4(a) 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.
"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, 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.
"SunTrust" has the meaning set forth in the preamble of this Agreement.
--------
"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.
-14-
<PAGE>
"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 or Section 3.6(a)(ii) 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 or such later date as provided for in
Section 3.4(b) of this Agreement.
"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.
-------------
"Type" shall mean, with respect to a Borrowing, a Borrowing consisting of
----
Base Rate Advances, Eurodollar Advances or Bid Rate Advances.
"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 attributed 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.
-15-
<PAGE>
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 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.
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 the aggregate unused Revolving Credit Commitments or
364-Day Line of Credit Commitments hereunder, as applicable. 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. As of the Closing Date,
any Bid Rate Loans outstanding under the 1995 Credit Agreement shall be deemed
to be Bid Rate Loans outstanding under this Agreement.
-16-
<PAGE>
ARTICLE 3.
-----------
GENERAL LOAN 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 evi denced 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) the 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 and Bid
Rate Loans advanced under the Revolving Credit Commitments exceed the aggregate
amount of the Revolving Credit Commitments; or
(b) the aggregate amount of all outstanding 364-Day Loans and Bid Rate
Loans advanced under the 364-Day Line of Credit Commitments exceed the aggregate
amount of the 364-Day Line of Credit Commitments; or
(c) the aggregate of (i) all Bid Rate Loans and (ii) all Syndicated
Loans 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.
-17-
<PAGE>
Section 3.4. Extension of Revolving Loan Maturity Date and 364-Day
-----------------------------------------------------
Loan Maturity Date.
- ------------------
(a) 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); provided that any failure by a Lender to give such notice
--------
shall be deemed to constitute an election by such Lender not to extend the
Revolving Loan Maturity Date. 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 Loan Maturity Date, then either (i)
the Revolving Loan Maturity Date shall not be extended and the Revolving Credit
Commitments shall expire on the 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(a), 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.
(b) At any time prior to the date which is 90 days before any
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 364-Day
Loan Maturity Date for an additional 364 days 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); provided that
--------
any failure by a Lender to give such notice shall be deemed to constitute an
election by such Lender not to extend the 364-Day Loan Maturity Date. 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 364-Day Loan
Maturity Date shall be extended by an additional 364 days. If any Lender elects
not to extend the 364-Day Loan Maturity Date, then either (i) the 364-Day Loan
Maturity Date shall not be extended and the 364-Day Line of Credit Commitments
shall expire on the 364-Day Loan Maturity Date or (ii) such Lender may assign
its rights and obligations under this Agreement and under such Lender's 364-Day
Line of 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
-18-
<PAGE>
the contrary contained in the foregoing part of this Section 3.4(b), the Lenders
shall have no obligation to extend the 364-Day Loan Maturity Date and may extend
the 364-Day 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. 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.
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 Borrow ing 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 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 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. The Borrower shall not give more than three
(3) Bid Rate Requests in any one calender week. 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 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 the aggregate unutilized
Commitments hereunder. 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
---------
-19-
<PAGE>
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 Loan offered by any one of the
Lenders in its Bid Rate Quote. 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 Quote, 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 Loan incurred by the Borrower in connection with such a request for quotes
shall not exceed (i) the then aggregate unutilized Commitments hereunder, or
(ii) the amount bid by the Lender in connection with such Lender's Bid Rate
Quote. Immediately upon the incurrence of a Bid Rate Loan, each Lender's
Revolving Credit Commitment or 364-Day Line of Credit Commitment hereunder, as
applicable, shall be deemed to be reduced by such Lender's Pro Rata Share of the
amount of such Bid Rate Loan.
(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 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 expiration 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.
-20-
<PAGE>
(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 telephone
(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.
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 option, 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 corresponding 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 Borrowing which
includes such amount paid and
-21-
<PAGE>
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 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; 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;
-22-
<PAGE>
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:
(i) with respect to the Revolving Credit Commitment, an amount equal to
the Applicable Percentage multiplied by the Revolving Credit Commitment;
and
(ii) with respect to the 364-Day Line of Credit Commitment, an amount
equal to the Applicable Percentage multiplied by the 364-Day 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 Commitments, in an amount equal to (i) the Applicable Percentage
multiplied by the average daily unused portion of the Revolving Loan Commitment
- -------------
plus (ii) the Applicable Percentage multiplied by the average daily unused
- ---- -------------
portion of the 364-Day Line of Credit Commitment.
(c) The Borrower shall pay the Agent the fees outlined in the Fee Letter.
-23-
<PAGE>
(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 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 pursuant 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 or 364-Day 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 Lender. 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. [Intentionally Left Blank].
--------------------------
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 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
-24-
<PAGE>
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, 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 Loans, all computations of interest and fees shall be made 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.
-25-
<PAGE>
(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 parties) 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 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 or 364-Day 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).
-26-
<PAGE>
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 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.
(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:
-27-
<PAGE>
(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 requested 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
liabilities (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.
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
(including without limitation through the London interbank market, the secondary
certificates of deposit market and bankers acceptances) 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
-28-
<PAGE>
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 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 cer tificate 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.
-29-
<PAGE>
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 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
-30-
<PAGE>
Loan Documents and to request Borrowings under this Agreement, together with the
original, not photocopied, signatures of such officers.
(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) Agent's Fees. The Agent shall have received the fees required to be
------------
paid pursuant to the Fee Letter.
(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 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 pending before any
court or other governmental authority other than as set forth in Schedule 5.4
------------
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,
-31-
<PAGE>
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.
Section 5.2. Financial Statements. The Borrower has furnished the
--------------------
Lenders with unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at July 1, 1995, and unaudited consolidated statements of income
and cash flow of the Borrower and its Subsidiaries for such year, each prepared
by the Borrower. Such financial statements (including any related schedules
and/or notes) are true and correct in all material respects, have been prepared
in accordance with GAAP consistently followed throughout the period 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,
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<PAGE>
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 July 1, 1995.
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. Except as set forth on Schedule
--------
5.3 attached hereto, there is no audit of any federal, state or other income tax
- ---
returns of the Borrower and its Subsidiaries currently being conducted or
pending.
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 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 July 1, 1995 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
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<PAGE>
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
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 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
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<PAGE>
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 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.
-35-
<PAGE>
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 enforceability 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.
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.
-36-
<PAGE>
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 of the first three quarterly periods and within 90 days after the
end of the last quarterly period in each fiscal year, (i) 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 (ii) 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 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
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<PAGE>
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 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 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
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<PAGE>
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.
(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
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<PAGE>
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, investigation and laboratory fees, court costs,
and litigation expenses.
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 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
Subsidiary. 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 Default, 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
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<PAGE>
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 10 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 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 0.50
to 1.0, calculated on a quarterly basis.
-41-
<PAGE>
(b) Fixed Charge Coverage Ratio. The Borrower shall not permit the
---------------------------
ratio of (a) EBIT plus Consolidated Lease Expense to (b) Consolidated Interest
Expense plus Consolidated Lease Expense to be less than 1.50 to 1.0, calculated
quarterly for the fiscal quarter then ending and the preceding seven fiscal
quarters.
(c) Current Ratio. The Borrower shall not permit the ratio of
-------------
Consolidated Current Assets to Consolidated Current Liabilities to be less than
1.25 to 1.0, calculated on a quarterly basis.
In the event that the Borrower acquires or otherwise obtains the
remaining outstanding common stock of Golden Poultry, the financial covenants
set forth in this Section 7.1 will be calculated beginning on the last day of
the first fiscal quarter following such purchase, on a consolidated basis in
accordance with GAAP.
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; provided that the Borrower shall
--------
not make any Restricted Payments upon the occurrence and during the continuance
of a Default or Event of Default. So long as there is no Default or Event of
Default occurring or continuing, there shall not be included in the definition
of 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;
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(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;
(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 obligations
(exclusive of obligations for the payment of borrowed money); and
(e) Liens securing purchase money debt, provided the aggregate of
such debt so secured does not exceed fifteen percent (15%) of Consolidated Net
Worth.
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 "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;
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(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
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;
(r) make or permit to remain outstanding investments in GC
Properties and
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<PAGE>
(s) guarantee or otherwise be or become liable for obligations of
Young Pecan not to exceed an aggregate amount of $65,000,000.
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, 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
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<PAGE>
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 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 Indebtedness or 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, condition or covenant contained in any agreement under which
any such obligation is created (or if any other event thereunder or any such
agreement
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<PAGE>
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 Section 6.1 or Article 7 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 Section 6.1
or Article 7) 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 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
(g) 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 property through legal proceedings or distraint
which is not vacated or bonded within 60 calendar days from the date thereof; or
(h) 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
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(i) 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
(j) 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
(k) 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 that is not paid within 10 days of the due date
therefor; or
(l) A default or event of default occurs under any of the agreements
evidencing the Prudential Indebtedness; or
(m) 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(f)) 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 and (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.
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(b) Upon the occurrence of an Event of Default under Section 8.1(f),
(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.
(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 SunTrust 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 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
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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 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
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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;
(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.
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Section 9.7. The Agent and Affiliates. SunTrust (and each successor
------------------------
Agent) has the same rights and powers under the 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 SunTrust in its individual capacity.
