<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 24, 1997
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
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Subordinated Capital Certificates of Interest
(Series D) 15 years................................ $ 5,000,000 $ 500(1) $ 5,000,000 $ 1,515
Subordinated Capital Certificates of Interest
(Series D) 10 years................................ $ 1,000,000 $ 500(1) $ 1,000,000 $ 303
Subordinated Capital Certificates of Interest
(Series C) 5 years................................. $ 5,000,000 $ 500(1) $ 5,000,000 $ 1,515
Subordinated Capital Certificates of Interest
(Series A) 3 years................................. $ 2,000,000 $ 500(1) $ 2,000,000 $ 606
Subordinated Capital Certificates of Interest
(Series A) 2 years................................. $ 5,000,000 $ 500(1) $ 5,000,000 $ 1,515
Subordinated Loan Certificates (Series C) 1 year.... $25,000,000 $ 500(1) $25,000,000 $ 7,576
Subordinated Large Denomination Loan Certificates
(Series A) 1 year.................................. $25,000,000 $50,000(2) $25,000,000 $ 7,576
- ----------------------------------------------------------------------------------------------------------
Total................................................ $68,000,000 $68,000,000 $20,606
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) All certificates are offered at par in minimum denominations of $500;
however, certificates will be issued in any amount which is $500 or
larger.
(2) All certificates are offered at par in minimum denominations of $50,000;
however, certificates will be issued in any amount which is $50,000 or
larger.
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- -------------------------------------------------------------------------------
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, No. 33-62869 and 333-12397.
---------------
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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 24, 1997
GOLD KIST INC.
$ 7,831,347--8.25%, FIFTEEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES D)
[LOGO] $ 5,715,945--8.00%, TEN YEAR SUBORDINATED
GOLD CAPITAL CERTIFICATES OF INTEREST (SERIES D)
KIST $10,622,093--7.75%, SEVEN YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$10,786,235--7.50%, FIVE YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES C)
$13,051,242--7.00%, THREE YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$16,279,572--6.75%, TWO YEAR SUBORDINATED
CAPITAL CERTIFICATES OF INTEREST (SERIES A)
$25,530,851--6.30%, ONE YEAR SUBORDINATED LOAN
CERTIFICATES (SERIES C)
$43,542,003--6.40%, ONE YEAR SUBORDINATED
LARGE DENOMINATION LOAN CERTIFICATES (SERIES
A)
$13,172,153--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 28, 1997,
Superior Indebtedness (as defined in the indenture under which each series will
be issued) amounted to approximately $633,727,000. 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............................ $ 7,831,347 $ 313,254 $ 7,518,093
Ten Year (Series D)--Per Unit
(3).............................. $ 500
Total............................ $ 5,715,945 $ 171,478 $ 5,544,467
Seven Year (Series A)--Per Unit
(3).............................. $ 500
Total............................ $ 10,622,093 $ 265,552 $ 10,356,541
Five Year (Series C)--Per Unit
(3).............................. $ 500
Total............................ $ 10,786,235 $ 215,725 $ 10,570,510
Three Year (Series A)--Per Unit
(3).............................. $ 500
Total............................ $ 13,051,242 $ 130,512 $ 12,920,730
Two Year (Series A)--Per Unit
(3).............................. $ 500
Total............................ $ 16,279,572 $ 122,097 $ 16,157,475
SUBORDINATED LOAN CERTIFICATES
One Year (Series C)--Per Unit
(3).............................. $ 500
Total............................ $ 25,530,851 $ 127,654 $ 25,403,197
SUBORDINATED LARGE DENOMINATION
LOAN CERTIFICATES
One Year (Series A)--Per Unit
(4).............................. $ 50,000
Total............................ $ 43,542,003 $ 217,710 $ 43,324,293
Six Month (Series A)--Per Unit
(5).............................. $ 20,000
Total............................ $ 13,172,153 $ 32,930 $ 13,139,223
</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 $146,531,441 in face
amount of certificates would total $1,635,863.
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 $144,895,578 are before deducting the
expenses to be borne by Gold Kist of an estimated amount of $111,606. 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 October , 1997
<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 28, 1997,
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 31,000 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)........................................ $ 7,831,347
10 year maturity, Series D (Interest as indicated on the front
cover of this Prospectus)........................................ $ 5,715,945
7 year maturity, Series A (Interest as indicated on the front
cover of this Prospectus)........................................ $ 10,622,093
5 year maturity, Series C (Interest as indicated on the front
cover of this Prospectus)........................................ $ 10,786,235
3 year maturity, Series A (Interest as indicated on the front
cover of this Prospectus)........................................ $ 13,051,242
2 year maturity, Series A (Interest as indicated on the front
cover of this Prospectus)........................................ $ 16,279,572
Subordinated Loan Certificates
1 year maturity, Series C (Interest as indicated on the front
cover of this Prospectus)........................................ $ 25,530,851
Subordinated Large Denomination Loan Certificates
1 year maturity, Series A (Interest as indicated on the front
cover of this Prospectus)........................................ $ 43,542,003
6 month maturity, Series A (Interest as indicated on the front
cover of this Prospectus)........................................ $ 13,172,153
</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 26, JUNE 25, JULY 1, JUNE 29, JUNE 28,
1993 1994 1995 1996 1997
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Net sales volume........... $1,400,566 1,561,034 1,688,537 1,955,569 2,289,044
Net margins (A)............ $ 27,238 39,404 11,751 37,032 11,890
Ratio of net margins to
fixed charges (B)......... 3.2 3.7 2.0 3.2 1.2
<CAPTION>
AS OF (000'S OMITTED)
--------------------------------------------------
JUNE 26, JUNE 25, JULY 1, JUNE 29, JUNE 28,
1993 1994 1995 1996 1997
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet
Data:
Total assets............... $ 665,102 716,432 821,637 975,960 1,119,836
Total liabilities.......... $ 354,889 394,754 482,675 621,378 745,303
Patrons' and other
equity(A)................. $ 285,620 296,662 314,990 326,410 346,075
</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 28, 1997, Superior Indebtedness (as defined in the indentures) amounted
to approximately $633,727,000 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.
5
<PAGE>
GOLD KIST INC.
Gold Kist Inc. is a diversified agricultural membership cooperative
association, headquartered in Atlanta, Georgia. Gold Kist serves approximately
31,000 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, is a partner in a major peanut processing and marketing
business and in a pecan processing and marketing business, and is a
participant in joint ventures organized for the production and sales of hogs
and fertilizer ingredients.
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 $144,895,578 before deduction of expenses
estimated to be $111,606. The proceeds will be used in the following order of
priority. Approximately $42,221,000 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, 1998. The rates of interest
borne by such indebtedness are set forth in Note 4 of Notes to Consolidated
Financial Statements. Any remaining proceeds will be used for general
corporate purposes, including additional production and processing plant
capacity expansion and additional working capital.
The Subordinated Capital Certificates of Interest, Subordinated Loan
Certificates and Subordinated Large Denomination Loan Certificates are being
offered as a continuous offering on a "best efforts" basis by Agvestments,
Inc. Consequently, no assurance can be given as to the amount of Subordinated
Capital Certificates of Interest, Subordinated Loan Certificates or
Subordinated Large Denomination Loan Certificates that will be sold or as to
the amount of net proceeds therefrom which will be available to Gold Kist from
time to time. If substantially less than the maximum proceeds are obtained, to
the extent that cash flow from future operations is not sufficient, Gold Kist
would borrow necessary additional funds from banks and other lenders. See Note
4 of Notes to Consolidated Financial Statements.
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below under the captions
"Consolidated Statement of Operations Data" for each of the years in the five-
year period ended June 28, 1997 and "Consolidated Balance Sheet Data" as of
June 26, 1993, June 25, 1994, July 1, 1995, June 29, 1996 and June 28, 1997
are derived from the consolidated financial statements of Gold Kist Inc. and
subsidiaries, which have been audited by KPMG Peat Marwick LLP, independent
auditors. The consolidated financial statements as of June 29, 1996 and June
28, 1997 and for each of the years in the three-year period ended June 28,
1997, 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 a change in accounting
for certain investments in debt and equity securities, included elsewhere
herein.
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED (000'S OMITTED)
--------------------------------------------------
JUNE 26, JUNE 25, JULY 1, JUNE 29, JUNE 28,
1993 1994 1995 1996 1997
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales volume........... $1,400,566 1,561,034 1,688,537 1,955,569 2,289,044
========== ========= ========= ========= =========
Interest expense........... $ 17,163 13,924 17,525 21,065 26,951
========== ========= ========= ========= =========
Margins before cumulative
effect of accounting
changes................... $ 27,238 34,065 11,751 37,032 11,890
Cumulative effect of
changes in accounting for
income taxes (A).......... $ -- 5,339 -- -- --
---------- --------- --------- --------- ---------
Net margins................ $ 27,238 39,404 11,751 37,032 11,890
========== ========= ========= ========= =========
Ratio of net margins to
fixed charges............. 3.2 3.7 2.0 3.2 1.2
========== ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
AS OF (000'S OMITTED)
--------------------------------------------
JUNE 26, JUNE 25, JULY 1, JUNE 29, JUNE 28,
1993 1994 1995 1996 1997
-------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.................. $140,629 139,847 146,585 184,457 209,269
======== ======= ======= ======= =========
Total assets..................... $665,102 716,432 821,637 975,960 1,119,836
======== ======= ======= ======= =========
Long-term liabilities............ $152,792 144,992 178,777 233,291 310,053
======== ======= ======= ======= =========
Total liabilities................ $354,889 394,754 482,675 621,378 745,303
======== ======= ======= ======= =========
Patrons' and other equity (B).... $285,620 296,662 314,990 326,410 346,075
======== ======= ======= ======= =========
Current ratio.................... 1.70 1.56 1.48 1.48 1.48
======== ======= ======= ======= =========
Ratio of long-term liabilities to
total capitalization............ % 34.85 32.83 36.21 41.68 47.25
======== ======= ======= ======= =========
</TABLE>
- --------
NOTE:
A. See Note 6 of Notes to Consolidated Financial Statements.
B. See Note 9(a) of Notes to Consolidated Financial Statements.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The nature of the poultry industry and the agriculture (agribusiness)
industry in general is such that supply and demand market forces exert a
significant amount of influence over the operations of firms engaged in these
businesses. Prices of commodities react directly to supply and demand.
Additionally, demand for poultry and other agricultural products produced,
processed and marketed by Gold Kist is often influenced by supplies and prices
of alternative products.
As with other perishable commodity businesses, the integrated poultry
industry has demonstrated a cyclical nature with varying levels of profits,
and to a lesser extent, losses over its thirty-six year history. Although the
industry has been profitable since 1983 with the exception of brief periods
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.
Increased 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. Average market prices for broilers
during 1997 remained at relatively high levels as compared to historical
averages. However, during the May-June 1997 period, market prices declined
below 1996 levels as a result of the increase in industry production. Export
prices for broiler leg-quarters declined substantially in 1997 as a result of
disruptions in the Russian markets. According to USDA estimates, the supply of
broilers is expected to increase at a 4.5% rate in 1997 and a 6.0% rate in
1998 as compared to the 6.3% average annual increase between 1993 and 1996.
Generally, feed grain costs represent approximately fifty percent of total
broiler production costs. Feed ingredient prices declined in 1993 as a result
of the record 1992 U.S. corn crop. 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. During 1997, average cash
market prices for corn declined 14% as a result of the favorable 1996 harvest.
However, soybean meal average cash market prices increased approximately 26%
for 1997 as compared to 1996 as a result of strong demand and lower carryover
stocks.
The Association believes that feed ingredient costs at levels in excess of
cash market prices during the first half of fiscal 1998 will likely result in
reductions in gross margins for such period. The increase in feed ingredient
costs and the resultant impact on net margins is primarily attributable to the
Company's forward purchasing and hedging strategies. See Note 1(c) of Notes to
Consolidated Financial Statements.
Historically, weather has had a significant impact on the farm economy and
the operating results of the Association. 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
negatively affected 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
8
<PAGE>
Southeast and Delta regions. Also, favorable spring weather contributed to the
increase in sales of agricultural inputs in 1996. Favorable weather conditions
during the summer of 1996 contributed to plentiful cotton, peanuts and grain
harvests in the United States. Cool wet weather conditions during the spring
of 1997 contributed to delayed plantings in the Southeast and reduced
plantings in the Mississippi-Delta region.
Export sales for 1995, 1996 and 1997 were $70.1 million, $100.1 million and
$96.4 million, respectively. In 1996, export sales increased primarily as a
result of the demand for poultry from Russian and Asian markets. During 1997,
export sales declined as a result of lower market prices for poultry. Export
sales for 1997 reflected increases in cotton sales. Export sales of poultry
products will be influenced by credit availability to foreign countries,
political and economic stability, particularly in Russia, Eastern Europe and
Mexico.
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 28, 1997.
RESULTS OF OPERATIONS
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 $153.6 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
$70.0 million as compared to $37.5 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, in 1996 as compared to 1995, the Association's forward
purchasing and hedging strategies resulted in a relatively modest 8% increase
in feed ingredient costs for 1996.
The Agri-Services segment's 1996 net sales volume of $569.1 million
increased 24.9% or $113.4 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
$10.3 million as compared to $5.0 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. In 1996,
the Pork Division had a net operating margin of $240,000 as compared to a $3.7
million net loss for 1995.
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.
9
<PAGE>
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.
Fiscal 1997 Compared to Fiscal 1996
For 1997, net sales volume of $2.3 billion represented a 17.1% or $333.5
million increase as compared to 1996. Net margins from operations, before
general corporate expenses and other deductions, were $27.6 million for 1997
as compared to $80.3 million for 1996. The decline in net margins from
operations was primarily the result of lower margins in the Poultry segment.
The Poultry segment had net sales of $1.6 billion for 1997, which
represented a 17.5% or $243.2 million increase as compared to 1996. An 11.5%
increase in pounds of poultry sold and a 6.0% increase in average selling
prices contributed to the increase in net sales for 1997. The increase in
poultry products market prices was due to the reduction in the rate of
industry growth as compared to prior years. The increase in pounds sold during
1997 reflected the Association's acquisition of its twelfth processing
facility in July 1996 and changes in product mix. The Poultry segment's net
margins from operations for 1997 were $17.4 million as compared to
approximately $70.0 million in 1996. The decline in net margins was due to a
28.0% increase in feed ingredient costs for 1997, which was partially offset
by the 6.0% increase in average selling prices for poultry products. As a
result of the Association's forward purchasing and hedging strategies, feed
ingredient costs for 1996 were below market prices for corn and soybean meal.
In 1997, the Association's feed ingredient costs reflected the increase in
market prices for corn and soybean meal.
The Agri-Services segment's 1997 net sales volume of $659.3 million
represented a 15.9% or $90.3 million increase over 1996. The sales volume
increase was due primarily to the growth in the procurement and marketing of
cotton and to a lesser extent increased sales of agricultural chemicals and
fertilizers. Net margins from operations in the Agri-Services segment for 1997
were $10.2 million as compared to $10.3 million for 1996. Net margins for 1997
were positively impacted by increased cotton marketing margins and to a lesser
extent increases in Pork Division net margins. These improvements were
partially offset by increased losses in retail store operations, which were
primarily due to continuing operational problems in the Mississippi-Delta
region. Higher feed ingredient costs contributed to net losses on commercial
feeds for 1997. Net margins for 1997 reflected $10.3 million in patronage
refunds from other cooperatives as compared to $9.3 million in 1996. A
substantial portion of the refunds for 1996 and 1997 were distributed by a
major fertilizer cooperative. The Agri-Services segment's net margins for 1996
reflected a $2.1 million loss associated with an agricultural equipment
manufacturing operation that was closed in 1996.
Distribution, administrative and general expenses for 1997 and 1996 were
$167.7 million and $155.7 million, respectively. The $12.0 million increase
primarily reflects the growth in operations.
10
<PAGE>
The various components included in other income (deductions) represented a
deduction of $5.5 million for 1997 as compared to $6.3 million for 1996.
Interest income of $13.3 million for 1997 increased $3.4 million primarily as
a result of interest income related to a favorable tax litigation decision.
Interest expense for 1997 was $27.0 million as compared to $21.1 million in
1996. The increase was due to a 31% increase in average borrowings. Equity in
earnings of partnership represents the Association's 33 1/3% pro rata share of
the Golden Peanut Company's 1997 earnings. See Note 9(b) of Notes to
Consolidated Financial Statements. Miscellaneous, net for 1997 includes a $1.2
million loss on the purchase of subsidiary common stock. Miscellaneous, net
for 1997 and 1996 includes a $992,000 loss representing the Association's
equity in the loss of a pecan processing and marketing enterprise. In 1996,
the Association's recognized earnings of $1.0 million related to this
investment. Net rental income of approximately $2.0 million and $1.8 million,
respectively, was included in miscellaneous, net for 1997 and 1996.
In 1997 and 1996, the Association's combined federal and state effective
income tax rates were (33%) and 33%, respectively. The effective tax rate for
1997 reflects a $5.2 million income tax benefit related to a Circuit Court of
Appeals decision in the Association's favor. See Note 6 of Notes to
Consolidated Financial Statements.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Association's liquidity is dependent upon funds from operations and
external sources of financing. The principal sources of external short-term
financing are proceeds from the continuous offering of Subordinated Loan
Certificates, an unsecured committed credit facility with a group of banks and
uncommitted letters and lines of credit. The Association has a $250 million
unsecured committed credit facility with nine commercial banks that includes a
five-year $125 million revolving credit commitment and a $125 million 364-day
line of credit commitment. In 1997, the Association established a $125 million
note agreement with an insurance company and a bank commitment for a $50
million term loan. At June 28, 1997, the Association had unused loan
commitments of $218.6 million and additional unused uncommitted facilities to
provide loans and letters of credit from banks aggregating $94.5 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, revolving credit agreements and a term loan
commitment. 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 1.25:1, 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 28, 1997, the Association's current
ratio, senior funded debt to total capitalization and total funded debt to
capitalization, determined under the loan agreements, were 1.48:1, 34% and
44%, respectively. At June 28, 1997, the Association was in compliance with
the agreements. See Note 4 of Notes to Consolidated Financial Statements.
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.
11
<PAGE>
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 operating 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.
In 1997, the uses of cash included $76.9 million for capital expenditures,
$55.7 million for long-term debt repayments and $30.0 million for patronage
refunds and other equity payments. In addition, cash uses included the funding
of increases in operating assets, such as inventories, receivables and
commodities margin deposits. During 1997, increases in inventories and
receivables primarily reflected the growth in poultry and cotton operations.
The increase in commodities margin deposits was the result of corn and soybean
futures contracts and the related unrealized losses associated with these
positions at June 28, 1997. See Note 1(c) of Notes to Consolidated Financial
Statements. The funds for these activities were provided by borrowings of
$182.8 million. During 1997, capital expenditures included $65.7 million for
expansion and improvements in poultry operations and $10.8 million to acquire
retail and cotton operations.
In September 1997, the Association acquired the remaining 3.7 million shares
of Golden Poultry Company, Inc. common stock that it did not already own. The
cost to acquire the outstanding shares and the fees and expenses incurred or
to be incurred in connection with the merger are approximately $55.1 million.
The Association used a term loan and its unsecured committed credit facility
to fund the stock purchase. See Note 11 of Notes to Consolidated Financial
Statements.
The Association plans capital expenditures of approximately $90.0 million in
1998 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 planned 1998 capital expenditures with existing cash
balances and net margins adjusted for non-cash items and additional long-term
borrowings, as needed. In 1998, management expects cash expenditures to
approximate $4.0 million for equity distributions. The Association believes
cash on hand and cash equivalents at June 28, 1997 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 1998.
IMPORTANT CONSIDERATIONS RELATED TO FORWARD-LOOKING STATEMENTS
It should be noted that this discussion contains forward-looking statements
which are subject to substantial risks and uncertainties. There are many
factors which could cause actual results to differ materially from those
anticipated by statements made herein. Such factors include, but are not
limited to, changes in general economic conditions, weather, the growth rate
of the market for the Company's products and services, the availability of raw
inputs, global political events, the ability of the Association to implement
changes in sales strategies and organization on a timely basis, the effect of
competitive products and pricing, and seasonal revenues, as well as a number
of other risk factors which could effect the future performance of the
Association.
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
12
<PAGE>
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.
BUSINESS
Gold Kist offers both cooperative marketing and cooperative purchasing
services to its member patrons. The standard Membership, Marketing and/or
Purchasing Agreement between each member and Gold Kist does not require the
member to market agricultural products or to purchase farm supplies through
Gold Kist. The Association undertakes to market for the member agricultural
products of a type marketed by Gold Kist and to purchase or manufacture and
sell to the member farm supplies, provided handling such supplies is
advantageous for Gold Kist. The Association also is engaged in the purchase,
sale, processing and storage of cotton, serves as a contract procurement agent
for, and storer of, farm commodities such as soybeans and grain, is a partner
in a major peanut processing and marketing business and in a pecan processing
and marketing business and is a participant in joint ventures organized for
the production and sale of hogs and of fertilizer ingredients.
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. See Note 1(c) of Notes to
Consolidated Financial Statements.
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. Ten 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, Georgia, North Carolina, and 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.
13
<PAGE>
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)
-----------------------------------
JULY 1, JUNE 29, JUNE 28,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Broiler Products
Volume.................................... $1,226,104 $1,380,649 $ 1,618,157
Percentage (%)............................ 72.6 70.6 70.7
</TABLE>
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 98 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 precision
farming, 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 39% 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)
--------------------------
JULY 1, JUNE 29, JUNE 28,
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Fertilizer and Chemicals
Volume............................................. $268,625 $306,247 $325,563
Percentage (%)..................................... 15.9 15.7 14.2
</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 forty percent 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.
Gold Kist also markets hogs raised by members and non-members in Alabama and
Georgia and is a participant in a joint venture with another cooperative
association for the production and sale of hogs.
14
<PAGE>
In fiscal 1997, the Association conducted cotton ginning and storage
operations in Georgia and South Carolina. Cotton ginning and storage facilities
are operated at Statesboro, Morven, Byromville and DeSoto, Georgia and
Bishopville, South Carolina. 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 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 28, 1997,
Gold Kist had export sales of $96.4 million of which the primary export product
(poultry) was $81.7 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 deduction for a reasonable reserve
for permanent non-allocated equity and 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
15
<PAGE>
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 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.
2-65587, 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.)
16
<PAGE>
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 28, 1997, there were the following aggregate
principal amounts of the series offered hereby outstanding: Fifteen Year--
$12,987,000; Ten Year--$9,756,000; Seven Year--$11,685,000; Five Year--
$14,936,000; Three Year--$5,035,000; 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.
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, 1998, 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, 1998 and ending on June
30, 1998. (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.
