UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required]
For the fiscal year ended May 1, 1994
Commission file number 0-2258
SMITHFIELD FOODS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 52-0845861
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 North Church Street, Smithfield, VA 23430
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code...........(804) 357-4321
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.50 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
The aggregate market value of the shares of Registrant's Common Stock held by
non-affiliates as of July 15, 1994 was approximately $288,873,000. This
figure was calculated by multiply- ing (i) the $29.00 last sales price of
Registrant's Common Stock as reported on The Nasdaq National Market on July
15, 1994 by (ii) the number of shares of Registrant's Common Stock not held
by any officer or director of the Registrant or any person known to the
Registrant to own more than five percent of the outstanding Common Stock of
the Registrant. Such calculation does not constitute an admission or
determination that any such officer, director or holder of more than five
percent of the outstanding shares of Common Stock of the Registrant is in
fact an affiliate of the Registrant.
At July 15, 1994, 16,284,026 shares of the Registrant's Common stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Annual Report to Stockholders for Fiscal Year
Ended May 1, 1994 are incorporated by reference into Part II.
Portions of the Proxy Statement for the Annual Meeting of
Stockholders to be held on August 31, 1994 are incorporated by
reference into Part III.
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<PAGE>
TABLE OF CONTENTS
Item Page
1. Business..................................................... 3
2. Properties................................................... 8
3. Legal Proceedings............................................ 9
4. Submission of Matters to a Vote of Security Holders.......... 9
4A. Executive Officers of the Company............................ 10
PART II
5. Market for Company's Common Equity and Related Stockholder Matters 10
6. Selected Financial Data...................................... 11
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................... 11
8. Financial Statements and Supplementary Data.................. 11
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 11
PART III
10. Directors and Executive Officers of the Company............... 11
11. Executive Compensation........................................ 11
12. Security Ownership of Certain Beneficial Owners and Management 11
13. Certain Relationships and Related Transactions................ 11
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 12
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<PAGE>
PART I
Item 1. BUSINESS
General
As a holding company, Smithfield Foods, Inc. conducts its pork
processing operations through three principal subsidiaries: Gwaltney of
Smithfield, Ltd. ("Gwaltney") and The Smithfield Packing Company,
Incorporated ("Smithfield Packing"), both based in Smithfield, Virginia, and
Patrick Cudahy Incorporated ("Patrick Cudahy"), based in Cudahy, Wisconsin.
The Company, in furthering its strategy of vertical integration, also
conducts hog production operations through its Brown's of Carolina, Inc.
subsidiary ("Brown's") and Smithfield-Carroll's, a joint hog production
arrangement between the Company and Carroll's Foods of Virginia, Inc., an
affiliate of Carroll's Foods, Inc., Warsaw, North Carolina. Both Brown's and
Smithfield-Carroll's produce hogs for the Company's pork processing plants in
Smithfield, Virginia and Bladen County, North Carolina. The Company is also
a participant in the Circle Four joint hog production arrangement with
Carroll's Foods, Inc., Murphy Farms, Inc. and Prestage Farms, Inc., all large
North Carolina hog producers, which conducts hog production operations in
Milford, Utah. The Company, through its Ed Kelly, Inc. subsidiary ("Kelly"),
operates a retail consumer electronics chain based in Winston-Salem, North
Carolina. The operations of Kelly are not significant to the Company's
business. In this report, references to "Smithfield Foods" or the "Company"
are to Smithfield Foods, Inc. together with all of its subsidiaries, unless
the context otherwise indicates.
The Company is the largest pork processor in the eastern United
States. The Company produces a wide variety of fresh pork and processed meat
products which it markets principally in the eastern United States. The
Company has also expanded to national distribution and to international sales
in Japan and Mexico.
As consumers have become more health conscious, pork producers and
processors, including the Company, have focused on providing leaner, fresh
pork products as well as lower-salt processed meats. Management believes
that pork products which are more attractive to diet-conscious Americans,
together with the industry's "Pork--The Other White Meat" campaign and other
efforts to heighten public awareness of pork as an attractive protein source,
have led to increased consumer demand for pork products. The Company,
through its NPD pig program, is developing a line of extra-lean pork products
to meet consumer demand for leaner pork.
Business Strategy
Since 1975, when current management assumed control, Smithfield
Foods has expanded both its production capacity and markets through a
combination of strong internal growth and the acquisition of regional
operations with well-recognized brand identities. In fiscal 1982, the
Company acquired Gwaltney, then Smithfield Packing's principal regional
competitor. This acquisition doubled the Company's size and added several
popular lines of branded products along with a state-of-the-art hot dog
production facility. The proximity of Gwaltney to Smithfield Packing allowed
for synergies and cost savings in manufacturing, purchasing and
transportation.
This combination set the stage for a series of acquisitions of
smaller regional processors with widely-recognized brands. In fiscal 1985,
the Company acquired Patrick Cudahy, which added a prominent line of dry
sausage products. In fiscal 1986, the Company acquired Esskay, Inc., a firm
with a broad line of delicatessen products having substantial brand loyalty
in the Baltimore-Washington, D.C. metropolitan area. In fiscal 1991, the
Company acquired the Mash's brand name and a ham processing plant in
Landover, Maryland. In fiscal 1993, the Company acquired the Valleydale and
Reelfoot brand names and a processing plant in Salem, Virginia.
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<PAGE>
The Company's business is based around four strategic initiatives:
(i) use of the leanest genetics available to enable the Company to market
highly differentiated pork products, (ii) vertical integration into state-of-
the-art hog production through company-owned hog production operations and
long-term partnerships and alliances with large and efficient hog producers,
(iii) operation of highly efficient processing facilities, and (iv)
plant locations that reduce freight expense and permit rapid delivery and
response to customers.
As a complement to the Company's hog processing operations, the
Company has vertically integrated into state-of-the-art hog production
through Brown's and Smithfield-Carroll's. In addition, the Company is
supplementing the hogs it obtains from these hog production operations with
market-indexed, multi-year agreements with several of the nation's largest
suppliers of high quality hogs strategically located in North Carolina,
including Carroll's Foods, Inc., Murphy Farms, Inc. and Prestage Farms, Inc.
In May 1991, Smithfield-Carroll's, through Smithfield-Carroll's
Farms (a partnership between the Company and an affiliate of Carroll's Foods,
Inc.), acquired from National Pig Development Company ("NPD"), a British
firm, the exclusive United States franchise rights for genetic lines of
specialized breeding stock. The NPD hogs produced by these superior genetic
lines are substantially leaner than any other breeding stock available in
commercial volume in the United States. Management expects that the leanness
and increased meat yields of these hogs will over time improve the Company's
profitability with respect to both fresh pork and processed meat products and
provide a sustainable competitive advantage over other domestic pork
processors. Smithfield-Carroll's has imported a nucleus herd of 2,000
animals which forms the top of a genetic pyramid capable of sustaining more
than 300,000 commercial sows and is in the process of replacing its breeding
stock with these superior genetic animals over the next several years.
Brown's is also in the process of infusing this breed into its herds. The
Company is conducting marketing and nutritional studies to determine how best
to maximize the benefits from the lean pork from these animals and plans a
limited rollout of NPD pork products to foodservice distributors and
restaurant chain accounts in fiscal 1995.
During the past four years, the Company has improved its
competitive position through an aggressive capital investment program
designed to increase production and reduce costs at its Mid-Atlantic
locations. As part of this program, the Company, in October 1992, began
operations at its new, state-of-the-art fresh pork processing plant in Bladen
County, North Carolina. The Company's principal competitors are located in
the Midwest. The Company's Mid-Atlantic and Southeastern locations provide
advantages to the Company over these competitors because of the Company's
lower freight costs to East Coast customers and longer effective shelf-life
for fresh pork products. Management believes that the benefits from its
capital investment program and its new Bladen County plant, together with
these transportation advantages, make the Company highly competitive in the
Eastern United States, particularly in the corridor from Florida to Maine.
The Company's operations are in one industry segment, meat
processing. The following table shows for the fiscal periods indicated the
percentages of the Company's revenues derived from processed meats, fresh
pork and other products.
1994 1993 1992 1991 1990
Processed Meats 49% 55% 57% 53% 53%
Fresh Pork 48% 41% 39% 44% 44%
Other Products 3% 4% 4% 3% 3%
100% 100% 100% 100% 100%
The increase in revenues derived from fresh pork in fiscal 1994 is
attributable to sales of fresh pork products produced at the Bladen County
plant. The meat processing industry is generally characterized by narrow
margins. Profit margins on processed meats are greater than profit margins
on fresh pork and on other products.
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<PAGE>
Processed Meat Products
The Company manufactures a wide variety of processed meats,
including smoked and boiled hams, bacon, sausage, hot dogs (pork, beef and
chicken), deli and luncheon meats and specialty products such as pepperoni
and dry salami. The Company markets its processed meat products under labels
that include, among others, Smithfield, Luter's, Hamilton's, Great, Gwaltney,
Esskay, Patrick Cudahy, Mash's and Valleydale.
In response to growing consumer preferences for more nutritious and
healthful meats, the Company has emphasized production of more closely-
trimmed, leaner and lower salt processed meats such as Smithfield Packing's
Hamilton's Easy-Karv Ham and Patrick Cudahy's 97% fat-free Realean Ham.
Fresh Pork Products
The Company increased its commitment to fresh pork with the opening
of its Bladen County plant. The plant, which is operated by Smithfield
Packing's Carolina Food Processors Division, led to an increase in fresh pork
output, both in absolute terms and relative to the Company's processed meats
output, in fiscal 1994. The plant, which is currently processing as many as
16,000 hogs per day on a one-shift basis, plans to process as many as 24,000
hogs per day on a two-shift basis beginning in the fourth quarter of fiscal
1995. This will lead to an additional increase in fresh pork output in
fiscal 1995. A substantial portion of the Company's fresh pork is sold to
its customers as unprocessed, trimmed cuts such as loins (including roasts
and chops), butts, picnics and ribs. The Company is putting greater emphasis
on the sale of value-added, higher-margin fresh pork products, such as
boneless loins, hams, butts and picnics. In addition to meeting a growing
consumer demand for its fresh pork, the Company's commitment to fresh pork
also provides its processing operations with raw material of much higher
quality than that generally available through market purchases.
Smithfield Packing has developed a case-ready pork program designed
to supply supermarket chains with pre-packaged, weighed, labeled and priced
fresh pork, ready for immediate sale to the consumer. Management believes
that this initiative over time should result in greater brand identification
and higher margins for the Company's fresh pork products.
Raw Materials
The Company's primary raw material is live hogs. Historically, hog
prices have been subject to substantial fluctuations. In addition, hog
prices tend to rise as hog supplies decrease during the hot summer months and
tend to decline as supplies increase during the fall. This is due to lower
farrowing performance during the winter months and slower animal growth rates
during the hot summer months. Hog supplies, and consequently prices, are
also affected by factors such as feed prices, weather and interest rates.
The Company produces its own hogs through Brown's and Smithfield-
Carroll's and purchases hogs from several of the nation's largest hog
producers strategically located in North Carolina, which include Carroll's
Foods, Inc., Murphy Farms, Inc. and Prestage Farms, Inc., as well as from
other independent hog producers and dealers located in the East, Southeast
and Midwest. In fiscal 1994, the Company obtained 11.4% of the live hogs it
processed from Brown's and Smithfield-Carroll's. The Company's raw material
cost fall when hog production at Brown's and Smithfield-Carroll's is
profitable and conversely rise when such production is unprofitable.
Management believes that hog production at Brown's and Smithfield-Carroll's
will further the Company's strategic initiative to become vertically
integrated and may reduce exposure to the fluctuations in profitability
historically experienced by the pork processing industry. The Company has
established multi-year agreements with Carroll's Foods, Murphy Farms and
Prestage Farms which provide the Company with a stable supply of high-quality
hogs at market-indexed prices. These producers supplied 50.9% of the hogs
processed by the Company in fiscal 1994.
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<PAGE>
As a result of the hogs obtained from Brown's and Smithfield-
Carroll's and from these major North Carolina producers, the percentage of
hogs obtained by the Company from Midwestern sources has declined from 34% in
fiscal 1987 to 5% in fiscal 1994. Midwestern hogs have historically been the
Company's higher-cost hogs due to such factors as higher transportation
costs, in-transit weight losses and inconsistency in size and quality. The
Company anticipates that the percentage of hogs obtained by the Company from
Midwestern sources will decline further as more hogs are produced by Brown's,
Smithfield-Carroll's and the major North Carolina producers.
The Company purchases its hogs on a daily basis at its plants in
Smithfield, Virginia and Bladen County, North Carolina, at buying stations in
Virginia, North Carolina and South Carolina and at independent dealer-
operated buying stations in the Midwest. The Company also purchases fresh
pork from other meat processors to supplement its processing requirements,
and raw beef, poultry and other meat products to add to its sausage and
luncheon meats. Such meat products and other materials and supplies,
including seasonings, smoking and curing agents, sausage casings and
packaging materials are readily available from numerous sources at
competitive prices.
Customers and Marketing
The Company has dominant market shares in the Mid-Atlantic and
Southeastern United States, and growing market shares in the Northeast,
South, Midwest and West. The Company's fundamental marketing strategy is to
sell large quantities of moderate-priced processed meat products as well as
fresh pork to national and regional supermarket chains, wholesale
distributors and the foodservice industry (fast food, restaurant and hotel
chains, hospitals and other institutional customers). Management believes
that this marketing approach reaches the largest number of value-conscious
consumers without requiring large advertising and promotional campaigns. The
Company uses both salaried salesmen and independent commission brokers to
sell its products. Except for a small number of orders for hams, the Company
does not make sales directly to consumers. In fiscal 1994, the Company made
sales to more than 3,000 customers, none of whom accounted for as much as 10%
of the Company's revenues. The Company has no significant or seasonally
variable backlog because most customers prefer to order products shortly
before shipment, and therefore, do not enter into formal long-term contracts.
Management believes that its registered trademarks have been important to the
success of its branded processed meat products.
The Company, in fiscal 1994, entered into an agreement with
Sumitomo Corporation for the exclusive distribution of a line of unique
branded fresh pork products in Japan. In addition, the Company began
exporting processed meats to Mexico in fiscal 1994. The Company anticipates
that export sales to these markets will increase substantially in fiscal
1995.
The Company's business is seasonal in that, traditionally, the
heavier periods of sales for hams are the holiday seasons such as Easter,
Thanksgiving and Christmas, and the heavier periods of sales for hot dogs and
luncheon meats are the summer months. The Company maintains large
inventories of hams in anticipation of its holiday seasons' business. Fresh
pork is shipped, generally within two to three days after slaughter, by
refrigerated trucks which are leased and operated by the Company and by
common carrier. The Company enters into commodity futures contracts to
reduce the risk of adverse price changes on the profitability of its hog
production operations and future sales commitments, such as future sales
commitments for hams for the holiday seasons.
Distribution
Because of the Mid-Atlantic and Southeastern locations of all but
one production facility, the Company offers next-day delivery to most of its
customers which affords it a competitive advantage in terms of service and
freight costs. The Company's Mid-Atlantic and
Southeastern locations allow it to supply customers in the Northeastern, Mid-
Atlantic,
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<PAGE>
Southeastern and Southern states with fresh pork products with a longer
effective shelf-life than those shipped from competing Midwestern processors.
Competition
The protein industry generally, and the pork processing industry in
particular, are highly competitive. The Company's products compete with a
large number of other protein sources, including beef, chicken, turkey and
seafood, but the Company's principal competition comes from other pork
processors.
Management believes that the principal competitive factors in the
pork processing industry are price, quality and brand loyalty. Many of the
Company's competitors are considerably larger, have correspondingly greater
financial and other resources and enjoy wider recognition for their branded
products. Some of these competitors are also more diversified than the
Company. To the extent that their other operations generate profits, such
companies may be able to subsidize their pork processing operations.
The Company believes it is one of the largest producers of smoked meats,
including hams, bacon and picnics, in the United States. The Company is the
largest producer of "Genuine Smithfield" hams. By statute of the
Commonwealth of Virginia, only hams processed within the Town of Smithfield
can be labeled "Genuine Smithfield" hams.
Regulation
Like other participants in the meat packing industry, the Company
is subject to various laws and regulations administered by federal, state and
other government entities, including the Environmental Protection Agency and
corresponding state agencies such as the Virginia State Water Control Board
("SWCB"), the North Carolina Division of Environmental Management, the United
States Department of Agriculture and the Occupational Safety and Health
Administration. Management believes that the Company complies with all such
laws and regulations in all material respects, except as set forth
immediately below, and that continued compliance with these standards will
not have a material effect on the Company's financial position.
The wastewater discharge permits for the Company's major manufacturing
plants in Smithfield, Virginia, currently impose more stringent phosphorous
and ammonia effluent limitations than the plants can currently meet. The
plants are currently being operated in compliance with less stringent
effluent limitations under an administrative consent order entered into with
the SWCB, pending reissuance of the permits, for which timely applications
have been filed. In May 1991, the Company elected to comply with the SWCB's
regulations by agreeing to connect the Company's wastewater treatment plants
to the regional sewer system operated by the Hampton Roads Sanitation
District. The Company will incur sewer charges in addition to the existing
costs of effluent treatment beginning in approximately two years. The sewer
charges that will be incurred will be accounted for as current period charges
in the year in which such costs are incurred. The Company expects to incur
approximately $2,000,000 in capital costs to upgrade the existing systems and
connect to the regional sewer system.
Employees
The Company has approximately 8,000 employees, approximately 4,250
of whom are covered by collective bargaining agreements expiring between
March 11, 1995 and December 31, 1998. The Company believes that its
relationship with its employees is good.
Working Capital
The pork processing industry is characterized by high unit sales
volume and rapid turnover of inventories and accounts receivable. Because of
the rapid turnover rate, the
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Company considers its inventories and accounts receivable highly liquid and
readily convertible into cash. Borrowings under lines of credit are used to
finance increases in the levels of inventories and accounts receivable
resulting from seasonal and other market-related fluctuations in raw material
costs. The demand for seasonal borrowings usually peaks in early November
when ham inventories are at their highest levels, and borrowings are repaid
in January when the accounts receivable generated by the sales of these hams
are collected. At May 1, 1994, the Company had aggregate lines of credit of
$120.0 million. Borrowings under the lines of credit are secured by
substantially all of the Company's inventories and accounts receivable.
Weighted average borrowings under the lines were $66.6 million in fiscal
1994, $79.2 million in fiscal 1993 and $29.4 million in fiscal 1992. Maximum
borrowings were $105.1 million in fiscal 1994, $105.9 million in fiscal 1993
and $56.0 million in fiscal 1992. The outstanding balances under these lines
totalled $52.1 million and $93.0 million as of May 1, 1994 and May 2, 1993,
respectively.
Miscellaneous
With the exception of the franchise agreement between Smithfield-
Carroll's and National Pig Development Company (See Item 1. Business), the
Company has no patents, licenses, franchises or concessions which it
considers material to its business.
The Company is not involved in significant research activities.
Item 2. PROPERTIES.
<TABLE>
The following table summarizes information concerning the principal
plants and other materially important physical properties of the Company:
APPROXIMATE
LAND AREA FLOOR SPACE
LOCATION OPERATION (ACRES) (SQ.FT.)
<S> <C> <C> <C>
Smithfield Packing Plant No. 1 Slaughtering and cutting 25.5 385,000
501 North Church Street hogs; manufacture of
Smithfield, Virginia bacon products, smoked
meats, and dry salt meats;
production of hams and
picnics.
Smithfield Packing Plant No. 2 Production of bone-in and 20.0 218,000
2501 West Vernon Avenue boneless cooked and smoked
Kinston, North Carolina ham and other smoked meat
products.
Smithfield Packing Plant No. 3 Production of bone-in smoked 7.8 100,000
5801 Columbia Park Drive ham and other smoked meat
Landover, Maryland products.
Smithfield Packing Plant No. 4 Slaughtering and cutting 860.0 510,000
Carolina Food Processors hogs; production of boneless
Division (Bladen County) hams and loins.
Route #87
Tarheel, North Carolina
Gwaltney Plant No. 1 Slaughtering and cutting 56.4 474,000
601 North Church Street hogs; manufacture of bacon
Smithfield, Virginia products and sausage; produc-
tion of bone-in and boneless
cooked and smoked hams and
picnics.
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Gwaltney Plant No. 2 Manufacture of hot dogs, 13.1 133,000
3515 Airline Blvd. bologna, luncheon meats
Portsmouth, Virginia and sausage products.
Gwaltney Plant No. 3 Manufacture of bacon, smoked 11.0 152,000
1013 Iowa Street sausage and boneless cooked
Salem, Virginia hams.
Patrick Cudahy Plant Manufacture of bacon, dry 60.0 1,057,000
3500 E. Barnard Ave. sausage, boneless cooked hams
Cudahy, Wisconsin and operation of a refinery.
</TABLE>
The Company operates hog buying stations in Virginia, North
Carolina and South Carolina which have facilities for purchasing and loading
hogs for shipment to the Company's plant's in Smithfield, Virginia and Bladen
County, North Carolina.
The Company, through Brown's, owns and leases hog production
facilities in North Carolina, and through Smithfield-Carroll's, owns hog
production facilities in North Carolina and Virginia.
Smithfield Packing Plants No. 1 and No. 2, including all real
property, machinery and equipment, are pledged as security for Smithfield
Packing's 9.8% Secured Notes, due August 2003, and 10.75% Secured Notes, due
August 2005, held by John Hancock Mutual Life Insurance Company. The
machinery and equipment in Smithfield Packing Plant No. 3 is pledged as
security for Smithfield Packing's Secured Notes, due October 1997, held by
MetLife Capital Corporation. Smithfield Packing Plant No. 4, including all
real property, machinery and equipment, is pledged as security for Smithfield
Packing's 8.41% Secured Notes, due February 2013, held by John Hancock Mutual
Life Insurance Company, Massachusetts Mutual Life Insurance Company and MML
Pension Insurance Company, and Smithfield Foods, Inc.'s 6.48% Notes, due
September 1998, held by NationsBank of Virginia, Inc. Gwaltney Plants No.
1 and No. 2, including all real property, machinery and equipment, are
pledged as security for Gwaltney's 6.24% Secured Notes, due November 1998,
and 9.85% Secured Notes, due November 2006, held by John Hancock Mutual Life
Insurance Company.
Based on standard hourly rates of production, converted to annual
capacities based on a 40-hour work week, Smithfield Plant No. 1 has an annual
slaughter capacity of 2,080,000 head and Gwaltney Plant No. 1 has an annual
slaughter capacity of 2,080,000 head. Based on standard hourly rates of
production, converted to an annual capacity based on a 40-hour work week,
Smithfield Plant No. 4 has an annual slaughter capacity on a one-shift basis
of 4,160,000 head. The plant is designed to operate on a two-shift basis.
Subject to applicable environmental and other regulations, production at all
the Company's plants can be increased without physically expanding existing
facilities by increasing the number of production hours.
Item 3. LEGAL PROCEEDINGS.
Smithfield Foods and its subsidiaries are defendants in various
lawsuits arising in the ordinary course of business. In the opinion of
management, any ultimate liability with respect to these matters will not
have a material effect on the Company's financial statements.
Reference is made to "Item 1.--Business--Regulation."
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
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Item 4A. EXECUTIVE OFFICERS OF THE COMPANY.
The executive officers of the Company as of July 15, 1994 are as
follows:
<TABLE>
Officer
Name Age Office Since
<S> <C> <C> <C>
Joseph W. Luter, III 55 Chairman of the Board, President 1975
and Chief Executive Officer of
the Company
Roger R. Kapella 52 President and Chief Operating 1985
Officer of Patrick Cudahy
Lewis R. Little 50 President and Chief Operating 1993
Officer of Gwaltney
Robert W. Manly 41 President and Chief Operating 1986
Officer of Smithfield Packing
Aaron D. Trub 59 Vice President, Secretary and 1970
Treasurer of the Company
C. Larry Pope 39 Controller of the Company 1981
</TABLE>
Mr. Luter is Chairman of the Board, President and Chief Executive
Officer of the Company.
Mr. Kapella is President and Chief Operating Officer of Patrick
Cudahy.
Mr. Little has been President and Chief Operating Officer of
Gwaltney since May 1993. He was Executive Vice President of Gwaltney prior
to May 1993.
Mr. Manly was appointed President and Chief Operating Officer of
Smithfield Packing in June 1994. He was Executive Vice President of the
Company prior to June 1994.
Mr. Trub is Vice President, Secretary and Treasurer of the Company.
Mr. Pope is Controller of the Company.
There is no family relationship among any officers.
The officers of Smithfield Foods, Inc. and its subsidiaries are
elected annually by the Board of Directors of the respective company of which
they are an officer. Each officer holds the office to which he was elected
at the discretion of the Board of his company for the ensuing year or until
removed or replaced.
PART II
Item 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
For information required by this item, see the information in
Exhibit 13-Annual Report to Stockholders (i) on page 28 adjacent to the
caption "Common Stockholders of Record" and (ii) under the caption "Common
Stock Data" on page 47, which information is incorporated herein by
reference.
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Item 6. SELECTED FINANCIAL DATA.
For selected financial data required by this item, see the data in
Exhibit 13-Annual Report to Stockholders under the caption "Financial
Summary" on pages 28 and 29, which data are incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
For information required by this item, see information in Exhibit
13-Annual Report to Stockholders under the caption "Financial Discussion" on
pages 23 through 27, which information is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements required by this item are on
pages 30 through 45 of Exhibit 13-Annual Report to Stockholders and are
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
For information concerning the directors and nominees for
directorship, see the information under the captions "Election of Directors"
on pages 3 and 4 and "Board of Directors and Committees" on pages 5 and 6 in
the Company's Proxy Statement for Annual Meeting of Stockholders to be held
on August 31, 1994, which information is incorporated herein by reference.
For information concerning executive officers of the Company,
reference is made to "Item 4A. Executive Officers of the Company."
Item 11. EXECUTIVE COMPENSATION.
For information required by this item, see the information under
the captions "Executive Compensation" on pages 7 through 13 and "Board of
Directors and Committees" on pages 5 and 6 in the Company's Proxy Statement
for Annual Meeting of Stockholders to be held on August 31, 1994, which
information is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
For information required by this item, see the information under
the captions "Principal Stockholders" on pages 2 and 3 and "Common Stock
Ownership of Executive Officers and Directors" on pages 4 and 5 in the
Company's Proxy Statement for Annual Meeting of Stockholders to be held on
August 31, 1994, which information is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For information required by this item, see the information under
the caption "Other Transactions" on pages 13 through 15 in the Company's
Proxy Statement for Annual Meeting of Stockholders to be held on August 31,
1994, which information is incorporated herein by reference.
11-32
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
<TABLE>
Reference
Annual Report
to Stockholders Form 10-K
Page Page
<S> <C> <C>
(a)(1) Financial Statements
The following consolidated financial
statements of Smithfield Foods, Inc.
and its consolidated subsidiaries are
incorporated by reference in Item 8:
Consolidated statements of income -
52 weeks ended May 1, 1994,
52 weeks ended May 2, 1993,
53 weeks ended May 3, 1992. 32
Consolidated balance sheets -
May 1, 1994 and May 2, 1993 30, 31
Consolidated statements of cash flows -
52 weeks ended May 1, 1994,
52 Weeks ended May 2, 1993,
53 weeks ended May 3, 1992. 33
Consolidated statements of stockholders'
equity
52 weeks ended May 1, 1994,
52 weeks ended May 2, 1993,
53 weeks ended May 3, 1992. 34
Notes to consolidated financial
statements 35-43
Report of Management 44
Report of Independent Public
Accountants 45
(a)(2) Financial Statement Schedules
II. Amounts Receivable from Related
Parties and Underwriters, Promoters
and Employees Other than Related
Parties 21-23
III. Condensed Financial Information
of Registrant 24-27
V. Property, Plant and Equipment 28-30
VI. Accumulated Depreciation of
Property, Plant and Equipment 31-33
</TABLE>
12-32
<PAGE>
Schedules other than those listed above have been omitted since they
are either not required or not applicable, or the information called for is
shown in the financial statements or in the notes thereto.
(a)(3) Exhibits
Exhibit 3.1 - Composite Certificate of Incorporation of the Company,
as amended to date (incorporated by reference to
Exhibit 3.1 to the Company's Form 10-K Annual Report
for the fiscal year ended April 28, 1991).
Exhibit 3.1(a) - Certificate of Designations of Series B 6-3/4%
Cumulative Convertible Preferred Stock, par value $1.00
per share, of the Company (incorporated by reference to
Exhibit 3.1(a) to the Company's Form 10-K Annual Report
for the fiscal year ended May 2, 1993).
Exhibit 3.2 - By-laws of the Company, as amended to date
(incorporated by reference to Exhibit 3.2 to the
Company's Form 10-K Annual Report for the fiscal year
ended April 28, 1991).
Exhibit 4.1 - Composite Certificate of Incorporation - See Exhibit
3.1.
Exhibit 4.2 - Form of Certificate representing the Company's Common
Stock, par value $.50 per share (including Rights
legend) (incorporated by reference to Exhibit 4.2 to
the Company's Form 10-K Annual Report for the fiscal
year ended April 28, 1991).
Exhibit 4.3 - Form of Certificate representing the Company's Series B
6-3/4% Cumulative Convertible Preferred Stock, par
value $1.00 per share (including Rights legend)
(incorporated by reference to Exhibit 4.3 to the
Company's Form 10-K Annual Report for the fiscal year
ended May 2, 1993).
Exhibit 4.4 - Form of Certificate representing Rights (incorporated
by reference to Exhibit 4 to the Company's Amendment
No. 1 to Registration Statement on Form 8-A dated May
23, 1991 (the "Amended Form 8-A").
Exhibit 4.5 - Rights Agreement, dated as of May 8, 1991, as amended
by Amendment No. 1 dated as of January 31, 1994, by and
between Smithfield Foods, Inc. and First Union National
Bank of North Carolina, Rights Agent.
Exhibit 4.6 - Second Amended, Restated and Continued Revolving Credit
Agreement dated March 1, 1994, among Gwaltney of
Smithfield, Ltd. The Smithfield Packing Company,
Incorporated, Patrick Cudahy Incorporated, Esskay,
Inc., Brown's of Carolina, Inc., Carolina Food
Processors, Inc. and Cooperative Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland",
New York Branch, as agent and each bank a party
thereto.
13-32
<PAGE>
Exhibit 4.6(a) - First Amendment to Credit Agreement and First Amendment
to Security Agreement dated March 1, 1994 of The
Smithfield Packing Company, Incorporated.
Exhibit 4.6(b) - Second Amended, Restated and Continued Guaranty, dated
March 1, 1994 made by Smithfield Foods, Inc. in favor
of Rabobank Nederland.
Exhibit 4.7 - Note Agreement dated July 29, 1988, between The
Smithfield Packing Company, Incorporated and John
Hancock Mutual Life Insurance Company, covering
$15,000,000 9.8% Secured Notes due August 1, 2003
(incorporated by reference to Exhibit 4.11 to the
Company's Form 10-K Annual Report for the fiscal year
ended April 30, 1989).
Exhibit 4.7(a) - Guaranty and Agreement by Smithfield Foods, Inc. dated
July 29, 1988 (incorporated by reference to Exhibit
4.11(a) to the Company's Form 10-K Annual Report for
the fiscal year ended April 30, 1989).