SunTrust (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. SunTrust
(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 com munication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and 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.
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<PAGE>
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 speci fied in Section 4.1 or 4.2, (ii) increase
the Commitments or other contractual 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 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:
-------------------------
(a) 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
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<PAGE>
(including, without limitation, the reasonable fees actually incurred and
disbursements of counsel), for any of the Lenders;
(b) 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
(c) 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, 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;
(d) without limiting the indemnities set forth in subsection (c)
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 respect to any Subsidiary of the
Borrower (or the assets thereof) owned or controlled by the Lenders.
-55-
<PAGE>
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. [Intentionally Left Blank].
--------------------------
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 to 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 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
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<PAGE>
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 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 par ticipant 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 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.
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<PAGE>
(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 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
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<PAGE>
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 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
-59-
<PAGE>
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 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 itself or through 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.
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<PAGE>
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.
GOLD KIST INC.
Address:
- -------
244 Perimeter Center
Parkway, N.E.
Atlanta, GA 30346
Telecopy No.: 404/393-5421 By: /s/ Stephen D. West
Attention: Mr. Stephen O. West ---------------------------------
Name: Stephen D. West
Title: Treasurer
Attest: /s/ Jack L. Lawing
----------------------------
Name: Jack L. Lawing
Title: Secretary
[CORPORATE SEAL]
(SIGNATURES CONTINUE ON NEXT PAGE)
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
SUNTRUST BANK, ATLANTA, INDIVIDUALLY
AS A LENDER AND AS THE AGENT
Address:
- -------
25 Park Place, 25th Floor
Center Code 076
Atlanta, Georgia 30303
Telecopy No.: 404/724-3716
Attention: Mr. Jess Jarratt
By: /s/ Jess E. Jarratt
------------------------------
Name: Jess E. Jarratt
Title: Group Vice President
By: /s/ Gregory L. Cannon
------------------------------
Name: Gregory L. Cannon
Title: Vice President
REVOLVING CREDIT COMMITMENT $19,000,000 15.20%
364-DAY LINE OF CREDIT COMMITMENT $19,000,000 15.20%
PAYMENT OFFICE:
25 Park Place, 25th Floor
Center Code 076
Atlanta, Georgia 30303
(SIGNATURES CONTINUE ON NEXT PAGE)
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
COBANK
Address:
- -------
67 Hunt Street
Agawam, MA 01001
Telecopy No.: 413/821-0250
Attention: Porter C. Little
By: /s/ Porter C. Little
-------------------------------
Name: Porter C. Little
Title: Vice President
REVOLVING CREDIT COMMITMENT $19,000,000 15.20%
364-DAY LINE OF CREDIT COMMITMENT $19,000,000 15.20%
PAYMENT OFFICE:
Department 167
Denver, Colorado 80291-0167
(SIGNATURES CONTINUE ON NEXT PAGE)
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
WACHOVIA BANK OF GEORGIA, N.A.
Address:
- -------
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: Senior Vice President
REVOLVING CREDIT COMMITMENT $19,000,000 15.20%
364-DAY LINE OF CREDIT COMMITMENT $19,000,000 15.20%
PAYMENT OFFICE:
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
(SIGNATURES CONTINUE ON NEXT PAGE)
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH
Address:
- -------
245 Park Avenue
New York, New York 10167
Telecopy No.: 212/916-7880
Attention: Corporate Services Dept.
By: /s/ Ian Reece
------------------------------
Name: Ian Reece
Title: Vice President & Manager
with a copy to:
- --------------
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30303-3400
Telecopy No.: 404/877-9150
Attention: Richard J. Beard
By: /s/ Dana W. Hemenway
------------------------------
Name: Dana W. Hemenway
Title: Vice President
REVOLVING CREDIT COMMITMENT $19,000,000 15.20%
364-DAY LINE OF CREDIT COMMITMENT $19,000,000 15.20%
PAYMENT OFFICE:
245 Park Avenue
New York, New York 10167
(SIGNATURES CONTINUE ON NEXT PAGE)
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
CAYMAN ISLANDS BRANCH
Address:
303 Peachtree St., N.E.
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 $19,000,000 15.20%
364-DAY LINE OF CREDIT COMMITMENT $19,000,000 15.20%
PAYMENT OFFICE:
DG Bank New York Branch
DG Bank Building
609 Fifth Avenue
New York, NY 10017-1021
[SIGNATURE PAGE TO CREDIT AGREEMENT]
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
THE BANK OF TOKYO-MITSUBISHI,
LTD., ATLANTA AGENCY
Address:
- -------
5050 Georgia-Pacific Center
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy No.: 404/577-1155
Attention: Gary L. England
By: /s/ Gary L. England
-------------------------------
Name: Gary L. England
Title:
----------------------------
REVOLVING CREDIT COMMITMENT $7,500,000 6.00%
364-DAY LINE OF CREDIT COMMITMENT $7,500,000 6.00%
PAYMENT OFFICE:
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
(SIGNATURES CONTINUE ON NEXT PAGE)
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
CAISSE NATIONALE DE
CREDIT AGRICOLE
Address:
- -------
55 East Monroe Street
Chicago, Illinois 60603-5702
Telecopy No.: 312/372-3455
Attention: Theodore D. Tice
By: /s/ W. Leroy Startz
--------------------------------
Name: W. Leroy Startz
Title: First Vice President
REVOLVING CREDIT COMMITMENT $7,500,000 6.00%
364-DAY LINE OF CREDIT COMMITMENT $7,500,000 6.00%
PAYMENT OFFICE:
55 East Monroe Street
Chicago, Illinois 60603-5702
(SIGNATURES CONTINUE ON NEXT PAGE)
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
FIRST UNION NATIONAL BANK OF GEORGIA
Address:
- -------
999 Peachtree Street, 12th Floor
Atlanta, Georgia 30309
Telecopy No.: 404/827-7220
Attention: Daniel Evans
By: /s/ Susan Tidwell
-------------------------------
Name: Susan Tidwell
Title: Senior Vice President
REVOLVING CREDIT COMMITMENT $7,500,000 6.00%
364-DAY LINE OF CREDIT COMMITMENT $7,500,000 6.00%
PAYMENT OFFICE:
First Union National Bank of Florida
Commercial Loan Accounting
214 Holden Street
Jacksonville, Florida 32202
Attention: Cindy Petry
(SIGNATURES CONTINUE ON NEXT PAGE)
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
Address:
- -------
299 Park Avenue
New York, New York 10171-0026
Telecopy No.: 212/821-3459
Attention: Eva Rushkevich
By: /s/ Eva Bushkevich
-------------------------------
Name: Eva Bushkevich
Title: Managing Director
REVOLVING CREDIT COMMITMENT $7,500,000 6.00%
364-DAY LINE OF CREDIT COMMITMENT $7,500,000 6.00%
PAYMENT OFFICE:
299 Park Avenue
New York, New York 10171-0026
[SIGNATURE PAGE TO CREDIT AGREEMENT]
<PAGE>
EXHIBIT A
---------
FORM OF BID RATE NOTE
---------------------
DATE: August 9, 1996
PLACE: Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned GOLD KIST INC., a cooperative marketing
association organized and existing under the laws of the State of Georgia (the
"Borrower"), hereby promises to pay to the order of_____________________________
--------
__________________________________________________________________ (the
"Lender"), at the office of the Agent as provided for in the Credit Agreement
------
(as hereinafter defined) on the Revolving Loan Maturity Date or sooner should
this Note be declared immediately due and payable as hereafter provided, the
aggregate principal sum of the Bid Rate Loans made by such Lender to the
Borrower, or so much thereof as shall have been advanced hereunder and remain
outstanding, plus all accrued and unpaid interest thereon. Capitalized terms
used herein but not otherwise defined shall have the meanings ascribed to such
terms in the Credit Agreement (as referred to below).
The Borrower agrees to pay interest on the principal amount advanced
hereunder from the date of the advance until paid in the manner and at the rate
or rates and at the times provided for in that certain Credit Agreement, dated
as of the date hereof, by and among the Borrower, the various banks and other
lending institutions as are, or may from time to time become, lenders, and
SunTrust Bank, Atlanta as Agent (as the same may be amended, restated or
otherwise modified from time to time, the "Credit Agreement"). Interest shall
----------------
be computed and paid on the basis provided in the Credit Agreement. All
payments of principal and interest hereunder shall be made to the Agent in
United States Dollars and in immediately available funds.
The Lender is hereby authorized to endorse all Bid Rate Loans made pursuant
to the Credit Agreement and all payments of principal of such Bid Rate Loans on
the schedule annexed hereto and made a part hereof, which endorsement shall
constitute prima facie evidence of the accuracy of the information so endorsed;
-----------
provided, that no delay or failure of Lender to record on the schedule the
- --------
amount of any Bid Rate Loan shall affect the obligation of Borrower to repay
such amount together with interest thereon in accordance with this Note and the
Credit Agreement.
Any installment of principal or of interest due under this Note that is not
paid on the due date therefor, whether a regularly scheduled payment date, on
the maturity date, or resulting from the acceleration of maturity upon the
occurrence of an Event of Default, shall bear interest from the due date to
payment in full at a fluctuating rate as provided in the Credit Agreement.