17
<PAGE>
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 7.50%, purchased on January 1, 1998, and redeemed at the request
of the holder on June 15, 1998, the redemption price would equal:
<TABLE>
<C> <C> <S>
$1,000.00 (Principal amount)
plus 33.90 (165 days' accrued interest at 7.50% per annum)
---------
$1,033.90
less 75.00 (1 year's simple interest at 7.50% per annum)
---------
$ 958.90 (Total Redemption Price)
</TABLE>
B. For a Five Year Certificate in the principal amount of $5,000, bearing
interest at 7.50% (paid quarterly at the election of the holder), purchased on
January 1, 1998 and redeemed at the request of the holder on June 15, 1998,
the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
(75 days' accrued interest at 7.50% per annum. Interest
previously paid on April 1, 1998 equals $93.75)
plus 77.05
---------
$5,077.05
less 375.00 (1 year's simple interest at 7.50% per annum)
---------
$4,702.05 (Total Redemption Price)
</TABLE>
C. For a Five Year Certificate in the principal amount of $5,000 bearing
interest at 7.50% (accumulated quarterly at the election of the holder),
purchased on January 1, 1998, and redeemed at the request of the holder on
June 15, 2000, the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
(2 1/4 years, 75 days' accrued interest at 7.50% per annum
plus 999.45 accumulated and compounded quarterly)
$5,999.45---------
less 375.00 (1 year's simple interest at 7.50% per annum)
---------
$5,624.45 (Total Redemption Price)
</TABLE>
18
<PAGE>
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 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, or the One Year
or Six Month Subordinated Large Denomination Loan Certificates issued pursuant
to the Indentures dated as of September 1, 1985, shall be Superior
Indebtedness, but shall rank equally with the certificates outstanding under
each of the Indentures. As of June 28, 1997, Superior Indebtedness amounted to
approximately $633,727,000, 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
19
<PAGE>
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.)
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.)
20
<PAGE>
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.
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
21
<PAGE>
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 28, 1997, there were the following aggregate principal amounts of the
series offered hereby outstanding: One Year Loan Certificates -- $14,582,000,
One Year Jumbo Loan Certificates -- $21,884,000, 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.
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.
22
<PAGE>
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 6.30%, purchased on January 1, 1998, and redeemed at
the request of the holder on February 15, 1998, the redemption price would
equal:
<TABLE>
<C> <C> <S>
$1,000.00 (Principal amount)
plus 7.77 (45 days' accrued interest at 6.30% per annum)
---------
$1,007.77
less 15.75 (3 month's simple interest at 6.30% per annum)
---------
$ 992.02 (Total Redemption Price)
</TABLE>
B. For a One Year Loan Certificate in the principal amount of $5,000,
bearing interest at 6.30% (paid quarterly at the election of the holder),
purchased on January 1, 1998 and redeemed at the request of the holder on
June 15, 1998, the redemption price would equal:
<TABLE>
<C> <C> <S>
$5,000.00 (Principal amount)
(75 days' accrued interest at 6.30% per annum. Interest
plus 64.73 previously paid on April 1, 1998 equals $78.75)
$5,064.73
less 78.75 (3 month's simple interest at 6.30% per annum)
---------
$4,985.98 (Total Redemption Price)
</TABLE>
Total redemption price ($4,985.98) plus interest previously paid ($78.75)
equals $5,064.73.
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.
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 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, or the One Year
or Six Month Subordinated Large Denomination Loan Certificates issued pursuant
to the Indentures dated as of September 1, 1985, shall be Superior
Indebtedness, but shall rank equally with the loan certificates outstanding
under each of the Indentures. As of June 28, 1997, Superior Indebtedness
amounted to approximately $633,727,000, 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.
23
<PAGE>
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 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.)
24
<PAGE>
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, 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.
EXPERTS
The consolidated financial statements and schedule of Gold Kist Inc. as of
June 29, 1996, and June 28, 1997 and for each of the years in the three-year
period ended June 28, 1997 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 certified public accountants, appearing
elsewhere herein or incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing. The report of KPMG Peat
Marwick LLP covering the July 1, 1995 consolidated financial statements refers
to a change in accounting for certain investments in debt and equity
securities.
The consolidated financial statements of Golden Peanut Company and
Subsidiaries at June 30, 1997 and 1996, and for each of the three years in the
period ended June 30, 1997 (not included separately herein), have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein. The 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 June 28, 1997 and for each of the three years in the period ended June 28,
1997, 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.
25
<PAGE>
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 Directors
Gold Kist Inc.:
We have audited the accompanying consolidated balance sheets of Gold Kist
Inc. and subsidiaries as of June 29, 1996 and June 28, 1997, 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 28, 1997.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We did not audit the
consolidated financial statements of Golden Peanut Company and Subsidiaries, a
partnership investment accounted for using the equity method of accounting, as
described in Note 9(b) to the consolidated financial statements. The
consolidated financial statements of Golden Peanut Company and Subsidiaries
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, 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 June 29, 1996 and June 28, 1997, and the results of their operations and
their cash flows for each of the years in the three-year period ended June 28,
1997, in conformity with generally accepted accounting principles.
As discussed in notes 1 and 9(a) to the consolidated financial statements,
the Company changed its method of accounting for certain investments in debt
and equity securities in 1995.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
September 5, 1997
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partnership Committee
Golden Peanut Company
We have audited the consolidated balance sheets of Golden Peanut Company and
Subsidiaries (the "Partnership") as of June 30, 1996 and 1997, and the related
consolidated statements of operations, partners' equity, and cash flows for
each of the three years in the period ended June 30, 1997 (not presented
separately herein). These financial statements are the responsibility of the
Partnership'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 consolidated financial position of Golden Peanut
Company and Subsidiaries at June 30, 1996 and 1997, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended June 30, 1997, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Atlanta, Georgia
August 29, 1997, except for
Note 11 as to which
the date is September 5, 1997
F-2
<PAGE>
GOLD KIST INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 29, 1996 JUNE 28, 1997
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $20,562 17,921
Receivables, principally trade, including notes
receivable of $68.9 million in 1996 and $73.2
million in 1997, less allowance for doubtful
accounts of $7,726 in 1996 and $8,836 in 1997.... 242,411 250,359
Inventories (note 2).............................. 270,367 295,977
Commodities margin deposits....................... 21,397 56,570
Other current assets.............................. 17,807 23,692
-------- ---------
Total current assets............................. 572,544 644,519
Investments (note 9).............................. 104,728 132,683
Property, plant and equipment, net (note 3)....... 255,728 295,174
Other assets...................................... 42,960 47,460
-------- ---------
$975,960 1,119,836
======== =========
LIABILITIES AND EQUITY
Current liabilities:
Notes payable and current maturities of long-term
debt (note 4):
Short-term borrowings............................ $112,800 178,900
Subordinated loan certificates................... 30,574 36,466
Current maturities of long-term debt............. 27,089 15,188
-------- ---------
170,463 230,554
Accounts payable.................................. 126,340 149,347
Accrued compensation and related expenses......... 32,590 30,761
Patronage refund and other equity payable in
cash............................................. 24,043 --
Interest left on deposit (note 4)................. 12,119 11,396
Other current liabilities......................... 22,532 13,192
-------- ---------
Total current liabilities........................ 388,087 435,250
Long-term debt, excluding current maturities (note
4)................................................ 188,948 256,039
Accrued postretirement benefit costs (note 7(b))... 40,271 43,683
Other liabilities.................................. 4,072 10,331
-------- ---------
Total liabilities................................ 621,378 745,303
-------- ---------
Minority interest (note 11)........................ 28,172 28,458
Patrons' and other equity (note 5):
Common stock, $1.00 par value--Authorized 500
shares; issued and
outstanding 36 in 1996 and 32 in 1997............ 36 32
Patronage reserves................................ 209,140 203,988
Unrealized gain on marketable equity security
(note 9(a))...................................... 20,978 32,749
Retained earnings................................. 96,256 109,306
-------- ---------
Total patrons' and other equity.................. 326,410 346,075
Commitments and contingent liabilities (notes 7 and
8)................................................
-------- ---------
$975,960 1,119,836
======== =========
</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
----------------------------------------
JULY 1, 1995 JUNE 29, 1996 JUNE 28, 1997
------------ ------------- -------------
<S> <C> <C> <C>
Net sales volume...................... $1,688,537 1,955,569 2,289,044
Cost of sales......................... 1,522,063 1,731,448 2,105,577
---------- --------- ---------
Gross margins........................ 166,474 224,121 183,467
Distribution, administrative and
general expenses..................... 131,410 155,664 167,665
---------- --------- ---------
Net operating margins................ 35,064 68,457 15,802
---------- --------- ---------
Other income (deductions):
Interest income...................... 8,779 9,946 13,361
Interest expense..................... (17,525) (21,065) (26,951)
Equity in earnings (loss) of
partnership (note 9(b))............. (9,625) (1,181) 5,807
Gain on sale of investments.......... 3,070 -- --
Miscellaneous, net................... 5,823 5,962 2,268
---------- --------- ---------
Total other deductions.............. (9,478) (6,338) (5,515)
---------- --------- ---------
Margins before income taxes and
minority interest................... 25,586 62,119 10,287
Income tax expense (benefit)--(note
6)................................... 13,094 20,757 (3,446)
---------- --------- ---------
Margins before minority interest..... 12,492 41,362 13,733
Minority interest..................... (741) (4,330) (1,843)
---------- --------- ---------
Net margins.......................... $ 11,751 37,032 11,890
========== ========= =========
</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 JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON
MARKETABLE
COMMON PATRONAGE EQUITY RETAINED
TOTAL STOCK RESERVES SECURITY EARNINGS
-------- ------ --------- ---------- --------
<S> <C> <C> <C> <C> <C>
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
Net margins for 1997........... 11,890 -- -- -- 11,890
Redemptions and other changes.. (3,996) (4) (5,152) -- 1,160
Change in value of marketable
equity security
(note 9(a))................... 11,771 -- -- 11,771 --
-------- --- ------- ------ -------
June 28, 1997................... $346,075 32 203,988 32,749 109,306
======== === ======= ====== =======
</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
----------------------------------------
JULY 1, 1995 JUNE 29, 1996 JUNE 28, 1997
------------ ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net margins.......................... $ 11,751 37,032 11,890
Non-cash items included in net
margins:
Depreciation and amortization....... 38,085 40,063 39,422
(Gains) losses on sales of assets... (3,459) 101 148
Equity in (earnings) loss of
partnership........................ 9,625 1,181 (5,807)
Deferred income tax benefit......... (6,650) (2,250) (1,951)
Patronage refunds from other
cooperatives....................... (1,447) (3,970) (5,642)
Other............................... 3,390 2,455 1,048
Changes in operating assets and
liabilities:
Receivables......................... (28,466) (53,231) (7,948)
Inventories......................... (28,521) (43,379) (25,610)
Commodities margin deposits......... (2,512) (18,590) (35,173)
Other current assets................ (870) (1,971) 2,043
Accounts payable and accrued
expenses........................... 15,117 20,917 5,403
Interest left on deposit............ 1,153 1,626 (723)
-------- ------- -------
Net cash provided by (used in)
operating activities............... 7,196 (20,016) (22,900)
-------- ------- -------
Cash flows from investing activities:
Acquisitions of investments.......... (5,093) (4,356) (1,293)
Acquisitions of property, plant and
equipment........................... (61,762) (74,262) (76,922)
Proceeds from disposal of
investments......................... 8,942 200 104
Proceeds from sales of loans......... 4,925 10,052 --
Other................................ (7,179) 2,406 784
-------- ------- -------
Net cash used in investing
activities......................... (60,167) (65,960) (77,327)
-------- ------- -------
Cash flows from financing activities:
Short-term borrowings, net........... 60,286 45,211 71,992
Proceeds from long-term debt......... 49,752 86,296 110,846
Principal payments of long-term
debt................................ (36,676) (28,557) (55,656)
Patronage refunds and other equity
paid in cash........................ (19,464) (13,009) (29,596)
-------- ------- -------
Net cash provided by financing
activities......................... 53,898 89,941 97,586
-------- ------- -------
Net change in cash and cash
equivalents........................ 927 3,965 (2,641)
Cash and cash equivalents at beginning
of year.............................. 15,670 16,597 20,562
-------- ------- -------
Cash and cash equivalents at end of
year................................. $ 16,597 20,562 17,921
======== ======= =======
Supplemental disclosure of cash flow
data:
Cash paid during the years for:
Interest (net of amounts
capitalized)....................... $ 18,792 18,327 25,761
======== ======= =======
Income taxes........................ $ 21,144 20,676 11,173
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(DOLLAR AMOUNTS IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Gold Kist Inc. is a diversified agricultural membership cooperative
association, headquartered in Atlanta, Georgia. Gold Kist Inc. serves
approximately 31,000 active farmer members and other cooperative associations
located principally in the southeastern United States. Gold Kist Inc. operates
poultry and pork production facilities providing both marketing and purchasing
services to producers. Gold Kist Inc. also purchases or manufactures feed,
seed, fertilizers, pesticides, animal health products and other farm supply
items for sale at wholesale and retail. Additionally, Gold Kist Inc. 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 (collectively "Gold Kist" or "Association"). All
significant intercompany balances and transactions have been eliminated
in consolidation. Certain reclassifications have been made to the 1995
and 1996 consolidated financial statements to conform to the
presentation in the 1997 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, fertilizers, 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
engages in commodity futures and options transactions to manage the risk
of adverse price fluctuations with regard to its poultry and other
animal feed ingredient purchases. Futures contracts are recognized when
closed 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)
At June 28, 1997, Gold Kist had unrealized commodity futures losses of
$36.8 million related to its hedging of a portion of its 1998 poultry
feed ingredients requirements. These futures positions were closed in
July 1997 resulting in realized losses of approximately $48.6 million
which will be reflected in the 1998 consolidated financial statements as
an adjustment in product cost.
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, as a result, it
is not practical to determine these investment's fair value. 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.
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 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 1995 and 1996 which are deductible for income tax
purposes only to the extent paid or redeemed in cash.
F-8
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. 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,
commodities margin deposits, accounts receivables and payables and
accrued expenses, notes receivable and debt. Because of the short
maturity of cash equivalents, accounts receivable and payables and
accrued expenses, interest left on deposit, 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 June 29, 1996 and June 28, 1997
unless otherwise specified (see notes 1(e) and 4).
(h)Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
Gold Kist adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of (SFAS 121), on June 30, 1996. SFAS 121 requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the asset.
If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the
assets exceed the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to
sell. Adoption of SFAS 121 did not have a material impact on Gold Kist's
financial position, results of operations or liquidity.
(i)Fiscal Year
Gold Kist employs a 52/53 week fiscal year. The consolidated financial
statements for 1995, 1996 and 1997 reflect 53, 52 and 52 weeks,
respectively. Fiscal 1998 will be a 52 week year.
(j)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.
F-9
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(2) INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1996 1997
-------- -------
<S> <C> <C>
Merchandise for sale...................................... $ 83,886 86,810
Live poultry and hogs..................................... 95,682 101,579
Marketable products--poultry.............................. 40,047 35,814
Marketable products--cotton............................... 11,258 27,442
Raw materials and supplies................................ 39,494 44,332
-------- -------
$270,367 295,977
======== =======
</TABLE>
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows:
<TABLE>
<CAPTION>
1996 1997
-------- -------
<S> <C> <C>
Land and land improvements................................ $ 33,268 37,435
Buildings................................................. 188,845 203,110
Machinery and equipment................................... 368,118 403,076
Construction in progress.................................. 16,833 29,364
-------- -------
607,064 672,985
Less accumulated depreciation............................. 351,336 377,811
-------- -------
$255,728 295,174
======== =======
</TABLE>
(4) NOTES PAYABLE AND LONG-TERM DEBT
At June 28, 1997, the Association had a $250 million unsecured committed
credit facility with nine commercial banks. The facility includes a five-year
$125 million revolving credit commitment and a $125 million 364-day line of
credit commitment. As of June 28, 1997, borrowings of $65 million and $95
million, respectively, were outstanding under the revolving credit and 364-day
line-of-credit commitments. 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 1998 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 28, 1997, Golden Poultry Company, Inc., a subsidiary of Gold Kist,
had borrowings of $36.4 million under unsecured committed credit facilities
totaling $45.0 million. These revolving credit facilities will expire
subsequent to the merger of Golden Poultry Company, Inc. with Gold Kist in
September 1997 (see note 11).
In February 1997, Gold Kist established a shelf note agreement with an
insurance company, whereby the insurance company may purchase up to $125
million of senior promissory notes. In February 1997, Gold Kist sold $30
million of 7.6% Series A Senior Notes and in May 1997, Gold Kist sold $25
million of 7.94% Series B Senior Notes. At Gold Kist's request, the insurance
company may purchase an additional $70 million of senior notes through
February 1999.
F-10
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
At June 28, 1997, Gold Kist had other borrowings of $85.5 million
outstanding under uncommitted loans and letters of credit facilities. At June
28, 1997, Gold Kist had other unused long-term loan commitments of $50.0
million and additional uncommitted facilities to provide loans and letters of
credit from banks aggregating approximately $94.5 million. These unsecured
borrowings bear interest at rates below prime.
Subordinated loan certificates of $30.6 million at June 29, 1996 bore
interest at rates of 5.5% to 6.4% with terms of one year and were unsecured.
At June 28, 1997, subordinated loan certificates outstanding were $36.5
million bearing interest at rates of 5.75% 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.
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1996 1997
-------- -------
<S> <C> <C>
Unsecured senior notes payable:
9.375% interest notes, due in semi-annual installments of
$5,500
with interest payable semiannually....................... $ 11,000 --
9.90% interest notes, due in semi-annual installments of
$1,539
with interest payable semiannually....................... 9,230 6,152
9.35% interest note, due in a single installment in June
2001
with interest payable quarterly.......................... 20,000 20,000
7.60% interest notes, due in annual installments of $2,727
beginning in February 2002 with interest payable
quarterly................................................ -- 30,000
7.94% interest notes, due in annual installments of $2,272
beginning in May 2002 with interest payable quarterly.... -- 25,000
Other long term debt:
Subordinated capital certificates of interest with fixed
maturities ranging from two to fifteen years, unsecured
(weighted average interest rate
of 7.2% at June 29, 1996 and 7.3% at June 28, 1997)...... 59,431 63,714
Revolving credit agreements with commercial banks
(weighted average rate of 5.7% at June 29, 1996 and 6.0%
at June 28, 1997)........................................ 50,000 101,350
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................. 18,500 18,050
Pro rata share of mortgage loan, at 8.47% interest, due in
monthly installments to June 30, 2004, secured by a
building (note 3)........................................ 2,306 2,100
Other..................................................... 5,570 4,861
-------- -------
216,037 271,227
Less current maturities.................................... 27,089 15,188
-------- -------
$188,948 256,039
======== =======
</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
F-11
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
notes payable at June 29, 1996 and June 28, 1997 was approximately $43.0
million and $83.1 million, respectively.
In June 1997, Gold Kist entered into two notional amount $25 million
interest rate swap agreements with a commercial bank. Under a five-year
interest rate swap, the Company will pay interest at a fixed rate of 6.48% and
receive interest at the three-month London Interbank Offered Rate (LIBOR).
Under a ten year interest rate swap, the Company will pay interest at the
three-month LIBOR and receive interest at a fixed rate of 7.44%. Beginning in
June 1998, the commercial bank has an option to terminate the ten-year
interest rate swap at any quarterly payment date.
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 1998 of unused
amounts, $10.1 million as of June 28, 1997, 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 years
subsequent to June 28, 1997 are as follows:
<TABLE>
<CAPTION>
Year:
<S> <C>
1998........................................................... $15,188
1999........................................................... 16,402
2000........................................................... 7,340
2001........................................................... 25,232
2002........................................................... 17,782
=======
</TABLE>
(5) PATRONS' AND OTHER EQUITY
Gold Kist's Articles of Incorporation provide for a class of common stock
and a class of preferred stock pursuant to the provisions of the Georgia
Cooperative Marketing Act. Each member is allocated one share of common stock,
$1.00 par value. The common shares are not marketable or transferable and no
dividends will be declared on these common shares. No issuance of preferred
stock has been authorized by Gold Kist.
Patronage reserves represent allocated undistributed member margins less
taxes paid on nonqualified equity. Patronage reserves do not bear interest and
are subordinated to all certificates outstanding and indebtedness of Gold
Kist. Patronage reserves may be revolved and paid at the discretion of the
Board of Directors.
Retained earnings include the cumulative net margins (losses) resulting from
nonmember and nonpatronage transactions, including noncooperative
subsidiaries. Also included are amounts related to the early redemption of
notified equity, representing the difference between the face value and the
redemption amounts.
(6) INCOME TAXES
The provisions for income tax expense (benefit), principally Federal,
consist of the following:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------ ------
<S> <C> <C> <C>
Current expense (benefit)........................... $19,744 23,007 (1,495)
Deferred benefit.................................... (6,650) (2,250) (1,951)
------- ------ ------
$13,094 20,757 (3,446)
======= ====== ======
</TABLE>
F-12
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
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 1996
and 1997.
Gold Kist's combined federal and state effective tax rates from operations
for 1995, 1996 and 1997 were 51%, 33%, and (33)%, respectively. A
reconciliation of income tax expense (benefit) from operations computed by
applying the Federal corporate income tax rate of 35% in 1995, 1996 and 1997
to margins before income taxes, minority interest and cumulative effect of
accounting changes for the applicable year follows:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------ ------
<S> <C> <C> <C>
Computed expected income tax expense.............. $ 8,955 21,742 3,600
Increase (decrease) in income tax expense
resulting from:
Income tax litigation............................ 5,520 -- (5,207)
Cash portion of nonqualified patronage refund.... (1,031) (986) --
Effect of state income taxes, net of Federal
benefit......................................... 447 970 (531)
Nonqualified equity redemptions.................. (490) (886) (831)
Target jobs credits.............................. (499) (11) (344)
Other, net....................................... 192 (72) (133)
------- ------ ------
$13,094 20,757 (3,446)
======= ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at June 29,
1996 and June 28, 1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
-------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits.................................. $ 15,589 16,920
Insurance accruals....................................... 8,059 8,822
Equity in partnerships................................... 2,618 --
Bad debt reserves........................................ 3,156 3,661
State tax operating loss carryforwards................... 1,406 1,850
Other.................................................... 1,426 2,372
-------- -------
Total gross deferred tax assets......................... 32,254 33,625
Less valuation allowance................................. (1,406) (1,078)
-------- -------
Net deferred tax assets................................. 30,848 32,547
-------- -------
Deferred tax liabilities:
Unrealized gain on marketable equity security............ (13,116) (17,634)
Accelerated depreciation................................. (1,245) (2,167)
Deferred compensation.................................... (3,371) (3,604)
Equity in partnerships................................... -- (245)
-------- -------
Total deferred tax liabilities.......................... (17,732) (23,650)
-------- -------
Net deferred tax assets................................. $ 13,116 8,897
======== =======
</TABLE>
The net change in the total valuation allowance for the years ended 1995,
1996 and 1997 was an increase of $71, a decrease of $578, and a decrease of
$328, respectively. The Association's management believes the existing net
deductible temporary differences comprising the total net deferred tax assets
will reverse during periods in which the Association generates net taxable
income.