Exhibit 4.8 - Note Agreement dated August 6, 1990, between The
Smithfield Packing Company, Incorporated and John
Hancock Mutual Life Insurance Company, covering
$15,000,000 10.75% Secured Notes due August 1, 2005
(incorporated by reference to Exhibit 4.10 to the
Company's Form 10-K Annual Report for the fiscal year
ended April 28, 1991).
Exhibit 4.8(a) - Form of Guaranty and Agreement by Smithfield Foods,
Inc. dated August 6, 1990 (incorporated by reference to
Exhibit 4.10(a) to the Company's Form 10-K Annual
Report for the fiscal year ended April 28, 1991).
Exhibit 4.9 - Note Agreement dated October 31, 1991, between Gwaltney
of Smithfield, Ltd. and John Hancock Mutual Life
Insurance Company, covering $20,000,000 9.85% Secured
Notes due November 1, 2006 (incorporated by reference
to Exhibit 4.9 to the Company's Form 10-K Annual Report
for fiscal year ended May 3, 1992).
Exhibit 4.9(a) - Guaranty and Agreement by Smithfield Foods, Inc. dated
October 31, 1991 (incorporated by reference to Exhibit
4.9(a) to the Company's Form 10-K Annual Report for
fiscal year ended May 3, 1992).
Exhibit 4.10 - Note Purchase Agreement dated January 15, 1993 by and
among Carolina Food Processors, Inc. and Smithfield
Foods, Inc. and John Hancock Mutual Life Insurance
Company, Massachusetts Mutual Life Insurance Company
and MML Pension Insurance Company, covering $25,000,000
8.41% Senior Secured Notes due February 1, 2013,
guaranteed by Smithfield Foods, Inc. (incorporated by
reference to Exhibit 4.11 to the Company's Form 10-K
Annual Report for fiscal year ended May 2, 1993).
Exhibit 4.10(a)- Omnibus Amendment Agreement dated December 1, 1993 by
and among Smithfield Foods, Inc., Carolina Foods
Processors, Inc., John Hancock Mutual Life Insurance
Company, Massachusetts
14-32
<PAGE>
Mutual Life Insurance Company and MML Pension Insurance
Company.
Exhibit 4.10(b)- Assumption, Waiver and Amendment Agreement dated May 1,
1994 by and among The Smithfield Packing Company,
Incorporated. Smithfield Foods, Inc., John Hancock
Mutual Life Insurance Company, Massachusetts Mutual
Life Insurance Company and MML Pension Insurance
Company.
Exhibit 4.11 - Master Lease Agreement dated May 14, 1993 between
General Electric Capital Corporation and Brown's of
Carolina, Inc. (incorporated by reference to Exhibit
4.12 to the Company's Form 10-K Annual Report for
fiscal year ended May 2, 1993).
Exhibit 4.11(a)- Corporate Guaranty by Smithfield Foods, Inc. dated May
14, 1993 (incorporated by reference to Exhibit 4.12(a)
to the Company's Form 10-K Annual Report for fiscal
year ended May 2, 1993).
Exhibit 4.12 - Amended and Restated Credit Agreement dated June 28,
1993 between Smithfield Foods, Inc. and NationsBank of
Virginia, N.A., covering $25,000,000 6.48% Notes due
September 30, 1998 (incorporated by reference to
Exhibit 4.13 to the Company's Form 10-K Annual Report
for fiscal year ended May 2, 1993).
Exhibit 4.12(a) -Loan Modification Agreement dated April 30, 1994 among
Smithfield Foods, Inc., Carolina Food Processors, Inc.,
The Smithfield Packing Company, Incorporated and
NationsBank of Virginia, N.A.
Exhibit 10.1 - Subscription Agreement dated September 3, 1992 between
Smithfield Foods, Inc. and Carroll's Foods, Inc.,
covering 1,000,000 shares of Smithfield Foods, Inc.
Common Stock (incorporated by reference to Exhibit 10.1
of the Company's Form 10-K Annual Report for fiscal
year ended May 2, 1993).
Exhibit 10.2 - Subscription Agreement dated as of October 21, 1992
between Smithfield Foods, Inc. and Wake Forest
University, covering $10,000,000 Series B 6-3/4%
Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 10.2 of the Company's Form 10-K
Annual Report for fiscal year ended May 2, 1993).
Exhibit 10.3 - Smithfield Foods, Inc. Stock Option Plan (1984), as
amended (incorporated by reference to Exhibit 10.1 to
the Company's Form 10-K Annual Report for fiscal year
ended April 28, 1991).
Exhibit 10.4 - Smithfield Foods, Inc. 1992 Stock Incentive Plan
(incorporated by reference to Exhibit 10.4 to the
Company's Form 10-K Annual Report for fiscal year ended
May 2, 1993).
Exhibit 10.5 - Master Lease Agreement (Smithfield 91-1) dated December
9, 1991, between State Street Bank and Trust Company of
Connecticut, National Association, as Lessor, and The
Smithfield Packing Company, Incorporated, as Lessee
(Trailers and Yard Equipment) (incorporated by
reference to Exhibit 10.2 to the
15-32
<PAGE>
Company's Form 10-K Annual Report for fiscal year
ended May 3, 1992).
Exhibit 10.5(a)- Master Lease Agreement (Smithfield 91-2) dated December
9, 1991, between State Street Bank and Trust Company of
Connecticut, National Association, as Lessor, and The
Smithfield Packing Company, Incorporated, as Lessee
(Tractors) (incorporated by reference to Exhibit
10.2(a) to the Company's Form 10-K Annual Report for
fiscal year ended May 3, 1992).
Exhibit 10.5(b)- Master Lease Agreement (Smithfield 91-3) dated December
9, 1991, between State Street Bank and Trust Company of
Connecticut, National Association, as Lessor, and
Gwaltney of Smithfield, Ltd., as Lessee (Trailers and
Yard Equipment) (incorporated by reference to Exhibit
10.2(b) to the Company's Form 10-K Annual Report for
fiscal year ended May 3, 1992).
Exhibit 10.5(c)- Master Lease Agreement (Smithfield 91-4) dated December
9, 1991, between State Street Bank and Trust Company of
Connecticut, National Association, as Lessor, and
Gwaltney of Smithfield, Ltd., as Lessee (Tractors)
(incorporated by reference to Exhibit 10.2(c) to the
Company's Form 10-K Annual Report for fiscal year ended
May 3, 1992).
Exhibit 10.6 - Storage Agreement dated September 4, 1987, by and
between RCS-Smithfield, Inc. and Smithfield Foods, Inc.
(incorporated by reference to Exhibit 10.9 to the
Company's Form 10-K Annual Report for the fiscal year
ended May 1, 1988).
Exhibit 10.7 - Storage Agreement dated September 18, 1991, by and
between Carolina Cold Storage Limited Partnership and
Smithfield Foods, Inc. (incorporated by reference to
Exhibit 10.5 of the Company's Form 10-K Annual Report
for fiscal year ended May 3, 1992).
Exhibit 11 - Computation of Net Income Per Share.
Exhibit 13 - 1994 Annual Report to Stockholders (With the exception
of the data incorporated by reference in Items 5, 6, 7
and 8, no other data appearing in the accompanying 1994
Annual Report to Stockholders is to be deemed filed as
part of this Form 10-K Annual Report).
Exhibit 21 - List of Subsidiaries of Smithfield Foods, Inc.
Exhibit 23 - Consent of Independent Public Accountants (see page
immediately following the signature pages of this Form
10-K Annual Report).
(b) Reports on Form 8-K
None.
16-32
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SMITHFIELD FOODS, INC.
By /s/ Joseph W. Luter, III
Joseph W. Luter, III
Chairman of the Board,
President and Chief
Executive Officer
Date 7/19/94
17-32
<PAGE>
Pursuant to the requirements of the Securities Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities indicated.
By /s/ Joseph W. Luter, III By /s/ Roger R. Kapella
Joseph W. Luter, III Roger R. Kapella
Chairman of the Board, President President and Chief Operating
and Chief Executive Officer Officer of Patrick Cudahy
Director Incorporated and Director
Date 7/19/94 Date 7/14/94
By /s/ Lewis R. Little By /s/ Robert W. Manly
Lewis R. Little Robert W. Manly
President and Chief Operating Officer President and Chief
of Gwaltney of Smithfield, Ltd. and Operating Officer of The
Director Smithfield Packing
Company, Incorporated and
Director
Date 7/18/94 Date 7/14/94
By /s/ Aaron D. Trub By /s/ C. Larry Pope
Aaron D. Trub C. Larry Pope
Vice President, Secretary and Controller
Treasurer and Director
Date 7/14/94 Date 7/18/94
By /s/ F. J. Faison, Jr. By /s/ Joel W. Greenberg
F. J. Faison, Jr. Joel W. Greenberg
Director Director
Date 7/18/94 Date 7/13/94
By /s/ Cecil W. Gwaltney By /s/ George E. Hamilton, Jr.
Cecil W. Gwaltney George E. Hamilton, Jr.
Director Director
Date 7/14/94 Date 7/14/94
By /s/ Richard J. Holland By /s/ Wendell H. Murphy
Richard J. Holland Wendell H. Murphy
Director Director
Date 7/14/94 Date 7/19/94
18-32
<PAGE>
SMITHFIELD FOODS, INC.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Smithfield Foods, Inc.:
We have audited in accordance with generally accepted auditing standards, the
financial statements included in Smithfield Foods, Inc.'s 1994 annual report
to stockholders incorporated by reference in this Form 10-K, and have issued
our report thereon dated June 7, 1994. Our report on the financial
statements includes an explanatory paragraph with respect to the change in
the method of accounting for income taxes as discussed in Notes 1 and 4 to
the financial statements. Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The schedules listed in the
index under Item 14(a)(2) are the responsibility of the Company's management
and are presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Richmond, Virginia,
June 7, 1994.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included (or incorporated by reference) in this Form 10-K, into
the Company's previously filed Registration Statements File No. 33-14219, No.
33-14220 and No. 33-53024.
ARTHUR ANDERSEN & CO.
Richmond, Virginia,
July 26, 1994.
19-32
<PAGE>
<TABLE>
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER
THAN RELATED PARTIES
FOR THE FIFTY-TWO WEEKS ENDED MAY 1, 1994
Balance Balance
Name of Debtor May 2, 1993 Additions Deductions May 1, 1994
<S> <C> <C> <C> <C>
Smithfield-Carroll's $19,830,000 $18,640,000 $19,830,000 $18,640,000 (A)
Circle Four - 194,000 - 194,000 (B)
B & G - 1,344,000 - 1,344,000 (C)
$19,830,000 $20,178,000 $19,830,000 $20,178,000
</TABLE>
(A) Amount represents unsecured short-term loans to Smithfield-Carroll's for
working capital and construction of hog production facilities. The loans bear
interest at prime rate and are expected to be repaid during fiscal 1995.
(B) Amount represents unsecured short-term advances to Circle Four for costs
related to hog production facilities. These advances are expected to be repaid
during fiscal 1995.
(C) Amount represents unsecured short-term loans of $1,100,000 and unsecured
short-term advances of $244,000 to B & G for working capital and construction of
hog production facilities. The loans bear interest at prime rate. The loans
and advances are expected to be repaid during fiscal 1995 with the proceeds of
long-term debt financings by B & G.
20-32
<PAGE>
<TABLE>
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN
RELATED PARTIES
FOR THE FIFTY-TWO WEEKS ENDED MAY 2, 1993
Balance Balance
Name of Debtor May 3, 1992 Additions Deductions May 2, 1993
<S> <C> <C> <C> <C>
Smithfield-Carroll's $23,330,000 $19,830,000 $23,330,000 $19,830,000 (A)
P. Edward Schenk, Jr., Former
Director Former President and
Chief Operating Officer of
Gwaltney of Smithfield, Ltd. 141,000 - 141,000 -
Carolina Cold Storage
Limited Partnership 5,160,000 - 5,160,000 -
Total $28,631,000 $19,830,000 $28,631,000 $19,830,000
</TABLE>
(A) Amount represents unsecured short-term loans to Smithfield-Carroll's for
working capital and construction of hog production facilities. The loans bear
interest at prime rate and were repaid during fiscal 1994.
21-32
<PAGE>
<TABLE>
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER
THAN RELATED PARTIES
FOR THE FIFTY-THREE WEEKS ENDED MAY 3, 1992
Balance Balance
Name of Debtor April 28,1991 Additions Deductions May 3, 1992
<S> <C> <C> <C> <C>
Joseph W. Luter, III, Chairman $4,022,000 (A) $ - $ 4,022,000 $ -
President and Chief Executive
Officer
John L. Gibson, II, Former
Director Richard J. Holland,
Director John B. Bernhardt 2,400,000 (B) - 2,400,000 -
Smithfield-Carroll's - 52,150,000 28,820,000 23,330,000 (C)
P. Edward Schenk, Jr., Former
Director Former President and
Chief Operating Officer of
Gwaltney of Smithfield, Ltd. - 141,000 - 141,000 (D)
Carolina Cold Storage
Limited Partnership - 5,160,000 - 5,160,000 (E)
Total $ 6,422,000 $57,451,000 $35,242,000 $28,631,000
</TABLE>
(A) Amount represents a secured demand note. This loan bore interest at 1%
above the Registrant's short-term borrowing rate. This loan was repaid in
May 1991.
(B) Amount represents secured demand notes. The loans bore interest at rates
of 2% ($1,000,000) and 3% ($1,400,000) above the prime rate. These loans
were repaid in May 1991.
(C) Amount represents unsecured short-term loans to Smithfield-Carroll's for
working capital and construction of hog raising facilities. The loans bear
interest at prime rate and were repaid during fiscal 1993 with the proceeds
of short and long-term debt financings by Smithfield-Carroll's.
(D) Amount represents unsecured demand notes. The notes bear interest at 1%
above the prime rate and were repaid during fiscal 1993.
(E) Amount represents a secured construction loan. The loan bears interest at
1% above the prime rate and was repaid in May 1992.
22-32
<PAGE>
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
SMITHFIELD FOODS, INC.
PARENT COMPANY BALANCE SHEETS
AS OF MAY 1, 1994 AND MAY 2, 1993
ASSETS
1994 1993
Current assets:
Cash $ 331,000 $ 679,000
Accounts receivable 120,000 223,000
Receivables from related parties 18,834,000 19,830,000
Refundable income taxes - 1,303,000
Deferred income taxes 8,470,000 4,533,000
Other 517,000 288,000
Total current assets 28,272,000 26,856,000
Investments in and net advances to
subsidiaries, at cost plus equity
in undistributed earnings 184,324,000 125,654,000
Other assets:
Investments in partnerships 9,403,000 8,415,000
Property, plant and equipment, net 2,518,000 3,076,000
Other 2,128,000 1,913,000
Total other assets 14,049,000 13,404,000
$226,645,000 $165,914,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,938,000 $ 409,000
Accounts payable 2,211,000 84,000
Accrued expenses 15,071,000 10,197,000
Income taxes payable 3,154,000 -
Total current liabilities 22,374,000 10,690,000
Long-term debt 25,360,000 3,198,000
Deferred income taxes and other noncurrent
liabilities 13,961,000 6,256,000
Series B 6.75% cumulative convertible
redeemable preferred stock 10,000,000 10,000,000
Stockholders' equity 154,950,000 135,770,000
$226,645,000 $165,914,000
The accompanying notes are an integral part of these balance sheets.
23-32
<PAGE>
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
SMITHFIELD FOODS, INC
PARENT COMPANY STATEMENTS OF INCOME
52 Weeks 52 Weeks 53 Weeks
Ended Ended Ended
May 1, 1994 May 2, 1993 May 3, 1992
Sales $ - $ - $ -
Expenses:
Cost of sales - - -
General and administrative,
net of allocation to
subsidiaries 928,000 1,773,000 226,000
Depreciation 452,000 540,000 416,000
Interest 2,046,000 274,000 (337,000)
3,426,000 2,587,000 305,000
Income (loss) before income taxes,
cumulative effect of change in
accounting for income tax and
equity in earnings of
subsidiaries (3,426,000) (2,587,000) (305,000)
Income taxes credit (600,000) (627,000) (423,000)
Income (loss) before cumulative
effect of change in accounting
for income taxes and equity in
earnings of subsidiaries (2,826,000) (1,960,000) 118,000
Cumulative effect of change in
accounting for income taxes - (1,138,000) -
Net income (loss) before equity in
earnings of subsidiaries (2,826,000) (822,000) 118,000
Equity in earnings of
subsidiaries 22,528,000 4,811,000 21,517,000
Net income $19,702,000 $ 3,989,000 $21,635,000
The accompanying notes are an integral part of these statements.
24-32
<PAGE>
<TABLE>
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
SMITHFIELD FOODS, INC.
PARENT COMPANY STATEMENTS OF CASH FLOWS
52 Weeks 52 Weeks 53 Weeks
Ended Ended Ended
May 1, 1994 May 2, 1993 May 3, 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 19,702,000 $ 3,989,000 $ 21,635,000
Adjustments to reconcile net income to
net cash used in operating
activities:
Depreciation and amortization 452,000 540,000 416,000
Gain on sale of property and
equipment - (1,000) (1,000)
Cumulative effect of change in
accounting for income taxes - (1,138,000) -
(Increase) decrease in deferred
income taxes and other
long-term liabilities 3,768,000 (2,618,000) (937,000)
(Increase) decrease in accounts
receivable 103,000 (2,000) 74,000
(Increase) decrease in receivables
from related parties 996,000 8,801,000 (22,209,000)
Increase in investments in and
advances to subsidiaries (58,670,000) (44,407,000) (14,161,000)
Increase in other current assets (229,000) (211,000) (54,000)
Increase in accounts payable
and accrued expenses 7,001,000 3,926,000 1,813,000
(Increase) decrease in refundable
income taxes 1,303,000 (1,303,000) _
Increase (decrease) in taxes
payable 3,154,000 (540,000) (831,000)
Increase in other assets (215,000) (498,000) (132,000)
Net cash used in operating
activities (22,635,000) (33,462,000) (14,387,000)
Cash flows from investing activities:
Capital expenditures (1,394,000) 673,000 (4,451,000)
Proceeds from sale of property,
plant and equipment 1,500,000 6,000 1,000
Investment in partnerships (988,000) 138,000 (750,000)
Net cash provided by (used in)
investing activities (882,000) 817,000 (5,200,000)
Cash flows from financing activities:
Proceeds from issuance of long-term
debt 25,000,000 3,800,000 -
Principal payments on long-term debt (1,309,000) (193,000) -
Proceeds from sale of common stock - 16,750,000 24,999,000
Proceeds from exercise of options and
warrants 153,000 1,642,000 3,682,000
Issuance of preferred stock - 10,000,000 -
Purchase of treasury stock - - (7,643,000)
Preferred dividends (675,000) (365,000) -
Net cash provided by financing
activities 23,169,000 31,634,000 21,038,000
Net increase (decrease) in cash (348,000) (1,011,000) 1,451,000
Cash at beginning of year 679,000 1,690,000 239,000
Cash at end of year $ 331,000 $ 679,000 $ 1,690,000
</TABLE>
The accompanying notes are an integral part of these statements.
25-32
<PAGE>
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
SMITHFIELD FOODS, INC.
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
MAY 1, 1994 AND MAY 2, 1993
1. The Notes to Parent Company Financial Statements should be read in
conjunction with the Notes to Registrant's Annual Report to Stockholders for
the years then ended.
2. Restricted assets of Registrant:
Existing loan covenants contain provisions which substantially limit the
amount of funds available for transfer from the subsidiaries to Smithfield
Foods, Inc. without the consent of certain lenders.
3. Accrued expenses as of May 1, 1994 and May 2, 1993 are as follows:
1994 1993
Self-insurance reserves $10,489,000 $ 8,237,000
Payroll and related benefits 2,056,000 742,000
Pension costs 52,000 152,000
Professional fees 438,000 415,000
Other 2,036,000 651,000
$15,071,000 $10,197,000
4. Long-Term Debt:
As of May 1, 1994, the Registrant is guaranteeing $91,649,000 of long-term
debt and capital lease obligations of its subsidiaries and lines of credit
aggregating $120,000,000 (of which $52,135,000 is outstanding) which the
Registrant and its subsidiaries have with banks.
Scheduled maturities of the Registrant's long-term debt consists of the
following:
FISCAL YEAR
1995 $ 1,938,000
1996 2,370,000
1997 3,254,000
1998 5,536,000
1999 14,200,000
$27,298,000
5. The amount of dividends received from subsidiaries in fiscal 1994 and 1992
was $12,000,000 and $8,000,000, respectively. No dividends were received in
fiscal 1993.
6. Income Taxes:
During fiscal 1993, the Registrant adopted SFAS No. 109, "Accounting for
Income Taxes," which requires the use of the liability method in accounting
for income taxes. The cumulative effect of adopting this change totaled
$1,138,000 and has been reflected in the statements of income.
7. Supplemental disclosures of cash flow information:
Cash paid during year for: 1994 1993 1992
Interest $ 1,007,000 $ 306,000 $ 37,000
Income taxes $ 5,574,000 $ 5,018,000 $10,823,000
26-32
<PAGE>
<TABLE>
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE FIFTY-TWO WEEKS ENDED MAY 1, 1994
Balance Additions Retirements Balance
May 2, 1993 at Cost (A) or Sales Other May 1, 1994
Classification:
<S> <C> <C> <C> <C> <C>
Land $ 8,501,000 $ 654,000 $ (1,116,000) $ - $ 8,039,000
Buildings and improvements 96,180,000 2,469,000 (1,694,000) 11,946,000 108,901,000
Machinery and equipment 192,637,000 7,533,000 (2,965,000) 6,238,000 203,443,000
Construction in progress 10,248,000 17,583,000 - (18,081,000) 9,750,000
$307,566,000 $ 28,239,000 $(5,775,000) $ 103,000 $330,133,000
</TABLE>
(A) Includes land, buildings, refrigeration and manufacturing equipment at
various pork processing plants and hog production facilities.
27-32
<PAGE>
<TABLE>
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE FIFTY-TWO WEEKS ENDED MAY 2, 1993
Balance Additions Retirements Balance
Classification: May 3, 1992 at Cost (A) or Sales Other (B) May 2, 1993
<S> <C> <C> <C> <C> <C>
Land $ 5,143,000 $ 1,787,000 $ (477,000) $ 2,048,000 $ 8,501,000
Buildings and improvements 44,389,000 10,178,000 - 41,613,000 96,180,000
Machinery and equipment 118,035,000 20,508,000 (1,460,000) 55,554,000 192,637,000
Construction in progress 58,030,000 55,519,000 - (103,301,000) 10,248,000
$225,597,000 $ 87,992,000 $ (1,937,000) $ (4,086,000) $307,566,000
</TABLE>
(A) Includes land, buildings, refrigeration and manufacturing equipment at
various pork processing plants and hog production facilities.
(B) Includes transfer and write-off of assets related to Esskay plant shutdown.
28-32
<PAGE>
<TABLE>
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE FIFTY-THREE WEEKS ENDED MAY 3, 1992
Balance Additions Retirements Balance
Classification: Apr. 28,1991 at Cost (A) or Sales Other May 3, 1992
<S> <C> <C> <C> <C> <C>
Land $ 2,879,000 $ 2,323,000 $ (59,000) $ - $ 5,143,000
Buildings and improvements 28,560,000 2,096,000 (90,000) 13,823,000 44,389,000
Machinery and equipment 93,753,000 10,038,000 (2,988,000) 17,232,000 118,035,000
Construction in progress 27,918,000 61,236,000 - (31,124,000) 58,030,000
$153,110,000 $ 75,693,000 $ (3,137,000) $ (69,000) $225,597,000
</TABLE>
(A) Includes land, buildings, refrigeration and manufacturing equipment at
various pork processing plants and hog production facilities.
29-32
<PAGE>
<TABLE>
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE FIFTY-TWO WEEKS ENDED MAY 1, 1994
Balance Charged to Retirements Balance
Classification: May 2, 1993 Expense (A) or Sales Other May 1, 1994
<S> <C> <C> <C> <C> <C>
Buildings and improvements $ (21,402,000) $ (5,433,000) $ - $ - $ (26,835,000)
Machinery and equipment (81,725,000) (16,275,000) 723,000 - (97,277,000)
$(103,127,000) $ (21,708,000) $ 723,000 $ - $(124,112,000)
</TABLE>
(A) Buildings and improvements are depreciated over periods from 10 to 40
years. Machinery and equipment are being depreciated over periods from 3
to 25 years.
30-32
<PAGE>
<TABLE>
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE FIFTY-TWO WEEKS ENDED MAY 2, 1993
Balance Charged to Retirements Balance
Classification: May 3, 1992 Expense (A) or Sales Other (B) May 2, 1993
<S> <C> <C> <C> <C> <C>
Buildings and improvements $(17,612,000) $ (4,324,000) $ - $ 534,000 $(21,402,000)
Machinery and equipment (70,605,000) (14,328,000) 464,000 2,744,000 (81,725,000)
$(88,217,000) $(18,652,000) $ 464,000 $ 3,278,000 $(103,127,000)
</TABLE>
(A) Buildings and improvements are depreciated over periods from 10 to 40
years. Machinery and equipment are being depreciated over periods from 3
to 12 years.
(B) Includes transfer and write-off of assets related to Esskay plant shutdown.
31-32
<PAGE>
<TABLE>
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE FIFTY-THREE WEEKS ENDED MAY 3, 1992
Balance Charged to Retirements Balance
Classification: Apr. 28,1991 Expense (A) or Sales Other May 3, 1992
<S> <C> <C> <C> <C> <C>
Buildings and improvements $(14,557,000) $ (3,101,000) $ 46,000 $ - $(17,612,000)
Machinery and equipment (62,712,000) (9,658,000) 1,752,000 13,000 (70,605,000)
$(77,269,000) $(12,759,000) $ 1,798,000 $ 13,000 $(88,217,000)
</TABLE>
(A) Buildings and improvements are depreciated over periods from 10 to 40
years. Machinery and equipment are being depreciated over periods from 3
to 12 years.
32-32
SMITHFIELD FOODS, INC.
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF MAY 8, 1991
AS AMENDED BY
AMENDMENT NO. 1
DATED AS OF JANUARY 31, 1994
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . 4
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . 4
Section 4. Form of Right Certificates. . . . . . . . . . . . . . . . . 5
Section 5. Countersignature and Registration . . . . . . . . . . . . . 6
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8. Cancellation and Destruction of Right Certificates. . . . . 8
Section 9. Availability of Preferred Shares. . . . . . . . . . . . . . 8
Section 10. Preferred Shares Record Date . . . . . . . . . . . . . . . 9
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 14. Fractional Rights and Fractional Shares. . . . . . . . . . 16
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . 17
Section 16. Agreement of Rights Holders. . . . . . . . . . . . . . . . 17
Section 17. Right Certificate Holder Not Deemed a Stockholder. . . . . 18
Section 18. Concerning the Rights Agent. . . . . . . . . . . . . . . . 18
Section 19. Merger or Consolidation or Change of
Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 18
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . 19
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . 21
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . 21
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . 24
Section 26. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . 25
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 29. Benefits of this Agreement . . . . . . . . . . . . . . . . 25
Section 30. Severability . . . . . . . . . . . . . . . . . . . . . . . 25
Section 31. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 25
Section 32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 26
Section 33. Descriptive Headings . . . . . . . . . . . . . . . . . . . 26
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Exhibit A - Form of Certificate of Designations of
Smithfield Foods, Inc.
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred
Shares
<PAGE>
RIGHTS AGREEMENT
Agreement, dated as of May 8, 1991, as amended as of January 31, 1994,
between Smithfield Foods, Inc., a Delaware corporation (the "Company"), and
First Union National Bank of North Carolina (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common
Share (as hereinafter defined) of the Company outstanding on May 31, 1991
(the "Record Date"), each Right representing the right to purchase one one-
thousandth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of the Stated
Percentage (as such term is hereinafter defined) or more of the Common Shares
of the Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person"
as the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to the Stated Percentage (as such
term is hereinafter defined) or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person shall become the Beneficial
Owner of the Stated Percentage (as such term is hereinafter defined) or more
of the Common Shares of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of the
Company, then such Person shall be deemed to be an "Acquiring Person."
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote or
dispose of (as determined pursuant to Rule 13d-3 of the General Rules
and Regulations under the Exchange Act) pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own, any security
if the agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section 1(c)(ii)(B)) or disposing
of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the Commonwealth of Virginia or the
State of North Carolina are authorized or obligated by law or executive order
to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
Charlotte, North Carolina time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Charlotte, North Carolina
time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean
the shares of common stock, par value $.50 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting
power, or other power to control or direct the management, of such other
Person or, if such other Person is a Subsidiary of another Person, of the
Person or Persons which ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(h) "Final Expiration Date" shall have the meaning set forth in Section
7 hereof.
(i) "Person" shall mean any individual, firm, corporation, partnership
or other entity, and shall include any successor (by merger or otherwise) of
such entity.
(j) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the Company
having the rights and preferences set forth in the Form of Certificate of
Designations attached to this Agreement as Exhibit A and, to the extent there
are not sufficient shares of Series A Junior Participating Preferred Stock
authorized to permit full exercise of the Rights, any other series of Junior
Participating Preferred Stock, par value $1.00 per share, of the Company
designated for such purpose and containing terms substantially similar to the
terms of Series A Junior Participating Preferred Stock.
(k) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(l) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such.
(m) "Stated Percentage" shall mean: (i) with respect to any Person (or
any Person, together with all Affiliates and Associates of such Person, as
the case may be) who, immediately upon the execution and delivery of this
Agreement by the parties hereto, shall be the Beneficial Owner of 20% or more
of the Common Shares of the Company then outstanding, a percentage equal to
the sum of (a) .001% and (b) the percentage of Common Shares of the Company
of which such Person (or such Person, together with all Affiliates and
Associates of such Person, as the case may be) shall be the Beneficial Owner
immediately upon such execution and delivery; provided, however, that if at
any time after such execution and delivery, the percentage of then
outstanding Common Shares of the Company beneficially owned by such Person
(or by such Person, together with all Affiliates and Associates of such
Person, as the case may be) shall become less than 20%, then from such time
forward "Stated Percentage" shall mean with respect to such Person (or such
Person, together with all Affiliates and Associates of such Person, as the
case may be) 20%; and (ii) with respect to any other Person (or any other
Person, together with all Affiliates and Associates of such Person), 20%.
(n) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint such co-Rights
Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) The Rights in respect of the issued and outstanding Common Shares
will be issued and become effective on the Record Date. Until the earlier of
(i) the tenth day after the Shares Acquisition Date (or, if the tenth day
after the Shares Acquisition Date occurs before the Record Date, the close of
business on the Record Date) or (ii) the tenth Business Day (or such later
date as may be determined by action of the Board of Directors prior to such
time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to the terms of
any such plan) of, or of the first public announcement of the intention of
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of any such
plan) to commence, a tender or exchange offer the consummation of which would
result in any Person becoming the Beneficial Owner of Common Shares
aggregating the Stated Percentage or more of the then outstanding Common
Shares (including any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates for
Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares.