<PAGE>
This Note is one of the Bid Rate Notes and evidences indebtedness incurred
under, and is subject to the terms and provisions of, the Credit Agreement, to
which Credit Agreement reference is hereby made for a statement of said terms
and provisions. This Note is entitled to the benefits and security as provided
in the Credit Agreement. Any term used herein that is defined in the Credit
Agreement shall have the meaning afforded it in the Credit Agreement when used
herein.
Upon the occurrence and during the continuation of any Event of Default,
the Lender may terminate its obligations to make advances under the Credit
Agreement and declare the entire unpaid principal balance advanced hereunder and
all accrued interest to be immediately due and payable in the manner and with
the effect provided in the Credit Agreement, and may thereafter exercise any of
the remedies referred to in the Credit Agreement or existing under applicable
law.
This Note may be prepaid in whole or in part in accordance with the terms
and provisions set forth in the Credit Agreement.
TIME IS OF THE ESSENCE OF THIS NOTE. In addition to and not in limitation
of the foregoing and the provisions of the Credit Agreement, the Borrower
further agrees to pay all expenses of collection, including reasonable
attorneys' fees actually incurred (which shall include the reasonably allocated
costs of staff counsel) not to exceed ten percent (10%) of all principal and
accrued interest, if this Note shall be collected at law or by or through an
attorney at law, or in bankruptcy, receivership or other court proceedings.
THIS NOTE HAS BEEN EXECUTED AND DELIVERED IN ATLANTA, GEORGIA AND SHALL BE
GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF GEORGIA.
PRESENTMENT, PROTEST AND NOTICE OF DISHONOR ARE HEREBY WAIVED BY THE
BORROWER.
IN WITNESS WHEREOF, the undersigned has executed this Note through the hand
and seal of its duly authorized officers on the date first above written.
GOLD KIST INC.
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Attest:
--------------------------
Name:
-------------------------
Title:
------------------------
[CORPORATE SEAL]
<PAGE>
GRID SCHEDULE
-------------
ADVANCES BEARING INTEREST
AT THE BID RATE
<TABLE>
<CAPTION>
Amount of at Unpaid Principal
the Above- Bearing Interest
Amount of Interest Advance Reference Notation Made
Date Advance Interest Rate Period Repaid Rate By
- ------ --------- ------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
_____ $________ ___________ ______________ $______________ $______________ ______________
</TABLE>
<PAGE>
EXHIBIT B
---------
FORM OF SYNDICATED NOTE
-----------------------
PRINCIPAL: $______________
DATE: August 9, 1996
PLACE: Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned GOLD KIST INC., a cooperative marketing
association organized and existing under the laws of the State of Georgia (the
"Borrower"), hereby promises to pay to the order of____________________________
--------
__________________________________________________________________ (the
"Lender"), at the office of the Agent as provided for in the Credit Agreement
------
(as hereinafter defined) on _____________________ or sooner should this Note be
declared immediately due and payable as hereafter provided, the principal sum of
________________________ Dollars ($_______________), or so much thereof as shall
have been advanced hereunder and remain outstanding, plus all accrued and unpaid
interest thereon. Capitalized terms used herein but not otherwise defined shall
have the meanings ascribed to such terms in the Credit Agreement (as referred to
below).
The Borrower agrees to pay interest on the principal amount advanced
hereunder from the date of the advance until paid in the manner and at the rate
or rates and at the times provided for in that certain Credit Agreement, dated
as of the date hereof, by and among the Borrower, the various banks and other
lending institutions as are, or may from time to time become, lenders, and
SunTrust Bank, Atlanta, as Agent (as the same may be amended, restated or
otherwise modified from time to time, the "Credit Agreement"). Interest shall
----------------
be computed and paid on the basis provided in the Credit Agreement. All
payments of principal and interest hereunder shall be made to the Agent in
United States Dollars and in immediately available funds.
The Lender is hereby authorized to endorse all ________ Loans made pursuant
to the Credit Agreement and all payments of principal of such ___________ Loans
on the schedule annexed hereto and made a part hereof, which endorsement shall
constitute prima facie evidence of the accuracy of the information so endorsed;
-----------
provided, that no delay or failure of Lender to record on the schedule the
- --------
amount of any _________ Loan shall affect the obligation of Borrower to repay
such amount together with interest thereon in accordance with this Note and the
Credit Agreement.
Any installment of principal or of interest due under this Note that is not
paid on the due date therefor, whether a regularly scheduled payment date, on
the maturity date, or resulting from the acceleration of maturity upon the
occurrence of an Event of Default, shall bear interest from the due date to
payment in full at a fluctuating rate as provided in the Credit Agreement.
This Note is one of the Syndicated Notes and evidences indebtedness
incurred under, and is subject to the terms and provisions of, the Credit
Agreement, to which Credit Agreement reference is hereby made for a statement of
<PAGE>
said terms and provisions. This Note is entitled to the benefits and security
as provided in the Credit Agreement. Any term used herein that is defined in
the Credit Agreement shall have the meaning afforded it in the Credit Agreement
when used herein.
Upon the occurrence and during the continuation of any Event of Default,
the Lender may terminate its obligations to make advances under the Credit
Agreement and declare the entire unpaid principal balance advanced hereunder and
all accrued interest to be immediately due and payable in the manner and with
the effect provided in the Credit Agreement, and may thereafter exercise any of
the remedies referred to in the Credit Agreement or existing under applicable
law.
This Note may be prepaid in whole or in part in accordance with the terms
and provisions set forth in the Credit Agreement.
TIME IS OF THE ESSENCE OF THIS NOTE. In addition to and not in limitation
of the foregoing and the provisions of the Credit Agreement, the Borrower
further agrees to pay all expenses of collection, including reasonable
attorneys' fees actually incurred (which shall include the reasonably allocated
costs of staff counsel) not to exceed ten percent (10%) of all principal and
accrued interest, if this Note shall be collected at law or by or through an
attorney at law, or in bankruptcy, receivership or other court proceedings.
THIS NOTE HAS BEEN EXECUTED AND DELIVERED IN ATLANTA, GEORGIA AND SHALL BE
GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF GEORGIA.
PRESENTMENT, PROTEST AND NOTICE OF DISHONOR ARE HEREBY WAIVED BY THE
BORROWER.
IN WITNESS WHEREOF, the undersigned has executed this Note through the hand
and seal of its duly authorized officers on the date first above written.
GOLD KIST INC.
By:
-----------------------------
Name:
Title:
Attest:
-------------------------
Name:
Title:
[CORPORATE SEAL]
<PAGE>
GRID SCHEDULE
-------------
ADVANCES BEARING INTEREST
AT THE PRIME RATE
Unpaid Principal
Bearing Interest
Amount of Amount of at the Above- Notation
Date Advance Advance Repaid Reference Rate Made By
- ------ --------- -------------- ---------------- --------
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
_____ $________ $___________ $__________ _______
<PAGE>
GRID SCHEDULE
-------------
ADVANCES BEARING INTEREST AT LIBOR
PLUS APPLICABLE PERCENTAGE
Unpaid Principal
Interest Bearing Interest
Period Amount of Amount of at the Above- Notation
and Date Advance Advance Repaid Reference Rate Made By
- ---------- ----------- -------------- ---------------- --------
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
_____ $__________ $___________ $__________ _______
<PAGE>
EXHIBIT C
---------
(Intentionally left blank)
<PAGE>
EXHIBIT D
---------
FORM OF NOTICE OF BORROWING
---------------------------
___________, 199__
SunTrust Bank, Atlanta, as Agent
25 Park Place, 25th Floor
Center Code 076
Atlanta, Georgia 30303
Attention: Jess Jarratt
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of August 9,
1996 (as amended, restated or otherwise modified to the date hereof the "Credit
------
Agreement"), by and among Gold Kist Inc. (the "Borrower"), the various banks and
- --------- --------
lending institutions party thereto and their assignees (collectively, the
"Lenders"), and SunTrust Bank, Atlanta, as Agent (the "Agent"). Capitalized
- -------- -----
terms used herein, and not otherwise defined herein, have their respective
meanings given them in the Credit Agreement.
1. Pursuant to Section 2.1 of the Credit Agreement, the Borrower hereby
requests that the Lenders make Syndicated Loans to the Borrower in an
aggregate amount equal to $_________________.
2. The Borrower requests that such Syndicated Loans be made available to
the Borrower on ___________ 199__.
3. The Borrower hereby requests that the requested Syndicated Loan be of
the following Type:
[Check one box only]
[ ] Base Rate Loan
[ ] LIBOR Loan, with an initial Interest Period for a duration of:
[Check one box only] [ ] one month
[ ] two months
[ ] three months
[ ] six months
4. Such Syndicated Loans are to be ________________ Loans.
5. The proceeds of this borrowing of Syndicated Loans will be used for the
following purpose: ____________________________________________.
<PAGE>
6. The Borrower requests that all borrowings pursuant to this notice be
deposited with SunTrust Bank, Atlanta in account number _____________.