F-13
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
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.
In April 1997, the Eleventh Circuit Court of Appeals reversed the decision of
the Tax Court in favor of Gold Kist. The Appellate Court's decision was not
appealed by the IRS and the accrued tax liability related to this issue has
been reversed in the 1997 financial statements.
(7) EMPLOYEE BENEFITS
(a)Pension Plans
Gold Kist has noncontributory defined benefit pension plans covering
substantially all of its employees and directors and an affiliate's
employees (participants). The plan covering the salaried participants
provides pension benefits that are based on the employees' compensation
during the years before retirement or other termination of employment.
The plan covering the hourly participants provides pension benefits that
are based on years of service. Gold Kist's funding policy is to
contribute within the guidelines prescribed by Federal regulations. Plan
assets consist principally of corporate equities and bonds, and United
States Government and Agency obligations.
Net periodic pension expense for 1995, 1996 and 1997 included the following
components:
<TABLE>
<CAPTION>
1995 1996 1997
-------- ------- -------
<S> <C> <C> <C>
Service cost--benefits earned during the
year........................................ $ 3,429 4,092 4,226
Interest cost on projected benefit
obligations................................. 6,949 7,426 8,006
Actual return on plan assets................. (11,393) (27,724) (19,118)
Net amortization and deferral................ 1,208 16,799 7,127
-------- ------- -------
Net periodic pension expense................ $ 193 593 241
======== ======= =======
</TABLE>
The following table sets forth the plans' funded status, amounts recognized
in the consolidated balance sheets at June 29, 1996 and June 28, 1997 and
economic assumptions:
<TABLE>
<CAPTION>
1996 1997
-------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested participants.................................. $ 88,287 90,256
Nonvested............................................ 7,088 7,410
-------- -------
Total accumulated benefit obligations............... $ 95,375 97,666
======== =======
Projected benefit obligations for services rendered to
date................................................. $111,251 116,670
======== =======
Plan assets for benefits:
Plan assets at fair value............................ $145,148 156,673
Prepaid pension cost included in other assets
in consolidated balance sheets...................... (18,179) (19,721)
-------- -------
Net plan assets..................................... $126,969 136,952
======== =======
Plan assets in excess of projected benefit
obligations.......................................... $ 15,718 20,282
======== =======
</TABLE>
F-14
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1997
------- ------
<S> <C> <C>
Consisting of:
Unrecognized net asset existing at the date of
adoption............................................... $ 8,318 7,116
Unrecognized net gain/(loss) from past experience
different from that assumed and effects of changes in
assumptions............................................ 13,824 18,889
Prior service cost not yet recognized in net periodic
pension cost........................................... (6,424) (5,723)
------- ------
$15,718 20,282
======= ======
Actuarial assumptions:
Weighted-average discount rate.......................... 8.00% 8.25%
Weighted-average expected long-term rate of return on
plan assets............................................ 9.50% 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.
(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 1995, 1996 and
1997 included the following components:
<TABLE>
<CAPTION>
1995 1996 1997
------ ----- -----
<S> <C> <C> <C>
Service cost--benefits
earned during the
year................... $1,742 2,029 2,452
Interest cost........... 2,645 2,998 3,508
Net amortization and
deferral............... (18) 80 80
------ ----- -----
Net postretirement
health and death
benefit expense....... $4,369 5,107 6,040
====== ===== =====
</TABLE>
Gold Kist's postretirement benefit plans are not funded. The status of
the plans at June 29, 1996 and June 28, 1997 was as follows:
<TABLE>
<CAPTION>
1996 1997
------- ------
<S> <C> <C>
Actuarial present value of accumulated postretirement
benefit obligation:
Retirees.............................................. $18,010 21,130
Fully eligible active plan participants............... 10,188 11,786
Other active plan participants........................ 16,571 20,245
------- ------
44,769 53,161
Unrecognized net loss from experience differences..... (2,737) (7,332)
------- ------
$42,032 45,829
======= ======
</TABLE>
F-15
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
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 health care cost trend rate used to determine the accumulated
postretirement benefit obligation at June 28, 1997 was 7%, 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 June 29, 1996 and 8.25% at June 28,
1997, 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 28, 1997 by approximately
13% and net postretirement health care cost by 14%.
(8) CONTINGENT LIABILITIES AND COMMITMENTS
Gold Kist is a party to 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
$17.4 million was outstanding at June 28, 1997. 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 28, 1997, 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 28, 1997, the
amounts outstanding under this facility were $42.4 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 28, 1997,
the Association's marketable equity security was carried at its fair
value of $71.1 million, which represents a gross unrealized gain of
$50.4 million. The 1997 gross unrealized gain, net of deferred taxes of
$17.7 million, has been reflected as a separate component of patrons'
and other equity. 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.
Gains realized on sales and dividends totaling $1.3 million are
included in miscellaneous, net for the year ended July 1, 1995.
Dividends of $494 thousand and $595 thousand are included in
miscellaneous, net for the years ended June 29, 1996 and June 28, 1997,
respectively.
F-16
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(b)Golden Peanut Company
Gold Kist has a 33 1/3% interest in Golden Peanut Company and
Subsidiaries, a partnership interest ("Golden Peanut Company"). Gold
Kist's investment in the Golden Peanut Company amounted to $17.2 million
and $24.1 million at June 29, 1996 and June 28, 1997, respectively. In
July 1996 and July 1997, Gold Kist made additional investments of $2.8
million and $1.2 million, respectively. Golden Peanut Company has a
$450.0 million commercial paper facility supported by lines of credit
with various banks totaling $190.0 million. At June 28, 1997, borrowings
of $103.0 million were outstanding under the commercial paper facility.
Summarized financial information of Golden Peanut Company is shown
below:
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
1996 1997
-------- -------
<S> <C> <C>
Current assets............................................ $150,178 164,450
Property, plant and equipment, net........................ 31,557 34,775
-------- -------
Total assets............................................. $181,735 199,225
======== =======
Current liabilities....................................... $124,969 120,591
Accrued postretirement benefit costs...................... 5,308 5,703
Other liabilities......................................... -- 511
Partners' equity........................................ 51,458 72,420
-------- -------
Total liabilities and partners' equity................... $181,735 199,225
======== =======
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1995 1996 1997
-------- ------- -------
<S> <C> <C> <C>
Net sales and other operating income............ $435,569 428,955 426,122
Costs and expenses.............................. 464,444 432,496 408,702
-------- ------- -------
Net earnings (loss)............................ $(28,875) (3,541) 17,420
======== ======= =======
</TABLE>
In 1995, 1996 and 1997, 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
$3.9 million, $3.1 million and $4.2 million in 1995, 1996 and 1997,
respectively. In addition, Gold Kist purchased $3.1 million, $2.6
million and $2.3 million of inventory from Golden Peanut Company in
1995, 1996 and 1997, 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 and cornish game hen facilities.
F-17
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
The Agri-Services segment purchases or manufactures feed, seed, fertilizers,
agricultural chemicals, animal health products, and other farm supply and
equipment items for sale through Gold Kist retail outlets and
independent dealers. The segment conducts cotton procurement, ginning, storage
and marketing operations, as well as other crop procurement services. This
segment also operates pork production facilities.
The following table presents certain financial information as to industry
segments:
<TABLE>
<CAPTION>
AGRI- INTERSEGMENT
POULTRY SERVICES ELIMINATIONS CONSOLIDATED
---------- -------- ------------- ------------
<S> <C> <C> <C> <C>
YEAR ENDED JULY 1, 1995
Net sales volume.............. $1,232,907 455,630 -- 1,688,537(a)
========== ======= ======= =========
Net margins from operations... $ 37,503 5,012 -- 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...................... $ 31,435 5,698 952(b) 38,085
========== ======= ======= =========
Capital expenditures.......... $ 43,309 18,073 380(b) 61,762
========== ======= ======= =========
Identifiable assets at July 1,
1995......................... $ 408,232 269,019 144,386(b) 821,637
========== ======= ======= =========
YEAR ENDED JUNE 29, 1996
Net sales volume.............. $1,386,490 569,079 -- 1,955,569(a)
========== ======= ======= =========
Net margins from operations... $ 69,951 10,317 -- 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...................... $ 32,180 7,247 636(b) 40,063
========== ======= ======= =========
Capital expenditures.......... $ 54,124 19,357 781(b) 74,262
========== ======= ======= =========
Identifiable assets at June
29, 1996..................... $ 487,869 311,680 176,411(b) 975,960
========== ======= ======= =========
YEAR ENDED JUNE 28, 1997
Net sales volume.............. $1,629,705 659,339 -- 2,289,044(a)
========== ======= ======= =========
Net margins from operations... $ 17,421 10,198 -- 27,619
========== ======= =======
General corporate expenses.... (11,817)
Other deductions, net......... (5,515)
---------
Margins before income taxes
and minority interest........ $ 10,287
=========
Depreciation and amortization
expense...................... $ 30,983 7,893 546(b) 39,422
========== ======= ======= =========
Capital expenditures.......... $ 65,687 10,816 419(b) 76,922
========== ======= ======= =========
Identifiable assets at June
28, 1997..................... $ 573,731 346,037 200,068(b) 1,119,836
========== ======= ======= =========
</TABLE>
(a) Net sales volume includes export sales amounting to $70,113, $100,089 and
$96,427 in 1995, 1996 and 1997, respectively, which have no significant
geographical concentration.
(b) Amounts relate to unallocated corporate assets.
F-18
<PAGE>
GOLD KIST INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS)
(11) SUBSEQUENT EVENT
In January 1997, the Gold Kist Board of Directors adopted a resolution
authorizing the Company's officers to negotiate with Golden Poultry Company,
Inc. to pursue a transaction in which Gold Kist would acquire all of the
shares of Golden Poultry Company's common stock not currently owned by Gold
Kist. Gold Kist owned 10,901,802 shares or 75% of Golden Poultry's 14,628,435
outstanding shares. The negotiations were completed and an Agreement and Plan
of Merger executed in April 1997 (the "Merger Agreement"), among Gold Kist,
Golden Poultry Company, Inc., Agri International, Inc. and Golden Poultry
Acquisition Corp.
Pursuant to the Merger Agreement, Gold Kist agreed to pay $14.25 per share
in cash for each outstanding share of common stock not already beneficially
owned by Gold Kist. The Merger Agreement was approved by the Boards of
Directors of the Association and Golden Poultry Company, Inc. and was approved
by a majority of the owners of the Golden Poultry common stock not owned by
Gold Kist at a Special Meeting of Shareholders on September 5, 1997. The
Merger became effective on September 8, 1997. The cost to acquire the
outstanding shares and the estimated fees and expenses incurred or to be
incurred in connection with the merger are approximately $55.1 million. The
acquisition of the minority interest will be accounted for using the purchase
method of accounting.
F-19
<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................................................................. 13
Description of Subordinated Capital Certificates of Interest............. 16
Description of Subordinated Loan Certificates and Subordinated Large De-
nomination Loan Certificates............................................ 21
Experts.................................................................. 25
Qualified Independent Underwriter........................................ 25
Legal Opinion............................................................ 26
Independent Auditors' Reports............................................ F-1
Consolidated Financial Statements........................................ F-3
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[LOGO OF GOLD KIST INC. APPEARS HERE]
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
----------------
, 1997
----------------
AGVESTMENTS, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fees.............................................. $ 20,606
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...................................................... $111,606*
</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" or "officer" means an individual who is or was a director
or officer, respectively, of a corporation who, while a director or officer
of a corporation, is or was serving at the corporation's request as a
director, officer, partner, trustee, employee, or agent of another domestic
or foreign business or nonprofit corporation, partnership, joint venture,
trust, employee benefit plan, or other entity. A director or officer is
considered to be serving an employee benefit plan at the corporation's
request if the director's 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" or "officer"
includes, unless the context otherwise requires, the estate or personal
representative of a director.
(3) "Disinterested director" means a director who at the time of a vote
referred to in subsection (c) of Code Section 14-3-853 or a vote or
selection referred to in subsection (b) or (c) of Code Section 14-3-855 is
not:
(A) A party to the proceeding; or
(B) An individual having a familial, financial, professional, or
employment relationship with the director whose indemnification or
advance for expenses is the subject of the decision being made, which
relationship would, in the circumstances, reasonably be expected to
exert an influence on the director's judgment when voting on the
decision being made.
(4) "Expenses" includes counsel fees.
(5) "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 actually incurred with respect to a
proceeding.
(6) "Official capacity" means:
(A) When used with respect to a director, the office of director in a
corporation; and
(B) When used with respect to an officer, as contemplated in Code
Section 14-3-857, the office in a corporation held by the officer.
"Official capacity" does not include service for any other domestic or
foreign corporation or any partnership, joint venture, trust, employee
benefit plan, or other entity.
(7) "Party" means an individual who was, is, or is threatened to be made
a named defendant or respondent in a proceeding.
(8) "Proceeding" means any threatened, pending or completed action, suit,
or proceeding, whether civil, criminal, administrative, arbitrative, or
investigative and whether formal or informal.
14-3-851. AUTHORITY TO INDEMNIFY DIRECTOR INVOLVED IN LEGAL PROCEEDING.
(a) Except as otherwise provided in this Code section, a corporation may
indemnify an individual who is a party to a proceeding because the individual
is or was a director against liability incurred in the proceeding if:
(1) He or she conducted himself or herself in good faith; and
(2) He or she reasonably believed:
(A) In the case of conduct in his or her official capacity, that his
or her conduct was in the best interests of the corporation;
(B) In all other cases, that his or her conduct was at least not
opposed to the best interests of the corporation; and
II-2
<PAGE>
(C) In the case of any criminal proceeding, he or she had no
reasonable cause to believe his or her 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
requirements 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, except for reasonable expenses incurred in connection with the
proceeding if it is determined that the director has met the relevant
standard of conduct under this Code section; or
(2) In connection with any other proceeding with respect to conduct for
which the director was adjudged liable on the basis that personal benefit
was improperly received by the director, whether or not involving action in
the director's official capacity.
14-3-852. INDEMNIFICATION FOR REASONABLE EXPENSES OF SUCCESSFUL DEFENSE.
A corporation shall indemnify a director who was successful, on the merits
or otherwise, in the defense of any proceeding to which the director was a
party because the director was a director of the corporation against
reasonable expenses incurred by the director in connection with the
proceeding.
14-3-853. ADVANCE OR REIMBURSEMENT OF LITIGATION EXPENSES.
(a) A corporation may, before final disposition of a proceeding, advance
funds to pay for or reimburse the reasonable expenses incurred by a director
who is a party to a proceeding because the director is a director if the
director delivers to the corporation:
(1) A written affirmation of the director's good faith belief that the
director has met the relevant standard of conduct described in of Code
Section 14-3-851 or that the proceeding involves conduct for which
liability has been eliminated under a provision of the articles of
incorporation as authorized by paragraph (4) of subsection (b) of Code
Section 14-3-202; and
(2) The director's written undertaking to repay any funds advanced 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) of this Code
section must be an unlimited general obligation of the director but need not
be secured and may be accepted without reference to the financial ability of
the director to make repayment.
(c) Authorizations under this Code section shall be made by the board of
directors:
(1) If there are two or more disinterested directors, by a majority vote
of all disinterested directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of a committee of two
or more disinterested directors appointed by such a vote; or
(2) If there are fewer than two disinterested directors, by the vote
necessary for action by the board in accordance with subsection (c) of Code
Section 14-3-824, in which authorization directors who do not qualify as
disinterested directors may participate.
14-3-854. COURT ORDERED INDEMNIFICATION AND PAYMENT OF EXPENSES.
(a) A director who is a party to a proceeding because he or she is a
director may apply for indemnification or advances of expenses to the court
conducting the proceeding or to another court of competent jurisdiction. After
receipt of an application, after giving any notice it considers necessary, the
court shall:
II-3
<PAGE>
(1) Order indemnification or advance for expenses if it determines that
the director is entitled to indemnification under this part; or
(2) Order indemnification or advance for expenses if it determines, in
view of all the relevant circumstances, that it is fair and reasonable:
(A) To indemnify the director; or
(B) To advance expenses to the director,
even if he or she has not met the relevant standard of conduct set
forth in subsections (a) and (b) of Code Section 14-3-851, failed to
comply with Code Section 14-3-853, or was adjudged liable in a
proceeding referred to in paragraph (1) or (2) of subsection (d) of
Code Section 14-3-851, but if he or she was adjudged so liable his or
her indemnification shall be limited to reasonable expenses incurred in
connection with the proceeding.
(b) If the court determines that the director is entitled to indemnification
or advance for expenses under this part, it may also order the corporation to
pay the director's reasonable expenses to obtain court ordered indemnification
or advance for expenses.
14-3-855. DETERMINATION OF RIGHT AND AUTHORIZATION OF PAYMENT FOR
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 for a specific
proceeding that indemnification of the director is permissible in the
circumstances because the director has met the relevant standard of conduct
set forth in Code Section 14-3-851.
(b) The determination shall be made:
(1) If there are two or more disinterested directors, by the board of
directors by a majority vote of all disinterested directors (a majority of
whom shall for such purpose constitute a quorum), or by a majority of the
members of a committee of two or more distinterested directors appointed by
such a vote;
(2) By special legal counsel:
(A) Selected in the manner prescribed in paragraph (1) of this
subsection; or
(B) If there are fewer than two disinterested directors, selected by
the board of directors, in which selection directors who do not qualify
as disinterested directors may participate; or
(3) By the members, but directors who do not qualify as disinterested
directors 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 there
are fewer than two disinterested directors or 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 special legal 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 $50,000,000.
ITEM 16. EXHIBITS.
See Index of Exhibits on Page II-6.
II-4
<PAGE>
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 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.
II-5
<PAGE>
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 of Merger, Amendment to Schedule 13D Exhibit 3
dated as of April 22, filed April 25, 1997
1997 among Golden
Poultry Company, Inc.,
Agri International,
Inc., Gold Kist, Inc.
and Golden Poultry
Acquisition Corp.
4(a)(1) 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
4(a)(2) 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)(3) 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 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)(2) 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)(3) 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
</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)(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
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
</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(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
4(i) 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(j)(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(j)(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(j)(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(j)(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(j)(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(j)(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(j)(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
4(j)(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
</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(j)(9) Note Purchase and
Private Shelf
Agreement, dated as of
February 11, 1997, with
the Prudential
Insurance Company of
America
4(j)(10) Amendment dated May 13,
1997 to Note Agreements
dated as of November 4,
1988, with the
Prudential Insurance
Company of America and
with Pruco Life
Insurance Company; Note
Agreement dated as of
June 7, 1991 with the
Prudential Insurance
Company of America; and
Note Purchase and
Private Shelf Agreement
dated February 11, 1997
with the Prudential
Insurance Company of
America
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)
</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(b)(10) Gold Kist Director 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)
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(c)(6) Form of Membership,
Marketing, and/or
Purchasing Agreement of
Gold Kist Inc.,
Atlanta, Georgia,
revised July 9, 1997
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
</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(f)(3) Amendment to Amended and Registration filed on Exhibit 10(f)(3)
Restated Partnership Form S-2 (Registration
Agreement (Golden No. 33-42900)
Peanut Company) between
Gold Kist, Inc.,
Archer-Daniels-Midland
Company and Alimenta
Processing Corporation
dated as of June 30,
1991
10(f)(4) Master Commercial Annual Report on Form 10- Exhibit B-10(f)(2)
Facilities Lease K for the Fiscal Year
Agreement between Gold ended June 30, 1987
Kist and Golden Peanut
Company dated as of
December 17, 1986
10(g) 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(h)(1) Credit Agreement dated Registration filed Exhibit 10(j)
as of August 9, 1996, September 20, 1996 on
with Various Banks and Form S-2 (Registration
Lending Institutions, No.
as Lenders and SunTrust 333-12397)
Bank, Atlanta, as Agent
10(h)(2) First Amendment, dated
May 12, 1997, to Credit
Agreement dated August
9, 1996
10(h)(3) Second Amendment, dated
June 27, 1997, to
Credit Agreement dated
August 9, 1996
10(i)(1) Master Note Agreement Report filed on Form 10-Q Exhibit 4(h)
with Wachovia Bank of for the fiscal quarter
Georgia, N.A., dated as ended September 28, 1996
of August 19, 1996
10(j) 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
23RD DAY OF SEPTEMBER, 1997.
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 23,
- ------------------------------------- Officer (Principal 1997
G. O. COAN Executive Officer)
/s/ Peter J. Gibbons Vice President- September 23,
- ------------------------------------- Finance (Principal 1997
PETER J. GIBBONS Financial Officer)
/s/ W. F. Pohl, Jr. Controller September 23,
- ------------------------------------- (Principal 1997
W. F. POHL, JR. Accounting Officer)
/s/ W. P. Smith, Jr. Director September 19,
- ------------------------------------- 1997
W. P. SMITH, JR.
/s/ Fred K. Norris, Jr. Director September 19,
- ------------------------------------- 1997
FRED K. NORRIS, JR.
/s/ Dan Smalley Director September 19,
- ------------------------------------- 1997
DAN SMALLEY
/s/ Phil Ogletree, Jr. Director September 19,
- ------------------------------------- 1997
PHIL OGLETREE, JR.
/s/ James E. Brady, Jr. Director September 19,
- ------------------------------------- 1997
JAMES E. BRADY, JR.
/s/ A. Jack Nally Director September 19,
- ------------------------------------- 1997
A. JACK NALLY
/s/ W. Kenneth Whitehead Director September 19,
- ------------------------------------- 1997
W. KENNETH WHITEHEAD
/s/ H. Michael Davis Director September 19,
- ------------------------------------- 1997
H. MICHAEL DAVIS
/s/ Herbert A. Daniel, Jr. Director September 19,
- ------------------------------------- 1997
HERBERT A. DANIEL, JR.
II-13
<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 1(A)
Gold Kist Inc.
244 Perimeter Center Parkway, N.E. (30346-2397) P.O. Box 2210. Atlanta, GA
30301-2210 (770) 393-5000
August 15, 1997
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, 1997, between Gold Kist Inc. and Agvestments, Inc.
("Agreement"), as amended, this letter is to serve as written designated 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
<PAGE>
EXHIBIT A
---------
Dated: August 15, 1997
Below are listed the class of securities noted as Designated Securities on the
attached Written Notice of Designated Securities.
Subordinated Capital Certificates of Interest
15 year maturity, (series D)
10 year maturity, (series D)
7 year maturity, (series A)
5 year maturity, (series C)
3 year maturity, (series A)
2 year maturity, (series A)
Subordinated Loan Certificates
1 year maturity , (Series C)
Subordinated Large Denomination Loan Certificate
1 year maturity, (Series A)
6 month maturity, (series A)
all as described in the Offering Prospectus.
<PAGE>
EXHIBIT 4 (J)(9)
================================================================================
GOLD KIST INC.