As soon as practicable after the Distribution Date, the Company will prepare
and execute, the Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested, send) by first-
class, insured, postage-prepaid mail, to each record holder of Common Shares
as of the close of business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right for each Common Share so held. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares,
in substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights attached
thereto. Until the Distribution Date (or the earlier of the Redemption Date
or the Final Expiration Date), the surrender for transfer of any certificate
for Common Shares outstanding on the Record Date, with or without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence
of this paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between
Smithfield Foods, Inc. and the Rights Agent named therein, dated as
of May 8, 1991, as amended (as amended or supplemented from time to
time, the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at
the principal executive offices of Smithfield Foods, Inc. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Smithfield Foods, Inc.
will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, Rights issued to any Person who becomes an Acquiring
Person (as defined in the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after
the Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 22 hereof, the
Right Certificates shall entitle the holders thereof to purchase such number
of one one-thousandths of a Preferred Share as shall be set forth therein at
the price per one one-thousandths of a Preferred Share set forth therein (the
"Purchase Price"), but the number of such one one-thousandths of a Preferred
Share and the Purchase Price shall be subject to adjustment as provided
herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, the Executive Vice President, any of
its Vice Presidents, or its Treasurer, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile
thereof, and shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall
not be valid for any purpose unless countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement
any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date
of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 14 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date,
any Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii)
hereof or that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of one one-thousandths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation
of the Right Certificate if mutilated, the Company will make and deliver a
new Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed
or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price for each one one-
thousandths of a Preferred Share as to which the Rights are exercised, at or
prior to the earliest of (i) the close of business on May 31, 2001 (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), or (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-thousandths of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be
$150.00, and shall be subject to adjustment from time to time as provided in
Section 11 or 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B)
requisition from the depositary agent depositary receipts representing such
number of one one-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company hereby directs the depositary agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash to be paid
in lieu of issuance of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder
of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such Right
Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, the number of Preferred Shares that
will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with this Section 7.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and
no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Right Certificates to
the Company, or shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company covenants and
agrees that it will take all such action as may be necessary to ensure that
all Preferred Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Preferred Shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or
of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Right Certificates to a person other than, or
the issuance or delivery of certificates or depositary receipts for the
Preferred Shares in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or to issue or
to deliver any certificates or depositary receipts for Preferred Shares upon
the exercise of any Rights until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose name
any certificate for Preferred Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares transfer books of the
Company are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder
of Preferred Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Pre-
ferred Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares
transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price
equal to the then current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu
of Preferred Shares, such number of Common Shares of the Company as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-thousandths of a Preferred Share
for which a Right is then exercisable and dividing that product by (y)
50% of the then current per share market price of the Company's Common
Shares (determined pursuant to Section 11(d) hereof) on the date of the
occurrence of such event. In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company
shall not take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights that are or
were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any
holder of such Rights shall thereafter have no right to exercise such
Rights under any provision of this Agreement. No Right Certificate
shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof
or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the preceding
sentence shall be cancelled.
(iii) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit
the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon
exercise of the Rights.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current
per share market price of the Preferred Shares (as defined in Section 11(d))
on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus
the number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and
the denominator of which shall be the number of Preferred Shares outstanding
on such record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration part
or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent. Preferred Shares owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then current per share market price of
the Preferred Shares on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent)
of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company to
be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of
this Section 11(d)(i)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the 30 consec-
utive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the
current per share market price of the Security is determined during a
period following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of such
Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and prior
to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the cur-
rent per share market price shall be appropriately adjusted to reflect
the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange
or, if the Security is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted
to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market
in the Security selected by the Board of Directors of the Company. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities exchange,
a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the
date hereof), multiplied by one thousand. If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one one-
millionth of a Preferred Share or one ten-thousandth of any other share or
security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction
which requires such adjustment or (ii) the date of the expiration of the
right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10 and 13 with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths
of a Preferred Share purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding imme-
diately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one one-
thousandths of a Preferred Share (calculated to the nearest one one-millionth
of a Preferred Share) obtained by (i) multiplying (x) the number of one one-
thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-thousandths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandths) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been
issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one one-
thousandths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-thousandths of the then par value, if any,
of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
of the Preferred Shares and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the Preferred Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder
a due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall determine to be advisable
in order that any consolidation or subdivision of the Preferred Shares,
issuance wholly for cash of any Preferred Shares at less than the current
market price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred
Shares, dividends on Preferred Shares payable in Preferred Shares or issuance
of rights, options or warrants referred to hereinabove in Section 11(b),
hereafter made by the Company to holders of its Preferred Shares shall not be
taxable to such stockholders.
(n) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A)
the number of one one-thousandths of a Preferred Share purchasable after such
event upon proper exercise of each Right shall be determined by multiplying
the number of one one-thousandths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (B) each Common Share outstanding immediately after
such event shall have issued with respect to it that number of Rights which
each Common Share outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares or the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event, directly or indirectly, (a) the Company shall
consolidate with, or merge with and into, any other Person, (b) any Person
shall consolidate with the Company, or merge with and into the Company and
the Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common Shares shall
be changed into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, or (c) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer), in one or more transactions, assets or earning
power aggregating 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person other than the
Company or one or more of its wholly-owned Subsidiaries, then, and in each
such case, proper provision shall be made so that (i) each holder of a Right
(except as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-thousandths of a Preferred
Share for which a Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of Preferred Shares, such number of Common Shares
of such other Person (including the Company as successor thereto or as the
surviving corporation) as shall equal the result obtained by (A) multiplying
the then current Purchase Price by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable and dividing that
product by (B) 50% of the then current per share market price of the Common
Shares of such other Person (determined pursuant to Section 11(d) hereof) on
the date of consummation of such consolidation, merger, sale or transfer;
(ii) the issuer of such Common Shares shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such issuer; and
(iv) such issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The Company shall not enter into any
transaction of the kind referred to in this Section 13 if at the time of such
transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on such date
as determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-
thousandths of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other
than fractions which are integral multiples of one one-thousandths of a
Preferred Share). Fractions of Preferred Shares in integral multiples of one
one-thousandths of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it; provided, that such
agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral
multiples of one one-thousandths of a Preferred Share, the Company shall pay
to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of one Preferred Share. For the purposes of this
Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and
in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common
Shares certificate made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
in the premises.
The Rights Agent shall be protected and shall incur no liability for, or
in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate
or certificate for the Preferred Shares or Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice
of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part
of any of the parties hereto; provided, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and
in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name
or in its changed name; and in all such cases such Right Certificates shall
have the full force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
the Chief Executive Officer, the President, the Executive Vice President, any
Vice President, the Treasurer or the Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify
the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability
of the Rights (including the Rights becoming void pursuant to Section
11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Section 3, 11, 13, 23 or
24, or the ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights evidenced
by Right Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any repre-
sentation or warranty as to the authorization or reservation of any Preferred
Shares to be issued pursuant to this Agreement or any Right Certificate or as
to whether any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
the Executive Vice President, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares or Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice
of such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by the holder
of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States, of the State of the
Commonwealth of Virginia or of the State of North Carolina (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the Commonwealth of Virginia or in the
State of North Carolina), in good standing, having an office in the State of
the Commonwealth of Virginia or in the State of North Carolina, which is
authorized under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the time held by
it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any
such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth day
following the Shares Acquisition Date (or, if the Shares Acquisition Date
shall have occurred prior to the Record Date, the close of business on the
fifteenth day following the record date), or (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption
price of $.01 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights by the Board of Directors may be made effective
at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; provided, however,
that the failure to give, or any defect in, any such notice shall not affect
the validity of such redemption. Within 10 days after such action of the
Board of Directors ordering the redemption of the Rights, the Company shall
mail a notice of redemption to all the holders of the then outstanding Rights
at their last addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof, and other than in
connection with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 11(a)(ii) hereof)
for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms
of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as
such term is defined in Section 11(b) hereof) for Common Shares exchangeable
for Rights, at the initial rate of one one-thousandths of a Preferred Share
(or equivalent preferred share) for each Common Share, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Shares
pursuant to the terms thereof, so that the fraction of a Preferred Share
delivered in lieu of each Common Share shall have the same voting rights as
one Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Preferred Shares issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares.
In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of a whole Common Share.
For the purposes of this paragraph (e), the current market value of a whole
Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders
of its Preferred Shares or to make any other distribution to the holders of
its Preferred Shares (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv) to
effect any consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the
Common Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then, in each such
case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the Preferred Shares for purposes of
such action, and in the case of any such other action, at least 10 days prior
to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice
of the occurrence of such event, which notice shall describe such event and
the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Smithfield Foods, Inc.
816 Connecticut Avenue, N.W., Suite 900
Washington, D.C. 20006
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
First Union National Bank of North Carolina
Shareholder Services Group
1154 Two First Union Center
Charlotte, North Carolina 28288-1154
Attention: J. Dean Presson
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the regis-
try books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders
of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent; provided, however, that from and
after the Distribution Date, this Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, the Common
Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions
hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
SMITHFIELD FOODS, INC.
Attest:
By:/s/Aaron D. Trub By:/s/Joseph W. Luter, III
Title: Secretary Title: Chairman of the Board,
President and Chief Executive
Officer
Attest: FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:/s/Angela G. Hester By:/s/Ed L. Hartgrove, Jr.
Title: Corporate Trust Officer Title: Vice President
<PAGE>
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
SMITHFIELD FOODS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
____________________________________
Smithfield Foods, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on May 8, 1991:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Certificate of Incorporation, as amended, the Board of Directors hereby
creates a series of Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), of the Corporation and hereby states the designation and
number of shares, and fixes the relative rights, preferences, and limitations
thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 25,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number
less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, par
value $.50 per share (the "Common Stock"), of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June, Septem-
ber and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1 or (b) subject to the provision
for adjustment hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, that in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share
on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters submit-
ted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights, and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, as amended, or in any
other Certificate of Designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $150,000 per share, plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal
to 1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock, except distributions made ratably on
the Series A Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall
at any time declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series A Preferred Stock were entitled imme-
diately prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
each share of Series A Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series
A Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all
series of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation, as amended,
of the Corporation shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote
of the holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chairman of the Board and attested by its
Secretary this 8th day of May, 1991.
____________________________________
Chairman of the Board, President and
Chief Executive Officer
Attest:
_______________________________
Vice President, Secretary and
Treasurer
<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER MAY 31, 2001 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
SMITHFIELD FOODS, INC.
This certifies that ____________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of May 8, 1991, as amended (as
amended or supplemented from time to time, the "Rights Agreement"), between
Smithfield Foods, Inc., a Delaware corporation (the "Company"), and the
Rights Agent named therein (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., Charlotte, North Carolina time, on
May 31, 2001 at the principal office of the Rights Agent, or at the office of
its successor as Rights Agent, one one-thousandth of a fully paid, non-
assessable share of Series A Junior Participating Preferred Stock, par value
$1.00 per share (the "Preferred Shares"), of the Company, at a purchase price
of $150.00 per one one-thousandths of a Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed. The number of Rights evidenced
by this Right Certificate (and the number of one one-thousandths of a
Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as
of May 8, 1991, based on the Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number of one
one-thousandths of a Preferred Share which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive offices
of the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price
of $.01 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's Common Stock, par value $.50 per share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandths of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of __________________, 1991.
ATTEST: SMITHFIELD FOODS, INC.
_____________________________ By:_________________________________
Countersigned:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By:__________________________
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________________________ hereby
sells, assigns and transfers unto
___________________________________________________
_____________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _________________, ____
__________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- - -----------------------------------------------------------------------------
- - -------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
___________________________________
Signature
- - -----------------------------------------------------------------------------
- - ----------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To SMITHFIELD FOODS, INC.
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: ,
___________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
Form of Reverse Side of Right Certificate -- continued
- - -----------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
Signature
- - -----------------------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase,
as the case may be, must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or
any change whatsoever.
In the event the certification set forth above in the Form of Assignment
or the Form of Election to Purchase, as the case may be, is not completed,
the Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment
or Election to Purchase will not be honored.
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On May 8, 1991, the Board of Directors of Smithfield Foods, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $.50 per
share (the "Common Shares"), of the Company. The dividend is payable on May
31, 1991 (the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $1.00 per share (the "Preferred Shares"), of the Company at a price
of $150.00 per one one-thousandth of a Preferred Share (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement") between the Company
and First Union National Bank of North Carolina, as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of the "Stated
Percentage" or more of the outstanding Common Shares or (ii) 10 business days
(or such later date as may be determined by action of the Board of Directors
prior to such time as any person or group of affiliated persons becomes an
Acquiring Person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of the "Stated
Percentage" or more of the outstanding Common Shares (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Share certificates outstanding as of the
Record Date, by such Common Share certificate with a copy of this Summary of
Rights attached thereto. Generally, "Stated Percentage" means 20%, except
with respect to any person or group which, at the time the Rights Agreement
was executed and delivered, was the beneficial owner of more than 20% of the
Company's Common Shares; and with respect to such person or group, "Stated
Percentage" means the percentage equal to the sum of (a) .001% and (b) such
person's or group's beneficial ownership percentage at such time of execution
and delivery, declining (but not below 20%) to the extent such person's or
group's beneficial ownership percentage decreases.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender for transfer of any certificates for Common
Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by
such certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date, and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 31, 2001 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at
a price, or securities convertible into Preferred Shares with a conversion
price, less than the then-current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences
of indebtedness or assets (excluding regular periodic cash dividends paid out
of earnings or retained earnings or dividends payable in Preferred Shares) or
of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such
case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an
aggregate dividend of 1,000 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $150,000 per share
but will be entitled to an aggregate payment of 1,000 times the payment made
per Common Share. Each Preferred Share will have 1,000 votes, voting
together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1,000 times the amount received
per Common Share. These rights are protected by customary anti-dilution
provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-thousandths interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the
then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the Right. In the
event that any person or group of affiliated or associated persons becomes an
Acquiring Person, proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right.
At any time after any Person becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one Common Share, or one
one-thousandth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other
than fractions which are integral multiples of one one-thousandth of a
Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Shares on the last trading day
prior to the date of exercise.
At any time prior to the close of business on the tenth day after the
first date of public announcement by the Company or an Acquiring Person that
an Acquiring Person has become such, the Board of Directors of the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). The redemption of the Rights may be made effective
at such time on such basis with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from
and after the Distribution Date, no such amendment may adversely affect the
interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated May 1991. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
SECOND AMENDED, RESTATED AND CONTINUED
REVOLVING CREDIT AGREEMENT
Dated as of March 1, 1994
Among
GWALTNEY OF SMITHFIELD, LTD.
THE SMITHFIELD PACKING COMPANY, INCORPORATED
PATRICK CUDAHY INCORPORATED
ESSKAY, INC.
BROWN'S OF CAROLINA, INC.
CAROLINA FOOD PROCESSORS, INC.
and
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH, AS AGENT
and
EACH BANK A PARTY HERETO
<PAGE>
PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I.
AMOUNTS AND TERMS OF THE ADVANCES
1.01 The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Making the Advances. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.03 Commitment Fee and Reduction of Commitment . . . . . . . . . . . . . 5
1.04 Repayment and Interest . . . . . . . . . . . . . . . . . . . . . . . 6
1.05 Mandatory Prepayments or Collateralization;
Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 7
1.06 Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.07 Payments and Computations. . . . . . . . . . . . . . . . . . . . . . 9
1.08 Payment on Non-Business Days . . . . . . . . . . . . . . . . . . . . 9
1.09 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.10 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . . . 10
1.11 Insufficient Funds . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.12 Defaulting Bank's Status . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II.
CONDITIONS PRECEDENT
2.01 Condition Precedent to Initial Advance . . . . . . . . . . . . . . . 13
2.02 Conditions Precedent to All Advances . . . . . . . . . . . . . . . . 14
2.03 Conditions as Covenants. . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.01 Representation and Warranties of the Borrower. . . . . . . . . . . . 15
ARTICLE IV.
COVENANTS OF BORROWER
4.01 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . 17
4.02 Negative Covenants 19
ARTICLE V.
EVENTS OF DEFAULT
5.01 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.02 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI.
THE AGENT
6.01 Authorization and Action . . . . . . . . . . . . . . . . . . . . . . 22
6.02 Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . 23
6.03 Rabobank as Bank . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.04 Bank Credit Decision, Etc. . . . . . . . . . . . . . . . . . . . . . 24
6.05 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.06 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.07 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII.
MISCELLANEOUS
7.01 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.02 Notices, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.03 No Waiver; Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 29
7.04 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.05 Costs, Expenses and Taxes. . . . . . . . . . . . . . . . . . . . . . 29
7.06 Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.07 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . 30
7.08 Consent to Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . 30
7.09 Binding Effect; Governing Law. . . . . . . . . . . . . . . . . . . . 31
7.10 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.11 Execution in Counterparts 32
7.12 Waiver of Jury Trial 32
7.13 No Novation 32
EXHIBITS
Exhibit A-1 - Gwaltney Promissory Note
Exhibit A-2 - Packing Promissory Note
Exhibit A-3 - Cudahy Promissory Note
Exhibit A-4- Esskay Promissory Note
Exhibit A-5- Brown's Promissory Note
Exhibit A-6- Carolina Promissory Note
Exhibit B- Second Amended and Restated and Continued Guaranty
Exhibit C- Form of Security Agreement
Exhibit D- Form of Request for Advance
Exhibit E- Borrowing Base Certificate
Exhibit F- Form of Waiver
Exhibit G- Form of Bank Agency Agreement
Schedule 1.10 - Specified Indebtedness
Schedule 4.01(e) - Accounts
Schedule 5.01(d) - Indebtedness
Schedule 5.01(i) - Environmental Disclosure
<PAGE>
INDEX TO DEFINITIONS
Page
Advance Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Available Commitment. . . . . . . . . . . . . . . . . . . . . . . . . 2
Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Borrower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Borrowing Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Borrowing Request . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Brown's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Carolina. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Committed Advances. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Credit Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Cudahy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Default Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Defaulting Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Environmental Authority . . . . . . . . . . . . . . . . . . . . . . . 21
Environmental Judgment or Order . . . . . . . . . . . . . . . . . . . 20
Environmental Requirements. . . . . . . . . . . . . . . . . . . . . . 21
Esskay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Gwaltney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1991 Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . 1
1991 Oral Finance Facility. . . . . . . . . . . . . . . . . . . . . . 1
Loan Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Loan Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Loan Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Majority Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Packing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Rabobank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Security Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Security Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 13
Term Federal Funds Rate . . . . . . . . . . . . . . . . . . . . . . . 7
Termination Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Uncommitted Advances. . . . . . . . . . . . . . . . . . . . . . . . . 3
Uncommitted Amount. . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECOND AMENDED, RESTATED AND CONTINUED
REVOLVING CREDIT AGREEMENT
Dated as of March 1, 1994
GWALTNEY OF SMITHFIELD, LTD., a Delaware corporation (Gwaltney"), THE
SMITHFIELD PACKING COMPANY, INCORPORATED, a Virginia corporation ("Packing"),
PATRICK CUDAHY INCORPORATED, a Delaware corporation ("Cudahy"), ESSKAY, INC.,
a Maryland corporation ("Esskay"), BROWN'S OF CAROLINA, INC., a North
Carolina corporation ("Brown's"), CAROLINA FOOD PROCESSORS, INC., a Delaware
corporation ("Carolina"; Gwaltney, Packing, Cudahy, Esskay, Brown's and
Carolina being individually referred to as a "Borrower" and collectively
referred to as the "Borrowers"), and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland", New York Branch, as
Agent for the Banks (the "Agent"), and each financial institution a party
hereto (being individually referred to as a "Bank" and collectively referred
to as the "Banks") agree as follows:
PRELIMINARY STATEMENTS
This Credit Agreement is a complete amendment, restatement and
continuation of a. the Amended, Restated and Continued Revolving Credit
Agreement (the "1991 Credit Agreement") dated as of November 27, 1991, as
amended as of August 12, 1992 and as of October 28, 1992, among Gwaltney,
Packing, Cudahy and Esskay and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch
("Rabobank"), with the 1991 Credit Agreement being a complete amendment,
restatement and continuation of the Revolving Credit Agreement dated as of
October 26, 1990, as amended as of October 30, 1991 between Gwaltney and
Rabobank and b. the Amended, Restated and Continued Oral Finance Facility
(the "1991 Oral Finance Facility") dated as of November 27, 1991 among
Gwaltney, Packing, Cudahy and Esskay and Rabobank, with the 1991 Oral Finance
Facility being a complete amendment, restatement and continuation of the Oral
Finance Facility dated as of October 26, 1990, as amended, between Gwaltney
and Rabobank. To the extent that any collateral, guaranty, pledge or
assignment has heretofore been given as security under or in connection with
the 1991 Credit Agreement or the 1991 Oral Finance Facility or any other
agreement, instrument or other document for the repayment of any indebtedness
incurred by the Borrowers to a Bank, the security agreements and other lien
documents (as the same may be amended, restated, continued, supplemented or
otherwise modified pursuant to or in connection with this Credit Agreement)
applicable thereto shall continue to secure the repayment of such
indebtedness previously incurred and presently outstanding, together with all
new indebtedness now or hereafter incurred by any or all of the Borrowers to
a Bank under this Credit Agreement or the Notes.
ARTICLE I
AMOUNTS AND TERMS OF THE ADVANCES
Section 1.01. The Advances a. Committed Facility. Each Bank severally
agrees, on the terms and conditions hereinafter set forth, to make advances
(the "Committed Advances") to any of the Borrowers from time to time during
the period from the date hereof to and including November 30, 1994 (the
"Termination Date") in an aggregate principal amount not to exceed at any
time outstanding for all of the Borrowers (1) the Available Commitment times
(2) the percentage (the "Credit Percentage" of such Bank) set forth for such
Bank on the then current Annex I attached hereto; provided, however, that if
at the time of determination the Commitments have been terminated or been
reduced to zero, the "Credit Percentage" of each Bank shall be the Credit
Percentage of such Bank in effect immediately prior to such termination or
reduction. The term "Available Commitment" shall mean, as of any date of
determination, the lesser of (x) the then current Available Borrowing Base
(as defined below) or (y) the difference of (A) $55,000,000, as such amount
may be reduced pursuant to Section 1.03(b) (the "Commitment") minus the
aggregate outstanding principal amount of Committed Advances outstanding on
such date. For purposes of this Agreement, "Available Borrowing Base" shall
mean, as of any date of determination, the then current aggregate Borrowing
Base (as defined in Exhibit E hereto) of all of the Borrowers minus the
aggregate outstanding principal amount of the Advances outstanding on such
date. Each Advance shall be in an amount of $100,000 or an integral multiple
thereof. Within the limits of the Commitment and with respect to Committed
Advances, each Borrower may borrow, prepay pursuant to Section 1.05 and
reborrow under this Section 1.01.
b. Uncommitted Facility. Each Bank severally agrees, on the terms and
conditions hereinafter set forth, to consider from time to time requests of
a Borrower for the Banks to make advances (the "Uncommitted Advances";
Committed Advances and Uncommitted Advances collectively referred to herein
as the "Advances") to any of the Borrowers during the period from the date
hereof to and including the Termination Date in an aggregate principal amount
not to exceed at any time outstanding for all of the Borrowers the
(1) Uncommitted Amount times (2) the Credit Percentage of each Bank. The
term "Uncommitted Amount" shall mean, on any date of determination, the
lesser of (x) the then Available Borrowing Base or (y) the difference of
(a) $55,000,000 minus (b) the aggregate outstanding principal amount of
Uncommitted Advances outstanding on such date. This Section 1.01(b) shall
not be a commitment to lend and each Bank will make, independently and
without reliance on the Agent or any other Bank, its decision to make an
Uncommitted Advance. Any one Bank may make an Uncommitted Advance without
any other Bank making an Uncommitted Advance at such time.
Section 1.02. Making the Advances a. Request for Advance.
(1) Each Committed Advance shall be made on notice (a "Borrowing
Notice") from the Borrower desiring such Advance to the Agent delivered
before 12 noon (New York City time) on a Business Day (as hereinafter
defined) specifying the amount of such Committed Advance and the Interest
Period (as hereinafter defined) therefor pursuant to Section 1.04. The Agent
shall give such Borrowing Notice to each Bank not later than 1:00 p.m. (New
York City time).
(2) When a Borrower wishes to request an Uncommitted Advance, it shall
give the Agent notice (a "Borrowing Request") delivered before 12 noon (New
York City time) on a Business Day specifying the requested amount and
Interest Period. Upon receipt of such Borrowing Request, the Agent shall
submit to such Borrower the interest rate per annum for such requested
Uncommitted Advance which interest rate shall in no event be less than the
interest rate set forth in Section 1.04(d) and shall provide each Bank with
such Borrowing Request and such interest rate. If a Bank shall desire to
make an Uncommitted Advance it shall notify (an "Advance Notice") such
Borrower, the Agent and each other Bank not later than 1:00 p.m. (New York
City time) of its willingness to make an Uncommitted Advance.
b. Disbursements.
(1) Not later than 2:00 p.m. (New York City time) on the date of
receipt of a Borrowing Notice or delivery of an Advance Notice, each
Bank with respect to a Borrowing Notice and any Bank delivering an
Advance Notice will make available for its account to the Agent at the
address of the Agent set forth in Annex I attached hereto, in
immediately available funds, the Advance to be made by it using the
wiring instructions for the Agent set forth on Annex I attached hereto
or as otherwise directed by the Agent. Unless the Agent shall have been
notified by a Bank prior to the date of such Committed Advance that such
Bank does not intend to make available to the Agent its portion of such
Committed Advance to be made on such date or if the Agent has received
an Advance Notice, the Agent may assume that such Bank will make such
amount available to the Agent on the date of the requested Advance and
the Agent may, in reliance upon such assumption, make available the
amount of the pro rata portion of such Advance to be provided by such
Bank.
(2) Provided that the applicable conditions set forth in Article
II hereof for such Advance are fulfilled and with respect to an Uncom
mitted Advance, an Advance Notice has been received, the Agent will make
such funds available to the Borrower requesting such Advance at the
account specified by the Borrower in such notice.
(3) If the amount described in Section 1.02(a) is not in fact made
available to the Agent by a Bank (such Bank being hereinafter referred
to as a "Defaulting Bank") and the Agent has nevertheless made available
to the Borrower the amount of the Advance to be provided by such Bank,
the Agent shall be entitled to recover such corresponding amount on
demand from such Defaulting Bank. If such Defaulting Bank does not pay
such corresponding amount forthwith upon the Agent's demand therefor,
the Agent shall promptly notify the Borrower requesting such Advance and
such Borrower shall immediately (but in no event later than two Business
Days after such demand) pay such corresponding amount to the Agent. The
Agent shall also be entitled to recover from such Defaulting Bank and
such Borrower, (x) interest on such corresponding amount in respect of
each day from the date such amount was made available to such Borrower
to the date such corresponding amount is recovered by the Agent, at a
rate per annum equal to either (a) if paid by such Defaulting Bank, for
the first two Business Days such amount remains owing, the Term Feder
al Funds Rate from time to time in effect and thereafter, at the Base
Rate or (b) if paid by such Borrower, the Base Rate plus (y) in each
case, an amount equal to costs (including legal expenses) and losses,
if any, incurred as a result of the failure of such Defaulting Bank to
provide such amount as provided in this Agreement. Nothing herein shall
be deemed to relieve any Bank from its obligation to fulfill its
commitments hereunder or to prejudice any rights which a Borrower may
have against any Bank as a result of any default by such Bank hereunder,
including, without limitation, the right of such Borrower to seek
reimbursement from any Defaulting Bank for any amounts paid by such
Borrower under clause (y) above on account of such Defaulting Bank's
default.
(4) No Bank shall be responsible for the failure of any other Bank
to make an Advance to be made by such other Bank; provided, however,
that the failure of any Bank to make an Advance to be made by it shall
not relieve the obligation of each other Bank to make the Advance to be
made by such other Bank.
Section 1.03. Commitment Fee and Reduction of Commitment a. The Borrowers
jointly and severally agree to pay to the Agent for the account of the Banks
a commitment fee on the average daily unused portion of the Commitment from
the date hereof until the Termination Date at the rate of 3/16 of 1% per
annum, payable in arrears on the last day of each calendar quarter during the
term of the Commitment, commencing on the last day of the calendar quarter
first occurring after the date hereof, and on the Termination Date.
b. The Borrowers shall have the right, upon at least five Business
Days' written notice to the Agent, to terminate in whole or reduce in part
the unused portion of the Commitment, provided, however, that each partial
reduction shall be in the amount of $100,000 or an integral multiple thereof.
The Agent will promptly transmit such notice to each Bank. Notwithstanding
the foregoing, in no event shall the Borrower be permitted to reduce the
Commitment below an aggregate amount equal to the aggregate principal amount
of Advances outstanding at such time. The Commitment once reduced pursuant
to this Section shall not be increased.
Section 1.04. Repayment and Interest a. Each Borrower shall, and hereby
jointly and severally agrees to, repay the aggregate unpaid principal amount
of all Advances, in accordance with the terms of a promissory note of such
Borrower to each Bank, in substantially the form of Exhibit A-1 hereto (as to
Gwaltney), Exhibit A-2 hereto (as to Packing), Exhibit A-3 hereto (as to
Cudahy), Exhibit A-4 hereto (as to Esskay), Exhibit A-5 hereto (as to
Brown's) and Exhibit A-6 hereto (as to Carolina) (individually, a "Note" and
collectively, the "Notes"), evidencing the indebtedness resulting from such
Advances and delivered to each Bank pursuant to Article II.
b. Each Borrower shall, and hereby jointly and severally agrees to,
pay interest on the unpaid principal amount of each Advance from the date of
such Advance until such principal is paid in full at the applicable rate set
forth below.
c. The period between the date of each Advance and the date of payment
in full of such Advance shall be divided into successive periods, each such
period being an "Interest Period" for such Advance. The initial Interest
Period for each Advance shall begin on the date of such Advance and end on
the last day of such period as selected by the Borrower desiring such
Advance, and thereafter, each subsequent Interest Period for such Advance
shall begin on the last day of the immediately preceding Interest Period for
such Advance and end on the last day of such period as selected by the
Borrower. The duration of each such Interest Period for each Advance shall
be overnight or one or three months, provided, however, that:
(1) the duration of any Interest Period for any Advance that
commences before the repayment date for such Advance and otherwise ends
after such repayment date shall end on such repayment date; and
(2) if a Borrower fails to select the duration of any Interest
Period for an Advance, the duration of such Interest Period shall be one
month.
d. Each Borrower shall, and hereby jointly and severally agrees to,
pay interest on the unpaid principal amount of each Committed Advance from
the date of such Committed Advance until such principal amount is due,
payable on the last day of each Interest Period for such Committed Advance,
at an interest rate per annum equal at all times during such Interest Period
for such Committed Advance to .65 of 1% per annum above the Term Federal
Funds Rate as applicable to such Interest Period; provided, however, that
interest on an Advance bearing interest at an overnight basis shall be
payable monthly in arrears on the last day of each month. The "Term Federal
Funds Rate" during any Interest Period for any Advance means an interest rate
per annum equal at all times during such Interest Period to the rate per
annum at which the Agent, as a branch of a foreign bank, in its sole
discretion, can acquire federal funds in the interbank term federal funds
market in New York City through brokers of recognized standing on the first
day of the Interest Period for such Committed Advance for a period equal to
such Interest Period and in the amount of such Committed Advance.
e. Each Borrower shall, and hereby jointly and severally agrees to,
pay interest on the unpaid principal amount of each Uncommitted Advance from
the date of such Uncommitted Advance until such principal amount is due,
payable on the last day of each Interest Period for such Uncommitted Advance,
at an interest rate per annum agreed to for such Uncommitted Advance by the
Borrower requesting the Uncommitted Advance and the Agent; provided, however,
that interest on an Uncommitted Advance bearing interest at an overnight
basis shall be payable monthly in arrears on the last day of each month.
f. On any overdue principal amount of an Advance, each Borrower shall,
and hereby jointly and severally agrees to, pay interest on demand at the
Default Rate from the date such amount becomes due to the date such amount is
paid in full. The "Default Rate" is a fluctuating rate equal to 3% per annum
above the rate of interest announced by the Agent from time to time in New
York, New York as the Agent's base rate (the "Base Rate"), each change in
such fluctuating interest rate to take effect simultaneously with the
corresponding change in the Base Rate.