The Borrower hereby certifies to the Agent and the Lenders that as of the
date hereof and as of the date of the making of the requested Syndicated Loans
and after giving effect thereto, (a) no Default or Event of Default has or shall
have occurred and be continuing, and (b) the representations and warranties of
the Borrower contained in the Credit Agreement and the other Loan Documents are
and shall be true and correct in all material respects, except to the extent
such representations or warranties specifically relate to an earlier date or
such representations or warranties become untrue by reason of events or
conditions otherwise permitted under the Credit Agreement or the other Loan
Documents.
If notice of the requested borrowing of Syndicated Loans was previously
given by telephone, this notice is to be considered the written confirmation of
such telephone notice required by Section 3.6(a) of the Credit Agreement.
GOLD KIST INC.
By: _________________________
Name:
Title:
<PAGE>
EXHIBIT E
---------
FORM OF BID RATE REQUEST
------------------------
___________, 199__
TO EACH OF THE LENDERS
UNDER THE CREDIT
AGREEMENT (Referenced Below)
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of August 9,
1996 (as amended, restated or otherwise modified to the date hereof the "Credit
------
Agreement"), by and among Gold Kist Inc. (the "Borrower"), the various banks and
- --------- --------
lending institutions party thereto and their assignees (collectively, the
"Lenders"), and SunTrust Bank, Atlanta, as Agent (the "Agent"). Capitalized
- -------- -----
terms used herein, and not otherwise defined herein, have their respective
meanings given them in the Credit Agreement.
The Borrower hereby requests Bid Rate Quotes for the following proposed Bid
Rate Borrowings:
<TABLE>
<CAPTION>
Borrowing Date Amount Interest Period
- -------------- ------ --------------
<S> <C> <C>
_______,199___ $____________ __________ days
_______,199___ $____________ __________ days
_______,199___ $____________ __________ days
_______,199___ $____________ __________ days
_______,199___ $____________ __________ days
</TABLE>
GOLD KIST INC.
By:________________________
Name:
Title:
<PAGE>
EXHIBIT F
---------
FORM OF BID RATE QUOTE
----------------------
___________, 199__
Gold Kist Inc.
244 Perimeter Center Parkway, N.E.
Atlanta, Georgia 30346
Attn: Mr. Stephen O. West
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of August 9,
1996 (as amended, restated or otherwise modified to the date hereof the "Credit
------
Agreement"), by and among Gold Kist Inc. (the "Borrower"), the various banks and
- --------- --------
lending institutions party thereto and their assignees (collectively, the
"Lenders"), and SunTrust Bank, Atlanta, as Agent (the "Agent"). Capitalized
- -------- -----
terms used herein, and not otherwise defined herein, have their respective
meanings given them in the Credit Agreement.
In response to the Borrower's Bid Rate Quote Request dated _____________
19__, the undersigned hereby makes the following Bid Rate Quote(s) on the
following terms:
1. Quoting Lender: ____________________________
2. Person to Contact at quoting Lender: __________________
3. The undersigned offers to make Bid Rate Loan(s) in the following principal
amount(s), for the following Interest Period(s) and at the following Bid
Rate(s):
<TABLE>
<CAPTION>
Borrowing Date Amount Interest Period Bid Rate
- -------------- ------ --------------- --------
<C> <S> <C> <C>
________,19___ $___________ ______ days ________%
________,19___ $___________ ______ days ________%
________,19___ $___________ ______ days ________%
</TABLE>
<PAGE>
The undersigned understands and agrees that the offer(s) set forth above,
subject to satisfaction of the applicable conditions set forth in the Credit
Agreement, irrevocably obligate[s] the undersigned to make the Bid Rate Loan(s)
for which any offer(s) [is/are] accepted, in whole or in part.
[LENDER]
By: __________________________
Name:
Title:
<PAGE>
EXHIBIT G
---------
FORM OF BID RATE ACCEPTANCE
---------------------------
___________, 199__
SunTrust Bank, Atlanta, as Agent
25 Park Place, 25th Floor
Center Code 076
Atlanta, Georgia 30303
Attention: Jess Jarratt
[Lender(s)]
__________________________
__________________________
__________________________
Attention: ______________
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of August 9,
1996, (as amended, restated or otherwise modified to the date hereof the "Credit
------
Agreement"), by and among Gold Kist Inc. (the "Borrower"), the various banks and
- --------- --------
lending institutions party thereto and their assignees (collectively, the
"Lenders"), and SunTrust Bank, Atlanta, as Agent (the "Agent"). Capitalized
- -------- -----
terms used herein, and not otherwise defined herein, have their respective
meanings given them in the Credit Agreement.
The Borrower hereby accepts the following offer(s) of Bid Rate Quotes:
<TABLE>
<CAPTION>
Quote Date Quoting Lender Amount Accepted
- ---------- -------------- ---------------
<S> <C> <C>
__________, 19___ _____________ $____________
__________, 19___ _____________ $____________
__________, 19___ _____________ $____________
</TABLE>
GOLD KIST INC.
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT H
---------
FORM OF NOTICE OF CONTINUATION/CONVERSION
-----------------------------------------
___________, 199__
SunTrust Bank, Atlanta, as Agent
25 Park Place, 25th Floor
Center Code 076
Atlanta, Georgia 30303
Attention: Jess Jarratt
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of August 9,
1996 (as amended, restated or otherwise modified to the date hereof the "Credit
------
Agreement"), by and among Gold Kist Inc. (the "Borrower"), the various banks and
- --------- --------
lending institutions party thereto and their assignees (collectively, the
"Lenders"), and SunTrust Bank, Atlanta, as Agent (the "Agent"). Capitalized
- -------- -----
terms used herein, and not otherwise defined herein, have their respective
meanings given them in the Credit Agreement.
Pursuant to Section 3.6(b) of the Credit Agreement, the Borrower hereby
requests a Continuation/Conversion of a borrowing of Eurodollar Loans under the
Credit Agreement, and in that connection sets forth below the information
relating to such Continuation/Conversion as required by such Section of the
Credit Agreement:
1. The proposed date of such Continuation/Conversion is _________, 199 .
2. The aggregate principal amount of [Eurodollar][Bid Rate] Loans subject to
the requested Continuation/Conversion is $_________________ and was originally
borrowed by the Borrower on ____________ 199___, and such [Eurodollar][Bid Rate]
Loans are ______________________ Loans.
3. The portion of such principal amount subject to such Continuation/Conversion
is $_____________.
4. The current Interest Period of the [Eurodollar][Bid Rate] Loans subject
to such Continuation/Conversion ends on ___________, 199 .
5. The duration of the new Interest Period for such Loans or portion
thereof subject to such Continuation/Conversion is:
<PAGE>
[Check one box only] [ ] one month
[ ] two months
[ ] three months
[ ] six months
The Borrower hereby certifies to the Agent and the Lenders that as of the
date hereof, as of the proposed date of the requested Continuation/Conversion,
and after giving effect to such Continuation/Conversion, no Event of Default has
or shall have occurred and be continuing.
GOLD KIST INC.
By: ____________________________
Name:
Title:
<PAGE>
EXHIBIT I
---------
FORM OF OPINION OF SPECIAL COUNSEL
----------------------------------
August 9, 1996
SunTrust Bank, Atlanta, as Agent
25 Park Place, 25th Floor
Center Code 076
Atlanta, Georgia 30303
Attention: Jess Jarratt
Each Lender now or from
time to time a party
to the Credit Agreement referred to
below
Ladies and Gentlemen:
We have acted as counsel to Gold Kist Inc., a cooperative marketing
association organized and existing under the laws of the State of Georgia (the
"Borrower"), and have acted as counsel to the Borrower in connection with the
- ---------
negotiation, execution and delivery of that certain Credit Agreement, dated as
of even date herewith (the "Credit Agreement") by and among the Borrower, the
----------------
various banks and other lending institutions that have or may become Lenders
under the Credit Agreement (the "Lenders") and SunTrust Bank, Atlanta, as Agent
-------
(the "Agent"). All capitalized terms used but not defined herein shall have the
-----
meanings set forth in the Credit Agreement.
In these capacities, we have reviewed the following (the "Loan Documents"):
--------------
(a) the Credit Agreement; and
(b) the Notes.
In addition to the foregoing, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records, and other instruments, and made such other investigations of
law and fact, as we have deemed necessary or advisable for the purposes of
rendering this opinion. In our examination of documents, we assumed the
genuineness of all signatures on documents presented to us as originals (other
than the signatures of officers of the Borrower) and the conformity to originals
of documents presented to us as conformed or reproduced copies.
Based upon the foregoing, and subject to the qualifications and assumptions
set forth herein, we are of the opinion that:
<PAGE>
1. Each of the Loan Documents constitutes the legal, valid and binding
obligations of the Borrower a party thereto, enforceable against the Borrower in
accordance with their respective terms except as the enforceability thereof may
be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws relating to or affecting the enforcement of
creditors' rights generally and (b) the fact that equitable remedies or relief
(including, but not limited to, the remedy of specific performance) are subject
to the discretion of the court before which any such remedies or relief may be
sought.