NOTE PURCHASE AND PRIVATE SHELF AGREEMENT
$125,000,000
PRIVATE SHELF FACILITY
with an initial draw of
$30,000,000
7.60% SERIES A SENIOR NOTES DUE FEBRUARY 11, 2012
Dated as of February 11, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. AUTHORIZATION OF ISSUE OF NOTES.................................. 1
1A. Authorization of Issue of Series A Notes.................... 1
1B. Authorization of Issue of Shelf Notes....................... 1
2. PURCHASE AND SALE OF NOTES....................................... 2
2A. Purchase and Sale of Series A Notes......................... 2
2B. Purchase and Sale of Shelf Notes............................ 3
3. CONDITIONS OF CLOSING............................................ 8
3A. Certain Documents........................................... 8
3B. Opinion of Purchaser's Special Counsel...................... 9
3C. Representations and Warranties; No Default.................. 10
3D. Purchase Permitted by Applicable Laws....................... 10
3E. Payment of Fees............................................. 10
4. PREPAYMENTS...................................................... 10
4A. Required Prepayments of Series A Notes...................... 10
4B. Required Prepayments of Shelf Notes......................... 11
4C. Optional Prepayment With Yield-Maintenance Amount........... 11
4D. Notice of Optional Prepayment............................... 11
4E. Application of Prepayments.................................. 11
4F. Retirement of Notes......................................... 12
5. AFFIRMATIVE COVENANTS............................................ 12
5A. Reporting Requirements...................................... 12
5B. Inspection of Property...................................... 16
5C. Covenant to Secure Notes Equally............................ 16
5D. Guaranteed Obligations...................................... 16
6. NEGATIVE COVENANTS............................................... 18
6A. Financial Covenants......................................... 18
6B. Limitation on Restricted Payments........................... 19
6C. Liens....................................................... 19
6D. Restrictions on Loans, Advances, Investments and
Contingent Liabilities...................................... 20
6E. Sale of Stock and Debt of Subsidiaries...................... 22
6F. Merger and Sale of Assets................................... 23
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
6G. Sale and Lease-Back......................................... 24
6H. Sale or Discount of Receivables............................. 24
6I. Commodity Contracts......................................... 24
6J. Issuance of Stock by Restricted Subsidiaries................ 24
7. EVENTS OF DEFAULT................................................ 25
7A. Acceleration................................................ 25
7B. Rescission of Acceleration.................................. 28
7C. Notice of Acceleration or Rescission........................ 28
7D. Other Remedies.............................................. 29
8. REPRESENTATIONS, COVENANTS AND WARRANTIES........................ 29
8A. Organization and Qualification.............................. 29
8B. Financial Statements........................................ 29
8C. Actions Pending............................................. 30
8D. Outstanding Debt............................................ 30
8E. Title to Properties......................................... 30
8F. Taxes....................................................... 30
8G. Conflicting Agreements or Other Matters..................... 31
8H. Offering of Notes........................................... 31
8I. Use of Proceeds/Regulation G, Etc........................... 31
8J. ERISA....................................................... 32
8K. Foreign Assets Control Regulations.......................... 32
8L. Governmental Consent........................................ 32
8M. Possession of Franchises, Licenses, Etc..................... 33
8N. Pollution and Other Regulations............................. 33
8O. Disclosure.................................................. 33
8P. Hostile Tender Offers....................................... 33
9. REPRESENTATIONS OF THE PURCHASERS................................ 34
9A. Nature of Purchase.......................................... 34
9B. Source of Funds............................................. 34
10. DEFINITIONS; ACCOUNTING.......................................... 35
10A. Yield-Maintenance Terms..................................... 36
10B. Other Terms................................................. 37
10C. Accounting Principles, Terms and Determinations............. 52
11. MISCELLANEOUS.................................................... 52
11A. Note Payments............................................... 52
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
11B. Expenses.................................................... 53
11C. Consent to Amendments....................................... 53
11D. Form, Registration, Transfer and Exchange of Notes;
Lost Notes.................................................. 54
11E. Persons Deemed Owners; Participations....................... 55
11F. Survival of Representations and Warranties; Entire
Agreement................................................... 55
11G. Successors and Assigns...................................... 56
11H. Independence of Covenants................................... 56
11I. Notices..................................................... 56
11J. Payments Due on Non-Business Days........................... 57
11K. Severability................................................ 57
11L. Descriptive Headings........................................ 57
11M. Satisfaction Requirement.................................... 57
11N. Governing Law............................................... 57
11O. Severalty of Obligations.................................... 58
11P. Counterparts................................................ 58
11Q. Binding Agreement........................................... 58
11R. Amendment of Other Agreements............................... 59
</TABLE>
Purchaser Schedule
Information Schedule
Schedule 6C Liens
Schedule 6D Permitted Investments
Schedule 8G Debt Restrictions
Schedule 10B-1 Subordinated Debt
Schedule 10B-2 Subsidiaries
Exhibit A-1 Form of Series A Note
Exhibit A-2 Form of Shelf Note
Exhibit B Form of Request for Purchase
Exhibit C Form of Confirmation of Acceptance
Exhibit D-1 Form of Opinion for Series A Note
Exhibit D-2 Form of Opinion for Shelf Note
iii
<PAGE>
GOLD KIST INC.
244 Perimeter Center Parkway
Atlanta, Georgia 30346
As of February 11, 1997
The Prudential Insurance Company
of America ("PRUDENTIAL")
Each Prudential Affiliate (as hereinafter defined)
which becomes bound by certain provisions of
this Agreement as hereinafter provided (together
with Prudential, the "PURCHASERS")
c/o Prudential Capital Group
One Gateway Center
Newark, New Jersey 07102
Ladies and Gentlemen:
The undersigned, GOLD KIST INC. (herein called the "COMPANY"), hereby
agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES.
1A. AUTHORIZATION OF ISSUE OF SERIES A NOTES. The Company will authorize
the issue of its senior promissory notes (the "SERIES A NOTES") in the aggregate
principal amount of $30,000,000, to be dated the date of issue thereof, to
mature February 11, 2012, to bear interest on the unpaid balance thereof from
the date thereof until the principal thereof shall have become due and payable
at the rate of 7.60% per annum and on overdue principal, Yield-Maintenance
Amount and interest at the rate specified therein, and to be substantially in
the form of Exhibit A-1 attached hereto. The terms "SERIES A NOTE" and "SERIES
A NOTES" as used herein shall include each Series A Note delivered pursuant to
any provision of this Agreement and each Series A Note delivered in substitution
or exchange for any such Series A Note pursuant to any such provision.
1B. AUTHORIZATION OF ISSUE OF SHELF NOTES. The Company will authorize the
issue of its additional senior promissory notes (the "SHELF NOTES") in the
aggregate principal amount of $95,000,000, to be dated the date of issue
thereof, to mature, in the case of each Shelf Note so issued, no more than 15
years after the date of original
<PAGE>
2
issuance thereof, to have an average life, in the case of each Shelf Note so
issued, of no more than 10 years after the date of original issuance thereof, to
bear interest on the unpaid balance thereof from the date thereof at the rate
per annum, and to have such other particular terms, as shall be set forth, in
the case of each Shelf Note so issued, in the Confirmation of Acceptance with
respect to such Shelf Note delivered pursuant to paragraph 2B(5), and to be
substantially in the form of Exhibit A-2 attached hereto. The terms "SHELF NOTE"
and "SHELF NOTES" as used herein shall include each Shelf Note delivered
pursuant to any provision of this Agreement and each Shelf Note delivered in
substitution or exchange for any such Shelf Note pursuant to any such provision.
The terms "NOTE" and "NOTES" as used herein shall include each Series A Note and
each Shelf Note delivered pursuant to any provision of this Agreement and each
Note delivered in substitution or exchange for any such Note pursuant to any
such provision. Notes which have (i) the same final maturity, (ii) the same
principal prepayment dates, (iii) the same principal prepayment amounts (as a
percentage of the original principal amount of each Note), (iv) the same
interest rate, (v) the same interest payment periods and (vi) the same date of
issuance (which, in the case of a Note issued in exchange for another Note,
shall be deemed for these purposes the date on which such Note's ultimate
predecessor Note was issued), are herein called a "SERIES" of Notes.
2. PURCHASE AND SALE OF NOTES.
2A. PURCHASE AND SALE OF SERIES A NOTES. The Company hereby agrees to
sell to Prudential and, subject to the terms and conditions herein set forth,
Prudential agrees to purchase from the Company $30,000,000 aggregate principal
amount of Series A Notes at 100% of such aggregate principal amount. On
February 11, 1997 or any other date prior to February 11, 1997 upon which the
Company and Prudential may agree (herein called the "SERIES A CLOSING DAY"), the
Company will deliver to Prudential at the offices of King & Spalding, 120 West
45th Street, New York, New York, one or more Series A Notes registered in its
name, evidencing the aggregate principal amount of Series A Notes to be
purchased by Prudential and in the denomination or denominations specified with
respect to Prudential in the Purchaser Schedule attached hereto, against payment
of the purchase price thereof by transfer of immediately available funds for
credit to the Company's account #12685864 at Wachovia Bank of Georgia, ABA
Routing Number 061000010.
2B. PURCHASE AND SALE OF SHELF NOTES.
2B(1). FACILITY. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by Prudential
and Prudential Affiliates from time to time, the purchase of Shelf Notes
pursuant to this Agreement.
<PAGE>
3
The willingness of Prudential to consider such purchase of Shelf Notes is herein
called the "FACILITY". At any time, the aggregate principal amount of Shelf
Notes stated in paragraph 1B, minus the aggregate principal amount of Shelf
Notes purchased and sold pursuant to this Agreement prior to such time, minus
the aggregate principal amount of Accepted Notes (as hereinafter defined) which
have not yet been purchased and sold hereunder prior to such time, is herein
called the "AVAILABLE FACILITY AMOUNT" at such time. NOTWITHSTANDING THE
WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF SHELF NOTES, THIS AGREEMENT
IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY
PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE
SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC
PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A
COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2B(2). ISSUANCE PERIOD. Shelf Notes may be issued and sold pursuant to
this Agreement until the earlier of:
(i) the second anniversary of the date of this Agreement (or if
any such anniversary is not a Business Day, the Business Day next preceding
such anniversary); and
(ii) the thirtieth day after Prudential shall have given to the
Company, or the Company shall have given to Prudential, a notice stating
that it elects to terminate the issuance and sale of Shelf Notes pursuant
to this Agreement (or if such thirtieth day is not a Business Day, the
Business Day next preceding such thirtieth day);
(iii) the last Closing Day after which there is no Available
Facility Amount;
(iv) the termination of the Facility under paragraph 7A; and
(v) the acceleration of any Note under paragraph 7A of this
Agreement.
The period during which Shelf Notes may be issued and sold pursuant to this
Agreement is herein called the "ISSUANCE PERIOD".
<PAGE>
4
2B(3). REQUEST FOR PURCHASE. The Company may from time to time during
the Issuance Period make requests for purchases of Shelf Notes (each such
request being herein called a "REQUEST FOR PURCHASE"). Each Request for
Purchase shall be made to Prudential by telecopier or overnight delivery
service, and shall (i) specify the aggregate principal amount of Shelf Notes
covered thereby, which shall not be less than $5,000,000 and not be greater than
the Available Facility Amount at the time such Request for Purchase is made,
(ii) specify the principal amounts, final maturities, principal prepayment dates
and amounts and interest payment periods (quarterly or semi-annual in arrears)
of the Shelf Notes covered thereby, (iii) specify the use of proceeds of such
Shelf Notes, (iv) specify the proposed day for the closing of the purchase and
sale of such Shelf Notes, which shall be a Business Day during the Issuance
Period not less than 10 days and not more than 25 days after the making of such
Request for Purchase, (v) specify the number of the account and the name and
address of the depository institution to which the purchase prices of such Shelf
Notes are to be transferred on the Closing Day for such purchase and sale, (vi)
certify that the representations and warranties contained in paragraph 8 are
true on and as of the date of such Request for Purchase and that there exists on
the date of such Request for Purchase no Event of Default or Default, (vii)
specify the Designated Spread for such Shelf Notes and (viii) be substantially
in the form of Exhibit B attached hereto. Each Request for Purchase shall be in
writing and shall be deemed made when received by Prudential.
2B(4). RATE QUOTES. Not later than five Business Days after the Company
shall have given Prudential a Request for Purchase pursuant to paragraph 2B(3),
Prudential may, but shall be under no obligation to, provide to the Company by
telephone or telecopier, in each case between 9:30 A.M. and 1:30 P.M. New York
City local time (or such later time as Prudential may elect) interest rate
quotes for the several principal amounts, maturities, principal prepayment
schedules, and interest payment periods of Shelf Notes specified in such Request
for Purchase. Each quote shall represent the interest rate per annum payable on
the outstanding principal balance of such Shelf Notes at which Prudential or a
Prudential Affiliate would be willing to purchase such Shelf Notes at 100% of
the principal amount thereof.
2B(5). ACCEPTANCE. Within 30 minutes after Prudential shall have
provided any interest rate quotes pursuant to paragraph 2B(4) or such shorter
period as Prudential may specify to the Company (such period herein called the
"ACCEPTANCE WINDOW"), the Company may, subject to paragraph 2B(6), elect to
accept such interest rate quotes as to not less than $5,000,000 aggregate
principal amount of the Shelf Notes specified in the related Request for
Purchase. Such election shall be made by an Authorized Officer of the Company
notifying Prudential by telephone or telecopier within the Acceptance Window
that the Company elects to accept such
<PAGE>
5
interest rate quotes, specifying the Shelf Notes (each such Shelf Note being
herein called an "ACCEPTED NOTE") as to which such acceptance (herein called a
"ACCEPTANCE") relates. The day the Company notifies Prudential of an Acceptance
with respect to any Accepted Notes is herein called the "ACCEPTANCE DAY" for
such Accepted Notes. Any interest rate quotes as to which Prudential does not
receive an Acceptance within the Acceptance Window shall expire, and no purchase
or sale of Shelf Notes hereunder shall be made based on such expired interest
rate quotes. Subject to paragraph 2B(6) and the other terms and conditions
hereof, the Company agrees to sell to Prudential or a Prudential Affiliate, and
Prudential agrees to purchase, or to cause the purchase by a Prudential
Affiliate of, the Accepted Notes at 100% of the principal amount of such Notes.
As soon as practicable following the Acceptance Day, the Company, Prudential and
each Prudential Affiliate which is to purchase any such Accepted Notes will
execute a confirmation of such Acceptance substantially in the form of Exhibit C
attached hereto (herein called a "CONFIRMATION OF ACCEPTANCE"). If the Company
should fail to execute and return to Prudential within three Business Days
following receipt thereof a Confirmation of Acceptance with respect to any
Accepted Notes, Prudential may at its election at any time prior to its receipt
thereof cancel the closing with respect to such Accepted Notes by so notifying
the Company in writing.
2B(6). MARKET DISRUPTION. Notwithstanding the provisions of paragraph
2B(5), if Prudential shall have provided interest rate quotes pursuant to
paragraph 2B(4) and thereafter prior to the time an Acceptance with respect to
such quotes shall have been notified to Prudential in accordance with paragraph
2B(5) the domestic market for U.S. Treasury securities or derivatives shall have
closed or there shall have occurred a general suspension, material limitation,
or significant disruption of trading in securities generally on the New York
Stock Exchange or in the domestic market for U.S. Treasury securities or
derivatives, then such interest rate quotes shall expire, and no purchase or
sale of Shelf Notes hereunder shall be made based on such expired interest rate
quotes. If the Company thereafter notifies Prudential of the Acceptance of any
such interest rate quotes, such Acceptance shall be ineffective for all purposes
of this Agreement, and Prudential shall promptly notify the Company that the
provisions of this paragraph 2B(6) are applicable with respect to such
Acceptance.
2B(7). FACILITY CLOSINGS. Not later than 11:30 A.M. (New York City
local time) on the Closing Day for any Accepted Notes, the Company will deliver
to each Purchaser listed in the Confirmation of Acceptance relating thereto at
the offices of the Prudential Capital Group, One Gateway Center, Newark, New
Jersey 07102, the Accepted Notes to be purchased by such Purchaser in the form
of one or more Notes in authorized denominations as such Purchaser may request
for each Series of Accepted Notes to be purchased on the Closing Day, dated the
Closing Day and
<PAGE>
6
registered in such Purchaser's name (or in the name of its nominee), against
payment of the purchase price thereof by transfer of immediately available funds
for credit to the Company's account specified in the Request for Purchase of
such Notes. If the Company fails to tender to any Purchaser the Accepted Notes
to be purchased by such Purchaser on the scheduled Closing Day for such Accepted
Notes as provided above in this paragraph 2B(7), or any of the conditions
specified in paragraph 3 shall not have been fulfilled by the time required on
such scheduled Closing Day, the Company shall, prior to 1:00 P.M., New York City
local time, on such scheduled Closing Day notify Prudential (which notification
shall be deemed received by each Purchaser) in writing whether (i) such closing
is to be rescheduled (such rescheduled date to be a Business Day during the
Issuance Period not less than one Business Day and not more than 10 Business
Days after such scheduled Closing Day (the "RESCHEDULED CLOSING DAY") and
certify to Prudential (which certification shall be for the benefit of each
Purchaser) that the Company reasonably believes that it will be able to comply
with the conditions set forth in paragraph 3 on such Rescheduled Closing Day and
that the Company will pay the Delayed Delivery Fee in accordance with paragraph
2B(8)(iii) or (ii) such closing is to be canceled. In the event that the Company
shall fail to give such notice referred to in the preceding sentence, Prudential
(on behalf of each Purchaser) may at its election, at any time after 1:00 P.M.,
New York City local time, on such scheduled Closing Day, notify the Company in
writing that such closing is to be canceled. Notwithstanding anything to the
contrary appearing in this Agreement, the Company may elect to reschedule a
closing with respect to any given Accepted Notes on not more than one occasion,
unless Prudential shall have otherwise consented in writing.
2B(8). FEES.
2B(8)(i) FACILITY FEE. At the time of the execution and delivery of this
Agreement by the Company and Prudential, the Company will pay to Prudential in
immediately available funds a fee (herein called the "FACILITY FEE") in the
amount of $75,000.
2B(8)(ii) ISSUANCE FEE. The Company will pay to Prudential in immediately
available funds a fee (herein called the "ISSUANCE FEE") on each Closing Day
occurring on or after May 11, 1997 (other than the Series A Closing Day) in an
amount equal to 0.125% of the aggregate principal amount of Notes sold on such
Closing Day.
2B(8)(iii) DELAYED DELIVERY FEE. If the closing of the purchase and sale
of any Accepted Note is delayed for any reason beyond the original Closing Day
for such Accepted Note, the Company will pay to Prudential (a) on the
Cancellation Date or
<PAGE>
7
actual closing date of such purchase and sale and (b) if earlier, the next
Business Day following 90 days after the Acceptance Day for such Accepted Note
and on each Business Day following 90 days after the prior payment hereunder, a
fee (herein called the "DELAYED DELIVERY FEE") calculated as follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note, "MMY" means Money Market Yield, i.e., the yield per
annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is delayed);
"DTS" means Days to Settlement, i.e., the number of actual days elapsed from and
including the original Closing Day with respect to such Accepted Note (in the
case of the first such payment with respect to such Accepted Note) or from and
including the date of the next preceding payment (in the case of any subsequent
delayed delivery fee payment with respect to such Accepted Note) to but
excluding the date of such payment; and "PA" means Principal Amount, i.e., the
principal amount of the Accepted Note for which such calculation is being made.
In no case shall the Delayed Delivery Fee be less than zero. Nothing contained
herein shall obligate any Purchaser to purchase any Accepted Note on any day
other than the Closing Day for such Accepted Note, as the same may be
rescheduled from time to time in compliance with paragraph 2B(7).
2B(8)(iv) CANCELLATION FEE. If the Company at any time notifies Prudential
in writing that the Company is canceling the closing of the purchase and sale of
any Accepted Note, or if Prudential notifies the Company in writing under the
circumstances set forth in the last sentence of paragraph 2B(5) or the
penultimate sentence of paragraph 2B(7) that the closing of the purchase and
sale of such Accepted Note is to be canceled, or if the closing of the purchase
and sale of such Accepted Note is not consummated on or prior to the last day of
the Issuance Period (the date of any such notification, or the last day of the
Issuance Period, as the case may be, being herein called the "CANCELLATION
DATE"), the Company will pay the Purchasers in immediately available funds an
amount (the "CANCELLATION FEE") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge
<PAGE>
8
Treasury Note(s) on the Cancellation Date over the bid price (as determined by
Prudential) of the Hedge Treasury Notes(s) on the Acceptance Day for such
Accepted Note by (b) such bid price; and "PA" has the meaning ascribed to it in
paragraph 2B(8)(iii). The foregoing bid and ask prices shall be as reported by
Telerate Systems, Inc. (or, if such data for any reason ceases to be available
through Telerate Systems, Inc., any publicly available source of similar market
data). Each price shall be based on a U.S. Treasury security having a par value
of $100.00 and shall be rounded to the second decimal place. In no case shall
the Cancellation Fee be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to purchase
and pay for any Notes is subject to the satisfaction, on or before the Closing
Day for such Notes, of the following conditions:
3A. CERTAIN DOCUMENTS. Such Purchaser shall have received the following,
each dated the date of the applicable Closing Day:
(i) The Note(s) to be purchased by such Purchaser.
(ii) Certified copies of the resolutions of the Board of Directors of
the Company authorizing the execution and delivery of this Agreement and
the issuance of the Notes, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to this
Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant Secretary and one
other officer of the Company certifying the names and true signatures of
the officers of the Company authorized to sign this Agreement and the
Notes and the other documents to be delivered hereunder.
(iv) Certified copies of the Certificate of Incorporation and By-laws
of the Company.
(v) A favorable opinion of Jack L. Lawing, Vice President, Law of
the Company and Alston & Bird, special counsel to the Company (or such
other counsel designated by the Company and acceptable to the
Purchaser(s)) satisfactory to such Purchaser which when taken together
address the matters set forth in Exhibit D-1 (in the case of the Series A
Notes) or Exhibit D-2 (in the case of any Shelf Notes) attached hereto and
as to such other matters as such Purchaser may reasonably request. The
Company hereby directs each such counsel to deliver such opinion, agrees
that the issuance and sale of any Notes will constitute a reconfirmation
of such direction, and understands and
<PAGE>
9
agrees that each Purchaser receiving such an opinion will and is hereby
authorized to rely on such opinion.
(vi) A good standing certificate for the Company from the Secretary
of State of Georgia dated of a recent date and good standing or other
certificates of qualification to do business as a foreign corporation for
the States of Alabama, Arkansas, Florida, Georgia, Indiana, Kentucky,
Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Ohio,
Oklahoma, South Carolina, Tennessee, Texas and Virginia.