Section 1.05. Mandatory Prepayments or Collateralization; Optional
Prepayments a. Each Borrower shall, and hereby jointly and severally agrees
to, within five Business Days following the delivery by it of each borrowing
base certificate under Section 4.01(c)(iv) hereof, either (1) prepay the
Advances made to any Borrower in the amount, if any, by which the outstanding
principal amount of the Advances made to any Borrower on the date of
prepayment under this Section 1.05(a) exceeds such Borrower's Borrowing Base
set forth on such borrowing base certificate, together with accrued interest
to the date of such prepayment on the amount prepaid, or (2) pledge and
assign to the Agent on behalf of the Banks additional collateral acceptable
to the Banks, in their sole discretion, and deliver all documentation that
the Agent or the Banks, in their sole discretion, may require in connection
with such pledge and assignment and the perfection of a first priority
security interest in such additional collateral, so that such Borrower's
Borrowing Base plus the value assigned by the Banks, in their sole
discretion, to such additional collateral equals or exceeds such outstanding
principal amount.
b. Each Borrower may, upon at least one Business Day's notice to the
Agent and each Bank, prepay the outstanding amount of any Advance made to
such Borrower in whole or in part with accrued interest to the date of such
prepayment on the amount prepaid; provided, however, that any prepayment of
any Advance shall be made on, and only on, the last day of an Interest Period
for such Advance; and provided, further, that each partial prepayment shall
be in a principal amount of at least $100,000.
Section 1.06. Increased Costs a. If either (1) the introduction of or any
change (including, without limitation, any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation or (2) the compliance by the Bank with any guideline or request
from any central bank or other governmental authority (whether or not having
the force of law), shall result in any increase in the cost to a Bank of
making, funding or maintaining any Advance, then the Borrowers shall, and
hereby jointly and severally agree to, from time to time, upon demand by such
Bank, pay to such Bank additional amounts sufficient to indemnify such Bank
against such increased cost. A certificate as to the amount of such
increased cost, submitted to the Borrowers by such Bank, shall, in the
absence of manifest error, be conclusive and binding for all purposes.
b. If either (1) the introduction of or any change in or in the
interpretation of any law or regulation or (2) compliance by a Bank with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount
of capital required or expected to be maintained by such Bank and such Bank
determines that the amount of such capital is increased by or based upon the
existence of such Bank's commitment to lend hereunder and other commitments
of this type, then, upon demand by such Bank, the Borrowers shall be jointly
and severally obligated to immediately pay to such Bank, from time to time as
specified by such Bank, additional amounts sufficient to compensate such Bank
in the light of such circumstances, to the extent that such Bank reasonably
determines such increase in capital to be allocable to the existence of such
Bank's commitment to lend hereunder. A certificate as to such amounts,
submitted to the Borrowers by such Bank, shall, in the absence of manifest
error, be conclusive and binding for all purposes.
Section 1.07. Payments and Computations The Borrowers shall make each
payment hereunder and under any Note or any other Loan Document not later
than 2:00 p.m. (New York City time) on the day when due in lawful money of
the United States of America to the Agent at its address specified in Annex
I attached hereto in same day funds. Each payment received by the Agent for
the account of the Banks under this Agreement or any Note shall be paid
promptly to such Bank, by wire transfer of same day funds in accordance with
the wiring instructions specified for such Bank in Annex I attached hereto,
for the account of such Bank. In the event the Agent fails to pay such
amounts to a Bank as provided in the previous sentence, the Agent shall pay
interest on such amount at a rate per annum equal to, for the first two
Business Days such amount remains unpaid, the Term Federal Funds Rate from
time to time in effect and thereafter, at the Base Rate. Each Borrower
hereby authorizes each Bank, if and to the extent payment of any amount is
not made when due under any Loan Document, to charge from time to time
against any account of such Borrower with such Bank any amount so due. All
computations of interest hereunder and under the Notes and commitment fee
hereunder shall be made by on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day) elapsed.
Section 1.08. Payment on Non-Business Days Whenever any payment to be made
hereunder or under the Notes shall be stated to be due, or whenever the last
day of any Interest Period would otherwise occur, on a Saturday, Sunday or a
public or bank holiday in New York City (any other day being a "Business
Day"), such payment may be made, and the last day of such Interest Period
shall occur, on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest or
commitment fee, as the case may be.
Section 1.09. Pro Rata Treatment Unless set forth to the contrary herein,
a. each Advance, b. each payment by a Borrower with respect to any Advance,
c. each other payment to be made by a Borrower or any Loan Party hereunder or
under any Loan Document and d. any amounts received with respect to the sale,
disposition, foreclosure or other transfer of any Collateral, shall be made
by, or credited to the account of, the Banks pro rata in the same proportion
at the time of such calculation as the outstanding principal amount of the
Advances owed to such Bank bears to the outstanding principal amount of the
Advances owed to all Banks. Each payment of interest on the Advances shall
be made for the account of the Banks pro rata in accordance with the amounts
of interest on the Advances due and payable to the respective Banks.
Section 1.10. Sharing of Payments, Etc a. Payments Under this Agreement.
Each Borrower agrees that, in addition to (and without limitation of) any right
of set-off, banker's lien or counterclaim a Bank may otherwise have, each Bank
shall be entitled, at its option, to offset balances held by it for the account
of the Borrower at any of such Bank's offices, in U.S. Dollars or in any other
currency, against any principal of, or interest on, any of such Bank's Advances
hereunder (or other obligations, if any, owing to such Bank hereunder) which is
not paid when due (regardless of whether such balances are then due to a
Borrower), in which case such Bank shall promptly notify such Borrower, all
other Banks and the Agent thereof; provided, however, such Bank's failure to
give such notice shall not affect the validity of such offset. If a Bank shall
obtain payment of any principal of, or interest on, any Advance made by it to a
Borrower under this Agreement through the exercise of any right of set-off,
banker's lien or counterclaim or similar right or otherwise or through voluntary
prepayments directly to a Bank or other payments made to a Bank not in
accordance with the terms of this Agreement and such payment, pursuant to
Section 1.09 hereof, should be distributed to the Banks pro rata in the same
proportion at the time of such calculation as the outstanding principal amount
of the Advances owed to such Bank bears to the outstanding principal amount of
the Advances owed to all Banks, such Bank shall promptly purchase from the other
Banks participations in (or, if and to the extent specified by such Bank, direct
interests in) the Advances made by the other Banks or other obligations arising
under or in connection with the Loan Documents owed to such other Banks in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Banks shall share the benefit of such payment
(net of any expenses which may be incurred by such Bank in obtaining or
preserving such benefit) pro rata in the same proportion at the time of such
calculation as the outstanding principal amount owed to such Bank bears to the
outstanding principal amount owed to all Banks. Each Borrower agrees that any
Bank so purchasing a participation (or direct interest) in the Advances made by
other Banks or other obligations arising under or in connection with the Loan
Documents owed to such other Banks may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Bank were a direct holder of Advances in the amount of such
participation.
b. Payments of Other Obligations. If a Bank shall obtain payment on
any other obligation, if any, owing by a Borrower or a Loan Party through the
exercise of any right of set-off, banker's lien or counterclaim or similar
right or otherwise or through voluntary prepayments or other payments made to
a Bank and an Event of Default or event which with the passage of time or
giving of notice or both would become an Event of Default has occurred or
would occur as a result of such payment, unless such Bank can conclusively
demonstrate that such funds are proceeds of collateral pledged to secure such
obligation in which case such funds shall not be shared hereunder, such
payment shall be distributed to the Banks pro rata in the same proportion at
the time of calculation as the outstanding principal amount of the Total
Obligations (as defined below) owed to such Bank bears to the outstanding
principal amount of the Total Obligations owed to all Banks. "Total
Obligations" shall mean the aggregate amount of any and all obligations then
due under this Agreement or any of the Specified Indebtedness. "Specified
Indebtedness" shall mean the indebtedness identified in Schedule 1.10 hereto.
Such Bank shall promptly purchase from the other Banks participations in (or,
if and to the extent specified by such Bank, direct interests in) the amount
owed to such other Banks in such amounts, or make such other adjustments from
time to time as shall be equitable, to the end that all the Banks shall share
the benefit of such payment (net of any expenses which may be incurred by
such Bank in obtaining or preserving such benefit) pro rata in the same
proportion at the time of calculation as the outstanding principal amount of
the Total Obligations owed to such Bank bears to the outstanding principal
amount of the Total Obligations owed to all Banks.
c. General Provisions. All the Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or
otherwise) if such payment is rescinded or must otherwise be restored.
Nothing contained herein shall require any Bank to exercise any such right or
shall affect the right of any Bank to exercise any such right with respect to
any other indebtedness or obligations of a Borrower.
Section 1.11. Insufficient Funds If the Agent receives funds insufficient
to pay in full the principal of any Advances and/or interest and/or fees and
expenses due and payable on any date such amounts are due, the Agent shall
distribute any such funds received by it:
a. first, to pay all fees and expenses owing to the Agent;
b. second, to pay all fees and expenses owing to the Banks pro
rata in accordance with the amount of such fees and expenses owing to
such Bank at such time;
c. third, to pay all accrued but unpaid interest on all
outstanding Advances pro rata in accordance with the second sentence of
Section 1.09 hereof; and
d. fourth, to pay all amounts of principal outstanding on the
Advances pro rata in accordance with the first sentence of Section 1.09
hereof.
Section 1.12. Defaulting Bank's Status Notwithstanding anything contained
herein to the contrary, but in addition to provisions regarding the failure
of a Bank to perform its obligations hereunder set forth elsewhere in this
Agreement, so long as any Bank shall be in default in its obligation to fund
its Credit Percentage of any Advance or shall have rejected its Commitment,
then such Bank shall not be entitled to receive any payments of principal of,
or interest on, its Commitment or the Advances or its share of any fees
payable hereunder, and for purposes of voting or consenting to matters with
respect to the Loan Documents, such Bank shall be deemed not to be a "Bank"
hereunder and such Bank's Credit Percentage shall be deemed to be zero,
unless and until (1) the obligations then outstanding are pro rata among all
of the Banks (including such defaulting Bank) based upon each Bank's Credit
Percentage immediately prior to such default, (2) such failure to fulfill its
obligation to fund is cured and such Bank shall have paid, as and to the
extent provided in this Agreement, to the applicable party, such amount then
owing together with interest on the amount of funds that such Bank failed to
timely fund or (3) the Advances under this Agreement shall have been declared
or shall have become immediately due and payable. No Commitment of any Bank
shall be increased or otherwise affected by any such failure or rejection by
any Bank. Any payments of principal or interest which would, but for this
Section, be paid to any Bank, shall be paid to the Banks who shall not be in
default under their respective Commitments and who shall not have rejected
any Commitment, for application to the Advances in such manner and order as
shall be determined by the Agent.
ARTICLE II
CONDITIONS PRECEDENT
Section 2.01. Condition Precedent to Initial Advance The obligation of each
Bank to make its initial Advance is subject to the condition precedent that
the Agent on behalf of the Banks shall have received at least two Business
Days before the day of such Advance the following, each dated the day of such
Advance, in form and substance satisfactory to each Bank:
a. The Notes.
b. A guaranty, duly executed by Smithfield Foods, Inc. (the
"Guarantor", and together with the Borrowers collectively the "Loan Parties"
and individually a "Loan Party"), in substantially the form attached hereto
as Exhibit B (the "Guaranty") in favor of the Agent on behalf of the Banks.
c. A security agreement, duly executed by each Borrower, in
substantially the form attached hereto as Exhibit C (collectively the
"Security Agreements", individually a "Security Agreement", each and together
with this Agreement, each Note, the Guaranty and each other document or
instrument executed and delivered by a Loan Party in connection with this
Agreement, collectively the "Loan Documents" and individually a "Loan
Document"), together with:
(1) Acknowledgement copies of proper Financing Statements (Form
UCC-1) duly filed under the Uniform Commercial Code of all jurisdicti
ons as may be necessary or, in the opinion of the Agent, desirable to
perfect the security interests created by the Security Agreements,
(2) Certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, listing the Financing Statements
referred to in paragraph (i) above and all other effective financing
statements which name each Borrower (under its present name and any
previous name) as debtor and which are filed in the jurisdictions
referred to in said paragraph (i), together with copies of such other
financing statements (none of which shall cover the collateral purported
to be covered by the Security Agreements),
(3) Evidence of the insurance required by the terms of the
Security Agreements,
(4) Evidence that all other actions necessary or, in the opinion
of the Agent, desirable to perfect and protect the security interests
created by the Security Agreements have been taken.
d. Certified copies of the resolutions of the Board of Directors of
each Loan Party approving each Loan Document to which it is a party, and of
all documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to such Loan Document.
e. A certificate of the Secretary or an Assistant Secretary of each
Loan Party certifying the names and true signatures of the officers of such
Loan Party authorized to sign each Loan Document to which it is a party and
the other documents to be delivered by it hereunder.
f. A favorable opinion of Woodrow W. Crook, counsel for the Loan
Parties in substantially the form of Exhibit D and as to such other matters
as the Agent may reasonably request.
g. A duly executed Bank Agency Agreement, in substantially the form
attached hereto as Exhibit G.
h. Evidence of payment in immediately available funds of the agency
fee owed to the Agent on the date of closing.
Section 2.02. Conditions Precedent to All Advances The obligation of a Bank
to make each Advance (including the initial Advance) shall be subject to the
further conditions precedent that on the date of such Advance a. the
following statements shall be true (and the receipt by the Borrower desiring
such Advance of the proceeds of such Advance shall be deemed to constitute a
representation and warranty by such Borrower that such statements are true on
such date):
(1) The representations and warranties contained in Section 3.01
of this Agreement, in Section 5 of the Guaranty and in Section 4 of each
Security Agreement are correct on and as of the date of such Advance as
though made on and as of such date,
(2) No event has occurred and is continuing, or would result from
such Advance, which constitutes an Event of Default (as defined in
Section 5.01 hereof) or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both; and
(3) After giving effect to such Advance, the aggregate outstanding
principal amount of the Advances does not exceed the Borrowing Base, of
the Borrower to which such Advance is made, on such date;
and b. the Agent shall have received such other approvals, opinions or
documents as the Agent or the Banks may reasonably request.
Section 2.03. Conditions as Covenants In the event the Banks make the
initial Advance prior to the satisfaction of all conditions precedent set
forth in Section 2.01 hereof, the Borrowers shall nevertheless cause such
condition or conditions to be satisfied within thirty days after the date of
the making of such initial Advance.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Borrower Each Borrower
represents and warrants as follows:
a. Such Borrower is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction indicated at the
beginning of this Agreement.
b. The execution, delivery and performance by such Borrower of each
Loan Document to which it is or will be a party are within such Borrower's
corporate powers, have been duly authorized by all necessary corporate
action, do not contravene (1) such Borrower's charter or by-laws or (2) law
or any contractual restriction binding on or affecting such Borrower, and do
not result in or require the creation of any lien, security interest or other
charge or encumbrance (other than pursuant hereto) upon or with respect to
any of its properties.
c. No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by such Borrower of any Loan
Document to which it is or will be a party.
d. This Agreement is, and each other Loan Document to which such
Borrower will be a party when delivered hereunder will be, legal, valid and
binding obligations of such Borrower enforceable against the Borrower in
accordance with their respective terms.
e. There is no pending or threatened action or proceeding affecting
such Borrower before any court, governmental agency or arbitrator, which may
materially adversely affect the financial condition or operations of such
Borrower.
f. No proceeds of any Advance will be used to acquire any security in
any transaction which is subject to Sections 13 and 14 of the Securities
Exchange Act of 1934.
g. Such Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System);
and no proceeds of any Advance will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock.
h. Schedule 4.01(e) is a true, correct and complete list of all or any
accounts maintained by a Borrower or Borrowers. Each of these accounts is
one of (1) a disbursement account for the payment of payroll, livestock
purchases or operating expenses in which a zero balance is maintained or
(2) a depositary account from which funds are cleared and deposited on a
daily basis with NationsBank into one of the accounts specified in Part I of
Schedule 4.01(e) or (3) an account of a Borrower in which not more than
$5,000 at any time is deposited that is used in the ordinary course of such
Borrower's business.
ARTICLE IV
COVENANTS OF THE BORROWERS
Section 4.01. Affirmative Covenants So long as any amount payable hereunder
or under the Notes or any other Loan Document shall remain unpaid or a Bank
shall have any Commitment hereunder, each Borrower will, unless the Banks,
pursuant to Section 7.01 hereof, shall otherwise consent in writing:
a. Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders, such compliance to
include, without limitation, paying before the same become delinquent all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith.
b. Visitation Rights; Collateral Examination. At any reasonable time
and from time to time, permit the Agent or a Bank or any agents or
representatives thereof, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, and conduct
unannounced field collateral examinations at least quarterly at the expense
of, the Borrower, and to discuss the affairs, finances and accounts of such
Borrower with any of its respective officers or directors.
c. Reporting Requirements. Furnish to each Bank: (1) as soon as
available and in any event 30 days after the end of each calendar month, the
balance sheet of such Borrower as of the end of such month and statement of
income of such Borrower for the period commencing at the end of the previous
fiscal year and ending with the end of such calendar month; (2) as soon as
available and in any event within 45 days after the end of each quarter, the
balance sheet of such Borrower as of the end of such quarter and statement of
income of such Borrower for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter certified by the chief
financial officer of such Borrower; (3) promptly after the filing or
receiving thereof, copies of all reports and notices which such Borrower
files under ERISA with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or which such Borrower
receives from such Corporation; (4) as soon as available and in any event
within five days after the end of each week (which week ends on Sunday) a
duly completed borrowing base certificate in the form of Exhibit E hereto, as
appropriate, setting forth such Borrower's Borrowing Base as of the last day
of such week and a summary, in form and substance satisfactory to the Agent
and the Banks and in reasonable detail, of the activity for each day of such
week with respect to the accounts of the Borrowers; (5) promptly, upon the
occurrence of an Event of Default or an event that but for the passage of
time or the giving of notice or both would constitute an Event of Default,
notice of such Event of Default or event; and (6) such other information
respecting the condition or operations, financial or otherwise, of such
Borrower as the Bank may from time to time reasonably request.
d. Storage Facilities. Use its best efforts to furnish to the Agent
on behalf of the Banks not later than March 31, 1994, a duly executed waiver,
in substantially the form of Exhibit F, from the owner (who is not a
Borrower) of each location where a Borrower stores any Collateral at anytime
or from time to time.
e. Cash Collateral. Treat all amounts received by a Borrower or
NationsBank (except (1) payments made by a Borrower to NationsBank with
respect to the Specified Indebtedness; (2) fees paid by a Borrower to
NationsBank for banking services, including without limitation service
charges on operating accounts and fees for certified or cashier's checks;
(3) fees paid to NationsBank for currency swaps; (4) fees paid to NationsBank
for interest rate hedges; and (5) fees paid to NationsBank for trustee
services with respect to benefit plans) as proceeds of the Collateral (unless
a Borrower can conclusively demonstrate to the Agent that such funds are
proceeds from collateral (other than the Collateral)) and deposit such
amounts in one of the accounts specified in Schedule 4.01(e) hereto. Each
Borrower agrees to notify in writing the Agent if an account, in addition to
those specified in Schedule 4.01(e), is opened and in such notice provide the
Agent with the name and address of the financial institution maintaining such
account and the account number therefore and, upon the request of the Agent
or a Bank, immediately to provide a letter agreement, in form and substance
satisfactory to the Agent and the Banks and substantially similar to
Exhibit G, from each financial institution maintaining any account or
accounts (including without limitation any account specified in
Schedule 4.01(e) for which a letter agreement has not been previously
provided) for Borrower. Each Borrower further agrees to maintain accounts
solely (x) for the purposes of making disbursements for the payment of
payroll, livestock purchases or operating expenses in which a zero balance is
maintained or (y) as a depositary account from which funds are cleared and
deposited on a daily basis with NationsBank in one of the accounts specified
in Part I of Schedule 4.01(e).
Section 4.02. Negative Covenants So long as any amount payable hereunder or
under the Notes or any other Loan Document shall remain unpaid or a Bank
shall have any Commitment hereunder, each Borrower will not, unless the
Banks, pursuant to Section 7.01 hereof, shall otherwise consent in writing:
a. Limitation on Types of Business. Enter into or engage in any
business other than pork production, hog farming or pork processing.
b. Accounts. Deposit, or permit to be deposited, proceeds of the
Collateral into an account other than the account(s) identified in
Schedule 4.01(e) hereof or any account for which the notice requirements of
Section 4.01(e) have been met.
c. Collateral. Include, after March 31, 1994, in a Borrower Base
Certificate any Collateral stored at a facility not owned by a Borrower and
for which a waiver has not been obtained pursuant to Section 4.01(d).
ARTICLE V
EVENTS OF DEFAULT
Section 5.01. Events of Default If any of the following events ("Events of
Default") shall occur and be continuing:
a. Any Borrower shall fail to pay any amount payable hereunder or
under a Note when due; or
b. Any representation or warranty made by any Loan Party (or any of
its officers) under or in connection with any Loan Document shall prove to
have been incorrect in any material respect when made; or
c. Any Loan Party shall fail to perform or observe any term, covenant
or agreement contained in Sections 4.01(e) or 4.02(b) or any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed and with respect to such other terms, covenants or
agreements any such failure shall remain unremedied for 10 days after written
notice thereof shall have been given to such Loan Party by the Agent or a
Bank; or
d. Any Loan Party or any of its subsidiaries shall fail to pay any
indebtedness (excluding indebtedness evidenced by the Note and including
without limitation the indebtedness described in Schedule 5.01(d)) of such
Loan Party or such subsidiary (as the case may be), or any interest or
premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such indebtedness; or any other default
under any agreement or instrument relating to any such indebtedness, or any
other event, shall occur and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such default or event is to accelerate, or to permit the acceleration of, the
maturity of such indebtedness; or any such indebtedness shall be declared to
be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment as scheduled on the date hereof) or
repurchased, prior to the stated maturity thereof; or
e. Any Loan Party or any of its subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against any
Loan Party or any of its subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for any substantial
part of its property, and, in the case of any such proceeding instituted
against it (but not instituted by it) either such proceeding shall remain
undismissed or unstayed for a period of 30 days or any of the actions sought
in such proceeding (including, without limitation, the entry of an order for
relief against it or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its property)
shall occur; or any Loan Party or any of its subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this
subsection (e); or
f. Any judgment or order for the payment of money in excess of
$250,000 shall be rendered against any Loan Party or any of its subsidiaries
and either (1) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (2) there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
g. Any provision of the Guaranty or any Security Agreement after
delivery thereof under Section 2.01 shall for any reason cease to be valid
and binding on the Guarantor or the Borrower party thereto, or the Guarantor
or the Borrower party thereto shall so state in writing; or
h. Any Security Agreement after delivery thereof under Section 2.01
shall for any reason, except to the extent permitted by the terms thereof,
cease to create a valid and perfected first priority security interest in any
of the collateral purported to be covered thereby; or
i. Any Environmental Judgment or Order shall be rendered against any
Loan Party or any Loan Party shall incur any Environmental Liability.
"Environmental Judgment or Order" shall mean any judgment, decree or order
arising from or in any way associated with any Environmental Requirements,
whether or not entered upon consent (other than the matters described in
Schedule 5.01(i)) or written agreements with an Environmental Authority or
other entity arising from or in any way associated with any Environmental
Requirements, whether or not incorporated in a judgment, decree or order.
"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. "Environmental Authority" shall mean any foreign,
federal, state, local or regional government that exercises any form of
jurisdiction or authority under any Environmental Requirement;
then, and in any such event, the Majority Banks (1) may, by notice to the
Borrowers, declare the obligation to make Advances to be terminated,
whereupon the same shall forthwith terminate, and (2) may, by notice to the
Borrowers, declare the Notes, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Notes, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived by the Borrowers;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to any Loan Party or any subsidiary under the Federal
Bankruptcy Code, (x) the obligation of each Bank to make Advances shall
automatically be terminated and (y) the Notes, all such interest and all such
amounts shall automatically become due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrowers.
Section 5.02. Loan Documents Subject to Article VI hereof, the Agent, upon
the direction of the Majority Banks, shall exercise any and all of its rights
under any and all of the other Loan Documents. "Majority Banks" means, as of
any date, Banks whose combined Credit Percentages equal or exceed 66-2/3%.
ARTICLE VI
THE AGENT
Section 6.01. Authorization and Action Each Bank hereby appoints and
authorizes the Agent to take such action as agent on such Bank's behalf and
to exercise such powers under this Agreement and the other Loan Documents as
are delegated to the Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. The power of attorney set
forth hereinabove shall be irrevocable and coupled with an interest. The
relationship between the Agent and the Banks shall be that of principal and
agent only and nothing herein shall be construed to deem the Agent a trustee
for any Bank nor to impose on the Agent duties or obligations other than
those expressly provided for herein. At the request of a Bank, the Agent
will forward to each Bank copies or, where appropriate, originals of the
documents delivered to the Agent pursuant to Section 2.01 hereof. The Agent
will also furnish to any Bank, upon the request of such Bank, a copy of any
certificate or notice furnished to the Agent by the Borrower, any Loan Party
or any other Affiliate of the Borrower, pursuant to this Agreement or any
other Loan Document not already delivered to such Bank pursuant to the terms
of this Agreement or any such other Loan Document. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks, and such
instructions shall be binding upon all Banks and all holders of Notes;
provided, however, that the Agent shall not be required to take any action
which exposes the Agent to personal liability or which is contrary to this
Agreement or any other Loan Document or applicable law. Not in limitation of
the foregoing, the Agent shall not exercise any right or remedy it or the
Banks may have under any Loan Document upon the occurrence of a Default or an
Event of Default unless the Majority Banks have so directed the Agent to
exercise such right or remedy.
Section 6.02. Agent's Reliance, Etc Neither the Agent nor any of its
directors, officers, agents, employees or counsel shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent:
a. may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Agent; b. may consult with legal
counsel (including counsel for the Borrower or any Loan Party), independent
public accountants and other experts selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants or experts; c. makes no warranty
or representation to any Bank and shall not be responsible to any Bank for
any statements, warranties or representations made in or in connection with
this Agreement or any other Loan Document; d. shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of any of this Agreement or any other Loan
Document or the satisfaction of any conditions precedent under this Agreement
or any Loan Document on the part of the Borrower or other Persons or inspect
the property, books or records of the Borrower or any other Person; e. shall
not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document, any other instrument or document furnished pursuant
thereto or any collateral covered thereby or the perfection or priority of
any Lien in favor of the Agent on behalf of the Banks in any such collateral;
and f. shall incur no liability under or in respect of this Agreement or any
other Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telephone or telecopy) believed by it
to be genuine and signed, sent or given by the proper party or parties.
Section 6.03. Rabobank as Bank Rabobank as a Bank hereunder, shall have the
same rights and powers under this Agreement and any other Loan Document as
any other Bank and may exercise the same as though it were not the Agent; and
the term "Bank" or "Banks" shall, unless otherwise expressly indicated,
include Rabobank in each case in its individual capacity. Rabobank and its
affiliates may each accept deposits from, maintain deposits or credit
balances for, invest in, lend money to, act as trustee under indentures of,
and generally engage in any kind of business with the Borrower, any Loan
Party or any other affiliate thereof as if it were any other bank and without
any duty to account therefor to the other Banks.
Section 6.04. Bank Credit Decision, Etc Each Bank expressly acknowledges
that neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or other Affiliates has made any representations or
warranties to such Bank and that no act by the Agent hereinafter taken,
including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Bank. Each
Bank acknowledges that it has, independently and without reliance upon the
Agent, any other Bank or counsel to the Agent, and based on the financial
statements of the Borrower and its Affiliates, its review of the Loan
Documents, the legal opinions required to be delivered to it hereunder, the
advice of its own counsel and such other documents and information as it has
deemed appropriate, made its own credit and legal analysis and decision to
enter into this Agreement and the transaction contemplated hereby. Each Bank
also acknowledges that it will, independently and without reliance upon the
Agent, any other Bank or counsel to the Agent, and based on such review,
advice, documents and information as it shall deem appropriate at the time,
continue to make its own decisions in taking or not taking action under the
Loan Documents. Except for notices, reports and other documents expressly
required to be furnished to the Banks by the Agent hereunder, the Agent shall
have no duty or responsibility to provide any Bank with any credit or other
information concerning the business, operations, property, financial and
other condition or creditworthiness of the Borrower, any Loan Party or any
other Affiliate thereof which may come into possession of the Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or other
Affiliates.
Section 6.05. Indemnification The Banks agree to indemnify the Agent (to
the extent not reimbursed by the Borrower and without limiting the obligation
of the Borrower to do so) pro rata in accordance with the Banks' respective
Credit Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time be
imposed on, incurred by, or asserted against the Agent in any way relating to
or arising out of the Loan Documents or any action taken or omitted by the
Agent under the Loan Documents; provided, however, that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct or
if the Agent fails to follow the written direction of the Majority Banks
unless such failure is pursuant to the advice of counsel of which the Banks
have received notice. Without limiting the generality of the foregoing, each
Bank agrees to reimburse the Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including counsel fees) incurred by the Agent
in connection with the preparation, execution, administration, or enforcement
of, or legal advice with respect to the rights or responsibilities of the
parties under, the Loan Documents, to the extent that the Agent is not
reimbursed for such expenses by the Borrower. The agreements in this Section
shall survive the payment of the Loans and all other amounts payable
hereunder or under the other Loan Documents and the termination of this
Agreement.