2. The execution and delivery by the Borrower of the Loan Documents do
not, and if the Borrower were now to perform its obligations under such Loan
Documents, such performance would not, result in any violation of any applicable
law to which the Borrower or its assets are subject.
3. The execution, delivery and performance by the Borrower of each Loan
Document, and the consummation of the transactions thereunder, do not and will
not require any governmental approval of, or notice to, or other action to, with
or by, any governmental authority of the State of Georgia or the United States
of America.
4. The Borrower is not (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Company Act of 1935, as amended, or (iii) subject to any other Applicable Law
which purports to regulate or restrict its ability to borrow money or to
consummate the transactions contemplated by the Credit Agreement or to perform
its obligations under any Loan Document.
5. Assuming that Borrower applies the proceeds of the Loans as provided in
the Credit Agreement, the transactions contemplated by the Credit Agreement do
not violate the provisions of Regulations G, T, U or X of the Board of Governors
of the Federal Reserve.
6. The consideration to be paid to the Agent and the Lenders for the
financial accommodations to be provided to the Borrower pursuant to the Credit
Agreement, and their disclosure to the Borrower in the manner set forth in the
Credit Agreement, do not violate any law of the State of Georgia relating to
interest and usury.
Very truly yours,
[ALSTON & BIRD]
-----------------------------------
By: Partner
<PAGE>
EXHIBIT J
---------
FORM OF OPINION OF GENERAL COUNSEL
----------------------------------
August 9, 1996
SunTrust Bank, Atlanta, as Agent
25 Park Place, 25th Floor
Center Code 076
Atlanta, Georgia 30303
Attention: Jess Jarratt
Each Lender now or from
time to time a party
to the Credit Agreement referred to
below
Ladies and Gentlemen:
I am General Counsel to Gold Kist Inc., a cooperative marketing association
organized and existing under the laws of the State of Georgia (the "Borrower"),
--------
and have acted as counsel to the Borrower in connection with the negotiation,
execution and delivery of that certain Credit Agreement, dated as of even date
herewith (the "Credit Agreement") by and among the Borrower, the various banks
----------------
and other lending institutions that have or may become Lenders under the Credit
Agreement (the "Lenders") and SunTrust Bank, Atlanta, as Agent (the "Agent").
------- -----
All capitalized terms used but not defined herein shall have the meanings set
forth in the Credit Agreement.
In these capacities, I have reviewed the following (the "Loan Documents"):
--------------
(a) the Credit Agreement; and
(b) the Notes.
In addition to the foregoing, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of such documents,
corporate records, and other instruments, and made such other investigations of
law and fact, as I have deemed necessary or advisable for the purposes of
rendering this opinion. In my examination of documents, I assumed the
genuineness of all signatures on documents presented to me as originals (other
than the signatures of officers of the Borrower) and the conformity to originals
of documents presented to me as conformed or reproduced copies.
Based upon the foregoing, and subject to the qualifications and assumptions
set forth herein, I am of the opinion that:
<PAGE>
1. The Borrower (i) is duly organized as a corporation, and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation and (ii) has the corporate power to execute, deliver and perform
the Loan Documents, to own and use its assets, and to conduct its business as
presently conducted and as proposed to be conducted immediately following the
consummation of the transactions contemplated by the Credit Agreement. The
Borrower is qualified to transact business as a foreign corporation in the
States set forth on Schedule A attached hereto.
----------
2. The Borrower has duly authorized the execution and delivery of the Loan
Documents and the performance of its obligations thereunder. The Borrower has
duly executed and delivered the Loan Documents.
3. The execution and delivery by the Borrower of the Loan Documents do
not, and if the Borrower were now to perform its obligations under the Loan
Documents, such performance would not, result in any:
(a) violation of the Borrower's articles of incorporation or bylaws;
(b) to the best of my knowledge, breach or violation of or default under,
any contract to which the Borrower is bound or under which the Borrower or its
assets is subject;
(c) to my knowledge, creation or imposition of a contractual Lien on or
against the assets of the Borrower under any such contracts; or
(d) violation of any judicial or administrative decree, writ, judgment or
order to which, to the best of my knowledge, the Borrower or its respective
assets are subject.
4. To the best of my knowledge, except as is set forth on Schedule 5.4 of
the Credit Agreement, there are no judgments outstanding against the Borrower or
affecting its assets, nor is there any litigation or other proceeding against
the Borrower or its assets pending or overtly threatened except as is set forth
on Schedule 5.4 of the Credit Agreement.
Very truly yours,
-------------------------------
Jack L. Lawing
General Counsel
<PAGE>
EXHIBIT K
---------
FORM OF
ASSIGNMENT AND ACCEPTANCE
-------------------------
Reference is made to that certain Credit Agreement, dated as of August 9,
1996 (as may be amended, restated, or otherwise modified from time to
time, the "Credit Agreement"), by and among GOLD KIST INC., as Borrower (the
----------------
"Borrower"), the lenders parties thereto (collectively, the "Lenders"), and
--------
SUNTRUST BANK, ATLANTA, as agent for the Lenders (in such capacity, the
"Agent"). Terms defined in the Credit Agreement are used herein with the same
meanings.
1. Assignor (as identified on Annex A) hereby sells and assigns to
-------
Assignee (as identified on Annex A), without recourse against Assignor, and
-------
Assignee hereby purchases and assumes from Assignor, without recourse
against Assignor, effective as of the Trigger Date hereinafter set forth,
the interests set forth below (collectively, the "Assigned Interest"), in
-------------------
Assignor's rights and obligations under the Credit Agreement including,
without limitation, the Loans owing to Assignor that are outstanding on the
Trigger Date as described on Annex A hereto, together with unpaid interest
-------
accrued on the assigned Loans to the Trigger Date, and the amount (if any)
of the accrued fees referred to in Section 3.9 of the Credit Agreement
accrued to the Trigger Date for the account of Assignor as described on
Annex A hereto. On and after the Trigger Date, (a) Assignee shall be a
-------
party to and be bound by the provisions of the Credit Agreement, and to the
extent of the interest assigned by this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and under the Loan Documents
(except for any such obligations that become due and payable before the
Trigger Date), and (b) Assignor shall, to the extent of its interest
assigned by this Assignment and Acceptance and otherwise to the extent set
forth in the foregoing clause (a), relinquish its rights and be released
from its obligations under the Credit Agreement and the Loan Documents
arising on and after the Trigger Date.
2. Each of the Assignor and the Assignee represents, warrants and agrees to
and with the other and the Agent as follows: (i) Assignor warrants that it
is the legal and beneficial owner of the interest being assigned hereby
free and clear of any adverse claim and that its Commitments and the
outstanding balances of its Loans under each Facility, in each case,
without giving effect to assignments thereof which have not become
effective, are as set forth below, (ii) except as set forth in (i),
Assignor makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Credit Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement
or any other Loan Document or any instrument or documents furnished
pursuant thereto, or the financial condition of Borrower or the performance
or observance by Borrower of any of its obligations under the Loan
Documents; (iii) the Assignee represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (iv) Assignee
confirms that it has received a copy of the Credit Agreement, such
financial statements and other
<PAGE>
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance;
(v) Assignee agrees that it will perform its obligations as a Lender under
the Loan Documents as required by the terms thereof; and (vi) Assignee
appoints and authorizes the Agent to take such actions as agent on its
behalf and to exercise such powers under the Credit Agreement and the other
Loan Documents as are delegated to the Agent by the terms of the Credit
Agreement and the other Loan Documents, together with such powers as are
reasonably incidental thereto.
3. This Assignment and Acceptance is being delivered to the Agent, together
with (i) the Notes evidencing the Loans included in the Assigned Interest,
and (ii) a copy of the Assignment and Acceptance after it is duly executed
by each of the Assignee and the Assignor.
4. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Georgia, without regard to the
conflict of laws principles thereof.
5. Borrower is an intended third party beneficiary of, and may enforce,
this Assignment and Acceptance.
6. This Assignment and Acceptance may be executed in any number of
counterparts and by 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.
CONSENTED TO:
SUNTRUST BANK, ATLANTA, AS AGENT
By: -------------------------
Name:
Title:
GOLD KIST INC.
By: -------------------------
Name:
Title:
<PAGE>
ANNEX A
-------
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address (Including Telex and Telecopy Numbers) for Notices:
Assignee's Payment Office:
Trigger Date of Assignment (may not be fewer than five (5) Business Days after
the date of the Assignment):
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRO RATA SHARE
FACILITY ASSIGNED OF COMMITMENT
- -------- ---------------- --------------
<S> <C> <C>
Revolving Loans $ %
364-Day Loans $ %
Fees: $ ______________
- ----
</TABLE>
<PAGE>
Immediately after the Trigger Date:
(a) The aggregate principal amount of the Revolving Loans owed to Assignor
is $________________ and the Assignor's Pro Rata Share of the Revolving Credit
Commitment is _____________%; and
(b) The aggregate principal amount of the 364-Day Loans owed to Assignor is
$______________ and Assignor's Pro Rata Share of the 364-Day Line of Credit
Commitment is ____________%.