(vii) Additional documents or certificates with respect to legal
matters or corporate or other proceedings related to the transactions
contemplated hereby as may be reasonably requested by such Purchaser.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser shall have
received from King & Spalding or such other counsel who is acting as special
counsel for it in connection with this transaction, a favorable opinion
satisfactory to such Purchaser as to such matters incident to the matters herein
contemplated as it may reasonably request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations and
warranties contained in paragraph 8 shall be true on and as of such Closing Day,
except to the extent of changes caused by the transactions herein contemplated;
there shall exist on such Closing Day no Event of Default or Default; and the
Company shall have delivered to such Purchaser an Officer's Certificate, dated
such Closing Day, to both such effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and payment
for the Notes to be purchased by such Purchaser on the terms and conditions
herein provided (including the use of the proceeds of such Notes by the Company)
shall not violate any applicable law or governmental regulation (including,
without limitation, Section 5 of the Securities Act or Regulation G, T or X of
the Board of Governors of the Federal Reserve System) and shall not subject such
Purchaser to any tax, penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation, and such Purchaser
shall have received such certificates or other evidence as it may request to
establish compliance with this condition.
3E. PAYMENT OF FEES. The Company shall have paid to Prudential any fees
due it pursuant to or in connection with this Agreement, including any Facility
Fee
<PAGE>
10
due pursuant to paragraph 2B(8)(i), any Issuance Fee due pursuant to paragraph
2B(8)(ii) and any Delayed Delivery Fee due pursuant to paragraph 2B(8)(iii).
4. PREPAYMENTS. The Series A Notes and any Shelf Notes shall be subject
to required prepayment as and to the extent provided in paragraphs 4A and 4B,
respectively. The Series A Notes and any Shelf Notes shall also be subject to
prepayment under the circumstances set forth in paragraph 4C. Any prepayment
made by the Company pursuant to any other provision of this paragraph 4 shall
not reduce or otherwise affect its obligation to make any required prepayment as
specified in paragraph 4A or 4B.
4A. REQUIRED PREPAYMENTS OF SERIES A NOTES. Until the Series A Notes shall
be paid in full, the Company shall apply to the prepayment of the Series A
Notes, without Yield-Maintenance Amount, the sum of $2,727,272.73 commencing on
February 11, 2002 and each February 11 thereafter to and including February 11,
2012, and such principal amounts of the Series A Notes, together with interest
thereon to the payment dates, shall become due on such payment dates. The
remaining unpaid principal amount of the Series A Notes, together with interest
accrued thereon, shall become due on the maturity date of the Series A Notes.
4B. REQUIRED PREPAYMENTS OF SHELF NOTES. Each Series of Shelf Notes shall
be subject to required prepayments, if any, set forth in the Notes of such
Series.
4C. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes of each
Series shall be subject to prepayment, in whole at any time or from time to time
in part (in integral multiples of $100,000 and in a minimum amount of
$1,000,000), at the option of the Company, at 100% of the principal amount so
prepaid plus interest thereon to the prepayment date and the Yield-Maintenance
Amount, if any, with respect to each such Note. Any partial prepayment of a
Series of the Notes pursuant to this paragraph 4C(1) shall be applied in
satisfaction of required payments of principal in inverse order of their
scheduled due dates.
4D. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder of
each Note of a Series to be prepaid pursuant to paragraph 4C irrevocable written
notice of such prepayment not less than 10 Business Days prior to the prepayment
date, specifying such prepayment date, the aggregate principal amount of the
Notes of such Series to be prepaid on such date, the principal amount of the
Notes of such Series held by such holder to be prepaid on that date and that
such prepayment is to be made pursuant to paragraph 4C. Notice of prepayment
having been given as aforesaid, the principal amount of the Notes specified in
such notice, together with interest thereon to the prepayment date and together
with the Yield-Maintenance
<PAGE>
11
Amount, if any, herein provided, shall become due and payable on such prepayment
date. The Company shall, on or before the day on which it gives written notice
of any prepayment pursuant to paragraph 4C, give telephonic notice of the
principal amount of the Notes to be prepaid and the prepayment date to each
Significant Holder which shall have designated a recipient for such notices in
the Purchaser Schedule attached hereto or the applicable Confirmation of
Acceptance or by notice in writing to the Company.
4E. APPLICATION OF PREPAYMENTS. In the case of each prepayment of less
than the entire unpaid principal amount of all outstanding Notes of any Series
pursuant to paragraphs 4A, 4B or 4C, the amount to be prepaid shall be applied
pro rata to all outstanding Notes of such Series (including, for the purpose of
this paragraph 4E only, all Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates other
than by prepayment pursuant to paragraph 4A, 4B or 4C) according to the
respective unpaid principal amounts thereof.
4F. RETIREMENT OF NOTES. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their stated final maturity (other than by prepayment pursuant
to paragraphs 4A, 4B or 4C or upon acceleration of such final maturity pursuant
to paragraph 7A), or purchase or otherwise acquire, directly or indirectly,
Notes of any Series held by any holder unless the Company or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or purchase or
otherwise acquire, as the case may be, the same proportion of the aggregate
principal amount of Notes of such Series held by each other holder of Notes of
such Series at the time outstanding upon the same terms and conditions. Any
Notes so prepaid or otherwise retired or purchased or otherwise acquired by the
Company or any of its Subsidiaries or Affiliates shall not be deemed to be
outstanding for any purpose under this Agreement, except as provided in
paragraph 4E.
5. AFFIRMATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note is outstanding and unpaid, the Company covenants as
follows:
5A. REPORTING REQUIREMENTS.
5A(1). GENERAL INFORMATION. The Company covenants that it will deliver to
each Significant Holder in triplicate:
<PAGE>
12
(i) as soon as practicable and in any event within 45 days after
the end of each quarterly period (other than the fourth quarterly period)
in each fiscal year,
(1) Consolidating and Consolidated statements of income,
stockholders' equity and cash flows for the period from the
beginning of the current fiscal year to the end of such quarterly
period, and
(2) a Consolidating and Consolidated balance sheet as at the
end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and satisfactory in form to the Required Holder(s) and certified by
an authorized financial officer of the Company as fairly presenting, in
all material respects, the financial condition of the Company and its
Consolidated Subsidiaries as of the end of such period and the results of
their operations for the period then ended in accordance with generally
accepted accounting principles, subject to changes resulting from normal
year-end adjustments and the inclusion of abbreviated footnotes; provided,
however, that delivery pursuant to clause (iii) below of copies of the
Quarterly Report on Form 10-Q of the Company for such quarterly period
filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements of this clause (i) with respect to the
Consolidated Statements ;
(ii) as soon as practicable and in any event within 90 days after
the end of each fiscal year,
(1) Consolidating and Consolidated statements of income,
stockholders' equity and cash flows for such year, and
(2) a Consolidating and Consolidated balance sheet as at the
end of such year,
setting forth in each case in comparative form corresponding Consolidated
figures from the preceding annual audit, all in reasonable detail and
satisfactory in scope to the Required Holder(s) and reported on by
independent public accountants of recognized standing selected by the
Company whose report shall be without limitation as to the scope of the
audit and reasonably satisfactory in substance to the Required Holder(s);
provided, however, that delivery pursuant to clause (iii) below of copies
of the Annual
<PAGE>
13
Report on Form 10-K of the Company for such year filed with the Securities
and Exchange Commission shall be deemed to satisfy the requirements of
this clause (ii) with respect to the Consolidated statements;
(iii) if the Company or any of its Restricted Subsidiaries shall
become a public company, promptly upon transmission thereof, copies of all
such financial statements, proxy statements, notices and reports as it
shall send to its public stockholders and copies of all registration
statements (without exhibits) and all reports (other than any registration
statement filed on Form S-8) which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other report
(including, without limitation, management letters) submitted to the
Company or any Subsidiary by independent accountants in connection with
any annual, interim or special audit made by them of the books of the
Company or any Subsidiary;
(v) promptly upon receipt thereof, a copy of each report, survey,
study, evaluation or assessment or, promptly upon request therefor, any
other document prepared by any consultant, engineer, environmental
authority or other Person (other than work product of the Company's legal
counsel) relating to compliance by the Company or any Subsidiary with any
Environmental Laws, if the cost of remediation, repair or compliance may
be reasonably expected to exceed $1,000,000 in any one case or in the
aggregate;
(vi) with reasonable promptness, upon the request of the holder of
any Note, provide such holder, and any qualified institutional buyer
designated by such holder, such financial and other information as such
holder may reasonably determine to be necessary in order to permit
compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Notes, except at such
times as the Company is subject to the reporting requirements of section
13 or 15(d) of the Exchange Act. For the purpose of this clause (vii), the
term "qualified institutional buyer" shall have the meaning specified in
Rule 144A under the Securities Act; and
(vii) with reasonable promptness, such other financial data as a
Significant Holder may reasonably request;
<PAGE>
14
5A(2). QUARTERLY OFFICER'S CERTIFICATES. Together with each delivery of
financial statements required by clauses 5A(i) and (ii) above, the Company will
deliver to each Significant Holder an Officer's Certificate demonstrating (with
computations in reasonable detail) compliance with the provisions of paragraphs
6A, 6B, 6C, 6D, 6E and 6G 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 Company has taken, is taking
or proposes to take with respect thereto;
5A(3). ANNUAL ACCOUNTANT'S LETTER. Together with each delivery of
financial statements required by clause 5A(ii) above, the Company will deliver
to each Significant Holder a certificate of the independent public accountants
giving the report on such financial statements stating that, in making the audit
necessary for their report, they have obtained no knowledge of any Event of
Default or Default, or, if they have obtained knowledge of any Event of Default
or Default, specifying the nature and period of existence thereof. The
accountants, however, shall not be liable to anyone as a result of this
provision by reason of their failure to obtain knowledge of any Event of Default
or Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards;
5A(4). SPECIAL INFORMATION. The Company also covenants that as soon as
practicable but in no event later than five Business Days after any Responsible
Officer obtains knowledge of:
(a) an Event of Default or Default;
(b) a material adverse change in the financial condition,
business or operations of the Company and its Subsidiaries, taken as a
whole;
(c) legal proceedings filed against the Company and/or any
Subsidiary, which reasonably could be expected to have a Material Adverse
Effect, or which in any manner draws into question the validity of or
reasonably could be expected to impair the ability of the Company to
perform its obligations under this Agreement or the Notes;
(d) the occurrence of any other event that reasonably could be
expected to impair the ability of the Company to meet its obligations
hereunder;
(e) any (i) Environmental Liabilities, (ii) pending, threatened
or anticipated Environmental Proceedings, (iii) Environmental Notices,
<PAGE>
15
(iv) Environmental Judgments and Orders, or (v) Environmental Releases at,
on, in, under or in any way affecting the Properties which reasonably
could be expected to have a Material Adverse Effect; or
(f) with respect to any Plan that is subject to the funding
requirements of Section 302 of ERISA or Section 412 of the Code, the
Company (i) has given or is required to give notice to the Pension Benefit
Guaranty Corporation that a material reportable event has occurred with
respect to such Plan, (ii) has delivered notice to the Pension Benefit
Guaranty Corporation of any intent to withdraw from or terminate any such
Plan, or (iii) has failed to make timely a contribution to any such Plan;
the Company will deliver to each Significant Holder an Officer's Certificate
specifying the nature and period of existence thereof and what action the
Company or the Subsidiary has taken, is taking or proposes to take with respect
thereto.
5B. INSPECTION OF PROPERTY. The Company covenants that it will permit
any Person designated by any Significant Holder in writing, at such Significant
Holder's expense, to:
(i) visit and inspect any of the properties of the Company and
its Subsidiaries,
(ii) examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts
therefrom;
(iii) discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company and its
independent public accountants,
all at such reasonable times and as often as such Significant Holder may
reasonably request.
5C. COVENANT TO SECURE NOTES EQUALLY. The Company covenants that, if
it or any Subsidiary shall create or assume any Lien upon any of its property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of paragraph 6C (unless prior written consent to the creation or
assumption thereof shall have been obtained pursuant to paragraph 11C), it will
make or cause to be made effective provision whereby the Notes will be secured
by such Lien equally and ratably with any and all other Debt thereby secured so
long as any such other Debt shall be so secured.
<PAGE>
16
5D. GUARANTEED OBLIGATIONS. The Company covenants that if any Person
(other than the Company) guarantees or provides collateral in any manner for any
Debt of the Company or any Subsidiary, it will simultaneously cause such Person
to guarantee or provide collateral for the Notes equally and ratably with all
Debt guaranteed or secured by such Person pursuant to documentation in form and
substance reasonably satisfactory to such holder.
5E. MAINTENANCE OF INSURANCE. The Company covenants that it and each
Subsidiary will maintain, with responsible insurers, insurance with respect to
its properties and business against such casualties and contingencies
(including, but not limited to, public liability, larceny, embezzlement or other
criminal misappropriation) and in such amounts as is customary in the case of
similarly situated corporations engaged in the same or similar businesses.
5F. MAINTENANCE OF CORPORATE EXISTENCE/COMPLIANCE WITH LAW/PRESERVATION OF
PROPERTY. The Company covenants that, except as permitted under paragraph 6F,
it and each Subsidiary will do or cause to be done all things necessary to:
(i) preserve, renew and keep in full force and effect the
corporate existence of the Company and its Subsidiaries (other than those
Subsidiaries not material to the financial condition, business or
operations of the Company and its Subsidiaries taken as a whole);
(ii) comply with all laws and regulations (including, without
limitation, laws and regulations relating to equal employment opportunity
and employee safety) applicable to it and any Subsidiary except where the
failure to comply could not reasonably be expected to have a Material
Adverse Effect on the business, operations or financial condition of the
Company and its Subsidiaries, taken as a whole;
(iii) maintain, preserve and protect all material intellectual
property of the Company and its Subsidiaries; and
(iv) preserve all the remainder of its property used or useful in
the conduct of its business and keep the same in good repair, working order
and condition excluding normal wear and tear.
5G. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company covenants that it and
each Subsidiary will, comply in a timely fashion with, or operate pursuant to
valid waivers of the provisions of, all applicable Environmental Laws,
including,
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17
without limitation, the emission of wastewater effluent, solid and hazardous
waste and air emissions together with any other applicable Environmental Laws
for conducting, on a timely basis, periodic tests and monitoring for
contamination of ground water, surface water, air and land and for biological
toxicity of the aforesaid, and all applicable regulations of the Environmental
Protection Agency or other relevant federal, state or local governmental
authority, except where the failure to comply could not reasonably be expected
to have a Material Adverse Effect. The Company agrees to indemnify and hold you,
your officers, agents and employees (each an "INDEMNIFIED PERSON") harmless from
any loss, liability, claim or expense that you may incur or suffer as a result
of a breach by the Company or any Subsidiary, as the case may be, of this
covenant other than as a result of the gross negligence or wilful misconduct of
such Indemnified Person. The Company shall not be deemed to have breached or
violated this paragraph 5G if the Company or any Subsidiary is challenging in
good faith by appropriate proceedings diligently pursued the application or
enforcement of such Environmental Laws for which adequate reserves have been
established in accordance with generally accepted accounting principles.
5H. NO INTEGRATION. The Company covenants that it has taken and will take
all necessary action so that the issuance of the Notes does not and will not
require registration under the Securities Act. The Company covenants that no
future offer and sale of debt securities of the Company of any class will be
made if there is a reasonable possibility that such offer and sale would, under
the doctrine of "integration", subject the issuance of the Notes to you to the
registration requirements of the Securities Act.
6. NEGATIVE COVENANTS. During the Issuance Period and so long thereafter
as any Note or other amount due hereunder is outstanding and unpaid, the Company
covenants as follows:
6A. FINANCIAL COVENANTS.
(i) CONSOLIDATED FUNDED DEBT TO LEVERAGE RATIO. The Company shall
not permit the ratio of Consolidated Funded Debt to Total Capital to exceed
0.50 to 1.0, calculated on a quarterly basis.
(ii) SENIOR DEBT. The Company shall not permit Consolidated Senior
Funded Debt to exceed an amount equal to 40% of Total Capital, calculated
on a quarterly basis.
(iii) FIXED CHARGE COVERAGE RATIO. The Company shall not permit the
ratio of (a) EBIT plus Consolidated Lease Expense to (b) Consolidated
<PAGE>
18
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.
(iv) CURRENT RATIO. The Company 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 Company acquires or otherwise obtains the remaining
outstanding common stock of Golden Poultry, the financial covenants set forth in
this paragraph 6A will be calculated beginning on the last day of the first
fiscal quarter following such purchase, on a consolidated basis in accordance
with GAAP.
6B. LIMITATION ON RESTRICTED PAYMENTS. The Company covenants that it will
not (i) 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 (ii) make interest payments on
equity, or redeem, purchase or otherwise acquire, directly or indirectly, any
shares of its stock or other equity, or (iii) 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 clause (xvii) of paragraph 6D 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 Company 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 Company or
(y) exchanges of stock of one or more classes of the Company, except to the
extent that cash or other value is involved in such exchange. The term "equity"
as used in this paragraph 6B shall include the Company's common stock, preferred
stock, if any, other equity certificates, and notified equity accounts of
patrons.
6C. LIENS. The Company covenants that it will not, nor will it permit any
Restricted Subsidiary to, create, assume or suffer to exist any Lien upon any of
its property or assets whether now owned or hereafter acquired, except:
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19
(i) Liens existing prior to the date of this Agreement, as set
forth on Schedule 6C attached hereto;
(ii) 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;
(iii) 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;
(iv) 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);
(v) Any Liens that constitute margin accounts set-off arrangements
made in connection with bona fide hedging transactions, as defined in
accordance with GAAP, in commodity futures entered into the ordinary course
of business and not for speculative purposes; and
(vi) Liens securing purchase money debt, provided the aggregate of
such debt so secured does not exceed fifteen percent (15%) of Consolidated
Net Worth.
6D. RESTRICTIONS ON LOANS, ADVANCES, INVESTMENTS AND CONTINGENT
LIABILITIES. The Company covenants that it will not, nor will it permit any
Restricted Subsidiary to, 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 Company, 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 Company or any
Subsidiary may:
<PAGE>
20
(i) make or permit to remain outstanding loans, advances,
indemnities, or Guarantees to any Subsidiary;
(ii) acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to
the Company or any Subsidiary;
(iii) 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;
(iv) own, purchase and acquire obligations of the United States
Government or any agency thereof;
(v) own, purchase and acquire obligations guaranteed by the United
States Government;
(vi) 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;
(vii) 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;
(viii) own, purchase and acquire adjustable rate preferred stocks
rated "A" or better by Moody's Investors Service or Standard and Poor's
Corporation;
(ix) endorse negotiable instruments for collection in the ordinary
course of business;
(x) make or permit to remain outstanding travel and other like
advances to officers and employees in the ordinary course of business;
(xi) make or permit to remain outstanding investments as a general
partner in Golden Peanut in amount not to exceed $27,500,000;
<PAGE>
21
(xii) make or permit to remain outstanding equity investments in
Golden Poultry in an amount not to exceed $24,900,000;
(xiii) 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;
(xiv) make or permit to remain outstanding loans made by GK Finance
to parties other than the Company or a Subsidiary in an amount not to
exceed $25,000,000 at any one time;
(xv) 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;
(xvi) make or permit to remain outstanding investments described on
Schedule 6D attached hereto;
(xvii) 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 Company, except as provided in clause
(xiv) above;
(xviii) make or permit to remain outstanding investments in GC
Properties; and
(xix) Guarantee or otherwise be or become liable for obligations of
Young Pecan not to exceed an aggregate amount of $65,000,000.
6E. SALE OF STOCK AND DEBT OF SUBSIDIARIES. The Company covenants that
it will not, nor will it permit any Restricted Subsidiary to, sell or otherwise
dispose of, or part with control of, any shares of stock or Indebtedness of any
Restricted Subsidiary, except to the Company or another Restricted Subsidiary,
and
<PAGE>
22
except that all shares of stock and Indebtedness of any Restricted Subsidiary at
the time owned by or owed to the Company 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 Company) 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 Company and all Restricted 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
Company and all Subsidiaries are simultaneously being sold as permitted by this
paragraph 6E).
As used in paragraphs 6E, 6F and 7A(xii), a "substantial part of" the
consolidated assets of the Company 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 Company.
6F. MERGER AND SALE OF ASSETS. The Company covenants that it will not,
nor will it permit any Restricted Subsidiary to, enter into any transaction of
merger, consolidation, pooling of interests, 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 Company 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:
(i) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one
or more other Restricted Subsidiaries;
(ii) any Subsidiary may sell, lease or otherwise dispose of any of
its assets to the Company or another Restricted Subsidiary;
(iii) the Company or any Restricted Subsidiary may enter into any
transaction of pooling of interests, joint venture, syndicate or other
<PAGE>
23
combination with any other Person so long as the aggregate investment of
the Company and/or its Restricted Subsidiaries does not exceed $5,000,000;
and
(iv) any Subsidiary may sell or otherwise dispose of all or
substantially all of its assets subject to the conditions specified in
paragraph 6E with respect to a sale of the stock of such Subsidiary.
6G. SALE AND LEASE-BACK. The Company covenants that it will not, nor will
it permit any Restricted Subsidiary to, enter into any arrangement, with any
Person or under which such other Person is a party, providing for the leasing by
the Company or any Restricted Subsidiary of real or personal property, used by
the Company or any Restricted Subsidiary in the operations of the Company or any
Restricted Subsidiary, which has been or is sold or transferred by the Company
or any Restricted Subsidiary to any other Person to whom funds have been or are
to be advanced by such other Person on the security of such rental obligations
of the Company 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.
6H. SALE OR DISCOUNT OF RECEIVABLES. The Company covenants that it will
not, nor will it permit any Restricted Subsidiary to, 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.
6I. COMMODITY CONTRACTS. The Company 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.
6J. ISSUANCE OF STOCK BY RESTRICTED SUBSIDIARIES. The Company 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 Company or another
Subsidiary.