Section 6.06. Collateral Matters a. Each Bank authorizes and directs the
Agent to enter into the Loan Documents for the benefit of the Banks. Each
Bank hereby agrees that, except as otherwise set forth herein, any action
taken by the Majority Banks in accordance with the provisions of this
Agreement or the Loan Documents, and the exercise by the Majority Banks of
the powers set forth herein or therein, together with such other powers as
are reasonably incidental thereto, shall be authorized and binding upon all
of the Banks. The Agent is hereby authorized on behalf of all of the Banks,
without the necessity of any notice to or further consent from any Bank, from
time to time prior to an Event of Default, to take any action with respect to
any Collateral or Loan Documents which may be necessary to perfect and
maintain perfected the security interest in and liens upon the Collateral
granted pursuant to the Loan Documents.
b. The Banks hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (1) upon termination of the Commitments and payment and
satisfaction of all of the Secured Obligations at any time arising under or
in respect of this Agreement or the Loan Documents or the transactions
contemplated hereby or thereby, (2) constituting property being sold or
disposed of upon receipt of the proceeds of such sale by the Agent or (3) in
accordance with the terms of any Security Agreement. Upon request by the
Agent at any time, the Banks will confirm in writing the Agent's authority to
release particular types or items of Collateral pursuant to this Section
6.06.
c. Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Agreement, or consented to in writing
by the Majority Banks or all of the Banks, as applicable, and upon at least
five (5) Business Days' prior written request by the Borrower, the Agent
shall (and is hereby irrevocably authorized by the Banks to) execute such
documents as may be necessary to evidence the release of the Liens granted to
the Agent for the benefit of the Banks herein or pursuant hereto upon the
Collateral that was sold or transferred; provided, however, that (1) the
Agent shall not be required to execute any such document on terms which, in
the Agent's opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty and (2) such release shall not in any manner
discharge, affect or impair the obligations under any Loan Document or any
liens upon (or obligations of any Borrower) all interests retained by such
Borrower, including (without limitation) the proceeds of the sale, all of
which shall continue to constitute part of the Collateral. In the event of
any sale or transfer of Collateral, or any foreclosure with respect to any of
the Collateral, the Agent shall be authorized to deduct all of the expenses
reasonably incurred by the Agent from the proceeds of any such sale, transfer
or foreclosure.
d. The Agent shall have no obligation whatsoever to the Banks or to
any other Person to assure that the Collateral exists or is owned by the
Borrower or any Subsidiary or is cared for, protected or insured or that the
Liens granted to the Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising
at all or in any manner or under any duty of care, disclosure or fidelity any
of the rights, authorities and powers granted or available to the Agent in
this Section 6.06 or in any of the Loan Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event
related thereto, the Agent may act in any manner it may deem appropriate, in
its sole discretion, given the Agent's own interest in the Collateral as one
of the Banks and that the Agent shall have no duty or liability whatsoever to
the Banks, except in each case for its gross negligence or willful
misconduct.
Section 6.07. Successor Agent The Agent may resign at any time as Agent
under the Loan Documents by giving written notice thereof to the Banks and
the Borrower. In the event of a material breach of its duties hereunder, the
Agent may be removed as Agent under the Loan Documents at any time by the
Banks (other than a Bank serving as Agent). Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Majority
Banks, and shall have accepted such appointment, within 30 days after the
resigning Agent's giving of notice of resignation or the Majority Banks'
removal of the resigning Agent, then the resigning Agent may, on behalf of
the Banks, appoint a successor Agent, which shall be a Bank, if any Bank
shall be willing to serve, and otherwise shall be a commercial bank having
combined capital and surplus of at least $500,000,000 and reasonably
acceptable to the Majority Banks. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the resigning Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any
resigning Agent's resignation or removal hereunder as Agent, the provisions
of this Article VI shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under the Loan Documents.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc Any consent or approval required or permitted
by this Agreement or in any Loan Document to be given by the Banks may be
given, and any term of this Agreement or of any other Loan Document may be
amended, and the performance or observance by a Borrower of any terms of this
Agreement or such other Loan Document or the continuance of any Event of
Default may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written
consent of the Majority Banks. Notwithstanding the foregoing, the rates of
interest on the Advances and the Notes, the dates on which any interest
payable by the Borrowers under any Loan Document is due, the Termination
Date, the amount and payment date of any fees (other than fees payable solely
to the Agent) and this Section 7.01 may not be amended, or a Borrower's
compliance therewith, may not be waived, without the written consent of all
the Banks. Further, the definition of Majority Banks (or any minimum
requirement necessary for the Banks or Majority Banks to take action
hereunder), Available Borrowing Base, Available Commitment, Uncommitted
Amount and Commitment may not be amended without the written consent of all
of the Banks. Further, the Form of Borrowing Base Certificate (Exhibit E),
the definitions used therein and the percentages and advance rates used in
calculating such Borrowing Base may not be amended without the written
consent (which may be given orally and confirmed in writing) of all of the
Banks. Further, no amendment, waiver or consent unless in writing and signed
by the Agent, in addition to the Banks required hereinabove to take such
action, shall affect the rights or duties of the Agent under this Agreement
or any of the other Loan Documents. Further, no Collateral at any time held
by the Agent shall be released or disposed of by the Agent nor shall the
Guarantor be released from the Guaranty unless all of the Banks so direct the
Agent. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or delay
or omission on the part of any Bank or the Agent in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon a Borrower shall entitle such Borrower to other or
further notice or demand in similar or other circumstances. Notwithstanding
any of the foregoing to the contrary, the consent of any Borrower shall not
be required for any amendment, modification or waiver of the provisions of
Article VI.
Section 7.02. Notices, Etc All notices and other communications provided
for under any Loan Document shall be in writing (including telegraphic, telex
or cable communication) and mailed, telegraphed, telexed, cabled or
delivered, if to any Borrower at 501 North Church Street, Smithfield,
Virginia 23430, Attention: Aaron D. Trub; and if to the Agent or a Bank, at
its address as specified in Annex I attached hereto; or, as to each party, at
such other address as shall be designated by such party in a written notice
to each other party. All such notices and communications shall, when mailed,
telegraphed, telexed or cabled, be effective when deposited in the mails,
delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively, except that notices to the
Agent and the Banks pursuant to the provisions of Article I shall not be
effective until received by the Agent or such Bank, as the case may be.
Notwithstanding the other provisions of this Section 7.02, the Agent and each
Bank may accept oral Borrowing Notices and Borrowing Requests pursuant to
Section 1.02 hereof, provided that neither the Agent nor a Bank shall incur
liability to any Borrower in acting on any such communication that the Agent
or such Bank believes in good faith to have been given by a person authorized
to give such notice on behalf of such Borrower or in the case of a Bank, the
Agent. Any confirmation sent by the Agent to any Borrower of any borrowing
under this Agreement shall, in the absence of manifest error, be conclusive
and binding for all purposes.
Section 7.03. No Waiver; Remedies No failure on the part of the Agent or a
Bank to exercise, and no delay in exercising, any right under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided
in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
Section 7.04. Accounting Terms All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistently applied, except as otherwise stated
herein.
Section 7.05. Costs, Expenses and Taxes a. The Borrowers jointly and
severally agree to pay on demand all costs and expenses in connection with
the preparation, execution, delivery, filing, recording and administration of
the Loan Documents and the other documents to be delivered under the Loan
Documents, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel (who may be in-house counsel) for the Agent
and each Bank, and local counsel who may be retained by said counsel, with
respect thereto and with respect to advising the Agent or a Bank as to its
rights and responsibilities under the Loan Documents, and all costs and
expenses (including reasonable counsel fees and expenses) in connection with
the enforcement of the Loan Documents and the other documents to be delivered
under the Loan Documents. In addition, the Borrowers jointly and severally
agree to pay any and all stamp and other taxes and fees payable or determined
to be payable in connection with the execution, delivery, filing and
recording of the Loan Documents and the other documents to be delivered under
the Loan Documents, and agrees to save each Bank harmless from and against
any and all liabilities with respect to or resulting from any delay in paying
or omission to pay such taxes and fees.
b. If, due to payments made by any Borrower pursuant to
Section 1.05(a) or due to acceleration of the maturity of the Advances
pursuant to Section 5.01 or due to any other reason, a Bank receives payments
of principal of any Advance other than on the last day of an Interest Period
relating to such Advance, the Borrower to which such Advance was made shall
pay to such Bank on demand any amounts required to compensate such Bank for
any additional losses, costs or expenses which it may incur as a result of
such payment, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Bank to fund or
maintain such Advance.
Section 7.06. Right of Set-off Upon the occurrence and during the
continuance of any Event of Default a Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Bank to or for the credit or the account of any Borrower against any and all
of the obligations of such Borrower now or hereafter existing under any Loan
Document, irrespective of whether or not such Bank shall have made any demand
under such Loan Document and although deposits, indebtedness or such
obligations may be unmatured or contingent. Such Bank agrees promptly to
notify such Borrower after any such set-off and application, provided that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of a Bank under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Bank may have.
Section 7.07. Severability of Provisions Any provision of this Agreement or
of any other Loan Document 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 or thereof or affecting the validity or unenforceability of
such provision in any other jurisdiction.
Section 7.08. Consent to Jurisdiction a. Each Borrower hereby irrevocably
submits to the jurisdiction of any New York State or Federal court sitting in
New York City in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which the Borrower is a
party, and each Borrower hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such New York
State court or in such Federal court. Each Borrower hereby irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. Each
Borrower irrevocably consents to the service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding by the mailing of copies of such process to such Borrower at its
address specified in Section 6.02. Each Borrower agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
b. Nothing in this Section 7.08 shall affect the right of the Agent
or a Bank to serve legal process in any other manner permitted by law or
affect the right of the Agent or a Bank to bring any action or proceeding
against any Borrower or its property in the courts of other jurisdictions.
Section 7.09. Binding Effect; Governing Law This Agreement shall be binding
upon and inure to the benefit of each Borrower, the Agent and each Bank and
their respective successors and assigns, except that no Borrower shall have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Banks. This Agreement and the
Note shall be governed by, and construed in accordance with, the laws of the
State of New York.
Section 7.10. Participations Each Bank may sell participations (without the
consent of the Agent, any Borrower or any other Bank) to one or more parties
in or to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the
Advances owing to it and the Note or Notes held by it); provided, however,
that (1) such Bank's obligations under this Agreement (including, without
limitation, its Commitment hereunder) shall remain unchanged, (2) such Bank
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (3) such Bank shall remain the holder of any
such Note for all purposes of this Agreement, (4) the Borrowers, the Agent,
and the other Banks shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement
and any other Loan Document and (5) such Bank shall not transfer, grant,
assign or sell any participation under which the participant shall have
rights to approve any amendment or waiver of this Agreement except to the
extent such amendment or waiver would (a) extend the final maturity date or
the date of the payments of any installment of fees or principal or interest
of any Advances in which such participant is participating, (b) reduce the
amount of any installment of principal of the Advances in which such
participant is participating, (c) reduce the interest rate applicable to the
Advances in which such participant is participating, or (d) reduce any fees
payable to the Banks hereunder. In connection with the efforts of any Bank
to participate interests, such Bank may disclose any information in its
possession regarding a Borrower or any other Loan Party. Notwithstanding the
foregoing, without the consent of the Agent, any Bank or any Borrower a Bank
may make, carry or transfer Advances at, to or for the account of, any of its
branch offices or the office of an affiliate of such Bank or (6) any Bank may
pledge any Advances or Notes to any Federal Reserve Bank.
Section 7.11. Execution in Counterparts This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute but one
and the same agreement.
Section 7.12. WAIVER OF JURY TRIAL EACH OF THE BORROWERS, THE AGENT AND
EACH BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT TO
WHICH IT IS A PARTY OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.
Section 7.13. No Novation The parties hereto have entered into this
Agreement and the other Loan Documents solely to amend, restate and
restructure the terms of, and obligations owing under and in connection with,
the 1991 Credit Agreement and 1991 Oral Finance Facility. The parties do not
intend this Agreement or the other Loan Documents nor the transactions
contemplated hereby or thereby to be, and this Agreement and the other Loan
Documents and the transactions contemplated hereby or thereby shall not be,
construed to be a novation of any of the obligations owing by a Borrower
under or in connection with the 1991 Credit Agreement or the 1991 Oral
Finance Facility.
[Signatures on Next Page.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
GWALTNEY OF SMITHFIELD, LTD.
By_________________________________
Title:
THE SMITHFIELD PACKING
COMPANY, INCORPORATED
By_________________________________
Title:
PATRICK CUDAHY INCORPORATED
By_________________________________
Title:
ESSKAY, INC.
By_________________________________
Title:
BROWN'S OF CAROLINA, INC.
By_________________________________
Title:
CAROLINA FOOD PROCESSORS,
INC.
By_________________________________
Title:
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK,
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH,
individually and as agent
By_________________________________
Authorized Officer
By_________________________________
Authorized Officer
NATIONSBANK OF VIRGINIA, N.A.
By_________________________________
Title:
<PAGE>
ANNEX I to
Second Amended, Restated and Continued
Revolving Credit Agreement
dated March 1, 1994
Agent
Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank Nederland,"
New York Branch
245 Park Avenue
New York, NY 10167
Attn: Corporate Services
Telephone: 212-916-7800
Telecopy: 212-818-0233
Bank Credit Percentage
Cooperatieve Centrale Raiffeisen- 68.1818%
Boerenleenbank B.A., "Rabobank Nederland",
New York Branch
245 Park Avenue
New York, New York 10167
Attn: Corporate Services
Telephone: 212-916-7800
Telecopy: 212-818-0233
Wiring Instructions:
Bank of New York
ABA #021000018
A/C Rabobank Nederland, New York Branch
A/C #8026002533
Ref: Smithfield
<PAGE>
NationsBank of Virginia, N.A. 31.8182%
MD2-600-01-05
Corporate Bank
6610 Rockledge Drive
Bethesda, Maryland 20817-1876
Telephone: 301-571-0702
Telecopy: 301-571-0719
Wiring Instructions:
NationsBank of Virginia
ABA #051000017
Credit Name: Comm Loans
Details: Ref Smithfield Foods, Notify Comm Loans
<PAGE>
Schedule 1.10
Specified Indebtedness
1. Amended and Restated Credit Agreement dated as of June 28, 1993
between Smithfield Foods, Inc. and NationsBank of Virginia, N.A., providing
for a term loan which is guaranteed by Carolina Food Processors, Inc. ("CFP")
and secured by a lien on the plant and equipment of CFP in Bladen County,
North Carolina, as extended or amended from time to time.
2. Any reimbursement obligation due and owing and arising in
connection with that certain Letter of Credit Number SN-18075 dated July 25,
1990 issued by Sovran Bank, N.A., now known as NationsBank of Virginia, N.A.,
for the account of Esskay, Inc. and for the benefit of Aetna Casualty and
Surety Company, as extended or amended from time to time.
3. Any reimbursement obligation due and owing and arising in
connection with that certain Letter of Credit Number SN-6889 dated
February 14, 1986 issued by Sovran Bank, N.A., now known as NationsBank of
Virginia, N.A., for the account of The Smithfield Packing Company,
Incorporated and for the benefit of American Motorists Insurance Company, as
extended or amended from time to time.
<PAGE>
EXHIBIT A TO FIRST AMENDMENT
Schedule 4.01(e)
PART I
Bank Accounts with NationsBank
Name Account Number Purpose
Carolina Food Processors 1062 5954 Concentration
Gwaltney of Smithfield, Ltd. 0237 4501 Concentration
Gwaltney of Smithfield, Ltd. 0229 5415 Richmond Lockbox
Gwaltney of Smithfield, Ltd. 1057 4717 Valleydale Payroll
Gwaltney of Smithfield, Ltd. 1062 3260 Valleydale Cont. Fund
Schulderberg Kurdle Co. 1042 1446 Concentration
Smithfield Foods, Inc. 229 2971 Healthcare
Smithfield Packing Co., Inc. 0237 5788 Concentration
Smithfield Packing Co., Inc. 0229 5334 Richmond Lockbox
Smithfield Packing Co., Inc. 114 90711 Kinston Contingency
Smithfield Packing Co., Inc. 114 90088 Hourly Payroll
Smithfield Packing Co., Inc. 114 90041 Salaried Payroll
<PAGE>
PART II
Smithfield Foods, Inc.
Bank of Isle of Wight Main Account
P.O. Box 429 10 10187712
Smithfield, VA 23430
Bank of Isle of Wight Payroll
P.O. Box 429 10 10741712
Smithfield, VA 23430
First Union National Bank of Virginia Executive Payroll
115 Main Street 73 55247527
Smithfield, VA 23430
NationsBank of Virginia, N.A. Healthcare
8300 Greensboro Drive, Suite 300 02292971
McLean, VA 22102-3604
Browns of Carolina
United Carolina Bank Operating
P.O. Box 38 049-226-358-2
Kenansville, NC 28349
United Carolina Bank Payroll
P.O. Box 38 049-226-359-0
Kenansville, NC 28349
United Carolina Bank Control Disbursement
P.O. Box 38 049-226-362-0
Kenansville, NC 28349
Carolina Food Processors, Inc.
United Carolina Bank Hourly Payroll
Hwy 87 001 2301000443
Tar Heel, NC 28392
United Carolina Bank Salaried Payroll
Hwy 87
Tar Heel, NC 28392
NationsBank of Virginia, N.A. Main Account
8300 Greensboro Drive, Suite 300 1062 5954
McLean, VA 22102-3604
Att: Robert Sharpe, III
United Carolina Bank Contingency Fund
Hwy 87 230-100-035-4
Tar Heel, NC 28392
Bank of Isle of Wight General Disbursements
P.O. Box 429 1011519312
Smithfield, VA 23430
Att: Tracy Nelms
United Carolina Bank Livestock Disbursements
Hwy 87 230-100-043-5
Tar Heel, NC 28392
Esskay, Inc.
NationsBank of Virginia, N.A. 1042 1446
8300 Greensboro Drive, Suite 300
McLean, VA 22102-3604
Att: Robert Sharpe, III
Signet Bank Contingency Fund
P.O. Box 1077 235-30264
Baltimore, MD 21203
Maryland National Bank Payroll
6100 Executive Blvd., Suite 500 0602516
Rockville, MD 20852
Att: Cindy Plunkett
Bank of Isle of Wight Gen. Disbursements
P.O. Box 429 1 011 334 412
Smithfield, VA 23430
Att: Tracy Nelms
Gwaltney of Smithfield, Ltd.
NationsBank of Virginia, N.A. Concentration Account
8300 Greensboro Drive, Suite 300 0237-4501
McLean, VA 22102-3604
Att: Robert Sharpe, III
First National Bank of Randolph County Hancock
P.O Box 1328 02-26041
Asheboro, NC 27204
NationsBank of Virginia, N.A. Richmond Lockbox
8300 Greensboro Drive, Suite 300 0229-5415
McLean, VA 22102-3604
Att: Robert Sharpe, III
Bank of Isle of Wight Salaried Payroll
P.O. Box 429 DA 1010957612
Smithfield, VA 23430
Att: Tracy Nelms
Bank of Isle of Wight Hourly Payroll
P.O. Box 429 DA 1010953312
Smithfield, VA 23430
Att: Tracy Nelms
Bank of Isle of Wight General Disbursements
P.O. Box 429 1011 344 1 12
Smithfield, VA 23430
Att: Tracy Nelms
Bank of Isle of Wight Livestock Disbursements
P.O. Box 429 1011 316 8 12
Smithfield, VA 23430
Att: Tracy Nelms
Banco Popular De Puerto Rico 40-00038-9
P.O. Box 2708, FPO
San Juan, PR 00936
Southern Trust Bank of Georgia, N.A. 0-15-469-5
P.O. Box 1234
Atlanta, GA 30371-9802
North Carolina National Bank of Florida 4007141301
P.O. Box 25900
Tampa, FL 33630
First Pennsylvania Bank, N.A. 431-293-0
P.O. Box 7558
Philadelphia, PA 19101
Fleet Bank of New York 350623
10 Fountain Plaza
Buffalo, NY 14202
Mellon Bank 004-4126
Mellon Bank Center
Pittsburgh, PA 15259
NationsBank of Maryland, N.A. 84-0406-9
8300 Greensboro Drive, Suite 300
McLean, VA 22102-3604
Att: Robert Sharpe, III
Security Pacific Bank 412 715698 29
101 North First Avenue
Phoenix, AZ 85003
Att: Ms. Karen Roy
Crestar Lockbox
P.O. Box 26150 205160190
Richmond, VA 23260
NationsBank of Maryland, N.A. Maryland Lockbox
8300 Greensboro Drive, Suite 300 85-00042
McLean, VA 22102-3604
Att: Robert Sharpe, III
Citizens First National of New Jersey 211-1125-1
85 Jefferson Avenue
Westwood, NJ 07675
NationsBank of North Carolina, N.A. Charlotte Lockbox
8300 Greensboro Drive, Suite 300 000280123
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Valleydale Payroll
8300 Greensboro Drive, Suite 300 1057 4717
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Valleydale
8300 Greensboro Drive, Suite 300 Contingency Fund
McLean, VA 22102-3604 1062 3260
Att: Robert Sharpe, III
Smithfield Packing Company, Inc.
NationsBank of Virginia, N.A. Concentration Account
8300 Greensboro Drive, Suite 300 0237-5788
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Richmond Lockbox
8300 Greensboro Drive, Suite 300 0-229-5334
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Kinston Contingency
8300 Greensboro Drive, Suite 300 114-9071-1
McLean, VA 22102-3604
Att: Robert Sharpe, III
Maryland National Bank Landover Contingency
6100 Executive Blvd., Suite 500 535256630
Rockville, MD 20852
Att: Cindy Plunkett
Maryland National Bank Landover Payroll
6100 Executive Blvd., Suite 500 535256879
Rockville, MD 20852
Att: Cindy Plunkett
Bank of Isle of Wight General Disbursements
P.O. Box 429 1011-343-312
Smithfield, VA 23430
Att: Tracy Nelms
Bank of Isle of Wight Livestock Disbursements
P.O. Box 429 1011-341-712
Smithfield, VA 23430
Att: Tracy Nelms
NationsBank of Virginia, N.A. Hourly Payroll - Weekly
8300 Greensboro Drive, Suite 300 114-9006-8
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Salaried Payroll
8300 Greensboro Drive, Suite 300 114-9004-1
McLean, VA 22102-3604
Att: Robert Sharpe, III
Centura Bank 185-085-7
P.O. Box 6057
Rocky Mount, NC 27802-6057
Citi Bank 0-100613-018
GPO 4106
San Juan, PR 00936
Trust Company Bank 8800942479
P.O. Box 4418
Atlanta, GA 30302
Society Bank of Eastern Ohio, N.A. 881-2245-8
P.O. Box 500
Canton, OH 44701
Pittsburgh National Bank 1983029
700 Buelah Road
Turtle Creek, PA 15145
First National Bank & Trust Company 1323591
P.O. Box 158
Newton, PA 18940
Jupiter Tequesta National Bank 002 10020-9
250 Tequesta Drive
Tequesta, FL 33469
NationsBank of Maryland, N.A. 84-0405-0
8300 Greensboro Drive, Suite 300 Maryland Lockbox
McLean, VA 22102-3604
Att: Robert Sharpe, III
United Jersey Bank 160000424
P.O. Box 130
Hackensack, NJ 07602
Manufacturers & Traders Trust 01-069238-2
P.O. Box 767
Buffalo, NY 14240-0767
First Seminole Bank 132 1 1350 00 100647-2
531 Westlake Mary Blvd.
Lake Mary, FL 32795-1629
U.S. Bank - Oregon 0099 0006 249
P.O. Box 4412
Portland, OR 97208-4412
NationsBank of North Carolina, N.A. Charlotte Lockbox
8300 Greensboro Drive, Suite 300 000280115
McLean, VA 22102-3604
Att: Robert Sharpe, III
EXHIBIT A-1
PROMISSORY NOTE
$___________ Dated: March 1, 1994
FOR VALUE RECEIVED, the undersigned, GWALTNEY OF SMITHFIELD,
LTD. (the "Borrower"), a Delaware corporation, HEREBY PROMISES TO PAY to the
order of __________________ (the "Bank") on the Termination Date (as defined in
the Credit Agreement referred to below) the principal sum of _______ MILLION
DOLLARS ($________) or, if less, the aggregate unpaid principal amount of all
Advances (as defined below) made by the Bank to the Borrower outstanding on the
Termination Date.
The Borrower promises to pay interest on the unpaid
principal amount of each Advance from the date of such Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of
the United States of America to the Bank at __________________ in same day
funds. All Advances made by the Bank to the Borrower and all payments made on
account of principal hereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, (1) the Second Amended, Restated and Continued
Revolving Credit Agreement dated as of March 1, 1994 (the "Credit Agreement")
among the Borrower, The Smithfield Packing Company, Incorporated, Patrick Cudahy
Incorporated, Esskay, Inc., Brown's of Carolina, Inc., Carolina Food Processors,
Inc., Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, as Agent, and each of the banks a party thereto,
(2) the Guaranty (as defined in the Credit Agreement), and (3) each Security
Agreement (as defined in the Credit Agreement) thereto. The Credit Agreement,
among other things, a. provides for the making of advances (the "Advances") by
the Bank to the Borrower from time to time in an aggregate amount not to exceed
at any time outstanding the amount first above mentioned, and b. contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
[This Promissory Note is given in substitution for, and not
in repayment of, the Note dated August 12, 1992 made by the Borrower to the
order of the Bank in connection with the Amended, Restated and Continued
Revolving Credit Agreement dated as of November 27, 1991, as amended as of
August 12, 1992 and as of October 28, 1992.]
IN WITNESS WHEREOF, the undersigned has caused this Note to
be duly executed and delivered under seal by its authorized officers.
GWALTNEY OF SMITHFIELD, LTD.
By_________________________________
Title:
ATTEST:
By:_______________________
Title:
<PAGE>
EXHIBIT A-2
PROMISSORY NOTE
$______________ Dated: March 1, 1994
FOR VALUE RECEIVED, the undersigned, THE SMITHFIELD PACKING
COMPANY, INCORPORATED (the "Borrower"), a Virginia corporation, HEREBY PROMISES
TO PAY to the order of __________________ (the "Bank") on the Termination Date
(as defined in the Credit Agreement referred to below) the principal sum of
_______ MILLION DOLLARS ($________) or, if less, the aggregate unpaid principal
amount of all Advances (as defined below) made by the Bank to the Borrower
outstanding on the Termination Date.
The Borrower promises to pay interest on the unpaid
principal amount of each Advance from the date of such Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of
the United States of America to the Bank at __________________ in same day
funds. All Advances made by the Bank to the Borrower and all payments made on
account of principal hereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, (i) the Second Amended, Restated and Continued
Revolving Credit Agreement dated as of March 1, 1994 (the "Credit Agreement")
among the Borrower, The Smithfield Packing Company, Incorporated, Patrick Cudahy
Incorporated, Esskay, Inc., Brown's of Carolina, Inc., Carolina Food Processors,
Inc., Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, as Agent, and each of the banks a party thereto,
(ii) the Guaranty (as defined in the Credit Agreement), and (iii) each Security
Agreement (as defined in the Credit Agreement) thereto. The Credit Agreement,
among other things, (a) provides for the making of advances (the "Advances") by
the Bank to the Borrower from time to time in an aggregate amount not to exceed
at any time outstanding the amount first above mentioned, and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
[This Promissory Note is given in substitution for, and not
in repayment of, the Note dated August 12, 1992 made by the Borrower to the
order of the Bank in connection with the Amended, Restated and Continued
Revolving Credit Agreement dated as of November 27, 1991, as amended as of
August 12, 1992 and as of October 28, 1992.]
IN WITNESS WHEREOF, the undersigned has caused this Note to
be duly executed and delivered under seal by its authorized officers.
THE SMITHFIELD PACKING
COMPANY, INCORPORATED
By_________________________________
Title:
ATTEST:
By:_______________________
Title:
<PAGE>
EXHIBIT A-3
PROMISSORY NOTE
$____________ Dated: March 1, 1994
FOR VALUE RECEIVED, the undersigned, PATRICK CUDAHY
INCORPORATED (the "Borrower"), a Delaware corporation, HEREBY PROMISES TO PAY to
the order of __________________ (the "Bank") on the Termination Date (as defined
in the Credit Agreement referred to below) the principal sum of _______ MILLION
DOLLARS ($________) or, if less, the aggregate unpaid principal amount of all
Advances (as defined below) made by the Bank to the Borrower outstanding on the
Termination Date.
The Borrower promises to pay interest on the unpaid
principal amount of each Advance from the date of such Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of
the United States of America to the Bank at __________________ in same day
funds. All Advances made by the Bank to the Borrower and all payments made on
account of principal hereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, (i) the Second Amended, Restated and Continued
Revolving Credit Agreement dated as of March 1, 1994 (the "Credit Agreement")
among the Borrower, The Smithfield Packing Company, Incorporated, Patrick Cudahy
Incorporated, Esskay, Inc., Brown's of Carolina, Inc., Carolina Food Processors,
Inc., Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, as Agent, and each of the banks a party thereto,
(ii) the Guaranty (as defined in the Credit Agreement), and (iii) each Security
Agreement (as defined in the Credit Agreement) thereto. The Credit Agreement,
among other things, (a) provides for the making of advances (the "Advances") by
the Bank to the Borrower from time to time in an aggregate amount not to exceed
at any time outstanding the amount first above mentioned, and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
[This Promissory Note is given in substitution for, and not
in repayment of, the Note dated August 12, 1992 made by the Borrower to the
order of the Bank in connection with the Amended, Restated and Continued
Revolving Credit Agreement dated as of November 27, 1991, as amended as of
August 12, 1992 and as of October 28, 1992.]
IN WITNESS WHEREOF, the undersigned has caused this Note to
be duly executed and delivered under seal by its authorized officers.
PATRICK CUDAHY INCORPORATED
By_________________________________
Title:
ATTEST:
By:_______________________
Title:
<PAGE>
EXHIBIT A-4
PROMISSORY NOTE
$___________ Dated: March 1, 1994
FOR VALUE RECEIVED, the undersigned, ESSKAY, INC. (the
"Borrower"), a Maryland corporation, HEREBY PROMISES TO PAY to the order of
__________________ (the "Bank") on the Termination Date (as defined in the
Credit Agreement referred to below) the principal sum of _______ MILLION DOLLARS
($________) or, if less, the aggregate unpaid principal amount of all Advances
(as defined below) made by the Bank to the Borrower outstanding on the
Termination Date.
The Borrower promises to pay interest on the unpaid
principal amount of each Advance from the date of such Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of
the United States of America to the Bank at __________________ in same day
funds. All Advances made by the Bank to the Borrower and all payments made on
account of principal hereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, (i) the Second Amended, Restated and Continued
Revolving Credit Agreement dated as of March 1, 1994 (the "Credit Agreement")
among the Borrower, The Smithfield Packing Company, Incorporated, Patrick Cudahy
Incorporated, Esskay, Inc., Brown's of Carolina, Inc., Carolina Food Processors,
Inc., Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, as Agent, and each of the banks a party thereto,
(ii) the Guaranty (as defined in the Credit Agreement), and (iii) each Security
Agreement (as defined in the Credit Agreement) thereto. The Credit Agreement,
among other things, (a) provides for the making of advances (the "Advances") by
the Bank to the Borrower from time to time in an aggregate amount not to exceed
at any time outstanding the amount first above mentioned, and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
[This Promissory Note is given in substitution for, and not
in repayment of, the Note dated August 12, 1992 made by the Borrower to the
order of the Bank in connection with the Amended, Restated and Continued
Revolving Credit Agreement dated as of November 27, 1991, as amended as of
August 12, 1992 and as of October 28, 1992.]
IN WITNESS WHEREOF, the undersigned has caused this Note to
be duly executed and delivered under seal by its authorized officers.
ESSKAY, INC.
By_________________________________
Title:
ATTEST:
By:_______________________
Title:
<PAGE>
EXHIBIT A-5
PROMISSORY NOTE
$___________ Dated: March 1, 1994
FOR VALUE RECEIVED, the undersigned, BROWN'S OF CAROLINA,
INC. (the "Borrower"), a North Carolina corporation, HEREBY PROMISES TO PAY to
the order of __________________ (the "Bank") on the Termination Date (as defined
in the Credit Agreement referred to below) the principal sum of _______ MILLION
DOLLARS ($________) or, if less, the aggregate unpaid principal amount of all
Advances (as defined below) made by the Bank to the Borrower outstanding on the
Termination Date.