The terms set forth herein are hereby agreed to by
________________________, as Assignor.
By: ----------------------------
Name:
Title:
The terms set forth herein are hereby agreed to by
________________________, as Assignee.
By: ----------------------------
Name:
Title:
<PAGE>
SCHEDULE 1.1.
SUBORDINATED DEBT
-----------------
Section 4.01. Agreement of Subordination.
--------------------------
The Association covenants and agrees, and each holder of Certificates
issued hereunder by his acceptance thereof likewise covenants and agrees, that
all Certificates shall be issued subject to the provisions of this Article; and
each Person holding any Certificate, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions.
All Certificates issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full in money or money's worth of all Superior Indebtedness.
Section 4.02. Payment to Certificateholders.
------------------------------
No payment on account of principal or interest on the Certificates shall
be made if, at the time of such payment there shall be in process the
liquidation of the Association, whether voluntary or involuntary, and any
Superior Indebtedness shall remain unpaid.
Upon any payment by the Association, or distribution of assets of the
Association of any kind or character, whether in cash, properties or securities,
to creditors upon any dissolution or winding-up or total liquidation of the
Association, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Superior Indebtedness shall first be paid in full, or
<PAGE>
payment thereof provided for in money or money's worth, in accordance with its
terms, before any payment is made on account of the principal of or interest on
the Certificates; and upon any such dissolution or winding-up or liquidation any
payment by the Association, or distribution of assets of the Association of any
kind or character, whether in cash, property, or securities, to which the
holders of the Certificates or the Trustee would be entitled, except for the
provisions of this Article, shall be paid by the Association or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution directly to the holders of Superior Indebtedness (as
their respective interests shall appear) or their representative or
representatives, or to the indenture trustee or trustees under any indenture
pursuant to which any instruments evidencing any Superior Indebtedness may have
been issued, as their respective interests may appear, to the extent necessary
to pay all Superior Indebtedness in full, in money or money's worth in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Superior Indebtedness, before any payment
or distribution is made to the holders of the Certificates or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or distribution
of assets of the Association of any kind or character, whether in cash, property
or securities, prohibited by the foregoing, shall be received by the Trustee or
the holders of the Certificates before all Superior Indebtedness is paid in
full, or provision is made for such payment in money or money's worth in
accordance with its terms, such payment or distribution shall be paid over or
delivered to the holders of Superior Indebtedness or their representative or
representatives, or to the indenture trustee or trustees under any indenture
pursuant to which any instruments evidencing any Superior Indebtedness may have
been issued, as their respective interests may appear, for application to the
payment of all Superior Indebtedness remaining unpaid to the extent necessary to
pay all Superior Indebtedness in full in money or money's worth in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the holders of such Superior Indebtedness.
Section 4.03. Subrogation of Certificates.
---------------------------
Subject to the payment in full of all Superior Indebtedness, the rights of the
holders of the Certificates shall be subrogated to the rights of the holders of
Superior Indebtedness to receive payments or distributions of cash, property or
securities of the Association applicable to the Superior Indebtedness until the
principal of and interest on the Certificates shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders of
the Superior Indebtedness of any cash, property or securities to which the
holders of the Certificates or the Trustee would be entitled except for the
provisions of this Article, and no payment over pursuant to the provisions of
this Article to or for the benefit of the holders of Superior Indebtedness by
holders of the Certificates or the
<PAGE>
Trustee, shall, as between the Association, its creditors other than holders of
Superior Indebtedness, and the holders of the Certificates, be deemed to be a
payment by the Association to or on account of the Superior Indebtedness. It is
understood that the provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the holders of the Certificates,
on the one hand, and the holders of the Superior Indebtedness, on the other
hand.
Nothing contained in this Article or elsewhere in this Indenture or in the
Certificates is intended to or shall impair, as between the Association, its
creditors, other than the holders of Superior Indebtedness, and the holders of
the Certificates, the obligation of the Association, which is absolute and
unconditional, to pay to the holders of the Certificates the principal of and
interest on the Certificates as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Certificates and creditors of the Association other
than the holders of the Superior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the holder of any Certificate from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders
of Superior Indebtedness in respect of cash, property or securities of the
Association received upon the exercise of any such remedy.
Upon any payments or distribution of assets of the Association referred to in
this Article, the Trustee, subject to the provisions of Section 8.01,and the
holders of the Certificates shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such dissolution,
winding-up or liquidation proceedings are pending, or a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, delivered to the Trustee or the holders of
the Certificates, for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Superior Indebtedness and
other indebtedness of the Association, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
Section 4.04. Authorization by Certificateholders.
-----------------------------------
Each holder of a Certificate by his acceptance thereof authorizes the Trustee
in his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
Section 4.05. Notice to Trustee.
-----------------
The Association shall give prompt written notice to the Trustee of any fact
known to the Association which would prohibit the making of any payment of
moneys to or by the Trustee in respect of the Certificates pursuant to the
<PAGE>
provisions of this Article. Notwithstanding the provisions of this Article or
any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment of moneys to or by the Trustee in respect of the Certificates pursuant
to the provisions of this Article, unless and until the Trustee shall have
received written notice thereof from the Association or a holder or holders of
Superior Indebtedness or from any trustee therefor; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Section 8.01,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if on a date not less than three Business Days prior to the date
upon which by the terms hereof any such moneys may become payable for any
purpose (including, without limitation, the payment of the principal of or
interest on any Certificate) the Trustee shall not have received with respect
to such moneys the notice provided for in this Section, then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such moneys and to apply the same to the purpose for which
they were received, and shall not be affected by any notice to the contrary
which may be received by it on or after such prior date.
Section 4.06. Trustee's Relation to Superior Indebtedness.
-------------------------------------------
The Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article in respect of any Superior Indebtedness at any time held
by it, to the same extent as any other holder of Superior Indebtedness, and
nothing in Section 8.13 or elsewhere in this Indenture shall deprive the Trustee
of any of its rights as such holder.
With respect to the holders of Superior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Superior Indebtedness shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Superior Indebtedness and, subject to the
provisions of Section 8.01, the Trustee shall not be liable to any holder of
Superior Indebtedness if it shall pay over or deliver to holders of
Certificates, the Association or any other Person moneys or assets to which any
holder of Superior Indebtedness shall be entitled by virtue of this Article or
otherwise.
Section 4.07. No impairment of Subordination.
------------------------------
No right of any present or future holder of any Superior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Association or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Association with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof which any such
holder may have or otherwise be charged with.
<PAGE>
5% CUMULATIVE PREFERRED CAPITAL CERTIFICATE OF INTEREST
OF
NO. 5263
ATLANTA, GEORGIA
SERIES NO. 2
-----------------------------, a Georgia Corporation, a Farmers Cooperative
Association, as defined in paragraphs (12), (13) and (14) of Section 103 of the
Revenue Act of 1932 hereby certifies that -----------------------------------
has invested ------------------------------ Dollars, $-------------- in the 5%
Cumulative Preferred Capital Certificate of Interest of this Association subject
to the following terms and conditions:
1. The Certificate shall be callable up to 10% of its face value within any
one calendar year after date of issue at the discretion of the Board of
Directors.
2. It is transferable upon the books of the Association when properly
endorsed by the registered owner hereof.
3. Interest shall be paid hereon at the rate of five (5) per cent per annum
on the 30th day of March, June, September and December.
4. This Certificate, in case of liquidation, whether voluntary, or
involuntary, shall be subordinate to any notes, or accounts payable, now due, or
hereafter made by the Association, to the Columbia Bank for Cooperatives,
Columbia, S.C., and/or any other lending agency, or creditor, but shall be paid
before payment of any Revolving Fund Certificates, or other distribution of the
assets of the Association to the members thereof.
This Certificate is issued pursuant to resolution duly adopted by the Board
of Directors of the Association on the twenty-first day of September, 1956 at a
meeting then duly convened.
WITNESSETH the name and Corporate Seal of ---------------------------------
hereunto affixed by its duly authorized officer, this ------------- day of
- ------------------, 19--.
(Seal)
ATTEST:
BY:
---------------------------------
Treasurer
- ------------------------------------
Secretary
<PAGE>
SCHEDULE 5.14
BARGAINING UNITS
JANUARY-JUNE 1996
<TABLE>
<CAPTION>
==============================================================================================================================
Weighted
Average Monthly
Pet Food & Animal Term of Hourly No. NLRB % Union Union Number Number
Health Products Union Agreement Rate Emps. Certification Membership Dues Griev. Arbit.
- ----------------- ----- --------- -------- ------ ------------- ---------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Guntersville Feed Mill IBT 12/05/93- 9.46 35 10/13/61 81.8% 19.00 18 0
12/04/96
POULTRY
Athens Processing UFCW 10/01/95- 7.08 767 N/A 27.2% 18.42 3 0
10/01/98
Carrollton Processing BCTW 11/01/93- 7.13 587 07/25/77 8.5% 18.00 5 1
09/15/96
Trussville Processing UFCW 11/01/94- 7.09 768 N/A 28.5% 18.15 20 0
11/01/97
Jasper, AL, Feed Mill IBT 02/01/95- 9.72 31 08/01/63 100% 19.00 0 0
02/01/98
Guntersville Poultry FM IBT 11/01/95- 9.92 16 08/06/95 37.5% 19.00 0 0
10/31/98
Guntersville Poultry FD IBT 12/05/93- 9.34 35 11/28/78 68.6% 17.00 1 0
12/04/96
Live Oak Processing UFCW 04/01/95- 6.99 1,150 08/16/71 34.3% 18.42 21 0
04/01/98
</TABLE>
<PAGE>
SCHEDULE 5.16.