<PAGE>
24
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of, or
Yield-Maintenance Amount payable with respect to, any Note when the same
shall become due, either by the terms thereof or otherwise as herein
provided; or
(ii) the Company defaults in the payment of any interest on any Note
for more than 10 days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as primary
obligor or as guarantor or other surety) in any payment of principal of or
interest on any other obligation for money borrowed (or any Capitalized
Lease Obligation, 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 Company or any Subsidiary fails to perform or observe any
other agreement, term or condition contained in any agreement under which
any such obligation is created (or if any other event thereunder or under
any such agreement shall occur and be continuing) and 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 (or to be repurchased by the Company
or any Subsidiary) prior to any stated maturity; or
(iv) any representation or warranty made by the Company herein or by
the Company or any of its officers in any writing furnished in connection
with or pursuant to this Agreement shall be false in any material respect
on the date as of which made; or
(v) the Company fails to perform or observe any agreement contained
in paragraph 6; or
<PAGE>
25
(vi) the Company fails to perform or observe any other agreement,
term or condition contained herein and such failure shall not be remedied
within 20 days after any Responsible Officer obtains actual knowledge
thereof; or
(vii) the Company or any Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as such debts
become due; or
(viii) any decree or order for relief in respect of the Company or
any Subsidiary is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
or similar law, whether now or hereafter in effect (herein called the
"BANKRUPTCY LAW"), of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession by,
a trustee, receiver, custodian, liquidator or similar official of the
Company or any Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a Subsidiary)
relating to the Company or any Subsidiary under the Bankruptcy Law of any
other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and the
Company or such Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any such proceedings, and
such order, judgment or decree remains unstayed and in effect for more than
30 days; or
(xi) any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the Company and such
order, judgment or decree remains unstayed and in effect for more than 60
days: or
(xii) any order, judgment or decree is entered in any proceedings
against the Company or any Subsidiary decreeing a split-up of the Company
or such Subsidiary which requires the divestiture of assets representing a
substantial part, or the divestiture of the stock of a Subsidiary whose
assets
<PAGE>
26
represent a substantial part, of the consolidated assets of the Company and
its Subsidiaries (determined in accordance with generally accepted
accounting principles) or which requires the divestiture of assets, or
stock of a Subsidiary, which shall have contributed a substantial part of
the consolidated net income of the Company and its Subsidiaries (determined
in accordance with generally accepted accounting principles) 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 60 days; or
(xiii) one or more final judgments in an aggregate amount in excess
of $1,000,000 is rendered against the Company or any Subsidiary and, within
60 days after entry thereof, any such judgment is not discharged or
execution thereof stayed pending appeal, or within 60 days after the
expiration of any such stay, such judgment is not discharged; or
(xiv) the Company or any ERISA Affiliate, in its capacity as an
employer under a Multiemployer Plan, makes a complete or partial withdrawal
from such Multiemployer Plan resulting in the incurrence by such
withdrawing employer of a withdrawal liability in an amount exceeding
$1,000,000;
then:
(a) if such event is an Event of Default specified in clause (i) or
(ii) of this paragraph 7A, any holder of any Note may at its option during
the continuance of such Event of Default, by notice in writing to the
Company, terminate the Facility and/or declare all of the Notes held by
such holder to be, and all of the Notes held by such holder shall thereupon
be and become, immediately due and payable at par together with interest
accrued thereon, without presentment, demand, protest or notice of any
kind, all of which are hereby waived by the Company,
(b) if such event is an Event of Default specified in clause
(viii), (ix) or (x) of this paragraph 7A with respect to the Company, the
Facility shall automatically terminate and all of the Notes at the time
outstanding shall automatically become immediately due and payable together
with interest accrued thereon and together with the Yield-Maintenance
Amount, if any, with respect to each Note, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the
Company, and
(c) with respect to any event constituting an Event of Default, the
Required Holder(s) of the Notes of any Series may at its or their option
during
<PAGE>
27
the continuance of such Event of Default, by notice in writing to the
Company, terminate the Facility and declare all of the Notes of such Series
to be, and all of the Notes of such Series shall thereupon be and become,
immediately due and payable together with interest accrued thereon and
together with the Yield-Maintenance Amount, if any, with respect to each
Note of such Series, without presentment, demand, protest or notice of any
kind, all of which are hereby waived by the Company.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the Notes
of any Series shall have been declared immediately due and payable pursuant to
paragraph 7A, the Required Holder(s) of the Notes of such Series may, by notice
in writing to the Company, rescind and annul such declaration and its
consequences if (i) the Company shall have paid all overdue interest on the
Notes of such Series, the principal of and Yield-Maintenance Amount, if any,
payable with respect to any Notes of such Series which have become due otherwise
than by reason of such declaration, and interest on such overdue interest and
overdue principal and Yield-Maintenance Amount at the rate specified in the
Notes of such Series, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes of such Series or this
Agreement. No such rescission or annulment shall extend to or affect any
subsequent Event of Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
of each Series at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur and be
continuing, the holder of any Note may proceed to protect and enforce its rights
under this Agreement and such Note by exercising such remedies as are available
to such holder in respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance of any covenant
or other agreement contained in this Agreement or in aid of the exercise of any
power granted in this Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or now or hereafter existing at law or in equity or by
statute or otherwise.
<PAGE>
28
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents,
covenants and warrants as follows:
8A. ORGANIZATION AND QUALIFICATION. The company is an agricultural
membership cooperative duly incorporated and existing in good standing under the
Cooperating 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 Company and each Subsidiary has the corporate
power to own its respective property and to carry on its respective business as
now being conducted, and the Company and each Subsidiary is duly qualified as a
foreign corporation to do business and in good standing in every jurisdiction in
which the nature of the respective business conducted by property owned by it
legally requires such qualification except to the extent failure to so qualify
does not result in a Material Adverse Effect.
8B. FINANCIAL STATEMENTS. The Company has furnished you with the
following financial statements, identified by a principal financial officer of
the Company: consolidated balance sheets of the Company and its Subsidiaries as
at June 30, in the years of 1991 through 1996, and consolidated statements of
income and statements of changes in financial position of the Company and its
Subsidiaries for such years, all certified by KPMB Peat Marwick. Such financial
statements (including any related schedules and/or notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of the Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements of income and
statements of changes in financial position fairly present the results of the
operations of the Company and its Subsidiaries for the periods indicated. There
has been no material change in the business, condition or operations (financial
or otherwise) of the Company and its Subsidiaries taken as a whole since June
30, 1996.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any properties or rights of the Company
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 Company and its Subsidiaries as a
whole.
<PAGE>
29
8D. OUTSTANDING DEBT. Neither the Company nor any of its Restricted
Subsidiaries has outstanding any Debt, on a consolidated basis except as
permitted by paragraph 6A. There exists no default under the provisions of any
instrument evidencing such Debt or of any agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company 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
properties or assets, including the properties and assets reflected in the
balance sheet as at June 30, 1996 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 paragraph 6C. The Company and its
Restricted Subsidiaries enjoy peaceful and undisturbed possession under all
leases necessary in any material respect for the operation of their respective
properties and assets, none of which contains any unusual or burdensome
provisions which might materially affect or impair the operation of such
properties or assets. All such leases are valid and subsisting and are in full
force and effect.
8F. TAXES. The Company 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 Company, are required to be filed, and each has paid all taxes
as shown on said returns and on 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 generally accepted accounting principles.
Federal, State and other income tax returns of the Company and its Subsidiaries
have been examined and reported on by the taxing authorities or closed by
applicable statutes and satisfied for all fiscal years prior to and including
the fiscal year ended on June 30, 1986.
8G. CONFLICTING AGREEMENTS OR OTHER MATTERS. Neither the Company nor any
of its Subsidiaries is a party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
its business, property or assets, or financial condition. Neither the execution
nor delivery of this Agreement nor of the Notes, nor the offering, issuance and
sale of the Notes, nor fulfillment of nor compliance with the terms and
provisions hereof and of the Notes 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 Company or any of its Subsidiaries pursuant to, the
charter or by-laws of the Company 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
<PAGE>
30
which the Company or any of its Subsidiaries is subject. Neither the Company nor
any of its Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing Indebtedness of the Company or such
Subsidiary, 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, Debt of the Company of the type to be
evidenced by the Notes except as set forth in the agreements listed in Schedule
8G attached hereto.
8H. OFFERING OF NOTES. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than you, and neither the Company nor any agent
acting on its behalf has taken or will take any action which would subject the
issuance or sale of the Notes to the provisions of Section 5 of the Securities
Act of 1933, as amended, or to the provisions of any securities or Blue Sky law
of any applicable jurisdiction. The Company hereby represents and warrants to
you that, within the preceding twelve months, neither the Company nor any Person
acting on behalf of the Company has offered or sold to any Person, any Notes, or
any securities of the same or similar class as the Notes, or any other
substantially similar securities of the Company.
8I. USE OF PROCEEDS/REGULATION G, ETC. The proceeds of the Series A Notes
will be used for general working capital purposes. Neither the Company nor any
agent acting on its behalf has taken or will take any action which might cause
this Agreement or the Notes to violate Regulation G, T, U or X or (to our best
knowledge) any other regulation of the Board of Governors of the Federal Reserve
System, or to violate the Securities Exchange Act of 1934, as amended, in each
case as in effect now or as the same may hereafter be in effect.
8J. 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
Pension Benefit Guaranty Corporation has been or is expected by the Company to
be incurred with respect to any Plan (other than a Multiemployer Plan) by the
Company or any of its Subsidiaries which is or would be materially adverse to
the Company and its Subsidiaries taken as a whole. Neither the Company nor any
of its Subsidiaries has incurred or presently expects to incur any withdrawal
liability under Title IV of ERISA which respect to any Multiemployer Plan which
is or would be materially adverse to the Company and its Subsidiaries taken as a
whole. The execution and delivery of this Agreement and the issue and sale of
the Notes will not involve any prohibited transaction within the meaning of
ERISA or in connection with which a tax
<PAGE>
31
could be imposed pursuant to section 4975 of the Code or a violation of Section
406 or Section 407 of ERISA. The representation by the Company in the next
preceding sentence is made in reliance upon and subject to the accuracy of your
representation in paragraph 9 as to the source of the funds to be used to pay
the purchase price of the Notes to be purchased by you.
8K. FOREIGN ASSETS CONTROL REGULATIONS. Neither the borrowing by the
Company 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).
8L. GOVERNMENTAL CONSENT. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offer, issue, sale or delivery of the Notes
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, the offer, issue,
sale or delivery of the Notes or fulfillment of or compliance with the terms and
provisions hereof or of the Notes.
8M. POSSESSION OF FRANCHISES, LICENSES, ETC. The Company and its
Subsidiaries possess all franchise, certificates, licenses, permits, and other
authorizations from governmental political subdivisions 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 properties and assets and neither the Company nor
any Subsidiary is in violation of any thereof in any material respect.
8N. POLLUTION AND OTHER REGULATIONS. The Company and each Subsidiary has
obtained all permits, licenses and other authorizations which are required
under, and is in material compliance with, Federal, State and local laws and
regulations relating to pollution, reclamation, or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases or 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.
The Company and each Subsidiary is in material compliance with
<PAGE>
32
all laws and regulations relating to equal employment opportunity and employee
health and safety, and health and sanitary codes, in all jurisdictions in which
the Company and each Subsidiary is presently doing business. The Company will
and will cause each Subsidiary to be in material compliance with all laws and
regulations which may be legally imposed in the future in jurisdictions in which
the Company and any Subsidiary may then be doing business.
8O. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to you by or on behalf of the Company 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 peculiar to the Company or any of
its Subsidiaries which materially adversely affects or in the future may (so far
as the Company can now foresee) materially adversely affect the business,
property or assets, or financial condition of the Company or any of its
Subsidiaries which has not been set forth in this Agreement or in the other
documents, certificates and statements furnished to you by or on behalf of the
Company contemplated hereby.
8P. HOSTILE TENDER OFFERS. None of the proceeds of the sale of any Notes
will be used to finance a Hostile Tender Offer.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is not acquiring the Notes
purchased by it hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of such Purchaser's property shall at all times be and remain within
its control.
9B. SOURCE OF FUNDS. You represent that at least one of the following
statements is an accurate representation as to each source of funds (a "SOURCE")
to be used by you to pay the purchase price of the Notes to be purchased by you
hereunder:
(i) the Source constitutes assets allocated to your "insurance company
general account" (as such term is defined under Section V of the United
States Department of Labor's Prohibited Transaction Exemption ("PTE") 95-
60), and as of the date of the purchase of the Notes, you satisfy
<PAGE>
33
all of the applicable requirements for relief under Sections I and IV of
PTE 95-60; or
(ii) if you are an insurance company, the Source does not include
assets allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest, other than
a separate account that is maintained solely in connection with your fixed
contractual obligations under which the amounts payable, or credited, to
such plan and to any participant or beneficiary of such plan (including
any annuitant) are not affected in any manner by the investment
performance of the separate account; or
(iii) the Source is either (a) an insurance company pooled separate
account, within the meaning PTE 90-1 (issued January 29, 1990), or (b) a
bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (iii), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account or collective investment fund; or
(iv) the Source constitutes asset of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the company and (a) the identity
of such QPAM and (b) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to clause (iii); or
(v) the Source is a governmental plan; or
<PAGE>
34
(vi) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to
this clause (vi); or
(vii) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this paragraph 9B, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this Agreement,
the terms defined in paragraphs 10A and 10B (or within the text of any other
paragraph) shall have the respective meanings specified therein and all
accounting matters shall be subject to determination as provided in paragraph
10C.
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to paragraph 4C or is declared to be
immediately due and payable pursuant to paragraph 7A, as the context requires.
"DESIGNATED SPREAD" shall mean .50% of 1% in the case of each Series A
Notes and 0% in the case of each Note of any other Series unless the
Confirmation of Acceptance with respect to the Notes of such Series specifies a
different Designated Spread in which case it shall mean, with respect to each
Note of such Series, the Designated Spread so specified.
"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (as converted to reflect
the periodic basis on which interest on such Note is payable, if payable other
than on a semi-annual basis) equal to the Reinvestment Yield with respect to
such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal of
any Note, the Designated Spread over the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City local time) on the Business Day
next preceding the Settlement Date with respect to such Called Principal, on the
display
<PAGE>
35
designated as "Page 678"on the Telerate Service (or such other display as may
replace page 678 on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or if such yields shall not be reported as
of such time or the yields reported as of such time shall not be ascertainable,
(ii) the Treasury Constant Maturity Series yields reported, for the latest day
for which such yields shall have been so reported as of the Business Day next
preceding the Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date.
Such implied yield shall be determined, if necessary, by (c) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (d) interpolating linearly between yields reported for
various maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called Principal
of any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) each Remaining Scheduled Payment of such
Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4A or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Called Principal of
such Note over the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no event be less
than zero.
<PAGE>
36
10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph 2B(5).
"ACCEPTANCE DAY" shall have the meaning specified in paragraph 2B(5).
"ACCEPTANCE WINDOW" shall have the meaning specified in paragraph 2B(5).
"ACCEPTED NOTE" shall have the meaning specified in paragraph 2B(5).
"AFFILIATE" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power 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.
"AGREEMENT" shall mean this Note Agreement, together with all Exhibits and
Schedules hereto, as from time to time amended and supplemented.
"AGRIGOLDEN" shall mean AgriGolden, Inc., a corporation formed under the
laws of the State of Georgia.
"AUTHORIZED OFFICER" shall mean (i) in the case of the Company, its chief
executive officer, its chief financial officer, its Treasurer, any vice
president of the Company designated as an "Authorized Officer" of the Company in
the Information Schedule attached hereto or any vice president of the Company
designated as an "Authorized Officer" of the Company for the purpose of this
Agreement in an Officer's Certificate executed by the Company's chief executive
officer or chief financial officer and delivered to Prudential, and (ii) in the
case of Prudential, any officer of Prudential designated as its "Authorized
Officer" in the Information Schedule or any officer of Prudential designated as
its "Authorized Officer" for the purpose of this Agreement in a certificate
executed by one of its Authorized Officers. Any action taken under this
Agreement on behalf of the Company by any individual who on or after the date of
this Agreement shall have been an Authorized Officer of the Company and whom
Prudential in good faith believes to be an Authorized Officer of the Company at
the time of such action shall be binding on the Company even though such
individual shall have ceased to be an Authorized Officer of the Company, and any
action taken under this Agreement on behalf of Prudential by any individual who
on or after the date of this Agreement shall have been an Authorized Officer of
Prudential and whom the Company in good faith believes to be an Authorized
Officer
<PAGE>
37
of Prudential at the time of such action shall be binding on Prudential even
though such individual shall have ceased to be an Authorized Officer of
Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified in paragraph
2B(1).
"BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a Sunday,
(ii) a day on which commercial banks in New York City are required or authorized
to be closed and (iii) for purposes of paragraph 2B(3) hereof only, a day on
which The Prudential Insurance Company of America is not open for business.
"CANCELLATION DATE" shall have the meaning specified in paragraph
2B(8)(iv).
"CANCELLATION FEE" shall have the meaning specified in paragraph
2B(8)(iv).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expenses) in accordance
with such principles.
"CAROLINA GOLDEN" shall mean Carolina Golden Products Company, a general
partnership formed under the laws of the State of Georgia, with AgriGolden and
Golden Poultry acting as general partners.
"CLOSING DAY" shall mean, with respect to the Series A Notes, the Series A
Closing Day and, with respect to any Accepted Note, the Business Day specified
for the closing of the purchase and sale of such Accepted Note in the Request
for Purchase of such Accepted Note, provided that (i) if the Company and the
Purchaser which is obligated to purchase such Accepted Note agree on an earlier
Business Day for such closing, the "CLOSING DAY" for such Accepted Note shall be
such earlier Business Day, and (ii) if the closing of the purchase and sale of
such Accepted Note is rescheduled pursuant to paragraph 2B(7), the Closing Day
for such Accepted Note, for all purposes of this Agreement except references to
"original Closing Day" in paragraph 2B(8)(iii), shall mean the Rescheduled
Closing Day with respect to such Accepted Note.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE>
38
"CONFIRMATION OF ACCEPTANCE" shall have the meaning specified in paragraph
2B(5).
"CONSOLIDATED CURRENT ASSETS" shall mean the current assets of the Company
and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" shall mean the current liabilities of
the Company and its Restricted Subsidiaries, determined on a consolidated basis
in accordance with GAAP.
"CONSOLIDATED FUNDED DEBT" shall mean (a) Funded Debt of the Company 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 Company or any Restricted Subsidiary
or (ii) is supported by a letter of credit issued for the account of the Company
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 Company 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 Company and its
Restricted Subsidiaries determined on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED NET EARNINGS" shall mean consolidated gross revenues of the
Company 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 Company and its Restricted
Subsidiaries including all charges of a proper character (including current and
deferred taxes on income and current additions to reserves but excluding equity
losses of Golden Peanut and Young Pecan, if any), but not including in gross
revenues any gains (net of expenses and taxes applicable thereto) in excess of
losses resulting from the sale, conversion or other disposition of capital
assets (i.e., assets other than current assets), any gains
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39
resulting from the write-up of assets, any equity of the Company 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 Company 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 Company and its
Restricted Subsidiaries, consolidated in accordance with GAAP.
"CONSOLIDATED SENIOR FUNDED DEBT" shall mean all Consolidated Funded Debt
less Subordinated Debt.
"CONSOLIDATED TOTAL ASSETS" shall mean all assets of the Company and its
Restricted Subsidiaries, consolidated in accordance with GAAP.
"CROP INDEBTEDNESS" shall mean any Debt incurred by the Company, any
Restricted Subsidiary, Golden Peanut, Young Pecan or any other Person (if the
Company 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 Company
and so certified to the Agent.
"CROP YEAR" shall mean the twelve month period beginning July 1 for those
crops harvested in that period.
"CUMULATIVE PREFERRED CERTIFICATES OF INTEREST" shall mean those debt
instruments issued by the Company to the public prior to 1977, and which have no
maturity dates.
"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
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40
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 Company or such Subsidiary even though such obligation shall not
be assumed by the Company or such Subsidiary.
"DEBT" shall mean Funded Debt and Current Debt, as the case may be.
"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.
"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
<PAGE>
41
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 corporation which is a member of the same
controlled group of corporations as the Company within the meaning of section
414(b) of the Code, or any trade or business which is under common control with
the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph 7A,
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act, and "DEFAULT" shall mean any of such events,
whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FACILITY" shall have the meaning specified in paragraph 2B(1).
"FACILITY FEE" shall have the meaning specified in paragraph 2B(8)(i).
"FUNDED DEBT" shall mean, as to any Person, and include without
duplication:
(a) all Indebtedness for money borrowed, including, without
limitation, purchase money mortgages, leases capitalized in accordance with
Financial Accounting Standards Board Statement No. 13, outstandings under
asset securitization programs, conditional sales contracts and similar
title retention debt instruments (including any current maturities of such
indebtedness) payable more than one year from the date of calculation
thereof or which is renewable under any revolving or similar agreement,
which under GAAP is shown on the balance sheet as a liability (but
excluding reserves for deferred income taxes and other reserves to the
extent such reserves do not constitute an obligation); and
(b) Guarantees, endorsements (other than endorsements of negotiable
instruments for collection in the ordinary course of business) and
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42
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
(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 Company'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 Company or any Subsidiary shall be deemed to be
Funded Debt or Current Debt, as the case may be, of the Company or such
Subsidiary even though such obligation shall not be assumed by the Company or
such Subsidiary.
"ENVIRONMENTAL JUDGMENTS AND ORDERS" shall mean all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
degree or order.
"ENVIRONMENTAL LIABILITIES" shall mean any liabilities, whether accrued or
contingent, arising from or relating in any way to any Environmental
Requirements.
"ENVIRONMENTAL NOTICES" shall mean any written communication from any
Environmental Authority stating possible or alleged noncompliance with or
possible or alleged liability under any Environmental Requirement, including
without limitation any complaints, citations, demands or requests from any
Environmental Authority for correction of any purported violation of any
Environmental Requirements or any investigation concerning any purported
violation of any Environmental Requirements. Environmental Notices also shall
mean (i) any written communication from any other Person threatening litigation
or administrative proceedings against or involving the
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43
Company relating to alleged violation of any Environmental Requirements and (ii)
any complaint, petition or similar documents filed by any other Person
commencing litigation or administrative proceedings against or involving the
Company relating to alleged violation of any Environmental Requirements.
"ENVIRONMENTAL PROCEEDINGS" shall mean any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"ENVIRONMENTAL RELEASES" shall mean releases (as defined in CERCLA or under
any applicable state or local environmental law or regulation) of Hazardous
Materials. Environmental Releases does not include releases for which no
remediation or reporting is required by applicable Environmental Requirements
and which do not present a danger to health, safety or the environment.
"ENVIRONMENTAL REQUIREMENTS" shall mean any applicable local, state or
federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to health, safety or
the environment.
"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 Company 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 Company.
"GOLDEN PEANUT"shall mean Golden Peanut Company, a general partnership
formed under the laws of the State of Georgia with the Company, 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 Company.
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44
"GUARANTEE" shall mean, with respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or service, regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of the obligation
guaranteed or such lesser amount to which the maximum exposure of the guarantor
shall have been specifically limited.
"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.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any Accepted Note, the
United States Treasury Note or Notes whose duration (as determined by
Prudential) most closely matches the duration of such Accepted Note.
"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.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of proceeds of
any Note, any offer to purchase, or any purchase of, shares of capital stock of
any corporation (other than Golden Poultry) or equity interests in any other
entity (other than Golden Poultry), or securities convertible into or
representing the beneficial ownership of, or rights to acquire, any such shares
or equity interests, if such shares, equity interests, securities or rights are
of a class which is publicly traded on any
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45
securities exchange or in any over-the-counter market, other than purchases of
such shares, equity interests, securities or rights representing less than 5% of
the equity interests or beneficial ownership of such corporation or other entity
for portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company makes
the Request for Purchase of such Note.