The Borrower promises to pay interest on the unpaid
principal amount of each Advance from the date of such Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of
the United States of America to the Bank at __________________ in same day
funds. All Advances made by the Bank to the Borrower and all payments made on
account of principal hereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, (i) the Second Amended, Restated and Continued
Revolving Credit Agreement dated as of March 1, 1994 (the "Credit Agreement")
among the Borrower, The Smithfield Packing Company, Incorporated, Patrick Cudahy
Incorporated, Esskay, Inc., Brown's of Carolina, Inc., Carolina Food Processors,
Inc., Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, as Agent, and each of the banks a party thereto,
(ii) the Guaranty (as defined in the Credit Agreement), and (iii) each Security
Agreement (as defined in the Credit Agreement) thereto. The Credit Agreement,
among other things, (a) provides for the making of advances (the "Advances") by
the Bank to the Borrower from time to time in an aggregate amount not to exceed
at any time outstanding the amount first above mentioned, and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
[This Promissory Note is given in substitution for, and not
in repayment of, the Note dated August 12, 1992 made by the Borrower to the
order of the Bank in connection with the Amended, Restated and Continued
Revolving Credit Agreement dated as of November 27, 1991, as amended as of
August 12, 1992 and as of October 28, 1992.]
IN WITNESS WHEREOF, the undersigned has caused this Note to
be duly executed and delivered under seal by its authorized officers.
BROWN'S OF CAROLINA, INC.
By_________________________________
Title:
ATTEST:
By:_______________________
Title:
<PAGE>
EXHIBIT A-6
PROMISSORY NOTE
$___________ Dated: March 1, 1994
FOR VALUE RECEIVED, the undersigned, CAROLINA FOOD
PROCESSORS, INC. (the "Borrower"), a Delaware corporation, HEREBY PROMISES TO
PAY to the order of __________________ (the "Bank") on the Termination Date (as
defined in the Credit Agreement referred to below) the principal sum of _______
MILLION DOLLARS ($________) or, if less, the aggregate unpaid principal amount
of all Advances (as defined below) made by the Bank to the Borrower outstanding
on the Termination Date.
The Borrower promises to pay interest on the unpaid
principal amount of each Advance from the date of such Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of
the United States of America to the Bank at __________________ in same day
funds. All Advances made by the Bank to the Borrower and all payments made on
account of principal hereof shall be recorded by the Bank and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, (i) the Second Amended, Restated and Continued
Revolving Credit Agreement dated as of March 1, 1994 (the "Credit Agreement")
among the Borrower, The Smithfield Packing Company, Incorporated, Patrick Cudahy
Incorporated, Esskay, Inc., Brown's of Carolina, Inc., Carolina Food Processors,
Inc., Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, as Agent, and each of the banks a party thereto,
(ii) the Guaranty (as defined in the Credit Agreement), and (iii) each Security
Agreement (as defined in the Credit Agreement) thereto. The Credit Agreement,
among other things, (a) provides for the making of advances (the "Advances") by
the Bank to the Borrower from time to time in an aggregate amount not to exceed
at any time outstanding the amount first above mentioned, and (b) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
[This Promissory Note is given in substitution for, and not
in repayment of, the Note dated August 12, 1992 made by the Borrower to the
order of the Bank in connection with the Amended, Restated and Continued
Revolving Credit Agreement dated as of November 27, 1991, as amended as of
August 12, 1992 and as of October 28, 1992.]
IN WITNESS WHEREOF, the undersigned has caused this Note to
be duly executed and delivered under seal by its authorized officers.
CAROLINA FOOD PROCESSORS,
INC.
By_________________________________
Title:
ATTEST:
By:_______________________
Title:
<PAGE>
EXHIBIT B
SECOND AMENDED, RESTATED AND CONTINUED GUARANTY, dated as of
March 1, 1994, made by SMITHFIELD FOODS, INC., a corporation organized and
existing under the laws of Delaware (the "Guarantor"), in favor of COOPERATIEVE
CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH,
as Agent for the banks a party to the Credit Agreement, as defined below (the
"Agent").
PRELIMINARY STATEMENTS.
The Agent and certain banks have entered into a Second
Amended, Restated and Continued Revolving Credit Agreement dated as of the date
hereof (said Agreement, as it may hereafter be amended or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) among
Gwaltney of Smithfield, Ltd. ("Gwaltney"), The Smithfield Packing Company,
Incorporated ("Packing"), Patrick Cudahy Incorporated ("Cudahy"), Esskay, Inc.
("Esskay"), Brown's of Carolina, Inc. ("Brown's") and Carolina Food Processors,
Inc. ("Carolina"; individually, a "Borrower" and collectively, the "Borrowers")
and the Agent and each of the banks a party thereto. It is a condition precedent
to the making of Advances by the Banks under the Credit Agreement that the
Guarantor, as owner of 100 percent of the outstanding shares of stock of each of
the Borrowers (other than Brown's) and 86 percent of the outstanding shares of
stock of Brown's, shall have executed and delivered this Guaranty.
The Credit Agreement is a complete amendment, restatement
and continuation (a) of the Amended, Restated and Continued Revolving Credit
Agreement (the "1991 Credit Agreement") dated as of November 27, 1991, as
amended as of August 12, 1992 and as of October 28, 1992, among Gwaltney,
Packing, Cudahy and Esskay and Cooperatieve Centrale Raiffeisen- Boerenleenbank
B.A., "Rabobank Nederland", New York Branch ("Rabobank"), with the 1991
Agreement being a complete amendment, restatement and continuation of the
Revolving Credit Agreement dated as of October 26, 1990, as amended as of
October 30, 1991 between Gwaltney and Rabobank and (b) the Amended and Restated
and Continued Oral Finance Facility (the "1991 Oral Finance Facility") dated as
of November 27, 1991 among Gwaltney, Packing, Cudahy and Esskay and the
Rabobank, with the 1991 Oral Finance Facility being a complete amendment,
restatement and continuation of the Oral Finance Facility dated as of October
26, 1990, as amended, between Gwaltney and Rabobank. This Guaranty is a
complete amendment, restatement and continuation of the Guaranty (the "1991
Guaranty") dated as of November 27, 1991 made by the Guarantor in favor of the
Rabobank. The 1991 Guaranty, as amended, restated and continued hereby, shall
continue to secure the repayment of the indebtedness previously incurred and
presently outstanding under the 1991 Credit Agreement and the repayment of the
indebtedness previously incurred and presently outstanding under the 1991 Oral
Finance Facility, together with all new indebtedness now or hereafter incurred
by the Borrowers to the Banks under the Credit Agreement, the Notes thereunder
or any other Loan Document.
NOW, THEREFORE, in consideration of the premises and in
order to induce the Bank to make Advances under the Credit Agreement, the
Guarantor hereby agrees as follows:
SECTION 1. Guaranty The Guarantor hereby unconditionally guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of one or more of the Borrowers now or hereafter
existing under the Credit Agreement, the Notes thereunder, the other Loan
Documents to which one or more of the Borrowers is a party, and any other
agreement or instrument relating thereto, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "Obligations"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent in enforcing any rights under this Guaranty.
SECTION 2. Guaranty Absolute The Guarantor guarantees that the Obligations
will be paid strictly in accordance with the terms of the Credit Agreement, the
Notes thereunder, the other Loan Documents, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of the Agent or a Bank with respect thereto. The liability of the
Guarantor under this Guaranty shall be absolute and unconditional irrespective
of:
(i) any lack of validity or enforceability of the
Credit Agreement, the Notes thereunder, any other Loan
Document, or any other agreement or instrument relating
thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any
consent to departure from the Credit Agreement, the Notes
thereunder, any other Loan Document and any other agreement
or instrument relating thereto;
(ii) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or
consent to departure from any other guaranty, for all or any
of the Obligations; or
(iii) any other circumstance which might
otherwise constitute a defense available to, or a discharge
of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by a Bank upon the insolvency, bankruptcy or
reorganization of one or more of the Borrowers or otherwise, all as though such
payment had not been made.
SECTION 3. Waiver The Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations and this
Guaranty and any requirement that the Agent or a Bank protect, secure, perfect
or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against one or more of the Borrowers or any
other person or entity or any collateral.
SECTION 4. Waiver of Subrogation The Guarantor hereby waives any claim, right
or remedy which the Guarantor may now have or hereafter acquire against any
Borrower that arises hereunder and/or from the performance by the Guarantor
hereunder including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification, or
participation in any claim, right or remedy of the Agent or a Bank against any
Borrower or any security which the Agent or a Bank now has or hereafter
acquires, whether or not such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise.
SECTION 5. Representations and Warranties The Guarantor hereby represents and
warrants as follows:
(a) The Guarantor is a corporation duly
incorporated, validly existing and in good standing under
the laws of the jurisdiction indicated at the beginning of
this Guaranty.
(b) The execution, delivery and performance by the
Guarantor of this Guaranty are within its corporate powers,
have been duly authorized by all necessary corporate action,
and do not contravene (i) the Guarantor's charter or by-laws
or (ii) law or any contractual restriction binding on or
affecting the Guarantor.
(c) No authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due
execution, delivery and performance by the Guarantor of this
Guaranty.
(d) This Guaranty is a legal, valid and binding
obligation of the Guarantor enforceable against it in
accordance with its terms.
(e) The balance sheets for the Guarantor and its
subsidiaries as at May 3, 1993, and the related statements
of income of the Guarantor and its subsidiaries for the
fiscal period then ended, copies of which have been
furnished to the Banks, fairly present the financial
condition of the Guarantor and its subsidiaries as at such
date and the results of the operations of the Guarantor and
its subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles
consistently applied, and since May 3, 1993, there has been
no material adverse change in such condition or operations.
(f) There is no pending or threatened action or
proceeding affecting the Guarantor or any of its
subsidiaries before any court, arbitrator or governmental
agency, which may materially adversely affect the financial
condition or operations of the Guarantor or any of its
subsidiaries or which purports to affect the legality,
validity or enforceability of this Guaranty.
SECTION 6. Covenants The Guarantor covenants and agrees that, so long as any
part of the Obligations shall remain unpaid or a Bank shall have any Commitment,
the Guarantor will, unless the Banks, in accordance with Section 7 hereof, shall
otherwise consent in writing:
(a) Reporting Requirements. Furnish to the Agent and each
Bank:
(i) as soon as available and in any event 30 days
after the end of each calendar month, (A) balance sheets of
the Guarantor and its subsidiaries as at the end of such
calendar month and statement of income of the Guarantor and
its subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such
calendar month and (B) a certificate of the chief financial
officer of the Guarantor certifying that the Guarantor is in
compliance in every respect with the terms of this Section
6;
(ii) as soon as available and in any event within 45
days after the end of each quarter of each fiscal year of
the Guarantor, balance sheets of the Guarantor and its
subsidiaries as of the end of such quarter and statements of
income of the Guarantor and its subsidiaries for the period
commencing at the end of the previous fiscal year and ending
with the end of such quarter, certified by the chief
financial officer of the Guarantor;
(iii) as soon as available and in any event
within 90 days after the end of each fiscal year of the
Guarantor, a copy of the financial statements for the
Guarantor and its subsidiaries for such year certified in a
manner acceptable to the Agent by independent public
accountants acceptable to the Banks; and
(iv) such other information respecting the condition
or operations, financial or otherwise, of the Guarantor or
any of its subsidiaries as the Agent or a Bank may from time
to time reasonably request.
(b) Compliance with Laws, Etc. Comply, and cause each of
its subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent contested in
good faith.
(c) Visitation Rights; Collateral Examination. At any
reasonable time and from time to time, permit the Agent or a Bank or any agents
or representatives thereof, to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Guarantor and
any of its subsidiaries, and to discuss the affairs, finances and accounts of
the Guarantor and any of its subsidiaries with any of their respective officers
or directors.
(d) Working Capital. Maintain on a consolidated basis (i)
an excess of current assets over current liabilities of not less than
$45,000,000 at all times on or before May 1, 1994 and $55,000,000 at any time
thereafter and (ii) a ratio of current assets to current liabilities of not less
than 1.25 to 1.00.
(e) Net Worth and Debt. Maintain on a consolidated basis
(i) a Tangible Net Worth (as hereinafter defined) of not less than $115,000,000,
and (ii) a ratio of Debt (as defined in subsection (f) below) to Tangible Net
Worth of not more than 2.50 to 1.00. "Tangible Net Worth" means the excess of
total assets over total liabilities, total assets and total liabilities each to
be determined in accordance with generally accepted accounting principles
consistent with those applied in the preparation of the financial statements
referred to in subsection 6(a), excluding, however, from the determination of
total assets (i) goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications,
licenses and rights in any thereof, and other similar intangibles, (ii) treasury
stock and capital stock, obligations or other securities of, or capital
contributions to, or investments in, any subsidiary, (iii) securities which are
not readily marketable, (iv) cash held in a sinking or other analogous fund
established for the purpose of redemption, retirement or prepayment of capital
stock or Debt, (v) any write-up in the book value of any asset resulting from a
revaluation thereof subsequent to the date hereof, and (vi) any items not
included in clauses (i) through (v) above which are treated as intangibles in
conformity with generally accepted accounting principles.
(f) Liens, Etc. Not create or suffer to exist, or permit
any subsidiary to create or suffer to exist, any lien, security interest or
other charge or encumbrance, or any other type of preferential arrangement, upon
or with respect to any of its properties or its subsidiaries', whether now owned
or hereafter acquired, or assign any right to receive income, in each case to
secure any Debt (as defined below) of any person or entity, other than (i)
purchase money liens or purchase money security interests upon or in any
property acquired or held by the Guarantor or any of its subsidiaries in the
ordinary course of business to secure the purchase price of such property or to
secure indebtedness incurred solely for the purpose of financing the acquisition
of such property, (ii) liens or security interests existing on such property at
the time of its acquisition, or (iii) liens in existence on the date hereof and
set forth on Schedule 6(f) hereto, provided that the aggregate principal amount
of the indebtedness secured by the liens or security interests referred to in
clauses (i), (ii) and (iii) above shall not exceed $140,000,000 at any time
outstanding.
"Debt" means (A) indebtedness for borrowed money or for the
deferred purchase price of property or services, (B) obligations as lessee under
leases which shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, (C) obligations under direct
or indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to in
clause (A) or (B) above, and (D) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of the Employee Retirement Income
Security Act of 1974 ("ERISA").
(g) Dividends, Etc. Not declare or pay any dividends,
purchase or otherwise acquire for value any of its capital stock now or
hereafter outstanding, or make any distribution of assets to its stockholders as
such, or permit any of its subsidiaries to purchase or otherwise acquire for
value any stock of any Borrower, except that it may declare and pay dividends on
its $10,000,000 principal amount of its 6.75% Cumulative Convertible Preferred
Stock in an aggregate amount not to exceed $675,000 during any fiscal year and
except that a Borrower may (i) declare and deliver dividends and distributions
payable in common stock of such Borrower and (ii) purchase or otherwise acquire
shares of its capital stock with the proceeds received from the issue of new
shares of its capital stock.
(h) Capital Expenditures. Not incur on a consolidated
basis with its subsidiaries, capital expenditures (other than expenditures for
normal replacements in the ordinary course of business) in the fiscal year
ending May 1, 1994 in excess of $32,000,000 and for the period thereafter prior
to the Termination Date in excess of $20,000.00.
(i) Limitation on Types of Business. Not enter into or
engage in, or permit any subsidiary to enter or engage in, any business other
than pork production, hog farming and pork processing and with respect to Ed
Kelly, Inc., the retail electronics business.
(j) Stock Repurchase. Not repurchase any of its capital
stock at any time.
(k) Funded Debt. Not permit Consolidated Funded Debt (as
hereinafter defined) at any time (i) during fiscal year 1994 to exceed an amount
equal to the product of (A) Consolidated Capitalization as of the last day of
fiscal year 1994 multiplied by (B) 55%, (ii) during each fiscal year thereafter
to exceed an amount equal to the product of (A) Consolidated Capitalization as
of the last day of the respective fiscal year multiplied by (B) 50%.
"Consolidated Funded Debt" means, at any date, the aggregate amount of Debt of
the Guarantor and/or its subsidiaries which by its terms is due and payable on a
date which is later than one (1) year from such date. "Consolidated
Capitalization" means the sum of Consolidated Funded Debt plus Tangible Net
Worth of the Guarantor and its subsidiaries.
SECTION 7. Amendments, Etc No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by the
Majority Banks other than with respect to Section 6(d), (e), (h) and (k) which
shall require the signature of all of the Banks, and then, in any event, such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 8. Addresses for Notices All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telex or cable
communication) and mailed, telegraphed, telexed, cabled or delivered, if to the
Guarantor, at its address at 501 North Church Street, Smithfield, Virginia
23430, Attention: Aaron D. Trub, if to a Bank, at its address specified in the
Credit Agreement, or as to each party at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and other communications shall, when mailed, telegraphed, telexed or
cabled, be effective when deposited in the mails, delivered to the telegraph
company, confirmed by telex answerback or delivered to the cable company,
respectively.
SECTION 9. No Waiver; Remedies No failure on the part of the Agent or a Bank
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 10. Right of Set-off Upon the occurrence and during the continuance of
any Event of Default each Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Bank to or for the credit
or the account of the Guarantor against any and all of the obligations of the
Guarantor now or hereafter existing under this Guaranty, irrespective of whether
or not the Agent on behalf of the Banks shall have made any demand under this
Guaranty and although such deposits, indebtedness or obligations may be
unmatured or contingent. Such Bank agrees promptly to notify the Guarantor
after any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Bank under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
Bank may have.
SECTION 11. Continuing Guaranty; Transfer of Notes This Guaranty is a
continuing guaranty and shall (i) remain in full force and effect until the
later of payment in full of the Obligations and all other amounts payable under
this Guaranty or the Termination Date, (ii) be binding upon the Guarantor, its
successors and assigns, and (iii) inure to the benefit of and be enforceable by
the Agent on behalf of the Banks and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), a Bank may assign
or otherwise transfer the Notes delivered under the Credit Agreement to any
other person or entity, and such other person or entity shall thereupon become
vested with all the rights in respect thereof granted to such Bank herein or
otherwise.
SECTION 12. Consent to Jurisdiction (a) The Guarantor hereby irrevocably
submits to the jurisdiction of any New York State or Federal court sitting in
New York City in any action or proceeding arising out of or relating to this
Guaranty, and the Guarantor hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such New York State
court or in such Federal court. The Guarantor hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding. The Guarantor irrevocably
consents to the service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding by the mailing of
copies of such process to the Guarantor to its address specified in Section 8.
The Guarantor agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Nothing in this Section 12 shall affect the right of
the Agent on behalf of the Banks to serve legal process in any other manner
permitted by law or affect the right of the Agent on behalf of the Banks to
bring any action or proceeding against the Guarantor or its property in the
courts of any other jurisdictions.
SECTION 13. Governing Law This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.
SECTION 14. WAIVER OF JURY TRIAL THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS GUARANTY.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
SMITHFIELD FOODS, INC.
By_________________________________
Title:
<PAGE>
SCHEDULE 6(f)
Liens
<PAGE>
EXHIBIT C
FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT dated as of March 1, 1994, made by
____________________, a _____________ corporation with an office at
________________________________ (the "Borrower"), to COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland", New York Branch, with an
office at 245 Park Avenue, New York, New York 10167, as Agent under the Credit
Agreement, defined below ("Agent").
PRELIMINARY STATEMENTS.
The Agent and certain banks have entered into a Second
Amended, Restated and Continued Revolving Credit Agreement dated as of the date
hereof (said Agreement, as it may hereafter be amended or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined) with [the
Borrower, Gwaltney of Smithfield, Ltd. ("Gwaltney"), The Smithfield Packing
Company, Incorporated ("Packing"), Patrick Cudahy Incorporated, ("Cudahy"),
Esskay, Inc. ("Esskay"), Brown's of Carolina, Inc. ("Brown's") and Carolina Food
Processors, Inc.("Carolina").]
The Credit Agreement is a complete amendment, restatement
and continuation (a) of the Amended, Restated and Continued Revolving Credit
Agreement (the "1991 Credit Agreement") dated as of November 27, 1991, as
amended as of August 12, 1992, and as of October 28, 1992, among Gwaltney,
Packing, Cudahy and Esskay and Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch ("Rabobank"), with the 1991
Agreement being a complete amendment, restatement and continuation of the
Revolving Credit Agreement dated as of October 26, 1990, as amended as of
October 30, 1991 between Gwaltney and Rabobank and (b) the Amended and Restated
and Continued Oral Finance Facility (the "1991 Oral Finance Facility") dated as
of November 27, 1991 among Gwaltney, Packing, Cudahy and Esskay and the
Rabobank, with the 1991 Oral Finance Facility being a complete amendment,
restatement and continuation of the Oral Finance Facility dated as of October
26, 1990 [, as amended,] between Gwaltney and Rabobank. This Security
Agreement, as amended, restated and continued hereby, shall continue to secure
the repayment of the indebtedness previously incurred and presently outstanding
under the 1991 Credit Agreement or the 1991 Oral Finance Facility, together with
all new indebtedness now or hereafter incurred by the Borrower to the Agent
under the Credit Agreement or the Borrower's Note thereunder.
It is a condition precedent to the making of Advances by the
Banks under the Credit Agreement that the Borrower shall have granted the
security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in
order to induce the Banks to make Advances under the Credit Agreement, the
Borrower hereby agrees as follows:
SECTION 1. Grant of Security The Borrower hereby pledges and assigns to the
Agent on behalf of the Banks, and hereby grants to the Bank a security interest
in, all of the Borrower's right, title and interest in and to the following,
whether now owned or hereafter acquired (the "Collateral"):
(a) All inventory in all of its forms, wherever
located, now or hereafter existing (including, but not
limited to, (i) all meat, meat products and raw materials
and work in process therefor, finished goods thereof, and
materials used or consumed in the manufacture or production
thereof including packaging and processing supplies, (ii)
goods in which the Borrower has an interest in mass or a
joint or other interest or right of any kind (including,
without limitation, goods in which the Borrower has an
interest or right as consignee), and (iii) goods which are
returned to or repossessed by the Borrower), and all
accessions thereto and products thereof and documents
therefor (any and all such inventory, accessions, products
and documents being the "Inventory");
(b) All farm products in all of their respective
forms, wherever located, now or hereafter existing,
including but not limited to (i) meat and products thereof
and (ii) all agricultural supplies used or consumed in the
Borrower's operations, including without limitation all
feed, meal, ingredients, seeds, drugs, medications,
vaccines, supplements and other chemicals used in feeding,
maintaining, growing, preserving or producing any farm
products, and (iii) all accessions to and products of and
documents for any of the foregoing (any and all such farm
products, accessions, products and documents being the "Farm
Products");
(c) All accounts, contract rights, chattel paper,
instruments, general intangibles and other obligations of
any kind (including, without limitation, payment-in-kind
certificates, rights to any government subsidy, set aside,
diversion, deficiency or disaster payment, and payments in
kind), now or hereafter existing, whether or not arising out
of or in connection with the sale or lease of goods or the
rendering of services, and all rights now or hereafter
existing in and to all security agreements, leases, and
other contracts securing or otherwise relating to any such
accounts, contract rights, chattel paper, instruments,
general intangibles or obligations (any and all such
accounts, contract rights, chattel paper, instruments,
general intangibles and obligations being the "Receivables",
and any and all such leases, security agreements and other
contracts being the "Related Contracts"); and
(d) All proceeds of any and all of the foregoing
Collateral (including, without limitation, proceeds which
constitute property of the types described in clauses (a),
(b) and (c) of this Section 1) and, to the extent not
otherwise included, all payments under insurance (whether or
not the Agent on behalf of the Banks is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any
of the foregoing Collateral.
SECTION 2. Security for Obligations This Agreement secures the payment of all
obligations of any or all of the Borrowers now or hereafter existing under the
Credit Agreement and each of the Notes thereunder, whether for principal,
interest, fees, expenses or otherwise, and all obligations of the Borrower now
or hereafter existing under this Agreement (all such obligations being the
"Obligations").
SECTION 3. Borrower Remains Liable Anything herein to the contrary
notwithstanding, (a) the Borrower shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Agent on behalf of the
Banks of any of the rights hereunder shall not release the Borrower from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Agent nor any Bank shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Agent or any Bank be obligated to
perform any of the obligations or duties of the Borrower thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
SECTION 4. Representations and Warranties The Borrower represents and warrants
as follows:
(a) All of the Inventory and Farm Products are
located at the places specified in the Schedule hereto. The
chief place of business and chief executive office of the
Borrower and the office where the Borrower keeps its records
concerning the Receivables, and all originals of all chattel
paper which evidence Receivables, are located at the address
first specified above for the Borrower. None of the
Receivables is evidenced by a promissory note or other
instrument.
(b) The Borrower owns the Collateral free and clear
of any lien, security interest, charge or encumbrance except
for the security interest created by this Agreement. No
effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file
in any recording office, except such as may have been filed
in favor of the Agent on behalf of the Banks relating to
this Agreement. The Borrower does not conduct business
under any name other than ___________________________.
(c) The Borrower has exclusive possession and
control of the Inventory and Farm Products.
(d) This Agreement creates a valid and perfected
first priority security interest in the Collateral, securing
the payment of the Obligations, and all filings and other
actions necessary or desirable to perfect and protect such
security interest have been duly taken.
(e) No authorization, approval or other action by,
and no notice to or filing with, any governmental authority
or regulatory body is required either (i) for the grant by
the Borrower of the security interest granted hereby or for
the execution, delivery or performance of this Agreement by
the Borrower or (ii) for the perfection of or the exercise
by the Agent on behalf of the Banks of its rights and
remedies hereunder, except for such financing statements as
may be filed in favor of the Agent on behalf of the Banks
relating to this Agreement.
SECTION 5. Further Assurances (a) The Borrower agrees that from time to time,
at the expense of the Borrower, the Borrower will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent or a Bank may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Agent on behalf of the Banks to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, the Borrower will: (i) mark conspicuously each
document included in the Inventory and each chattel paper included in the
Receivables and, at the request of the Agent on behalf of the Banks, each
Related Contract and each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Agent, indicating that such
document, chattel paper, Related Contract or Collateral is subject to the
security interest granted hereby; (ii) if any Receivable shall be evidenced by a
promissory note or other instrument, deliver and pledge to the Agent on behalf
of the Banks hereunder such note or instrument duly indorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and substance
satisfactory to the Agent on behalf of the Banks; and (iii) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Agent may
request, in order to perfect and preserve the security interest granted or
purported to be granted hereby.
(b) The Borrower hereby authorizes the Agent on behalf of
the Banks to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral without the
signature of the Borrower where permitted by law. A carbon, photographic or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) The Borrower will furnish to the Agent or the Banks
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as the
Agent or a Bank may reasonably request, all in reasonable detail.
SECTION 6. As to Inventory and Farm Products The Borrower shall:
(a) Keep the Inventory and Farm Products (other
than Inventory and Farm Products sold in the ordinary course
of business) at the places therefor specified in Section
4(a) or, upon 30 days' prior written notice to the Agent and
the Banks, at such other places in jurisdictions where all
action required by Section 5 shall have been taken with
respect to the Inventory and Farm Products.
(b) Pay promptly when due all property and other
taxes, assessments and government charges or levies imposed
upon, and all claims (including claims for labor, materials
and supplies) against, the Inventory and Farm Products,
except to the extent the validity thereof is being contested
in good faith.
SECTION 7. Insurance (a) The Borrower shall, at its own expense, maintain
insurance with respect to the Inventory and Farm Products in such amounts,
against such risks, in such form and with such insurers, as shall be
satisfactory to the Agent from time to time. Each policy for (i) liability
insurance shall provide for all losses to be paid to the Agent on behalf of the
Banks and the Borrower as their respective interests may appear and (ii)
property damage insurance shall provide for all losses (except for losses of
less than $3,000,000 per occurrence) to be paid directly to the Agent on behalf
of the Banks. Each such policy shall in addition (i) name the Borrower and the
Agent on behalf of the Banks as insured parties thereunder (without any
representation or warranty by or obligation upon the Agent or the Banks) as
their interests may appear, (ii) contain the agreement by the insurer that any
loss as set forth above shall be payable to the Agent on behalf of the Banks
notwithstanding any action, inaction or breach of representation or warranty by
the Borrower, (iii) provide that there shall be no recourse against the Agent or
the Banks for payment of premiums or other amounts with respect thereto and (iv)
provide that at least ten days' prior written notice of cancellation or of lapse
shall be given to the Agent by the insurer. The Borrower shall, if so requested
by the Agent, deliver to the Agent original or duplicate policies of such
insurance and, as often as the Agent may reasonably request, a report of a
reputable insurance broker with respect to such insurance. Further, the
Borrower shall, at the request of the Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 5 and cause the respective insurers to acknowledge
notice of such assignment.
(b) Reimbursement under any liability insurance maintained
by the Borrower pursuant to this Section 7 may be paid directly to the person
who shall have incurred liability covered by such insurance. In case of any
loss involving damage to Inventory or Farm Products when subsection (c) of this
Section 7 is not applicable, the Borrower shall make or cause to be made the
necessary replacements of such Inventory or Farm Products, and any proceeds of
insurance maintained by the Borrower pursuant to this Section 7 shall be paid to
the Borrower as reimbursement for the costs of such replacements.
(c) Upon (i) the occurrence and during the continuance of
any Event of Default, or (ii) the actual or constructive total loss (in excess
of $3,000,000 per occurrence) of any Inventory or Farm Products, all insurance
payments in respect of such Inventory or Farm Products shall be paid to and
applied by the Agent on behalf of the Banks as specified in Section 13(b).
SECTION 8. As to Receivables (a) The Borrower shall keep its chief place of
business and chief executive office and the office where it keeps its records
concerning the Receivables, and all originals of all chattel paper which
evidence Receivables, at the location therefor specified in Section 4(a) or,
upon 30 days' prior written notice to the Agent and the Banks, at such other
locations in a jurisdiction where all action required by Section 5 shall have
been taken with respect to the Receivables. The Borrower will hold and preserve
such records and chattel paper and will permit representatives of the Agent and
the Banks at any time during normal business hours to inspect and make abstracts
from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b),
the Borrower shall continue to collect, at its own expense, all amounts due or
to become due the Borrower under the Receivables. In connection with such
collections, the Borrower may take (and, at the Agent's reasonable direction,
shall take) such action as the Borrower or the Agent may deem necessary or
advisable to enforce collection of the Receivables; provided, however, that the
Agent on behalf of the Banks shall have the right at any time, upon the
occurrence and during the continuance of an Event of Default or an event which,
with the giving of notice or the lapse of time, or both, would become an Event
of Default and upon written notice to the Borrower of its intention to do so, to
notify the account debtors or obligors under any Receivables of the assignment
of such Receivables to the Agent on behalf of the Banks and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to the Borrower thereunder directly to the Agent on behalf of the Banks and,
upon such notification and at the expense of the Borrower, to enforce collection
of any such Receivables, and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as the Borrower might
have done. After receipt by the Borrower of the notice from the Agent referred
to in the proviso to the preceding sentence, (i) all amounts and proceeds
(including instruments) received by the Borrower in respect of the Receivables
shall be received in trust for the benefit of the Banks hereunder, shall be
segregated from other funds of the Borrower and shall be forthwith paid over to
the Agent on behalf of the Banks in the same form as so received (with any
necessary indorsement) to be held as cash collateral and either (A) released to
the Borrower so long as no Event of Default shall have occurred and be
continuing or (B) if any Event of Default shall have occurred and be continuing,
applied as provided by Section 13(b), and (ii) the Borrower shall not adjust,
settle or compromise the amount or payment of any Receivable, or release wholly
or partly any account debtor or obligor thereof, or allow any credit or discount
thereon.