SUBSIDIARIES
------------
<TABLE>
<CAPTION>
Percent of
Jurisdiction Ownership
----------------- ----------
<S> <C> <C>
AGRATECH SEEDS, INC. Georgia 100
AGRATRADE FINANCING, INC. Georgia 100
AGRI INTERNATIONAL, INC. Delaware 100
AGRIGOLDEN, INC. Georgia 100
AGVESTMENTS, INC. Georgia 100
CAROLINA GOLDEN PRODUCTS
COMPANY, INC. Georgia 100
CROSS EQUIPMENT COMPANY, INC. Georgia 100
DIXICO PET FOOD, INC. Georgia 100
GK PECANS, INC. Georgia 100
GK FINANCE CORPORATION Delaware 100
GKX, INC. Territory of Guam 100
GP FINANCE CORPORATION Delaware 100
GOLDEN POULTRY COMPANY, INC. Georgia 73
LUKER, INC. Georgia 100
</TABLE>
<PAGE>
SCHEDULE 5.3
Status of Tax Audits
--------------------
FEDERAL/IRS AUDITS
- ------------------
Fiscal 1990 and 1991
- --------------------
A Statutory Notice was received in March 1995 specifying tax deficiencies of
$3.2 million and $1.6 million, respectively. The principal issues are equity
discounts (see tax litigation on Schedule 5.4) and repairs and maintenance.
Settlement of all issues except equity is anticipated within the next 60 days by
working through the agent or the appeals division.
Fiscal 1992
- -----------
A Statutory Notice was received in March 1996 specifying tax deficiencies of
$3.5 million. The same issues as 1990-91 along with Section 263A Inventory
Capitalization and Depreciation are in dispute. Petition letter was filed with
Tax Court in June 1996. Settlement similar to 1990-91 is anticipated.
Fiscal 1993
- -----------
Audit is underway and agent is approximately 50% finished.
Fiscal 1994 and 1995
- --------------------
The IRS plans to extend the audit period to cover these years.
STATE AUDITS
- ------------
The 1993-95 Georgia returns for Gold Kist Inc. and all subsidiaries including
Golden Poultry Company, Inc. were audited. The Delaware Holding Company (DHC)
issue remains unresolved with a deficiency of $330,000 including interest. A DHC
case was recently decided in Georgia in the taxpayer's favor, however the
Department of Revenue's position is to write up this issue in all cases. This
issue is still under appeal.
The Georgia Revenue Department is conducting a sales and use tax audit on
returns filed from 3/31/93 to 3/31/96. This audit began in May and likely will
be completed in August.
The Florida Department of Revenue conducted an audit of Gold Kist Inc. and
Subsidiaries consolidated Income tax return for fiscal years 1991-1994. Although
a final audit report has not been received, the increase in tax for the audit
period is expected to be about $50,000.
<PAGE>
SCHEDULE 5.4.
ACTIONS PENDING
---------------
1. Ronald Pete Windham et al v. Harold O. Chitwood, et al., Case No.CV-93-00298
-------------------------------------------------------
in the Circuit Court of Jefferson County, Alabama, filed January 12, 1993.
Derivative and class action alleging that for profit subsidiary Golden
Poultry Company was unlawfully created and operated. On July 2, 1996, the
judge entered an order requiring no distributions or payment of money, but
requiring Gold Kist to acquire the remaining outstanding shares of Golden
Poultry. A hearing is scheduled for August 16, 1996 to determine payment of
attorneys' fees. The judgment may be appealed.
2. Garry Rowland et al v. Gold Kist Inc., Case No. CV-94-106 in the Circuit
-------------------------------------
Court for Walker County, Alabama, filed February 1994. (Removed to Federal
District Court in Birmingham, Alabama, then remanded back to state court.)
Class action alleging underweighing of feed delivered on bulk delivery
trucks. Fraud and breach of contract are alleged. The company denies
wrongdoing and is vigorously contesting the suit.
3. Gold Kist Inc. v. Commissioner of Internal Revenue, Docket No. 10768-93.
--------------------------------------------------
This case involves the taxability of the difference between the face value
of reserves allocated to members and the discounted value at which they were
redeemed in the tax years 1987, 1988 and 1989. The tax court ruled on June
27, 1995, that these amounts are taxable and entered a judgment for
deficiencies in the aggregate amount of $1,785,631. The Company had made
larger tax payments after the notice of deficiency was received by the
Company and the Court's order actually gave the Company a refund. The
Company filed an appeal of the decision to the Eleventh Circuit Court of
Appeals. Briefs have been filed and the case will likely be argued prior to
December 31, 1996. If determined adversely to Gold Kist, additional
liability for state income taxes could result.
4. Gold Kist Inc. v. Commissioner of Internal Revenue, Docket No. 9874-95.
--------------------------------------------------
This case was filed on June 9, 1995, and contains the same issue with
respect to the difference between the face value of reserves allocated to
members and the discounted value at which they were redeemed in the tax
years 1990 and 1991. There are other issues in this case, particularly
questions with respect to capital versus expense items, but settlement
negotiations are proceeding with respect to the other issues. The resolution
of the issue dealing with the face value of reserves will depend upon the
final disposition of the Eleventh Circuit case .
5. Gold Kist Inc. v. Commissioner of Internal Revenue, Docket No. 11962-96.
--------------------------------------------------
This case was filed on June 7, 1996. It also contains the same issue as the
issue in the Eleventh Circuit Court of Appeals, but with respect to tax year
1992. It deals further with adjustments related to (i) whether certain
direct and indirect costs must be capitalized for purposes of inventory of
goods held for sale, (ii) whether methods of depreciation and depreciation
recovery periods are proper, and (iii) whether the costs of certain repairs
constitute deductible, ordinary and necessary business expenses.
<PAGE>
SCHEDULE 5.6
Margin Stock Owned
------------------
Archer-Daniels-Midland 2,867,215 shares
Golden Poultry Company, Inc. 16,602,407 shares
<PAGE>
SCHEDULE 5.9
Conflicting Agreements
----------------------
NONE
<PAGE>
SCHEDULE 7.3
Liens Existing Prior to the Date of this Agreement
--------------------------------------------------
Haralson County IRBs $7,500,000
Bulloch County IRBs $6,700,000
GC Properties (Corporate Office Building-54%) $2,306,484
<PAGE>
SCHEDULE 7.4
Investments*
------------
at June 1, 1996
Archer-Daniels-Midland $20,741,282
CF Industries $20,903,000
Young Pecan Company (Equity and Note through GK Pecans, Inc.) $ 2,330,000
InTrade $ 4,908,000
Alimenta Commodities Inc. $ 1,666,666
Universal Cooperative $ 1,557,000
Hesco $ 1,173,000
All Others $ 1,582,000
* All investments are shown at book value or adjusted original cost without
reflecting equity in earnings or losses or adjustments to comply with FAS 115.
<PAGE>
EXHIBIT 12
GOLD KIST INC.
RATIO OF NET MARGINS TO FIXED CHARGES
FOR THE FIVE YEARS ENDED JUNE 29, 1996
(DOLLR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fixed Charges:
Debt interest 18,838 17,163 13,924 17,525 21,065
Interest portion of rents 5,334 5,189 5,390 9,325 6,224
Interest decrease (see below) -- -- -- -- --
------- ------- ------- ------- -------
Total 24,172 22,352 19,314 26,850 27,289
======= ======= ======= ======= =======
Margins (loss) before income taxes,
minority interest, and cumulative
effect of change in accounting
principle (4,041) 43,692 50,074 25,586 62,119
Deduct: Equity in Gain (Loss) of less than
50% owned affiliates 8,732 5,593 (453) (21) 1,621
Add: Earnings distributed by less than
50% owned partnership 22,695 11,404 1,770 653 697
Deduct: Interest decrease (see below) -- -- -- -- --
------- ------- ------- ------- -------
$ 9,922 $49,503 $52,297 $26,260 $61,195
Fixed charges 24,172 22,352 19,314 26,850 27,289
------- ------- ------- ------- -------
Subtotal 34,094 71,855 71,611 53,110 88,484
Divided by fixed charges 24,172 22,352 19,314 26,850 27,289
------- ------- ------- ------- -------
Ratio 1.41 3.21 3.71 1.98 3.24
======= ======= ======= ======= =======
</TABLE>
<PAGE>
EXHIBIT 23(A)
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.