"INCLUDING" shall mean, unless the context clearly requires otherwise,
"including without limitation".
"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.
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2B(2).
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any 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) or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the payment
or performance of an obligation, including any rights of setoff (whether by
statute, common law, contract or otherwise).
"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.
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46
"MATERIAL ADVERSE EFFECT" shall mean any material adverse change in (i) the
business, results of operations, financial condition, assets or prospects of the
Company and the Subsidiaries, taken as a whole, or (ii) the ability of Company
or the Subsidiaries to perform their obligations under this Agreement.
"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 Company, any Restricted Subsidiary, Golden Peanut or Young
Pecan at the end of the Peanut Sale Cycle or the Pecan Sale Cycle for that
particular Crop Year divided by the total inventory value for either peanuts or
pecans, expressed as a percentage.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA.
"NOTES" shall have the meaning specified in paragraph 1B.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of the
Company by an Authorized Officer of the Company.
"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 Company, 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.
"OTHER PRUDENTIAL AGREEMENTS" shall mean that certain (i) Note Agreement
dated as of November 4, 1988 with respect to 9.90% Senior Notes due December 31,
1998 and (ii) Note Agreement dated as of June 3, 1991 with respect to 9.35%
Senior Notes due June 28, 2001, as each such Agreement may be amended, modified
or supplemented from time to time in accordance with its terms.
"PATRON'S AND OTHER EQUITY" shall mean the total of all capital stock
including cumulative certificates of interest, revolving fund certificates,
patronage reserves, other equity and retained earnings of the Company as
indicated in the Company's consolidated balance sheets.
"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.
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47
"PECAN SALE CYCLE" shall mean the period of time from October 1 of any Crop
Year to the last Business Day of January in the year which is two years after
such Crop Year.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability corporation or partnership, a trust,
an unincorporated organization and a government or any department or agency
thereof.
"PLAN" shall mean any employee pension benefit plan (as such term is
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 Company or any ERISA
Affiliate.
"PRUDENTIAL" shall mean The Prudential Insurance Company of America.
"PRUDENTIAL AFFILIATE" shall mean any corporation or other entity all of
the Voting Stock (or equivalent voting securities or interests) of which is
owned by Prudential either directly or through Prudential Affiliates.
"PURCHASERS" shall mean Prudential with respect to the Series A Notes and,
with respect to any Accepted Notes, Prudential and/or the Prudential
Affiliate(s), which are purchasing such Accepted Notes.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"REQUEST FOR PURCHASE" shall have the meaning specified in paragraph 2B(3).
"REQUIRED HOLDER(S)" shall mean the holder or holders of at least 66 2/3%
of the aggregate principal amount of the Notes or of a Series of Notes, as the
context may require, from time to time outstanding.
"RESCHEDULED CLOSING DAY" shall have the meaning specified in paragraph
2B(7).
"RESPONSIBLE OFFICER" shall mean the chief executive officer, chief
operating officer, chief financial officer, treasurer or chief accounting
officer of the Company, general counsel of the Company or any other officer of
the Company involved principally in its financial administration or its
controllership function.
"RESTRICTED SUBSIDIARIES" shall mean all of the Company's Subsidiaries
except Golden Poultry; provided, however, that if the Company acquires all of
the remaining
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48
outstanding common stock of Golden Poultry, then Golden Poultry shall be deemed
to be a Restricted Subsidiary.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES" shall have the meaning specified in paragraph 1B.
"SERIES A CLOSING DAY" shall have the meaning specified in paragraph 2A.
"SERIES A NOTE(S)" shall have the meaning specified in paragraph 1A.
"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.
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as Prudential or
any Prudential Affiliate shall hold (or be committed under this Agreement to
purchase) any Note, or (ii) any other holder of at least 5% of the aggregate
principal amount of the Notes of any Series from time to time outstanding.
"SUBORDINATED CAPITAL CERTIFICATES OF INTEREST" shall mean those debt
instruments issued by the Company to the public under Trust Indentures with
SunTrust Bank, Atlanta, Georgia, as Trustee, registered with the United States
Securities and Exchange Commission and having maturities of greater than one
year.
"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
Company 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 Cumulative
Preferred Capital Certificates of Interest, issued by the Company, an example of
whose subordination provisions is annexed hereto as Schedule 10B-1.
"SUBORDINATED LOAN CERTIFICATES" shall mean those debt instruments issued
by the Company to the public under Trust Indentures with SunTrust Bank, Atlanta,
Georgia, as Trustee, registered with the United Stated Securities and Exchange
Commission and having maturities of one year or less.
"SUBSIDIARY" shall mean any corporation, association or partnership
organized under the laws of any State of the United States of America, Canada,
or any Province
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49
of Canada, which conducts the major portion of its business in and makes the
major portion of its sales to Persons located in the United States of America,
Canada, and 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 Company either
directly or through Subsidiaries, including, without limitation, as of the date
thereof, those Subsidiaries listed on Schedule 10B-2 hereto.
"TOTAL CAPITAL" shall mean the sum of Funded Debt and Shareholders' Equity.
"TRANSFEREE" shall mean any direct or indirect transferee of all or any
part of any Note purchased by any Purchaser under this Agreement.
"VOTING STOCK" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether 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 corporation, as general partners.
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All references
in this Agreement to "generally accepted accounting principles" shall be deemed
to refer to generally accepted accounting principles in effect in the United
States at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with the
most recent audited financial statements delivered pursuant to clause (ii) of
paragraph 5A or, if no such statements have been so delivered, the most recent
audited financial statements referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any Purchaser
shall hold any Note, it will make payments of principal of, interest on, and any
Yield-Maintenance Amount payable with respect to, such Note, which comply with
the terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City local time, on the date due) to
(i) the
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50
account or accounts of such Purchaser specified in the Purchaser Schedule
attached hereto in the case of any Series A Note, (ii) the account or accounts
of such Purchaser specified in the Confirmation of Acceptance with respect to
such Note in the case of any Shelf Note or (iii) such other account or accounts
in the United States as such Purchaser may from time to time designate in
writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. Each Purchaser agrees that, before disposing of
any Note, it will make a notation thereon (or on a schedule attached thereto) of
all principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as the
Purchasers have made in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save Prudential, each
Purchaser and any Transferee harmless against liability for the payment of, all
out-of-pocket expenses arising in connection with such transactions, including
(i) all document production and duplication charges and the fees and expenses of
any special counsel engaged by the Purchasers or any Transferee in connection
with this Agreement (other than with respect to the initial transfer to the
Transferee), the transactions contemplated hereby and any subsequent proposed
modification of, or proposed consent under, this Agreement, whether or not such
proposed modification shall be effected or proposed consent granted, and (ii)
the costs and expenses, including attorneys' fees, incurred by any Purchaser or
any Transferee in enforcing (or determining whether or how to enforce) any
rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the transactions contemplated hereby or by reason of any
Purchaser's or any Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case. The obligations
of the Company under this paragraph 11B shall survive the transfer of any Note
or portion thereof or interest therein by any Purchaser or any Transferee and
the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) of the
Notes of each Series except that, (i) with the written consent of the holders of
all Notes of a particular Series, and if an Event of Default shall have occurred
and be continuing, of the holders of all Notes of all Series, at the time
outstanding (and not without such written consents), the Notes of such Series
may be amended or the provisions thereof waived to change the maturity thereof,
to change or affect the principal thereof, or to
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51
change or affect the rate or time of payment of interest on or any Yield-
Maintenance Amount payable with respect to the Notes of such Series, (ii)
without the written consent of the holder or holders of all Notes at the time
outstanding, no amendment to or waiver of the provisions of this Agreement shall
change or affect the provisions of paragraph 7A or this paragraph 11C insofar as
such provisions relate to proportions of the principal amount of the Notes of
any Series, or the rights of any individual holder of Notes, required with
respect to any declaration of Notes to be due and payable or with respect to any
consent, amendment, waiver or declaration, (iii) with the written consent of
Prudential (and not without the written consent of Prudential) the provisions of
paragraph 2B may be amended or waived (except insofar as any such amendment or
waiver would affect any rights or obligations with respect to the purchase and
sale of Notes which shall have become Accepted Notes prior to such amendment or
waiver), and (iv) with the written consent of all of the Purchasers which shall
have become obligated to purchase Accepted Notes of any Series (and not without
the written consent of all such Purchasers), any of the provisions of paragraphs
2B and 3 may be amended or waived insofar as such amendment or waiver would
affect only rights or obligations with respect to the purchase and sale of the
Accepted Notes of such Series or the terms and provisions of such Accepted
Notes. Each holder of any Note at the time or thereafter outstanding shall be
bound by any consent authorized by this paragraph 11C, whether or not such Note
shall have been marked to indicate such consent, but any Notes issued thereafter
may bear a notation referring to any such consent. No course of dealing between
the Company and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein and in the Notes, the term "this Agreement"
and references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
The Notes are issuable as registered notes without coupons in denominations of
at least $1,000,000, except as may be necessary to reflect any principal amount
not evenly divisible by $1,000,000. The Company shall keep at its principal
office a register in which the Company shall provide for the registration of
Notes and of transfers of Notes. Upon surrender for registration of transfer of
any Note at the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like tenor and of a like
aggregate principal amount, registered in the name of such transferee or
transferees. At the option of the holder of any Note, such Note may be
exchanged for other Notes of like tenor and of any authorized denominations, of
a like aggregate principal amount, upon surrender of the Note to be exchanged at
the principal office of the Company. Whenever any Notes are so surrendered for
exchange, the Company shall, at its expense, execute and deliver the Notes which
the holder making the exchange is entitled to receive. Each
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52
installment of principal payable on each installment date upon each new Note
issued upon any such transfer or exchange shall be in the same proportion to the
unpaid principal amount of such new Note as the installment of principal payable
on such date on the Note surrendered for registration of transfer or exchange
bore to the unpaid principal amount of such Note. No reference need be made in
any such new Note to any installment or installments of principal previously due
and paid upon the Note surrendered for registration of transfer or exchange.
Every Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which were carried by
the Note so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange. Upon receipt of written notice
from the holder of any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or destruction, upon receipt
of such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and interest on, and any Yield-Maintenance
Amount payable with respect to, such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in all or any part of such Note
to any Person on such terms and conditions as may be determined by such holder
in its sole and absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by any Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter.
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53
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
11H. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is
prohibited by any one of such covenants, the fact that it would be permitted by
an exception to, or otherwise be in compliance within the limitations of,
another covenant shall not avoid the occurrence of a Default or Event of Default
if such action is taken or such condition exists.
11I. NOTICES. All written communications provided for hereunder
(other than communications provided for under paragraph 2) shall be sent by
first class mail or nationwide overnight delivery service (with charges prepaid)
and (i) if to any Purchaser, addressed as specified for such communications in
the Purchaser Schedule attached hereto (in the case of the Series A Notes) or
the Purchaser Schedule attached to the applicable Confirmation of Acceptance (in
the case of any Shelf Notes) or at such other address as any such Purchaser
shall have specified to the Company in writing, (ii) if to any other holder of
any Note, addressed to it at such address as it shall have specified in writing
to the Company or, if any such holder shall not have so specified an address,
then addressed to such holder in care of the last holder of such Note which
shall have so specified an address to the Company and (iii) if to the Company,
addressed to it at Gold Kist Inc., 244 Perimeter Center Parkway, Atlanta,
Georgia 30346, Attention: Stephen O. West, Telecopier: 404-393-5421, provided,
however, that any such communication to the Company may also, at the option of
the Person sending such communication, be delivered by any other means either to
the Company at its address specified above or to any Authorized Officer of the
Company. Any communication pursuant to paragraph 2 shall be made by the method
specified for such communication in paragraph 2, and shall be effective to
create any rights or obligations under this Agreement only if, in the case of a
telephone communication, an Authorized Officer of the party conveying the
information and of the party receiving the information are parties to the
telephone call, and in the case of a telecopier communication, the communication
is signed by an Authorized Officer of the party conveying the information,
addressed to the attention of an Authorized Officer of the party receiving the
information, and in fact received at the telecopier terminal the number of which
is listed for the party receiving the communication in the Information Schedule
or at such other telecopier terminal as the party receiving the information
shall have specified in writing to the party sending such information.
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54
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or
the Notes to the contrary notwithstanding, any payment of principal of or
interest on, or Yield-Maintenance Amount payable with respect to, any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day. If the date for any payment is extended to the next succeeding
Business Day by reason of the preceding sentence, the period of such extension
shall not be included in the computation of the interest payable on such
Business Day.
11K. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to any Purchaser, to any holder of Notes or to the
Required Holder(s), the determination of such satisfaction shall be made by such
Purchaser, such holder or the Required Holder(s), as the case may be, in the
sole and exclusive judgment (exercised in good faith) of the Person or Persons
making such determination.
11N. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York. THE COMPANY HEREBY SUBMITS TO THE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
IRREVOCABLY AGREES THAT, SUBJECT TO THE SOLE AND ABSOLUTE ELECTION OF THE
REQUIRED HOLDER(S) AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT OR THE NOTES SHALL BE LITIGATED IN SUCH
COURTS, AND THE COMPANY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH
COURTS.
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55
11O. SEVERALTY OF OBLIGATIONS. The sales of Notes to the Purchasers
are to be several sales, and the obligations of Prudential and the Purchasers
under this Agreement are several obligations. No failure by Prudential or any
Purchaser to perform its obligations under this Agreement shall relieve any
other Purchaser or the Company of any of its obligations hereunder, and neither
Prudential nor any Purchaser shall be responsible for the obligations of, or any
action taken or omitted by, any other such Person hereunder.
11P. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11Q. BINDING AGREEMENT. When this Agreement is executed and delivered
by the Company, Prudential, it shall become a binding agreement between the
Company, and Prudential. This Agreement shall also inure to the benefit of each
Purchaser which shall have executed and delivered a Confirmation of Acceptance,
and each such Purchaser shall be bound by this Agreement to the extent provided
in such Confirmation of Acceptance.
<PAGE>
56
11R. AMENDMENT OF OTHER AGREEMENTS. Effective as of December 28,
1996, each of the Other Prudential Agreements are hereby amended pursuant to
paragraph 11C thereof by substituting for paragraph 6 thereof, paragraph 6 of
this Agreement. Defined terms and references employed in such substituted
provisions shall be given the meaning and effect provided for in this Agreement.
Very truly yours,
GOLD KIST INC.
By:_________________________
Name:
Title:
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:__________________________
Vice President
<PAGE>
EXHIBIT 4(J)(10)
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
PRUCO LIFE INSURANCE COMPANY
c/o Prudential Capital Group
One Gateway Center, 11th Floor
7-45 Raymond Boulevard West
Newark, New Jersey 07102
May 13, 1997
GOLD KIST INC.
224 Perimeter Center Parkway, N.E.
Atlanta, Georgia 30346
Attention: Mr. Steven O. West
Treasurer
Ladies and Gentlemen:
Reference is made to each of the following agreements:
(i) those certain NOTE AGREEMENTS each dated as of November 4, 1988
between GOLD KIST, INC. (the "Company") and THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA ("Prudential"), and the Company and PRUCO LIFE INSURANCE
COMPANY ("PRUCO"), as previously amended (the "1988 Agreement");
(ii) that certain NOTE AGREEMENT dated as of June 3, 1991, between
the Company and Prudential, as previously amended (the "1991 Agreement");
and
(iii) that certain NOTE PURCHASE AND PRIVATE SHELF AGREEMENT dated as
of February 11, 1997, between the Company and Prudential, as previously
amended (the "1997 Agreement"). All of the foregoing agreements being
hereinafter referred to collectively as the "Note Agreements".
Pursuant to paragraph 11C of each of the Note Agreements:
1. Prudential and Pruco, with respect to the 1988 Agreements, and
Prudential, with respect to all of the other Note Agreements, hereby waive any
Events of Default under paragraph 6A(iii) for the fiscal quarter ending March
29, 1997 and through the fiscal quarter ending June 30, 1997; provided that the
ratio of a (a) EBIT plus Consolidated Lease Expense to (b) Consolidated Interest
Expense plus Consolidated Lease Expense shall not be less than 1.45 to 1.0
during such periods; and
2. Prudential, with respect to the 1997 Agreement only, agrees that the
definition of "Designated Spread" in paragraph 10A shall be amended to read in
its entirety as follows:
"Designated Spread" shall mean 0.50% in the case of each Series A
Notes and 0% in the case of each Note of any other Series unless the
Confirmation of Acceptance with
<PAGE>
GOLD KIST INC.
May 13, 1997
Page 2
respect to the Notes of such Series specifies a different Designated Spread
in which case it shall mean, with respect to each Note of such Series, the
Designated Spread so specified."
The waiver contained in paragraph 1 above shall not be deemed to waive any
other provision of the Note Agreements and shall not serve as a consent or
waiver of any other matter prohibited by the terms and conditions of the Note
Agreements. All of the terms and conditions of the Note Agreements shall remain
in full force and effect, except as and to the extent amended above.
If the foregoing accurately sets forth our understanding, please sign each
copy of this letter enclosed and return one to Prudential, whereupon this letter
shall be a binding agreement between Prudential, Pruco and the Company, with
respect to the 1988 Agreements and Prudential and the Company, with respect to
all of the other Note Agreements.
Very truly yours,
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: [SIGNATURE ILLEGIBLE]
--------------------------------
Vice President
PRUCO LIFE INSURANCE
COMPANY
By: [SIGNATURE ILLEGIBLE]
--------------------------------
Vice President
Agreed and accepted
this 13 day of May, 1997
GOLD KIST, INC.
By: /s/ Stephen O. West
---------------------------
Treasurer
<PAGE>
[LETTERHEAD OF ALSTON & BIRD LLP]
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-4777
September 24, 1997
The Board of Directors
of Gold Kist Inc.
Post Office Box 2210
Atlanta, Georgia 30303
Re: Registration Statement on Form S-2 with respect to
Five Classes of Subordinated Capital Certificates of
Interest and Two Classes of Subordinated Loan Certificates
-----------------------------------------------------------
Gentlemen:
This opinion is given to you in connection with the filing by Gold Kist
Inc, ("Gold Kist") with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, of a registration statement on Form S-2 (the
"Registration Statement") with respect to Gold Kist's Fifteen Year Subordinated
Capital Certificates of Interest (Series D) in the principal amount of
$5,000,000, 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 $5,000,000, Three Year
Subordinated Capital Certificates of Interest (Series A) 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 $25,000,000, and One Year Subordinated
Large Denomination Loan Certificates (Series A) in the principal amount of
$25,000,000 (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.
<PAGE>
September 24, 1997
Page 2
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, 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
Application 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
/s/ Alexander W. Patterson
By:__________________________
Alexander W. Patterson
<PAGE>
EXHIBIT 10 (C)(6)
MEMBERSHIP, MARKETING, AND/OR PURCHASING AGREEMENT
OF GOLD KIST INC., ATLANTA, GEORGIA
For the undersigned to be recorded as a member and be eligible for patronage
refunds and other member benefits, this agreement must be accepted and on file
at Gold Kist Inc. headquarters.
<TABLE>
<S> <C>
-------------------------------------
Print
Clearly
- ------------------------------------------------------------------------------------------------------------------------------------
First Name (or Name of Partnership or Corporation) Init. Last Name Social Security No. (or Fed .ID. No.)
----------------------------------------------
Country of Residence
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Farm, if different from above
Location No. Patron No.
----------------------------------------------
_____________________________________________________________________________________
Street or RFD No. FOR ATLANTA OFFICE USE
----------------------------------------------
_____________________________________________________________________________________
City State Zip Code + 4 Member No. St. Code Co. Code
- ------------------------------------------------------------------------------------------------------------------------------------
Status of Member: (Always check one)
[__] Proprietorship
_______________________
Owner's Date of Birth
[__] Partnership (print full names of all partners)
___________________________________________________________ _______________________
First Name Init. Last Name Date of Birth
___________________________________________________________ _______________________
First Name Init. Last Name Date of Birth
___________________________________________________________ _______________________
First Name Init. Last Name Date of Birth
[__] Corporation - (Print Name and Title of person signing membership agreement)
___________________________________________________________________________________________
Name and title of person signing below.
CERTIFICATION: Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to
me),AND
(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (IRS) that I am
subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified me that I
am no longer subject to backup withholding (does not apply to real estate transactions, mortgage interest paid, the acquisition
or abandonment of secured property, contributions to an individual retirement arrangement (IRA), and payments other than
interest and dividends).
Certification instructions. You must cross out item (2) above if you have been notified by IRS that you are currently subject to
backup withholding because of underreporting interest or dividends on your tax return.
The person whose signature appears below acknowledges that the full text of the MEMBERSHIP, MARKETING, AND/OR PURCHASING AGREEMENT
of GOLD KIST INC., ATLANTA, GEORGIA, appears on the reverse side of this agreement and is incorporated herein. By initialing here
________, I also certify that I am engaged in the production of farm commodities and am eligible for membership in Gold Kist.
Given under the hand and seal of the parties this ______ day of ___________________, 19 _______
____________________________________________ __________________________ ______________________________________
By: Corporate Secretary Location Member's ("Producer's") Signature
Revised 7/9/96 G-1
____________________________________________________________________________________________________________________________________
ACKNOWLEDGEMENT
Receipt of Gold Kist Membership Information Packet dated October 25, 1996, is acknowledged and the information above is confirmed
correct.
_______________________________________________________________________ ________________________________
Applicant's Signature Date
Delivered by: ___________________________________________________________ ________________________________
Gold Kist Employee's Signature Date
___________________________________________________________
Gold Kist Employee's Name (Please Print)
</TABLE>
<PAGE>
MEMBERSHIP, MARKETING, AND/OR PURCHASING AGREEMENT
OF GOLD KIST INC., ATLANTA, GEORGIA
Gold Kist Inc., hereinafter called "Gold Kist," and the undersigned, hereinafter
called "Producer," agree as follows:
1. By signing this agreement, the Producer represents that Producer is engaged
in the production of agricultural products within the meaning of the cooperative
Marketing Act of the State of Georgia. Unless already a member of Gold Kist,
Producer applies for membership in Gold Kist and agrees and consents to abide by
the By-Laws of Gold Kist, with particular reference to, but not limited to, the
following:
ARTICLE XVII, Section 3, Tax Consent. Each Patron, by virtue of Producer's
membership in Gold Kist, consents to take into account in the manner provided in
Section 1385(a) of the Internal Revenue Code of 1954, as amended from time to
time, or any successor provision thereto (and hence generally to include in
Producer's gross income) for the taxable year in which received by Producer the
stated dollar amount of any Patronage Dividend certificate or written notice
of allocated reserves or per-unit retain certificate issued to Producer pursuant
to Section 2(b) of this Article XVII. The consent hereby given shall survive
termination of the Patron's membership.
The Producer does hereby direct that any unclaimed funds to which Producer
is entitled be transferred to the Gold Kist Foundation, Inc., as provided in the
Gold Kist By-Laws in Section 8 of Article XII.