SECTION 9. Transfers and Other Liens The Borrower shall not:
(a) Sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral, except
Inventory or Farm Products in the ordinary course of
business.
(b) Create or suffer to exist any lien, security
interest or other charge or encumbrance upon or with respect
to any of the Collateral to secure Debt of any person or
entity, except for the security interests created by this
Agreement.
SECTION 10. Agent Appointed Attorney-in-Fact The Borrower hereby irrevocably
appoints the Agent on behalf of the Banks the Borrower's attorney-in-fact, with
full authority in the place and stead of the Borrower and in the name of the
Borrower, the Agent on behalf of the Banks or otherwise, from time to time in
the Agent's discretion, to take any action and to execute any instrument which
the Agent may deem necessary or advisable to accomplish the purposes of this
Agreement (subject to the rights of the Borrower under Section 8), including,
without limitation:
(i) to obtain and adjust insurance required to be
paid to the Agent on behalf of the Banks pursuant to Section
7,
(ii) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of
the Collateral,
(iii) instruments, documents and chattel paper,
in connection with clause (i) or (ii) above, and
(iv) proceedings which the Agent may deem necessary
or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of the Agent on behalf of
the Banks with respect to any of the Collateral.
SECTION 11. Agent May Perform If the Borrower fails to perform any agreement
contained herein, the Agent on behalf of the Banks may itself perform, or cause
performance of, such agreement, and the expenses of the Agent incurred in
connection therewith shall be payable by the Borrower under Section 14(b).
SECTION 12. The Agent's Duties The powers conferred on the Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Agent shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral.
SECTION 13. Remedies If any Event of Default shall have occurred and be
continuing:
(a) The Agent on behalf of the Banks may exercise
in respect of the Collateral, in addition to other rights
and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code (the "Code")
(whether or not the Code applies to the affected Collateral)
and also may (i) require the Borrower to, and the Borrower
hereby agrees that it will at its expense and upon request
of the Agent forthwith, assemble all or part of the
Collateral as directed by the Agent and make it available to
the Agent at a place to be designated by the Agent which is
reasonably convenient to both parties and (ii) without
notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private
sale, at any of the Agent's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms
as the Agent may deem commercially reasonable. The Borrower
agrees that, to the extent notice of sale shall be required
by law, at least ten days' notice to the Borrower of the
time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been
given. The Agent may adjourn any public or private sale
from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) All cash proceeds received by the Agent in
respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in
the discretion of the Banks, be held by the Agent on behalf
of the Banks as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to
the Agent pursuant to Section 14) in whole or in part by the
Agent on behalf of the Banks against, all or any part of the
Obligations in such order as set forth in Section 1.11 of
the Credit Agreement. Any surplus of such cash or cash
proceeds held by the Agent on behalf of the Banks and
remaining after payment in full of all the Obligations shall
be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive such surplus.
SECTION 14. Indemnity and Expenses (a) The Borrower agrees to indemnify the
Agent from and against any and all claims, losses and liabilities growing out of
or resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from the Agent's
gross negligence or willful misconduct.
(b) The Borrower will upon demand pay to the Agent the
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Agent may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (iii) the exercise or enforcement
of any of the rights of the Agent hereunder or (iv) the failure by the Borrower
to perform or observe any of the provisions hereof.
SECTION 15. Continuing Security Interest; Transfer of Notes This Agreement
shall create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until the later of payment in full of the
Obligations or the Termination Date, (ii) be binding upon the Borrower, its
successors and assigns and (iii) inure to the benefit of and be binding on the
Agent and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), [a Bank may assign or otherwise
transfer the Notes held by it and delivered under the Credit Agreement to any
other person or entity, and such other person or entity shall thereupon become
vested with all the benefits in respect thereof granted to a Bank] herein or
otherwise. Upon the later of the payment in full of the Obligations or the
Termination Date, the security interest granted hereby shall terminate and all
rights to the Collateral shall revert to the Borrower. Upon any such
termination, the Agent on behalf of the Banks will, at the Borrower's expense,
execute and deliver to the Borrower such documents as the Borrower shall
reasonably request to evidence such termination.
SECTION 16. Governing Law; Terms This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that the validity or perfection of the security interest hereunder, or
remedies hereunder, in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of New York. Unless otherwise
defined herein or in the Credit Agreement, terms used in Article 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined.
IN WITNESS WHEREOF, the Borrower has caused this Agreement
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
[Insert Name of Borrower]
By_________________________________
Title:
<PAGE>
SCHEDULE
to
Security Agreement
Part I
Locations of Inventory and Farm Products:
Part II
Business Name:
<PAGE>
EXHIBIT D
[Date of initial Advance]
Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank
Nederland", New York Branch
245 Park Avenue
New York, New York 10167
NationsBank of Virginia, N.A.
[Address]
Esskay, Inc.
Smithfield Foods, Inc.
Patrick Cudahy Incorporated
Gwaltney of Smithfield, Ltd.,
The Smithfield Packing Company, Incorporated
Brown's of Carolina, Inc.
Carolina Food Processors, Inc.
Gentlemen:
We have acted as counsel to Esskay, Inc. ("Esskay"), Patrick
Cudahy Incorporated ("Cudahy"), Gwaltney of Smithfield, Ltd. ("Gwaltney"), The
Smithfield Packing Company, Incorporated ("Packing"); Brown's of Carolina, Inc.
("Brown's") and Carolina Food Processors, Inc. ("Carolina"); Esskay, Cudahy,
Gwaltney, Packing, Brown's and Carolina individually a "Borrower" and
collectively, the "Borrowers") and Smithfield Foods, Inc. (the "Guarantor"), in
connection with the Second Amended, Restated and Continued Revolving Credit
Agreement dated as of December 15, 1993 (the "Credit Agreement") among the
Borrowers and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch (the "Bank"). This opinion is delivered to you
pursuant to Section 2.01(f) of the Credit Agreement. Capitalized terms not
otherwise defined herein are used herein as defined in the Loan Documents (as
such term is defined in the Credit Agreement).
In connection with this opinion, we have (i) investigated
such questions of law, (ii) examined such corporate documents and records of the
Loan Parties, certificates of public officials and other documents and (iii)
received such information from officers and representatives of the Loan Parties,
as we have deemed necessary or appropriate for the purposes of this opinion. We
have examined, among other documents, the following documents:
(a) A copy of the Credit Agreement;
(b) An execution copy of the Note of each Borrower;
(c) An execution copy of the Guaranty;
(d) An execution copy of each of the Security
Agreements;
(e) Acknowledgment copies of the respective
financing statements (the "Financing Statements"), naming
each Borrower as debtor and the Bank as secured party, which
Financing Statements have been filed in the filing offices
listed in Schedule I hereto; and
(f) Certificates from ___________ as to copies of
financing statements on file with the filing offices listed
in Schedule I hereto.
In our examination of the documents referred to above, we
have assumed the due authorization, execution and delivery of the Credit
Agreement by the Bank, the authenticity of all documents submitted to us as
original documents, and the conformity to original documents of all documents
submitted to us as copies thereof. In our examination of the certificates
referred to in clause (f) above, we have assumed that all financing statements,
other than the Financing Statements, in which a Borrower is named as debtor,
have been properly filed and indexed in the appropriate filing offices in the
State, that such certificates are accurate and complete, and that the Bank has
no knowledge of the contents of any other financing statement.
In rendering our opinion, we have relied upon those
representations and warranties made to the Bank by each Borrower as set forth in
subsection (a) of Section 4 of the Security Agreement to which such Borrower is
a party and upon the accuracy of representations made by each Borrower to us in
a certificate to the effect that:
(A) Such Borrower has neither granted nor
permitted, nor does there otherwise exist, any execution or
attachment on any of the Collateral or any other interest,
lien, charge or encumbrance, which does not require steps
for perfection under the Uniform Commercial Code of any
jurisdiction to be enforceable against third parties; nor
has such Borrower assigned any of its Receivables.
(B) None of the Collateral consists or will consist
of consumer goods, crops, timber, minerals and the like
(including oil and gas) or accounts resulting from the sale
thereof, beneficial interests in a trust or a decedent's
estate, letters of credit, or items which are subject to (i)
a statute or treaty of the United States which provides for
a national or international registration or a national or
international certificate of title for the perfection of a
security interest therein or which specified a place of
filing different from that specified in the UCC for filing
to perfect such security interest or (ii) a certificate of
title statute of a jurisdiction other than those mentioned
in the last paragraph hereof.
(C) Collateral consisting of goods constitutes and
will hereafter constitute items which are mobile in nature
and, if they are installed on any property, are removable by
simple disconnection (in the nature of a stove or
refrigerator). Thus, no Collateral consisting of goods will
constitute fixtures.
(D) Such Borrower has not changed its name, whether
by amendment of its charter, by reorganization, or otherwise
within the past four months.
(E) Such Borrower has not changed its chief
executive office, chief place of business, or its office
where it keeps its records concerning the Receivables within
the past four months.
(F) None of the Receivables is or will be due from
the United States or any State of the United States or any
agency or department of the United States or any State.
Based upon and subject to the foregoing and the further
qualifications set forth below, we are of the opinion that:
1. (a) Each of Cudahy, Smithfield, Gwaltney and
Carolina is a corporation duly incorporated, validly existing and in good
standing under the laws of Delaware.
(b) Esskay is a corporation duly incorporated,
validly existing and in good standing under the laws of Maryland.
(c) Packing is a corporation duly incorporated,
validly existing and in good standing under the laws of Virginia.
(d) Brown's is a corporation duly incorporated,
validly existing and in good standing under the laws of North Carolina.
2. The execution, delivery and performance by each Loan
Party of the Loan Documents to which it is a party are within such Loan Party's
powers, have been duly authorized by all necessary corporate action, and do not
contravene (i) such Loan Party's charter or by-laws or (ii) any law, rule or
regulation applicable to such Loan Party (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System) or (iii)
any contractual or legal restriction binding on or affecting such Loan Party.
The Loan Documents to which such Loan Party is a party have been duly executed
and delivered on behalf of such Loan Party.
3. No authorization, order, license, franchise, consent
or approval or other action by, and no notice to or registration or filing with,
any governmental authority or regulatory body is required for (i) the due
execution, delivery, recordation, filing or performance by any Loan Party of any
Loan Document to which it is a party, (ii) the grant by each Borrower of the
respective security interest granted by the Security Agreement to which such
Borrower is a party or (iii) the perfection of or the exercise by the Bank of
its rights under any Loan Document, except for the filings referred to in
paragraph 6 below and as otherwise stated in said paragraph 6.
4. In any action or proceeding arising out of or relating
to any Loan Document in any court in the State of Virginia, such court would
recognize and give effect to the provisions of such Loan Document wherein the
parties thereto agree that such Loan Document shall be governed by, and
construed in accordance with, the law of the State of New York. If the law of
the State of Virginia were applied to determine the contractual rights and
liabilities created by such Loan Document, such Loan Document would be the
legal, valid and binding obligation of each Loan Party that is a party thereto
enforceable against such Loan Party in accordance with its terms, subject,
however, to (a) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, (b) the qualification that certain provisions of the Security
Agreement are or may be unenforceable in whole or in part under the law of the
State of Virginia, but the inclusion of such provisions does not affect the
validity of the Security Agreement and the Security Agreement contains adequate
remedies, if properly invoked, for the practical realization upon the security
afforded thereby, and (c) the effect of general principles of equity (regardless
whether such enforceability is considered in a proceeding in equity or at law).
5. There is no pending or, to the best of our knowledge
after due inquiry, threatened action or proceeding against any Loan Party before
any court, governmental agency or arbitrator which is likely to have a
materially adverse effect upon the financial condition or operations of such
Loan Party.
6. Each Security Agreement creates valid security
interests in favor of the Bank in the Inventory and in the Receivables, as
security for the payment of the Obligations, and the Financing Statements are in
appropriate form and have been duly filed pursuant to the UCC resulting in the
perfection of such security interests, except as follows:
(a) in the case of instruments (as such term is
defined in Article 9 of the UCC) not constituting part of
chattel paper (as such term is defined in Article 9 of the
UCC), the security interests of the Bank therein cannot be
perfected by the filing of the Financing Statements but will
be perfected if possession thereof is obtained in accordance
with the provisions of the Security Agreement.
(b) in the case of non-identifiable cash proceeds,
continuation of perfection of the Bank's security interest
therein is limited to the extent set forth in Section 9-306
of the UCC;
(c) in the case of all Collateral, Article 9 of the
UCC requires the filing of continuation statements within
the period of six months prior to the expiration of five
years from the date of the original filings, in order to
maintain the effectiveness of the filings referred to in
this paragraph; and
(d) in the case of property which becomes
Collateral after the date hereof, Section 552 of the Federal
Bankruptcy Code limits the extent to which property acquired
by a debtor after the commencement of a case under the
Federal Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by
the debtor before the commencement of such case.
We call to your attention that the perfection of the above
security interests will be terminated (i) as to any Collateral acquired by a
Borrower more than four months after such Borrower so changes its name, identity
or corporate structure as to make the Financing Statements seriously misleading,
unless new appropriate financing statements indicating the new name, identity or
corporate structure of such Borrower are properly filed before the expiration of
such four months and (ii) as to any Collateral consisting of Receivables, four
months after a Borrower changes its chief executive office to a new jurisdiction
outside the State of [Virginia] (or, if earlier, when perfection under the laws
of the State of [Virginia] would have ceased as set forth in subparagraph (c)
above) unless such security interests are perfected in such new jurisdiction
before that termination. (The security interests referred to in paragraph 6
above are referred to herein collectively as the "Security Interests").
7. The Security Interests are first priority.
The foregoing opinions are subject to the qualifications
that we express no opinion as to:
(i) any Borrower's rights in or title to any
Collateral;
(ii) the validity, perfection or priority of the
Security Interests as they relate to any interest in or
claim in or under any policy of insurance, except a claim to
proceeds payable by reason of loss or damage under insurance
policies maintained by the Borrowers with respect to
Inventory as required by and in compliance with Section 7 of
the Security Agreement;
(iii) the priority of the Security Interests
in:
(A) any Collateral consisting of goods as against
the rights of any party which may now or hereafter have a
perfected "purchase money security interest" (within the
meaning of Article 9 of the UCC) in such Collateral,
(B) any Collateral consisting of goods as against a
consignor which has delivered or may hereafter deliver such
goods to a Borrower under a true consignment (as
distinguished from a consignment intended as security),
(C) any Collateral consisting of goods as against
another security interest therein perfected under the laws
of any other jurisdiction,
(D) any Collateral consisting of goods as against a
security interest therein created by any person other than a
Borrower prior to its acquisition by such Borrower,
(E) any Collateral consisting of goods as against a
"buyer in ordinary course of business" (as such term is
defined in the UCC) of such Collateral,
(F) any Collateral consisting of chattel paper
which is not stamped by a Borrower with a legend showing the
Bank's security interest (as provided by the Security
Agreement) as against a purchaser of such chattel paper who
would take priority over an earlier security interest under
Section 9-308 of the UCC,
(G) any Collateral consisting of goods covered by a
document of title,
(H) any Collateral consisting of goods as against a
lien therein given by statute or rule of law for materials
or services,
(I) any Collateral consisting of goods which are
installed in or affixed to, or become a part of a product or
mass with, goods which are not items of Collateral,
(J) any Collateral referred to in subparagraphs (a)
and (b) of paragraph 6 above, and
(K) Collateral as against any lien creditor (as
such term is defined in Article 9 of the UCC) or any buyer
other than a buyer in ordinary course of business, to the
extent that the Security Interests therein purport to secure
any advances or other extensions of credit, other than
Advances made pursuant to the existing Commitment under the
Credit Agreement;
(iv) the priority of the Security Interests as
against any claim or lien in favor of the United States or
any agency or instrumentality thereof (including, without
limitation, federal tax liens and liens under Title IV of
the Employee Retirement Income Security Act of 1974).
Very truly yours,
<PAGE>
Schedule I to
Opinion of Messr. Woodrow W. Crook
Locations of filing of Financing Statements
<PAGE>
EXHIBIT E
BORROWING BASE CERTIFICATE
Valuation Date: __________, 19__
As to each Borrower, the term "Borrowing Base" used in the
Second Amended, Restated and Continued Revolving Credit Agreement dated as of
March 1, 1994 (capitalized terms not otherwise defined herein are used herein as
defined in such Agreement) among Gwaltney of Smithfield, Ltd., The Smithfield
Packing Company, Incorporated, Patrick Cudahy Incorporated, Esskay, Inc.,
Brown's of Carolina, Inc., Carolina Food Processors, Inc. and Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch,
as Agent (the "Agent") and the banks a party thereto (the "Banks") shall mean
such Borrower's portion of the following, as reflected on the attached detailed
schedule:
I. Consolidated Borrowing Base
(a) 75% of the market value of
inventory of the Borrowers
located in states where the Agent
on behalf of the Banks has a
perfected, first priority
security interest; plus $
(b) 75% of receivables of the
Borrowers that are not past due,
have a term of not more than 60
days and in which the Agent on
behalf of the Banks has a
perfected, first priority
security interest $
II. Minus $3,000,000 <$3,000,000>
Total Borrowing Base of the undersigned $
We certify to the Agent and the Banks, that the foregoing
and the attached detailed schedule, to be true and correct and not misleading in
any material respect on and as of the date hereof.
GWALTNEY OF SMITHFIELD, PATRICK CUDAHY
LTD. INCORPORATED
By___________________________ By___________________________
Chief Accounting Officer Chief Accounting Officer
THE SMITHFIELD PACKING ESSKAY, INC.
COMPANY, INCORPORATED
By___________________________ By___________________________
Chief Accounting Officer Chief Accounting Officer
BROWN'S OF CAROLINA, INC. CAROLINA FOOD
PROCESSORS, INC.
By___________________________ By___________________________
Chief Accounting Officer Chief Accounting Officer
<PAGE>
EXHIBIT F
[Date]
[Insert Name and Address
of Storage Facility]
Re: [Insert Name of Appropriate Borrower]
Ladies/Gentlemen:
The undersigned, Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A, "Rabobank Nederland", New York Branch, as Agent ("Rabobank")
has been informed by ____________ ("Borrower") that Borrower has delivered and
will, from time to time hereafter, deliver certain goods ("Goods") to you for
storage in your facility located at your address set forth above.
Rabobank, as agent for certain banks, is engaged in a
financing of Borrower, which financing is secured by a security interest in all
of the tangible and intangible personal property of Borrower, including, without
limitation, the Goods.
By acceptance of this letter, you agree that Rabobank's
security interest in the Goods shall be senior to all liens, claims and
interests, other than your lien for any accrued and unpaid storage fees charged
by you for the actual storage of the Goods. To protect Rabobank's security
interest in the Goods, all warehouse receipts and other documents of title, if
any, which evidence any Goods now or hereafter delivered by Borrower to you
shall be non-negotiable and issued to or for the account of Rabobank, as agent
for certain banks. You shall provide Rabobank with a copy of such receipts or
other documents upon Rabobank's request therefor.
Notwithstanding the issuance of such receipts or other
documents to or for the account of Rabobank, Rabobank hereby authorizes you,
subject to the conditions described below, to release any of the Goods to any
authorized agent of Borrower upon Borrower's request. Your authority to release
the Goods to Borrower or Borrower's customers is subject to the following
conditions: (i) upon the written request of Rabobank, within one (1) day after
your release of the Goods, you shall mail to Rabobank, at 245 Park Avenue, New
York, New York 10167, Attention: Corporate Services a copy of a receipt
describing the agent to whom such goods were released and the quantity and
description of the released Goods, and (ii) upon the oral or written direction
of Rabobank, you shall refuse to release Goods to Borrower or Borrower's
customers and you shall only release such Goods to Rabobank or the party
designated by Rabobank in such oral or written direction of Rabobank.
Borrower agrees that you shall have no liability to Borrower
if you comply with Rabobank's oral or written direction as described above.
Borrower further agrees that it will continue to pay all storage fees and other
expenses related to the storage of the Goods and will reimburse you for all
reasonable costs or expenses incurred as a direct result of your compliance with
the terms and provisions of this letter.
Please confirm receipt of this letter and your agreement to
the delivery instructions contained herein by signing the enclosed copy of this
letter as indicated and return it to Rabobank, 245 Park Avenue, New York, New
York 10167, Attention: Corporate Services.
Very truly yours,
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., "Rabobank Nederland",
New York Branch
By:_______________________________
Title:____________________________
Acknowledged and agreed to this
___ day of _________, 19__.
[Insert Name of Borrower]
By:____________________________
Title:__________________________
Acknowledged and agreed to this
___ day of _________, 19__.
[Insert Name of Storage Facility]
By:____________________________
Title:__________________________
<PAGE>
EXHIBIT G
FORM OF BANK AGENCY AGREEMENT
[Date]
NationsBank of Virginia, N.A.
[Address]
Attention: ____________________
[Insert any other NationsBank
affiliate with Accounts]
Re: Gwaltney of Smithfield, Ltd.; The Smithfield
Packing Company, Incorporated; Patrick Cudahy
Incorporated; Esskay, Inc.; Brown's of Carolina,
Inc.; and Carolina Food Processors, Inc.
Gentlemen/Ladies:
This Letter Agreement, among NationsBank of Virginia, N.A.
("NationsBank") [and _______________] (collectively, the "Bank"), the above-
referenced parties (the "Borrowers") and Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as agent (the
"Agent") for the lenders ("Lenders") under that certain Credit Agreement (as
defined below), shall serve as instructions regarding the operation and
procedures for all bank accounts now or hereafter maintained at the Bank by, or
for the deposit, credit or custody of property of, any or all of the Borrowers.
1. Account Identification. This Agreement applies to the
accounts specified in Part I of Schedule 4.01(e) to the Credit Agreement that
have been established at the Bank on behalf of one or more of the Borrowers, and
to each other account now or hereafter established at the Bank on behalf of one
or more of the Borrowers (collectively, the "Accounts") (provided, that the Bank
will deliver written notice to the Agent of the establishment of any other such
accounts). The Bank hereby agrees that all amounts received by the Bank (except
(i) payments made by a Borrower to NationsBank with respect to the Specified
Indebtedness (as defined in this Credit Agreement); (ii) fees paid by a Borrower
to NationsBank for banking services, including without limitation service
charges on operating accounts and fees for certified or cashier's checks; (iii)
fees for currency swaps; (iv) fees for interest rate hedges; and (v) fees paid
by a Borrower to NationsBank for trustee services with respect to benefit plans)
shall be treated as proceeds of the Collateral (as defined in the Credit
Agreement) unless a Borrower can conclusively demonstrate to the Agent that such
funds are proceeds from collateral (other than the Collateral).
2. Security Interest; Agency. The Borrowers hereby grant
to the Agent on behalf of the Lenders a continuing lien upon, and security
interest in, the Accounts and all funds, items, instruments, investments,
securities and other things of value at any time paid, deposited, credited or
held in or in transit to any Account. The Lenders hereby appoint the Bank as
the agent and pledgee-in-possession for the Accounts, and all of the funds of a
Borrower and such other items, instruments, investments, securities, things of
value, property and proceeds; and the Bank by its execution and delivery of this
Agreement hereby accepts such appointment and agrees to be bound by the terms of
this Agreement. Each Borrower hereby agrees to such appointment of the Bank and
further agrees that the Bank, on behalf of the Lenders, shall be entitled to
exercise, upon the instructions of the Agent or the Lenders, any and all rights
that the Agent or the Lenders may have under that certain Second Amended,
Restated and Continued Credit Agreement dated as of March 1, 1994 between the
Agent, Lenders and the Borrowers (as heretofore or hereafter amended or
modified, the "Credit Agreement"; capitalized terms used without other
definition herein having the meanings accorded thereto in the Credit Agreement)
and all other Loan Documents, or under applicable law, with respect to the
Accounts and all other collateral described in this Section 2. The Bank agrees
to take such action as shall from time to time be specified in writing from the
Agent or the Lenders to enable the Agent or the Lenders to exercise the rights
and remedies with respect to the lien and security interest described in this
Section 2.
3. Events of Default. At all times after the Bank's
receipt of any notice of the occurrence of any Event of Default or event which
with the passage of time or giving of notice or both would become an Event of
Default (a "Default") under the Credit Agreement, the Bank shall follow the
instructions of the Agent as to the holding, investment and transfer of all
collected amounts from time to time on deposit in any Account. In addition,
each Borrower agrees that the Bank may act as the agent of the Agent and the
Lenders in exercising as to any funds or items from time to time on deposit in
any of the Accounts any rights of set-off provided by applicable law or by any
Loan Document. Each Borrower agrees that the Bank shall be entitled to rely,
without independent investigation, on any statement of the Agent or a Lender to
the effect that an Event of Default or a Default has occurred and is continuing
or to the effect that any exercise of set-off requested by the Lender is
permitted under applicable law or any Loan Document.
4. Information. The Bank shall provide the Agent or a
Lender with such information with respect to the Accounts as the Agent or a
Lender may from time to time reasonably request, and each Borrower hereby
consents to such information being provided to Agent or a Lender.
5. Exculpation; Indemnity. The Bank undertakes to
perform only such duties as are expressly set forth herein. Notwithstanding any
other provisions of this Agreement, the parties hereto agree that the Bank shall
not be liable for any action taken by it or any of its directors, officers,
agents or employees in accordance with this Agreement, including, without
limitation, any action so taken at the request of the Agent or a Lender, except
for the Bank's or such person's own gross negligence or willful misconduct. In
no event shall the Bank be liable for losses or delays resulting from causes
beyond the Bank's reasonable control or for indirect, special or consequential
damages.
6. Irrevocable Agreement. The Borrower acknowledges that
the agreements made by it and the authorizations granted by it herein are
irrevocable and that the authorizations granted in Section 2 are powers coupled
with an interest.
7. Set-off/Uncommitted Advances. The Bank waives, with
respect to all of its existing and future claims against a Borrower, all
existing and future rights of set-off and banker's liens against the Accounts
and all items (and proceeds thereof) that come into its possession in connection
with the Accounts, except those rights of set-off and banker's liens arising in
connection with (i) items deposited therein that are subsequently returned to
the Bank unpaid, and (ii) for any past-due compensation and expenses with
respect to the Accounts. If on any day at the close of business an Account of a
Borrower shall have a negative balance, the amount of such balance shall be
deemed to be an Uncommitted Advance (as defined in the Credit Agreement) by
NationsBank under the Credit Agreement; provided, however, in no event shall any
such Uncommitted Advance exceed (i) $3,000,000 or (ii) when added to all other
Uncommitted Advances then outstanding, an aggregate principal amount greater
than the (A) Uncommitted Amount (as defined in the Credit Agreement) times (B)
the Credit Percentage (as defined in the Credit Agreement) of NationsBank.
8. Miscellaneous. This Agreement shall supersede any
other agreement (to the extent conflicting herewith) relating to the matters
referred to herein, including any other account agreement between a Borrower and
the Bank. This agreement is binding upon the parties hereto and their
respective successors and assigns (including any trustee of a Borrower appointed
or elected in any action under any bankruptcy proceeding) and shall inure to
their benefit. Neither this agreement nor any provision hereof may be changed,
amended, modified or waived orally, but only an instrument in writing signed by
the parties hereto, provided that such instrument need be signed only by the
Bank, the Agent and the Lenders if it does not change any rights or obligations
of, or authorizations granted by, the Borrowers hereunder and notice thereof is
provided by the Agent to the Borrowers. Any provision of this Agreement that
may prove unenforceable under any law or regulation shall not affect the
validity of any other provision hereof. This Agreement shall be governed by,
and interpreted in accordance with, the laws of the State of New York without
reference to its principles of conflicts of law. This Agreement may be executed
in any number of counterparts which together shall constitute one and the same
instrument.
9. Termination. This Agreement shall remain in full
force and effect until such time as the Agent shall deliver written notice to
the Bank as to the full and final payment of all obligations under the Loan
Documents and the termination of the Credit Agreement. All rights of the Bank
under Section 5 for the period prior to any such termination shall survive such
termination.
10. Notices. All notices, requests or other
communications shall be given in accordance with the Credit Agreement and if to
a Bank at the address set forth above.
GWALTNEY OF SMITHFIELD, LTD.
By_________________________________
Title:
THE SMITHFIELD PACKING
COMPANY, INCORPORATED
By_________________________________
Title:
PATRICK CUDAHY INCORPORATED
By_________________________________
Title:
ESSKAY, INC.
By_________________________________
Title:
BROWN'S OF CAROLINA, INC.
By_________________________________
Title:
CAROLINA FOOD PROCESSORS,
INC.
By_________________________________
Title:
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK,
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH,
individually and as agent
By_________________________________
Authorized Officer
By_________________________________
Authorized Officer
NATIONSBANK OF VIRGINIA, N.A.,
as a Lender
By_________________________________
Title:
Agreed and Accepted this
1st day of March, 1994
NATIONSBANK OF VIRGINIA, N.A.,
as the Bank
By_______________________________
Title:
[Insert additional Signature Blocks]
as of May 1, 1994
Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, as Agent
245 Park Avenue
New York, New York 10167
Re: First Amendment to Credit Agreement and First
Amendment to Security Agreement dated as of
March 1, 1994 of The Smithfield Packing Company,
Incorporated (the Packing Security Agreement)
Ladies and Gentlemen:
Reference is made to that certain Second Amended, Restated and
Continued Revolving Credit Agreement dated as of March 1, 1994 (the Credit
Agreement) among Gwaltney of Smithfield, Ltd., Carolina Food Processors, Inc.
(Carolina), Patrick Cudahy Incorporated, Esskay, Inc., Brown's of Carolina, Inc.
and the undersigned (Packing) and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as Agent
and the banks a party thereto.
Because certain business benefits can be derived by merging Carolina,
Kinston Ham Products, Inc. and Smithfield-Wilson, Inc. with and into Packing,
the undersigned hereby requests that Carolina be permitted to merge into
Packing, whereby Packing would assume all of Carolina's obligations and
liabilities under the Credit Agreement and related documents, all as more
particularly described in the Assumption Agreement delivered in connection
herewith. Immediately upon the effectiveness of this First Amendment, all
rights (including without limitation any right to borrow) of Carolina under the
Credit Agreement and the other Loan Documents shall be automatically, without
any further action, terminated.
A. Amendments to Credit Agreement
The Credit Agreement is hereby amended as follows:
(a) Schedule 4.01(e) is amended and restated in its
entirety by substituting in lieu thereof the revised Schedule 4.01(e)
attached hereto as Exhibit A; and
(b) Any reference to Carolina Food Processors, Inc. shall
mean and be deemed to be a reference to The Smithfield Packing
Company, Incorporated.
B. Amendment to Packing Security Agreement
The Packing Security Agreement is hereby amended and restated in its
entirety by substituting in lieu thereof the revised Schedule attached hereto as
Exhibit B.