<PAGE>
EXHIBIT 23(B)
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 20, 1996
<PAGE>
EXHIBIT 23(C)
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
September 6, 1996, with respect to the combined consolidated financial
statements of Golden Peanut Company and Subsidiaries and Alimenta Commodities,
LLC (not included separately herein) 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 20, 1996
<PAGE>
EXHIBIT 23(D)
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 19, 1996
<PAGE>
EXHIBIT 25
===============================================================================
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) [ ]
SUNTRUST BANK, ATLANTA
(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)
W. BRYAN ECHOLS
SUNTRUST BANK, ATLANTA
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 SunTrust Bank,
Atlanta 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 SunTrust Bank,
Atlanta 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. 33-63523)
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, SunTrust Bank, Atlanta, 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 20th day of September, 1996.
SUNTRUST BANK, ATLANTA
By: /s/ T. J. Donaldson
--------------------------------------
T.J. Donaldson
Group Vice President
By: /s/ W. Bryan Echols
--------------------------------------
W. Bryan Echols
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 therefore.
SUNTRUST BANK, ATLANTA
By: /s/ T. J. Donaldson
---------------------------
T. J. Donaldson
Group Vice President
By: /s/ W. Bryan Echols
---------------------------
W. Bryan Echols
Vice President
Dated: September 20, 1996
<PAGE>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of Currency
OMB Number: 1557-0081
Expires March 31, 1998
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------------
[LOGO OF FEDERAL FINANCIAL Please refer to page i, [ 1 ]
INSTITUTIONS EXAMINATION Table of Contents, for
COUNCIL APPEARS HERE] the required disclosure
of estimated burden.
- -------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 (960630)
--------
This report is required by law: 12 U.S.C. (S)324 (State This report form is to be filed by banks with branches and
member banks); 12 U.S.C. (S)1817 (State nonmember banks); consolidated subsidiaries in U.S. territories and possessions,
and 12 U.S.C. (S)161 (National banks). Edge or Agreement subsidiaries, foreign branches, consolidated
foreign subsidiaries, or International Banking Facilities.
- -------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must be accordance with Federal regulatory authority instructions.
attested to by not less than two directors (trustees) for State NOTE: These instructions may in some cases differ from
nonmember banks and three directors for State member and generally accepted accounting principles.
National banks.
We, the undersigned directors (trustees), attest to the
Russell L. Hunter, Senior Vice President correctness of this Report of Condition (including the
- -------------------------------------------------------------- supporting schedules) and declare that it has been examined
Name and Title of Officer Authorized to Sign Report by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the
of the named bank do hereby declare that these Reports of appropriate Federal regulatory authority and is true and
Condition and Income (including the supporting schedules) correct.
have been prepared in conformance with the instructions
issued by the appropriate Federal Regulatory authority and /s/ Robert R. Long
are true to the best of my knowledge and belief. -------------------------------------------------------------
Director (Trustee)
/s/ Russell L. Hunter /s/ L. Phillip Humann
- -------------------------------------------------------------- -------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
July 22, 1996 /s/ R. W. Courts, II
- -------------------------------------------------------------- -------------------------------------------------------------
Date of Signature Director (Trustee)
- -------------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the NATIONAL BANKS: Return the original only and in the special return
appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of
the special return address envelope, return the original only
STATE NONMEMBER BANKS: Return the original only in the to the FDIC, c/o Quality Data Systems, 2127 Espey Court,
special return address envelope provided. If express mail is Suite 204, Crofton, MD 21114.
used in lieu of the special return address envelope, return
the original only to the FDIC, c/o Quality Data Systems,
2127 Espey Court, Suite 204, Crofton, MD 21114.
- -------------------------------------------------------------------------------------------------------------------------------
-- --
FDIC Certificate Number |__|__|__|__|__| | |
(RCRI 0000) SUNTRUST BANK, ATLANTA
P O BOX 4418
ATLANTA GA 30302
F130330000 00867
31
| |
-- --
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, FEDERAL DEPOSIT INSURANCE CORPORATION, OFFICE OF THE COMPTROLLER OF THE CURRENCY
</TABLE>
<PAGE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND
STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
C400 /-
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin (1)___________________________0081.. 771,062 1.a
b. Interest-bearing balances (2)____________________________________________________0071.. 3,847 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)_______________________1754.. 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)_____________________1773.. 2,753,751 2.b
3. 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 IBFs:
a. Federal funds sold_______________________________________________________________0276.. 1,286,630 3.a
b. Securities purchased under agreements to resell__________________________________0277.. 0 3.b
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income RCFD
----
(from Schedule RC-C______________________________2122.. 7,967,608 .......... 4.a
b. LESS: Allowance for loan and lease losses_______3123.. 131,462 .......... 4.b
c. LESS: Allocated transfer risk reserve___________3128.. 0 .......... 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (items 4.a minus 4.b and 4.c)_____________________________2125.. 7,836,146 4.d
5. Trading assets (from Schedule RC-D)_________________________________________________3545.. 12,172 5.
6. Premises and fixed assets (including capitalized leases)____________________________2145.. 89,838 6.
7. Other real estate owned (from Schedule RC-M)________________________________________2150.. 3,651 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M)______________________________________________________________________2130.. 12,664 8.
9. Customers' liability to this bank on acceptances outstanding________________________2155.. 361,730 9.
10. Intangible assets (from Schedule RC-M)______________________________________________2143.. 19,983 10.
11. Other assets (from Schedule RC-F)___________________________________________________2160.. 142,205 11.
12 Total assets (sum of items 1 through 11)____________________________________________2170.. 13,293,679 12.
</TABLE>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE RC - CONTINUED
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of RCON
----
columns A and C from Schedule RC-E, part I)__________________________________________2200.. 5,832,122 13.a
RCON
----
(1) Noninterest-bearing (1)______________________6631.. 2,195,882 .......... 13.a.1
(2) Interest-bearing_____________________________6636.. 3,636,240 .......... 13.a.2
RCFN
----
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part II_______________________________________________________________2200 2,119,667 13.b
RCFN
----
(1) Noninterest-bearing__________________________6631.. 0 .......... 13.b.1
(2) Interest-bearing_____________________________6636.. 2,119,667 .......... 13.b.2
14. 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 IBFs: RCFD
----
a. Federal funds purchased______________________________________________________________0278.. 2,210,458 14.a
b. Securities sold under agreements to repurchase_______________________________________0279.. 0 14.b
RCOM
----
15. a. Demand notes issued to the U.S. Treasury_____________________________________________2840.. 0 15.a
RCFD
----
b. Trading liabilities (from Schedule RC-D______________________________________________3548.. 2,000 15.b
16. Other borrowed money:
a. With a remaining maturity of one year or less________________________________________2332.. 32,524 16.a
b. With a remaining maturity of more than one year______________________________________2333.. 2,351 16.b
17. Mortgage indebtedness and obligations under capitalized leases__________________________2910.. 2,406 17.
18. Bank's liability on acceptances executed and outstanding________________________________2920.. 361,730 18.
19. Subordinated notes and debentures_______________________________________________________3200.. 75,000 19.
20. Other liabilities (from Schedule RC-G)__________________________________________________2930.. 853,240 20.
21. Total liabilities (sum of items 13 through 20)__________________________________________2948.. 11,491,498 21.
22. Limited-life preferred stock and related surplus________________________________________3282.. 0 22.
EQUITY CAPITAL
RCFD
----
23. Perpetual preferred stock and related surplus___________________________________________3838.. 0 23.
24. Common stock____________________________________________________________________________3230.. 21,601 24.
25. Surplus (exclude all surplus related to preferred stock)________________________________3839.. 513,406 25.
26. a. Undivided profits and capital reserves_______________________________________________3632.. 514,880 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities_______________3434.. 752,294 26.b
27. Cumulative foreign currency translation adjustments_____________________________________3284.. 0 27.
28. Total equity capital (sum of 23 through 27)_____________________________________________3210.. 1,802,181 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of
items 21, 22, and 28)___________________________________________________________________3300. 13,293,679 29.
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
30. Indicate in the box at the right the number of the statement below that best describes
the most comprehensive level of auditing work performed for the bank by independent RCFD Number
---- ------
external auditors as of any date during 1995____________________________________________6724.. N/A M.1
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
31. Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company (but external auditors
not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
Directors' examination of the bank conducted in accordance 8 = No external audit work
with generally accepted auditing standards by a certified
public accounting firm (may be required by state charter-
ing authority)
____________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-END> JUN-29-1996
<CASH> 20,562
<SECURITIES> 0
<RECEIVABLES> 250,137
<ALLOWANCES> 7,726
<INVENTORY> 270,367
<CURRENT-ASSETS> 572,544
<PP&E> 607,064
<DEPRECIATION> 351,336
<TOTAL-ASSETS> 975,960
<CURRENT-LIABILITIES> 388,087
<BONDS> 188,948
0
0
<COMMON> 36
<OTHER-SE> 326,374
<TOTAL-LIABILITY-AND-EQUITY> 975,960
<SALES> 1,955,569
<TOTAL-REVENUES> 1,971,447
<CGS> 1,731,448
<TOTAL-COSTS> 1,731,448
<OTHER-EXPENSES> 1,181
<LOSS-PROVISION> 4,029
<INTEREST-EXPENSE> 21,065
<INCOME-PRETAX> 62,119
<INCOME-TAX> 20,757
<INCOME-CONTINUING> 37,032
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,032
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