2. This Agreement shall automatically terminate immediately upon the Producer
ceasing to be engaged in the production of agricultural products within the
meaning of the Cooperative Marketing Act of the state of Georgia. Otherwise, it
shall continue in full force and effect until terminated as provided in the
By-Laws of Gold Kist or in the next sentence.
Either party may terminate its Agreement by giving the other party written
notice by certified mail.
3. Gold Kist may enter into agreement with other Producers differing in terms
from those contained herein but consistent with the Articles of Incorporation
and By-Laws of Gold Kist without invalidating this Agreement provided that the
Producer at Producer's request may sign a similar agreement as a substitute for
this Agreement.
4. Gold Kist is authorized to exercise any powers conferred upon it hereunder
through any central agency, corporation, cooperative or subsidiary of which it
is or may become a member or shareholder, or which is a member of Gold Kist.
5. This Agreement is subject to and includes all of the applicable provisions
contained in Gold Kist's Articles of Incorporation and By-Laws now or hereafter
in effect. The parties agree that there are no oral or other conditions,
promises, representations or inducements in addition to or at variance with any
of the terms hereof; and that this Agreement represents the voluntary and clear
understanding of both parties fully and completely.
6. The Producer requests that Gold Kist enter Producer's subscription for the
Gold Kist member publication for which Producer agrees to pay upon the receipt
of bill, the current subscription rate as determined from time to time by Gold
Kist, or Gold Kist may deduct such amount from any patronage payment or refund
due Producer each year.
7. In the event that Producer fails to deliver products to Gold Kist for
marketing or to purchase farm production supplies or services through Gold Kist
during three consecutive fiscal years of Gold Kist, Producer shall cease to be a
member of Gold Kist as provided in the By-Laws of Gold Kist and, provided that
allocated reserves are shown on Gold Kist's books in the name of Producer,
Producer shall be placed on the list of Former Member Equity Holders.
8. Out of net earnings of Gold Kist form business done with or for its
patrons, Gold Kist will distribute to Producer, on a patronage basis, patronage
dividends, at the times and in the amounts determined and in the form and manner
as provided in the By-Laws of Gold Kist now or hereafter in force. The Gold Kist
Board of Directors has complete discretion on the method and timing of payment,
and any early payments of allocated reserves, if any, may be at a substantial
discount.
9. Gold Kist and Producer will submit to binding arbitration all disputes
between the parties, whether governed by federal, state, or international
contract law, tort law, statute, or treaty, and irrespective of the form of
relief sought, relating to or arising out of matters of a type declared by Gold
Kist's Board of Directors before the dispute arises to be of a type covered by
Gold Kist's arbitration policy. This obligation to arbitrate shall survive
any termination of membership with respect to matters arising or relating to
events or actions before such termination. All such arbitrations shall be
according to rules and procedures adopted from time to time by Gold Kist's Board
of Directors.
In no event will punitive or exemplary damages be claimed by or awarded to
either party, in arbitration or otherwise.
MARKETING/PURCHASING CONDITIONS
10. Gold Kist and Producer may from time to time agree that Gold Kist will buy
from Producer agricultural products of a type marketed by Gold Kist, and in
such event Gold Kist agrees to buy and to market such products in a manner
deemed by it to be most advantageous, including refining or producing other
products form such agricultural products.
11. This Agreement is intended by the parties to vest in Gold Kist the
ownership of such agricultural products and for such agricultural products to
become part of Gold Kist's inventory.
12. Gold Kist is authorized to establish or adopt standards for all products
delivered hereunder and may make rules and regulations governing the marketing,
hedging, handling, shipping, grading, financing, pooling and selling thereof.
Gold Kist shall have the right to allocate to its various patronage activities
the expense of any and all its activities in any reasonable manner as determined
by Gold Kist in its conclusive discretion.
13. Gold Kist agrees to purchase or manufacture and offer and sell to the
Producer, under Gold Kist's own rules and regulations, such machinery,
equipment, fertilizer, feeds, seeds and other supplies as the Producer from time
to time may require, provided the same are such as may be advantageous to handle
by Gold Kist in the interest of the Producer.
<PAGE>
EXHIBIT 10(H)(2)
FIRST AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "First Amendment") is entered
---------------
into as of this 12th day of May, 1997 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 to the Credit Agreement referred to
below (collectively, the "Lenders", and, individually, a "Lender"), and SUNTRUST
------- ------
BANK, ATLANTA, a Georgia banking corporation ("SunTrust", as agent for the
--------
Lenders (SunTrust, in such capacity, hereinafter referred to as the "Agent").
-----
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower, the Agent and the Lenders have entered into that
certain Credit Agreement, dated as of August 9, 1996 (as amended, restated or
otherwise modified to the date hereof, the "Credit Agreement"; capitalized terms
----------------
which are defined in the Credit Agreement and not otherwise defined shall be
used herein with the meanings ascribed to such terms in the Credit Agreement);
and
WHEREAS, the Borrower, the Agent and the Lenders desire to amend the Credit
Agreement in the manner set forth below to allow the Borrower to purchase the
outstanding equity interests of Golden Poultry, Inc. not now owned by it, and to
change the definition of Restricted Subsidiaries;
NOW, THEREFORE, for and in consideration of the mutual premises, covenants
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1.
Section 7.2, Section 7.3, Section 7.4(1) and Section 7.6 of the Credit
Agreement are hereby amended by deleting those subsections in their entirety and
inserting in lieu thereof the following text:
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:
* * *
<PAGE>
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 (other than as permitted in Section 7.4(1), 7.4(q), and Section
3.21 herein) 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:
(c) statutory Liens or 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;
-2-
<PAGE>
(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);
(e) Liens securing purchase money debt, provided the aggregate of such
debt so secured does not exceed fifteen percent (15%) of Consolidated Net
Worth; and
(f) Liens encumbering securities of Archer-Daniel-Midland Company, a
Delaware Corporation, owned by Borrower.
* * *
Section 7.4 Restrictions on Loans, Advances, Investments and Contingent
-----------------------------------------------------------
Liabilities. The Borrower shall not 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:
* * *
(l) purchase and hold all the outstanding capital stock of Golden Poultry,
it being agreed that the purchase price of the capital stock of Golden Poultry
not owned by Borrower as of the date hereof will not exceed $56,000,000.00."
* * *
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 the consolidate
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:
-3-
<PAGE>
(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;
(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;
(d) any Subsidiary may merge with Golden Poultry; and
(e) Borrower may sell securities of Archer-Daniel-Midland
Company, a Delaware corporation, owned by it.
2.
Section 5.6 is hereby superseded by deleting the existing Section 5.6 in
its entirety and inserting in lieu thereof the following text:
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 C.F.R. 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. Except as
disclosed on Schedule 5.6 attached hereto, none of such proceeds will be
------------
used, directly or indirectly, for the purpose of purchasing or carrying any
margin stock or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin stock or for
any other purpose which might constitute this transaction a "purpose
credit" within the meaning of such Regulation U. Neither the Borrower nor
any agent acting on its behalf has taken or will take any action which
might cause this Agreement or any of the Notes to violate Regulations G, T,
U, or X or (to the best knowledge of the Borrower) any other regulation of
the Board of Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, as amended, in each case as in effect now
or as the same may hereafter be in effect.
3.
There shall be added a Schedule 5.6 to the Credit Agreement in the form of
Schedule 5.6 to this First Amendment quoted below.
-4-
<PAGE>
SCHEDULE 5.6
------------
Borrower contemplates having a wholly-owned subsidiary corporation of
Borrower acquire by merger Golden Poultry. Initially it is contemplated
that a wholly-owned subsidiary corporation of Borrower will merge with
Golden Poultry and Golden Poultry will be the surviving corporation, with
Borrower or a wholly-owned subsidiary of Borrower as its only shareholder.
4.
Section 3.21 is hereby superseded by deleting the existing Section
3.21 in its entirety and inserting in lieu thereof the following text:
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 (iii) to acquire the portion of
equity interests of Golden Poultry not now owned by Borrower, and (iv)
other general corporate purposes.
5.
The Credit Agreement, as amended by the First Amendment, shall remain in
full force and effect in accordance with the terms thereof in effect prior to
this First Amendment to the extent not inconsistent with this First Amendment.
The Credit Agreement, as amended by the First Amendment, is hereby reaffirmed
and restated on the date hereof; furthermore, nothing contained herein shall be
construed as a waiver or modification of existing rights or obligations under
the Credit Agreement. From and after the date hereof, references to the Credit
Agreement shall be deemed to be references to the Credit Agreement as amended to
the date hereof by the First Amendment.
6.
Borrower represents and warrants that all of the representations and
warranties set forth in Article 5 of the Credit Agreement are true and correct
on the date hereof, no "Default" or "Event of Default" has occurred and is
continuing as of the date hereof, and no "Default" or "Event of Default" will
occur arising from the acquisition of the equity interests of Golden Poultry.
7.
This First Amendment shall be binding on, and shall inure to the benefit
of, the parties hereto and their respective successors and assigns. This First
Amendment shall be effective as of the date when the Agent, on behalf of the
Lenders, shall have received, in form and substance satisfactory to it,
counterparts of this First Amendment executed by the Borrower and the "Required
Lenders."
-5-
<PAGE>
8.
This First Amendment shall be governed by, and construed in accordance
with, the laws of the State of Georgia.
9.
This First Amendment constitutes the entire understanding of the parties
with respect to the subject matter hereof, and any other prior or
contemporaneous agreements, whether written or oral, with respect thereto are
expressly superseded hereby.
10.
Borrower agrees to reimburse the Agent for its reasonable costs and
expenses, including reasonable attorneys' fees, incurred in connection with this
First Amendment.
11.
This First Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed and delivered by their duly authorized officers as of the day and
year first above written.
GOLD KIST INC.
By:/s/ Stephen O. West
---------------------------
Name: Stephen O. West
Title: Treasurer
Attest:/s/ J. DAVID DYSON
-----------------------
Name: J. DAVID DYSON
Title: ASST. SECRETARY
[CORPORATE SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURE PAGE TO FIRST AMENDMENT]
-7-
<PAGE>
EXHIBIT 109(H)(3)
SECOND AMENDMENT TO CREDIT AGREEMENT
------------------------------------
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second Amendment") is
----------------
entered into as of this 27th day of June, 1997 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 to the Credit Agreement
referred to below (collectively, the "Lenders", and, individually, a "Lender"),
------- ------
and SUNTRUST BANK, ATLANTA, a Georgia banking corporation ("SunTrust", as agent
--------
for the Lenders (SunTrust, in such capacity, hereinafter referred to as the
"Agent").
-----
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower, the Agent and the Lenders have entered into that
certain Credit Agreement, dated as of August 9, 1996 (as amended, restated or
otherwise modified to the date hereof, the "Credit Agreement"; capitalized terms
----------------
which are defined in the Credit Agreement and not otherwise defined shall be
used herein with the meanings ascribed to such terms in the Credit Agreement);
and
WHEREAS, the Borrower, the Agent and the Lenders desire to amend the Credit
Agreement in the manner set forth below to extend the maturity dates and to make
other changes to the covenants described within;
NOW, THEREFORE, for and in consideration of the mutual premises, covenants
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1.
The last sentence of Section 7.1 shall be superseded with the following
sentence:
"Effective with fiscal year ended June 28, 1997, the use of the term
"Consolidated" in Article 7 shall mean, in connection with the calculation of
financial covenants, the Borrower, the Restricted Subsidiaries, and Golden
Poultry, on a consolidated basis, and, without limiting the foregoing, in the
event that the Borrower acquires or otherwise obtains the remaining outstanding
common stock of Golden Poultry not now owned by it, the financial covenants set
forth in Article 7 will be calculated beginning on the last day of the first
fiscal quarter following such purchase, on a consolidated basis in accordance
with GAAP."
2.
The definition of "Consolidated Earnings Available for Restricted Payments"
shall be superseded on June 28, 1997 by the following:
<PAGE>
"'Consolidated Net Earnings Available for Restricted Payments'
-----------------------------------------------------------
shall mean (i) prior to June 29, 1997, 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, and (ii) on June 29, 1997 and thereafter, an amount equal to
the sum of ($15,000,000) plus (b) 50% of Consolidated Net Earnings
----
(less 100% of cumulative net losses) for the period (taken as one
accounting period) commencing on June 29, 1997 and terminating at the
end of the last fiscal quarter preceding the date of any proposed
Restricted Payment."
3.
The definition of "364-Day Maturity Date" shall be superseded with the
following:
"364-Day Maturity Date" shall mean August 5, 1998, which is the
---------------------
date which is four (4) days prior to the second anniversary of the
Closing Date or such later date as provided for in Section 3.4(b) of
this Agreement.
4.
Section 7.4 of the Credit Agreement is hereby amended by adding a new
subsection 7.4(t) (with other portions of Article 7 reproduced herein for
clarity):
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 7.4. Restrictions on Loans, Advances, Investments and
------------------------------------------------
Contingent Liabilities. The Borrower shall not 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;
***
-2-
<PAGE>
(t) Make additional investments in CF Industries, Inc., a Delaware
corporation, Highland-Exchange Service Cooperative, a Florida corporation,
CoBank, Universal Cooperative, Inc., a Minnesota corporation, or other
cooperatives or companies as a result of the receipt of non-cash
allocations of patronage earnings or equity in earnings.
5.
The Credit Agreement, as amended, and as amended by this Second Amendment,
shall remain in full force and effect in accordance with the terms thereof in
effect prior to this Second Amendment to the extent not inconsistent with this
Second Amendment. The Credit Agreement, as amended by this Second Amendment, is
hereby reaffirmed and restated on the date hereof. Furthermore, nothing
contained herein shall be construed as a waiver or modification of existing
rights or obligations under the Credit Agreement, except as set forth herein.
From and after the date hereof, references to the Credit Agreement shall be
deemed to be references to the Credit Agreement as amended to the date hereof
by this Second Amendment.
6.
Borrower represents that all of the representations and warranties set
forth in Article 5 of the Credit Agreement are true and correct on the date
hereof and that no "Default" or "Event of Default" has occurred and is
continuing as of the date hereof.
7.
This Second Amendment shall be binding on, and shall inure to the benefit
of, the parties hereto and their respective successors and assigns. This Second
Amendment shall be effective as provided in Paragraph 12 hereof when the Agent,
on behalf of the Lenders, shall have received, in form and substance
satisfactory to it, counterparts of this Second Amendment executed by the
Borrower and the Lenders.
8.
This Second Amendment shall be governed by, and construed in accordance
with, the laws of the State of Georgia.
9.
This Second Amendment constitutes the entire understanding of the parties
with respect to the subject matter hereof, and any other prior or
contemporaneous agreements, whether written or oral, with respect thereto are
expressly superseded hereby.
-3-
<PAGE>
10.
Borrower agrees to reimburse the Agent for its reasonable costs and
expenses, including reasonable attorneys' fees, incurred in connection with this
Second Amendment.
11.
This Second Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
12.
The effective date of this Second Amendment shall be the opening of
business on June 28, 1997, provided that the extension of the 364-Day Maturity
Date shall not be effective until the expiration of the 364-Day Line of Credit
Commitment on August 7, 1997.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be executed and delivered by their duly authorized officers as of the day and
year first above written.
GOLD KIST INC.
By:________________________________
Name:
Title:
Attest:____________________________
Name:
Title:
[CORPORATE SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURE PAGE TO SECOND AMENDMENT]
-4-
<PAGE>
EXHIBIT 12
GOLD KIST INC.
RATIO OF NET MARGINS TO FIXED CHARGES
FOR THE FIVE YEARS ENDED JUNE 28, 1997
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fixed Charges:
Debt interest 17,163 13,924 17,525 21,065 26,951
Interest portion of rents 5,189 5,390 9,325 6,224 10,467
Interest decrease (see below) -- -- -- -- --
------- ------- ------- ------- -------
Total 22,352 19,314 26,850 27,289 37,418
======= ======= ======= ======= =======
Margins (loss) before income taxes,
minority interest, and cumulative
effect of change in accounting
principle 43,692 50,074 25,586 62,119 10,287
Deduct: Equity in Gain (Loss) of less than
50% owned affiliates 5,593 (453) (21) 1,621 4,855
Add: Earnings distributed by less than
50% owned partnership 11,404 1,770 653 697 -
Deduct: Interest decrease (see below) -- -- -- -- --
------- ------- ------- ------- -------
$49,503 $52,297 $26,260 $61,195 $5,432
Fixed charges 22,352 19,314 26,850 27,289 37,418
------- ------- ------- ------- -------
Subtotal 71,855 71,611 53,110 88,484 42,850
Divided by fixed charges 22,352 19,314 26,850 27,289 37,418
------- ------- ------- ------- -------
Ratio 3.21 3.71 1.98 3.24 1.15
======= ======= ======= ======= =======
</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.
ALSTON & BIRD
<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 a change in accounting for certain investments in debt and equity
securities.
KPMG Peat Marwick LLP
Atlanta, Georgia
September 24, 1997
<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
August 29, 1997, except for Note 11 as to which the date is September 5, 1997,
with respect to the consolidated financial statements of Golden Peanut Company
and Subsidiaries (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 24, 1997
<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 22, 1997
<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of a Trustee Pursuant to
Section 305(b)(2) [_]
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)
Philip DeMouey
SunTrust Bank, Atlanta
58 Edgewood Ave.
Room 400
Atlanta, Georgia 30303
(404) 588-7583
(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.
<TABLE>
<CAPTION>
Exhibit
Number
- ------
<S> <C> <C>
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.
</TABLE>
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 24th day of September, 1997.
SUNTRUST BANK, ATLANTA
By: /s/ David Kaye
-----------------------------
David Kaye
Group Vice President
By: /s/ Philip DeMouey
-----------------------------
Philip DeMouey
Assistant Vice President
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issue of Debt Securities by
Gold Kist Inc., we hereby consent that reports of examination by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.
SUNTRUST BANK, ATLANTA
By: /s/ David Kaye
----------------------------
David Kaye
Group Vice President
By: /s/ Philip DeMouey
----------------------------
Philip DeMouey
Assistant Vice President
Dated: September 24, 1997
<PAGE>
SUNTRUST BANK ATLANTA
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 06/30/97 State #: 130330 FFIEC 031
Vendor ID: 0 Cert #: 00867 RC-1
Transit #: 61000104
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1997
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>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
a. Noninterest-bearing balances and currency and coin (1)_____________________________________ 0081 1,107,326 1.a
b. Interest-bearing balances (2)______________________________________________________________ 0071 4,501 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 3,075,005 2.b
3. Federal funds sold and securities purchased under agreements to resell________________________ 1350 2,074,409 3
4. Loans and lease financing receivables: RCFD
----
a. Loans and leases, net of unearned income (from Schedule RC-C)___________ 2122 10,146,000 4.a
b. LESS: Allowance for loan and lease losses_______________________________ 3123 131,278 4.b
c. LESS: Allocated transfer risk reserve___________________________________ 3128 0 4.c
d. Loans and leases, net of unearned income, RCFD
allowance, and reserve (item 4.a minus 4.b and 4.c)_______________________________________ 2125 10,014,722 4.d
5. Trading assets (from Schedule RC-D)___________________________________________________________ 3545 21,092 5.
6. Premises and fixed assets (including capitalized leases)______________________________________ 2145 96,777 6.
7. Other real estate owned (from Schedule RC-M)__________________________________________________ 2150 1,831 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 449,863 9.
10. Intangible assets (from Schedule RC-M)________________________________________________________ 2143 18,090 10.
11. Other assets (from Schedule RC-F)_____________________________________________________________ 2160 171,594 11.
12. Total assets (sum of items 1 through 11)______________________________________________________ 2170 17,047,874 12.
</TABLE>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
SUNTRUST BANK ATLANTA Call Date: 06/30/97 State #: 130330 FFIEC 031
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 00867 RC-2
ATLANTA, GEORGIA 30302 Transit #: 61000104
12
Schedule RC - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES
13. Deposits. RCON
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, RCON ----
part I)_________________________________________________________________________ ____ 2200 7,050,141 13.a
(1) Noninterest-bearing (1)_____________________________________________________ 6631 2,919,686 13.a.1
(2) Interest-bearing____________________________________________________________ 6636 4,130,455 13.a.2
RCFN
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RCFN ----
RC-E, part II)__________________________________________________________________ ____ __________ 2200 1,558,328 13.b
(1) Noninterest-bearing_________________________________________________________ 6631 0 13.b1
(2) Interest-bearing____________________________________________________________ 6636 1,558,328 RCFD 13.b2
----
14. Federal funds purchased and securities sold under agreements to repurchase___________________________ 2800 3,666,404 14
RCON
----
15. a. Demand notes issued to the U.S. Treasury__________________________________________________________ 2840 0 15.a
RCFD
----
b. Trading liabilities (from Schedule RD-D)__________________________________________________________ 3548 1,685 15.b
16. Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
a. With a remaining maturity of one year or less_____________________________________________________ 2332 748,160 16.a
b. With a remaining maturity of more than one year through three years_______________________________ A547 0 16.b
c. With a remaining maturity of more then three years________________________________________________ A548 2,502 16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding_____________________________________________ 2920 449,863 18
19. Subordinated notes and debentures(2)_________________________________________________________________ 3200 250,000 19
20. Other liabilities (from Schedule RC-G)_______________________________________________________________ 2930 1,084,678 20
21. Total liabilities (sum of items 13 through 20)_______________________________________________________ 2948 14,811,761 21
22. Not applicable
EQUITY CAPITAL
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 553,406 25
26. a. Undivided profits and capital reserves____________________________________________________________ 3632 605,599 26.a
b. Net realized holding gains (losses) on available-for-sale securities______________________________ 8434 1,055,507 26.b
27. Cumulative foreign currency translation adjustments__________________________________________________ 3284 0 27
28. Total equity capital (sum of items 23 through 27)____________________________________________________ 3210 2,236,113 28
29. Total liabilities and equity capital (sum of items 21 and 28)________________________________________ 3300 17,047,874 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the RCFD Number
most comprehensive level of auditing work performed for the bank by independent external ----
auditors as of any date during 1996__________________________________________________________________ 6724 N/A M.1
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-END> JUN-28-1997
<CASH> 17,921
<SECURITIES> 0
<RECEIVABLES> 259,194
<ALLOWANCES> 8,835
<INVENTORY> 295,977
<CURRENT-ASSETS> 80,262
<PP&E> 697,985
<DEPRECIATION> 377,811
<TOTAL-ASSETS> 1,119,836
<CURRENT-LIABILITIES> 435,250
<BONDS> 256,039
0
0
<COMMON> 32
<OTHER-SE> 346,043
<TOTAL-LIABILITY-AND-EQUITY> 1,119,836
<SALES> 2,289,044
<TOTAL-REVENUES> 2,310,480
<CGS> 2,105,577
<TOTAL-COSTS> 2,105,577
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,377
<INTEREST-EXPENSE> 26,951
<INCOME-PRETAX> 10,287
<INCOME-TAX> (3,446)
<INCOME-CONTINUING> 11,890
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,890
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