C. Conditions Precedent
This First Amendment shall become effective upon receipt by the Agent
of a fully executed copy of this letter and each of the following:
(1) a Certificate of Merger evidencing the consummation of
the merger described above;
(2) a duly executed Assumption Agreement, in substantially
the form of Exhibit C hereto, of Packing evidencing the assumption by
Packing of the obligations of Carolina under the Assumed Loan
Documents (as defined therein);
(3) a duly executed Reaffirmation and Consent of Guarantor,
in substantially the form of Exhibit D hereto;
(4) duly executed UCC financing statements; and
(5) evidence of the payment of any and all costs and
expenses incurred by the Agent and/or the Banks (including but not
limited to the fees, costs and expenses of counsel thereto).
D. Miscellaneous
Each Borrower hereby confirms and agrees that after giving effect to
this First Amendment that it shall be jointly and severally liable for any and
all Advances made under the Credit Agreement, irrespective of which Borrower
shall request such Advance or receive such Advance.
Each of the Borrowers and the Guarantor hereby represents and warrants
that after giving effect to the transactions contemplated by this First
Amendment, no Event of Default or event which with notice or the passage of time
or both would constitute an Event of Default has occurred and is continuing.
Upon the effectiveness of this First Amendment, each reference to the
Credit Agreement or the Packing Security Agreement in any of the Loan Documents
shall be deemed to be a reference to the Credit Agreement or the Packing
Security Agreement, as the case may be, in each case as amended by this First
Amendment, and as the same may from time to time be further amended,
supplemented, restated or otherwise modified in the future by one or more other
written amendments or supplemental or modification agreements entered into
pursuant to the applicable provisions thereof. Any reference to the term Loan
Documents shall mean and include the Credit Agreement and the Packing Security
Agreement as so amended or further amended, supplemented, restated or otherwise
modified.
This First Amendment shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York.
Except as expressly herein amended, the terms and conditions of the
Credit Agreement, the Packing Security Agreement and all other Loan Documents
shall remain in full force and effect. This First Amendment and the documents
and instruments executed in connection herewith and the transactions
contemplated hereby are not intended to be, and shall not be construed to be, a
novation.
This First Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original and shall be binding upon all
parties, their successors and assigns.
The Borrowers and the Guarantor hereby agree to reimburse the Agent
and the Banks upon demand for all costs and expenses (including attorneys' fees)
incurred in the preparation, negotiation and execution of this First Amendment
and the other agreements and documents executed and delivered in connection
herewith.
[Signatures on Next Page.]
<PAGE>
All terms defined in the Credit Agreement which are used herein shall
have the meanings defined in the Credit Agreement, unless specifically defined
otherwise herein.
THE SMITHFIELD PACKING
COMPANY, INCORPORATED
By:_________________________________
Name:
Title:
Agreed and Acknowledged this
_______ day of April, 1994.
GWALTNEY OF SMITHFIELD, LTD.
By:_________________________________
Name:
Title:
CAROLINA FOOD PROCESSORS, INC.
By:_________________________________
Name:
Title:
PATRICK CUDAHY INCORPORATED
By:_________________________________
Name:
Title:
[Signatures Continued on Next Page.]
ESSKAY, INC.
By:_________________________________
Name:
Title:
BROWN'S OF CAROLINA, INC.
By:_________________________________
Name:
Title:
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH,
individually and as Agent
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
NATIONSBANK OF VIRGINIA, N.A.
By:_________________________________
Name:
Title:
<PAGE>
EXHIBIT A TO FIRST AMENDMENT
Schedule 4.01(e)
PART I
Bank Accounts with NationsBank
Name Account Number Purpose
Smithfield Packing Co., Inc.
(formerly Carolina Food Processors) 1062 5954 Concentration
Gwaltney of Smithfield, Ltd. 0237 4501 Concentration
Gwaltney of Smithfield, Ltd. 0229 5415 Richmond Lockbox
Gwaltney of Smithfield, Ltd. 1057 4717 Valleydale Payroll
Gwaltney of Smithfield, Ltd. 1062 3260 Valleydale Cont. Fund
Schulderberg Kurdle Co. (Esskay) 1042 1446 Concentration
Smithfield Foods, Inc. 229 2971 Healthcare
Smithfield Packing Co., Inc. 0237 5788 Concentration
Smithfield Packing Co., Inc. 0229 5334 Richmond Lockbox
Smithfield Packing Co., Inc. 114 90711 Kinston Contingency
Smithfield Packing Co., Inc. 114 90088 Hourly Payroll
Smithfield Packing Co., Inc. 114 90041 Salaried Payroll
<PAGE>
PART II
Smithfield Foods, Inc.
Bank of Isle of Wight Main Account
P.O. Box 429 10 10187712
Smithfield, VA 23430
Bank of Isle of Wight Payroll
P.O. Box 429 10 10741712
Smithfield, VA 23430
First Union National Bank of Virginia Executive Payroll
115 Main Street 73 55247527
Smithfield, VA 23430
NationsBank of Virginia, N.A. Healthcare
8300 Greensboro Drive, Suite 300 02292971
McLean, VA 22102-3604
Brown's of Carolina
United Carolina Bank Operating
P.O. Box 38 049-226-358-2
Kenansville, NC 28349
United Carolina Bank Payroll
P.O. Box 38 049-226-359-0
Kenansville, NC 28349
United Carolina Bank Control Disbursement
P.O. Box 38 049-226-362-0
Kenansville, NC 28349
Esskay, Inc.
NationsBank of Virginia, N.A. 1042 1446
8300 Greensboro Drive, Suite 300
McLean, VA 22102-3604
Att: Robert Sharpe, III
Signet Bank Contingency Fund
P.O. Box 1077 235-30264
Baltimore, MD 21203
Maryland National Bank Payroll
6100 Executive Blvd., Suite 500 0602516
Rockville, MD 20852
Att: Cindy Plunkett
Bank of Isle of Wight Gen. Disbursements
P.O. Box 429 1 011 334 412
Smithfield, VA 23430
Att: Tracy Nelms
Gwaltney of Smithfield, Ltd.
NationsBank of Virginia, N.A. Concentration Account
8300 Greensboro Drive, Suite 300 0237-4501
McLean, VA 22102-3604
Att: Robert Sharpe, III
First National Bank of Randolph County Hancock
P.O Box 1328 02-26041
Asheboro, NC 27204
NationsBank of Virginia, N.A. Richmond Lockbox
8300 Greensboro Drive, Suite 300 0229-5415
McLean, VA 22102-3604
Att: Robert Sharpe, III
Bank of Isle of Wight Salaried Payroll
P.O. Box 429 DA 1010957612
Smithfield, VA 23430
Att: Tracy Nelms
Bank of Isle of Wight Hourly Payroll
P.O. Box 429 DA 1010953312
Smithfield, VA 23430
Att: Tracy Nelms
Bank of Isle of Wight General Disbursements
P.O. Box 429 1011 344 1 12
Smithfield, VA 23430
Att: Tracy Nelms
Bank of Isle of Wight Livestock Disbursements
P.O. Box 429 1011 316 8 12
Smithfield, VA 23430
Att: Tracy Nelms
Banco Popular De Puerto Rico 40-00038-9
P.O. Box 2708, FPO
San Juan, PR 00936
Southern Trust Bank of Georgia, N.A. 0-15-469-5
P.O. Box 1234
Atlanta, GA 30371-9802
North Carolina National Bank of Florida 4007141301
P.O. Box 25900
Tampa, FL 33630
First Pennsylvania Bank, N.A. 431-293-0
P.O. Box 7558
Philadelphia, PA 19101
Fleet Bank of New York 350623
10 Fountain Plaza
Buffalo, NY 14202
Mellon Bank 004-4126
Mellon Bank Center
Pittsburgh, PA 15259
NationsBank of Maryland, N.A. 84-0406-9
8300 Greensboro Drive, Suite 300
McLean, VA 22102-3604
Att: Robert Sharpe, III
Security Pacific Bank 412 715698 29
101 North First Avenue
Phoenix, AZ 85003
Att: Ms. Karen Roy
Crestar Lockbox
P.O. Box 26150 205160190
Richmond, VA 23260
NationsBank of Maryland, N.A. Maryland Lockbox
8300 Greensboro Drive, Suite 300 85-00042
McLean, VA 22102-3604
Att: Robert Sharpe, III
Citizens First National of New Jersey 211-1125-1
85 Jefferson Avenue
Westwood, NJ 07675
NationsBank of North Carolina, N.A. Charlotte Lockbox
8300 Greensboro Drive, Suite 300 000280123
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Valleydale Payroll
8300 Greensboro Drive, Suite 300 1057 4717
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Valleydale
8300 Greensboro Drive, Suite 300 Contingency Fund
McLean, VA 22102-3604 1062 3260
Att: Robert Sharpe, III
Smithfield Packing Company, Inc.
NationsBank of Virginia, N.A. Concentration Account
8300 Greensboro Drive, Suite 300 0237-5788
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Richmond Lockbox
8300 Greensboro Drive, Suite 300 0-229-5334
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Kinston Contingency
8300 Greensboro Drive, Suite 300 114-9071-1
McLean, VA 22102-3604
Att: Robert Sharpe, III
Maryland National Bank Landover Contingency
6100 Executive Blvd., Suite 500 535256630
Rockville, MD 20852
Att: Cindy Plunkett
Maryland National Bank Landover Payroll
6100 Executive Blvd., Suite 500 535256879
Rockville, MD 20852
Att: Cindy Plunkett
Bank of Isle of Wight General Disbursements
P.O. Box 429 1011-343-312
Smithfield, VA 23430
Att: Tracy Nelms
Bank of Isle of Wight Livestock Disbursements
P.O. Box 429 1011-341-712
Smithfield, VA 23430
Att: Tracy Nelms
NationsBank of Virginia, N.A. Hourly Payroll - Weekly
8300 Greensboro Drive, Suite 300 114-9006-8
McLean, VA 22102-3604
Att: Robert Sharpe, III
NationsBank of Virginia, N.A. Salaried Payroll
8300 Greensboro Drive, Suite 300 114-9004-1
McLean, VA 22102-3604
Att: Robert Sharpe, III
Centura Bank 185-085-7
P.O. Box 6057
Rocky Mount, NC 27802-6057
Citi Bank 0-100613-018
GPO 4106
San Juan, PR 00936
Trust Company Bank 8800942479
P.O. Box 4418
Atlanta, GA 30302
Society Bank of Eastern Ohio, N.A. 881-2245-8
P.O. Box 500
Canton, OH 44701
Pittsburgh National Bank 1983029
700 Buelah Road
Turtle Creek, PA 15145
First National Bank & Trust Company 1323591
P.O. Box 158
Newton, PA 18940
Jupiter Tequesta National Bank 002 10020-9
250 Tequesta Drive
Tequesta, FL 33469
NationsBank of Maryland, N.A. 84-0405-0
8300 Greensboro Drive, Suite 300 Maryland Lockbox
McLean, VA 22102-3604
Att: Robert Sharpe, III
United Jersey Bank 160000424
P.O. Box 130
Hackensack, NJ 07602
Manufacturers & Traders Trust 01-069238-2
P.O. Box 767
Buffalo, NY 14240-0767
First Seminole Bank 132 1 1350 00
100647-2
531 Westlake Mary Blvd.
Lake Mary, FL 32795-1629
U.S. Bank - Oregon 0099 0006 249
P.O. Box 4412
Portland, OR 97208-4412
NationsBank of North Carolina, N.A. Charlotte Lockbox
8300 Greensboro Drive, Suite 300 000280115
McLean, VA 22102-3604
Att: Robert Sharpe, III
United Carolina Bank Hourly Payroll
Hwy 87 001 2301000443
Tar Heel, NC 28392
*United Carolina Bank Salaried Payroll
Hwy 87
Tar Heel, NC 28392
*NationsBank of Virginia, N.A. Main Account
8300 Greensboro Drive, Suite 300 1062 5954
McLean, VA 22102-3604
Att: Robert Sharpe, III
*United Carolina Bank Contingency Fund
Hwy 87 230-100-035-4
Tar Heel, NC 28392
*Bank of Isle of Wight General Disbursements
P.O. Box 429 1011519312
Smithfield, VA 23430
Att: Tracy Nelms
*United Carolina Bank Livestock Disbursements
Hwy 87 230-100-043-5
Tar Heel, NC 28392
- - ---------------
Formerly Carolina Food Processors, Inc.
<PAGE>
EXHIBIT B TO SECURITY AGREEMENT
SCHEDULE TO SECURITY AGREEMENT
SMITHFIELD PACKING
Plants:
Smithfield, VA
Norfolk, VA
Suffolk, VA
Landover, MD
Bladen County, NC
Kinston, NC
Wilson, NC
Storage:
Jurisdiction
American Warehouse Scott County
201 First Avenue, South
Forest, MS 39074
Americold Hillsborough County
1601 N. 50th Street
Tampa, FL 33619
Burris Refrigerated Caroline County
Rt. 313 North
Federalsburg, MD 21632
Burris Refrigerated No County
1229 Fleetway Drive
Chesapeake, VA 23323
Burris Refrigerated Sumter County
1900 Corporate Way
Sumter, SC 29154
Carolina Frozen Distributors Mecklenburg County
5119 Hovis Road
Charlotte, NC 28208
Carolina Cold Storage Bladen County
P. O. Box 268
Hwy 87 North
Tar Heel, NC 28392
Collins Cold Storage Dillon County
1305 East Main Street
Dillon, SC 29536
Camden Yards Harford County
504 Perryman Road
Aberdeen, MD 21130
Collin's Florence County
200 North Harrell
Florence, SC 29501
Camden Yards #3
Baltimore, MD
Camden Yards Cold Storage Baltimore City
1300 South Monroe Street
Baltimore, MD 21213
D.A. Ford Cold Storage Stanley County
Hwy 49 South
Richfield, NC 28137
Industrial Cold Storage Duval County
1814 Industrial Blvd.
Jacksonville, FL 32203
Merchant's Howard County
7950 Oceana Avenue
Jessup, MD 20794
Merchant's Terminal Prince George County
1811 Cabin Branch Drive
Landover, MD 20785
Modern Cold Storage Pitt County
20 Ashmore Branch Road
Piedmont, SC 29673
Modern Cold Storage Pitt County
Industrial Drive
Greenville, SC 29606
Modern Cold Storage Union County
U.S. 74 114 Cuddy Drive
Marshville, NC 28103
Nordic Cold Storage Wake County
915 Withers Road
Raleigh, NC 27603
Nordic Cold Storage Spartenburg County
1996 East Poinsetta Street
Greer, SC 29651
Nordic Cold Storage Mecklenburg County
5610 David Cox Road
Charlotte, NC 29213
Nordic Cold Storage Robinson County
Rt. 4 Box 849
Lumberton, NC 28358
Nordic Cold Storage Wilson County
2317 Wilco Blvd.
Wilson, NC 27893
Nordic Cold Storage Harnett County
301 South & Dennings Road
Benson, NC 27504
RCS East Airport Division Hanover County
5501 Corregated Road
Sandston, VA 23150
RCS Smithfield Isle of Wight County
10070 Old Stage Hwy
Smithfield, VA 23430
Richmond Cold Storage Henrico County
18th and Marshall St.
Richmond, VA 23202
Ruger's Ice
Cobbs Creek, VA
Safeway Freezer Storage Cumberland County
97 North Mill Road
P. O. Box 579
Vineland, New Jersey 08360
Southern Cold Storage Henrico County
2900 Cofer Road
Richmond, VA 23224
Southern Cold Storage Duplin County
P. O. Box 877 Country Road
Wallace, NC 28466
Southern Cold Storage
Sumter, SC 29150
Tidewater Warehouse Services No County
3800 Cooke Avenue
Chesapeake, VA 23323
U.S. Cold Storage Robinson County
P.O. Box 1469
Lumberton, NC 28359
United Cold Storage City of Norfolk
Princess Anne Road
Norfolk, VA 23502
United Refrigerated Richland County
2339 Shop Road
Columbia, SC 29201
United Refrigerated Service
Mecklenburg County
700 West 9th Street
Charlotte, NC 28201
United Refrigerated Services Mecklenburg County
100 Exchange Street
Charlotte, NC 28201
United States Cold Storage Webb County
P. O. Box 1903
Laredo, TX 78044-1903
EXHIBIT C TO FIRST AMENDMENT
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT dated as of May __, 1994 by and among
CAROLINA FOOD PROCESSORS, INC. (Carolina), THE SMITHFIELD PACKING COMPANY
INCORPORATED (Packing), COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH, as agent under the Credit Agreement, as
defined below (the Agent) and the banks a party to the Credit Agreement (each a
Bank and collectively, the Banks).
W I T N E S S E T H:
WHEREAS, Carolina, Packing, Gwaltney of Smithfield, Ltd., Patrick
Cudahy Incorporated, Esskay, Inc. and Brown's of Carolina (collectively, the
Borrowers), the Agent and the Banks entered into that certain Second Amended,
Restated and Continued Revolving Credit Agreement dated as of March 1, 1994 (as
amended on the date hereof and as it may be amended, modified, supplemented or
restated from time to time, the Credit Agreement);
WHEREAS, Smithfield Foods, Inc. (the Guarantor) guaranteed repayment
of the obligations of the Borrowers to the Banks owing under and in connection
with the Credit Agreement pursuant to that certain Second Amended, Restated and
Continued Guaranty dated as of March 1, 1994 (the Guaranty) executed by the
Guarantor in favor of the Agent on behalf of the Banks;
WHEREAS, Carolina, Kinston Ham Products, Inc. and Smithfield-Wilson,
Inc. intend to merge with and into Packing;
WHEREAS, the parties hereto desire to enter into this Agreement to
evidence the assumption by Packing of all of the obligations owing by Carolina
to the Agent and the Banks under the Credit Agreement and each of the other
Assumed Loan Documents (as defined below) and for the other purposes set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
SECTION 1. Assumption of Obligations Packing hereby agrees that it
is bound by, assumes all obligations and liabilities under, and agrees to
perform and discharge all of, the obligations of Carolina including, without
limitation, the respective obligations and liabilities of Carolina owing under
and in connection with, each of the following to which Carolina is a party: (i)
the Credit Agreement, (ii) the documents, instruments and agreements described
in Schedule 1 attached hereto, and (iii) any and all other documents,
instruments and agreements executed by Carolina in connection with any of the
items referred to in clauses (i) and (ii) (all of the foregoing collectively
referred to as the Assumed Loan Documents).
SECTION 2. Consent to Assumption of Indebtedness Each of the Agent
and the Banks hereby acknowledges and consents to the assignment to and
assumption by Packing of the obligations and liabilities of Carolina under and
in connection with the Credit Agreement and each of the other Assumed Loan
Documents. Each Borrower and the Guarantor hereby acknowledge and consent to
the assignment and assumption by Packing of the obligations and liabilities of
Carolina under and in connection with the Credit Agreement and each Credit
Document.
SECTION 3. Indemnification Each of the Borrowers and the Guarantor
hereby agrees to indemnify, defend and hold harmless the Agent and the Banks
from and against any suits, proceedings, demands, judgments, claims, damages,
expenses and costs, including without limitation, interests, penalties and legal
counsel fees (collectively, Indemnified Claims) asserted against, relating to,
imposed on or suffered or incurred by the Agent and/or the Banks by reason of or
resulting from this Agreement or the assumption by Packing of the obligations
and liabilities of Carolina under the Assumed Loan Documents or arising in
connection with the transactions generally contemplated hereby.
SECTION 4. Governing Law THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 5. Successors and Assigns This Agreement shall inure to the
benefit of, and shall be binding upon, the successors and assigns of each party
hereto.
SECTION 6. Amendments No amendment or waiver of any provision hereof
shall in any event be effective unless the same shall be in writing and signed
by the parties hereto and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 7. Counterparts This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute but one and the
same agreement.
SECTION 8. Definitions Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the
singular and plural.
[Signatures on Next Page.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assumption
Agreement to be executed under seal by their respective authorized officers, as
of the date first above written.
COOPERATIEVE CENTRALE
RAIFFEISEN- BOERENLEENBANK,
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH, individually
and as Agent
By:_______________________________
Title:__________________________
By:_______________________________
Title:__________________________
NATIONSBANK OF VIRGINIA, N.A.
By:_______________________________
Title:__________________________
CAROLINA FOOD PROCESSORS,
INC.
By:_______________________________
Title:__________________________
THE SMITHFIELD PACKING
COMPANY INCORPORATED
By:_______________________________
Title:__________________________
[Signatures Continued on Next Page.]
Agreed and Consented to
this ____ day of April, 1994:
GWALTNEY OF SMITHFIELD, LTD.
By:_______________________________
Title:__________________________
PATRICK CUDAHY INCORPORATED
By:_______________________________
Title:__________________________
ESSKAY, INC.
By:_______________________________
Title:__________________________
BROWN'S OF CAROLINA
By:_______________________________
Title:__________________________
SMITHFIELD FOODS, INC.
By:_______________________________
Title:__________________________
<PAGE>
SCHEDULE I TO
ASSUMPTION AGREEMENT
1. Promissory Note executed by Carolina in favor of Rabobank Cooperatieve
Centrale Raiffeisen- Boerenleenbank B.A., "Rabobank Nederland", New
York Branch in the original principal amount of $75,000,000.
2. Promissory Note executed by Carolina in favor of NationsBank of
Virginia, N.A. in the original principal amount of $35,000,000.
3. Security Agreement dated as of March 1, 1994 executed by Carolina in
favor of the Agent.
EXHIBIT D TO FIRST AMENDMENT
FORM OF REAFFIRMATION AND CONSENT
THIS REAFFIRMATION AND CONSENT dated as of May __, 1994, executed and
delivered by SMITHFIELD FOODS, INC. (the Guarantor) in favor of COOPERATIEVE
CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH,
as Agent (the Agent) under the Credit Agreement (as defined below).
WHEREAS, Carolina Food Processors, Inc. (Carolina), The Smithfield
Packing Company, Incorporated (Packing), Gwaltney of Smithfield, Ltd., Patrick
Cudahy Incorporated, Esskay, Inc. and Brown's of Carolina (collectively, the
Borrowers), the Agent and the banks a party thereto entered into that certain
Second Amended, Restated and Continued Revolving Credit Agreement dated as of
March 1, 1994 (as amended on the date hereof and as it may be amended, modified,
supplemented or restated from time to time, the Credit Agreement);
WHEREAS, Smithfield Foods, Inc. (the Guarantor) guaranteed repayment
of the obligations of the Borrowers to the Banks owing under and in connection
with the Credit Agreement pursuant to that certain Second Amended, Restated and
Continued Guaranty dated as of March 1, 1994 (the Guaranty) executed by the
Guarantor in favor of the Agent on behalf of the Banks;
WHEREAS, Carolina, Kinston Ham Products, Inc. and Smithfield-Wilson,
Inc. intend to merge with and into Packing as requested in that certain First
Amendment dated as of the date hereof to the Credit Agreement (the First
Amendment);
WHEREAS, the Guarantor has reviewed the First Amendment; and
WHEREAS, it is a condition precedent to the effectiveness of the First
Amendment that the Guarantor execute and deliver this Reaffirmation and Consent.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which the Guarantor hereby acknowledges, the Guarantor hereby
agrees as follows:
SECTION 1. Reaffirmation and Consent The Guarantor hereby consents
to the transactions contemplated by the First Amendment and reaffirms its
continuing obligations to the Agent and the Banks under the Guaranty and agrees
that neither the transactions contemplated by the First Amendment, nor any
future amendments or arrangements whatsoever relating to the Credit Agreement,
any of the other Loan Documents, or any collateral thereunder, shall in any way
affect the validity and enforceability of the Guaranty or reduce, impair or
discharge the obligations of the Guarantor thereunder.
SECTION 2. References The Guarantor agrees that each reference to
the Credit Agreement or the Packing Security Agreement (as defined in the First
Amendment) in any of the Loan Documents shall be deemed to be a reference to the
Credit Agreement or the Packing Security Agreement, as the case may be, in each
case as amended by the First Amendment, as the same may from time to time be
further amended, supplemented, restated or otherwise modified in the future by
one or more other written amendments or supplemental or modification amendments
entered into pursuant to the applicable provisions thereof. Any reference to
the term Loan Documents shall mean and include the Credit Agreement and the
Packing Security Agreement as so amended or further amended, supplemented,
restated or otherwise modified.
SECTION 3. Defined Terms Terms not otherwise defined herein are used
herein as defined in the Credit Agreement.
IN WITNESS WHEREOF, this Reaffirmation and Consent has been executed
by a duly authorized officer and delivered as of the date first written above.
SMITHFIELD FOODS, INC.
By:_______________________________
Name:
Title:
SECOND AMENDED, RESTATED AND CONTINUED GUARANTY, dated as of March 1,
1994, made by SMITHFIELD FOODS, INC., a corporation organized and existing under
the laws of Delaware (the Guarantor"), in favor of COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as Agent
for the banks a party to the Credit Agreement, as defined below (the "Agent").
PRELIMINARY STATEMENTS.
The Agent and certain banks have entered into a Second Amended, Restated
and Continued Revolving Credit Agreement dated as of the date hereof (said
Agreement, as it may hereafter be amended or otherwise modified from time to
time, being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined) among Gwaltney of
Smithfield, Ltd. ("Gwaltney"), The Smithfield Packing Company, Incorporated
("Packing"), Patrick Cudahy Incorporated ("Cudahy"), Esskay, Inc. ("Esskay"),
Brown's of Carolina, Inc. ("Brown's") and Carolina Food Processors, Inc.
("Carolina"; individually, a "Borrower" and collectively, the "Borrowers") and
the Agent and each of the banks a party thereto. It is a condition precedent to
the making of Advances by the Banks under the Credit Agreement that the
Guarantor, as owner of 100 percent of the outstanding shares of stock of each of
the Borrowers (other than Brown's) and 86 percent of the outstanding shares of
stock of Brown's, shall have executed and delivered this Guaranty.
The Credit Agreement is a complete amendment, restatement and continuation
(a) of the Amended, Restated and Continued Revolving Credit Agreement (the "1991
Credit Agreement") dated as of November 27, 1991, as amended as of August 12,
1992 and as of October 28, 1992, among Gwaltney, Packing, Cudahy and Esskay and
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New
York Branch ("Rabobank"), with the 1991 Agreement being a complete amendment,
restatement and continuation of the Revolving Credit Agreement dated as of
October 26, 1990, as amended as of October 30, 1991 between Gwaltney and
Rabobank and (b) the Amended and Restated and Continued Oral Finance Facility
(the "1991 Oral Finance Facility") dated as of November 27, 1991 among Gwaltney,
Packing, Cudahy and Esskay and the Rabobank, with the 1991 Oral Finance Facility
being a complete amendment, restatement and continuation of the Oral Finance
Facility dated as of October 26, 1990, as amended, between Gwaltney and
Rabobank. This Guaranty is a complete amendment, restatement and continuation
of the Guaranty (the "1991 Guaranty") dated as of November 27, 1991 made by the
Guarantor in favor of the Rabobank. The 1991 Guaranty, as amended, restated and
continued hereby, shall continue to secure the repayment of the indebtedness
previously incurred and presently outstanding under the 1991 Credit Agreement
and the repayment of the indebtedness previously incurred and presently
outstanding under the 1991 Oral Finance Facility, together with all new
indebtedness now or hereafter incurred by the Borrowers to the Banks under the
Credit Agreement, the Notes thereunder or any other Loan Document.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. Guaranty. The Guarantor hereby unconditionally guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of one or more of the Borrowers now or hereafter
existing under the Credit Agreement, the Notes thereunder, the other Loan
Documents to which one or more of the Borrowers is a party, and any other
agreement or instrument relating thereto, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "Obligations"), and agrees to
pay any and all expenses (including counsel fees and expenses) incurred by the
Agent in enforcing any rights under this Guaranty.
SECTION 2. Guaranty Absolute. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement, the Notes thereunder, the other Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent or a Bank with respect
thereto. The liability of the Guarantor under this Guaranty shall be absolute
and unconditional irrespective of:
(i) any lack of validity or enforceability of the Credit Agreement,
the Notes thereunder, any other Loan Document, or any other agreement or
instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment
or waiver of or any consent to departure from the Credit Agreement, the
Notes thereunder, any other Loan Document and any other agreement or
instrument relating thereto;
(ii) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Obligations; or
(iii) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by a Bank upon the insolvency, bankruptcy or
reorganization of one or more of the Borrowers or otherwise, all as though such
payment had not been made.
SECTION 3. Waiver. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or a Bank protect, secure,
perfect or insure any security interest or lien or any property subject thereto
or exhaust any right or take any action against one or more of the Borrowers or
any other person or entity or any collateral.
SECTION 4. Waiver of Subrogation. The Guarantor hereby waives any claim,
right or remedy which the Guarantor may now have or hereafter acquire against
any Borrower that arises hereunder and/or from the performance by the Guarantor
hereunder including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification, or
participation in any claim, right or remedy of the Agent or a Bank against any
Borrower or any security which the Agent or a Bank now has or hereafter
acquires, whether or not such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise.
SECTION 5. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a) The Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction indicated
at the beginning of this Guaranty.
(b) The execution, delivery and performance by the Guarantor of this
Guaranty are within its corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene (i) the Guarantor's
charter or by-laws or (ii) law or any contractual restriction binding on
or affecting the Guarantor.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Guarantor
of this Guaranty.
(d) This Guaranty is a legal, valid and binding obligation of the
Guarantor enforceable against it in accordance with its terms.
(e) The balance sheets for the Guarantor and its subsidiaries as at
May 3, 1993, and the related statements of income of the Guarantor and its
subsidiaries for the fiscal period then ended, copies of which have been
furnished to the Banks, fairly present the financial condition of the
Guarantor and its subsidiaries as at such date and the results of the
operations of the Guarantor and its subsidiaries for the period ended on
such date, all in accordance with generally accepted accounting principles
consistently applied, and since May 3, 1993, there has been no material
adverse change in such condition or operations.
(f) There is no pending or threatened action or proceeding affecting
the Guarantor or any of its subsidiaries before any court, arbitrator or
governmental agency, which may materially adversely affect the financial
condition or operations of the Guarantor or any of its subsidiaries or
which purports to affect the legality, validity or enforceability of this
Guaranty.
SECTION 6. Covenants. The Guarantor covenants and agrees that, so long
as any part of the Obligations shall remain unpaid or a Bank shall have any
Commitment, the Guarantor will, unless the Banks, in accordance with Section 7
hereof, shall otherwise consent in writing:
(a) Reporting Requirements. Furnish to the Agent and each Bank:
(i) as soon as available and in any event 30 days after the end of
each calendar month, (A) balance sheets of the Guarantor and its
subsidiaries as at the end of such calendar month and statement of income
of the Guarantor and its subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such calendar month
and (B) a certificate of the chief financial officer of the Guarantor
certifying that the Guarantor is in compliance in every respect with the
terms of this Section 6;
(ii) as soon as available and in any event within 45 days after the
end of each quarter of each fiscal year of the Guarantor, balance sheets
of the Guarantor and its subsidiaries as of the end of such quarter and
statements of income of the Guarantor and its subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end
of such quarter, certified by the chief financial officer of the
Guarantor;
(iii) as soon as available and in any event within 90 days after
the end of each fiscal year of the Guarantor, a copy of the financial
statements for the Guarantor and its subsidiaries for such year certified
in a manner acceptable to the Agent by independent public accountants
acceptable to the Banks; and
(iv) such other information respecting the condition or operations,
financial or otherwise, of the Guarantor or any of its subsidiaries as the
Agent or a Bank may from time to time reasonably request.
(b) Compliance with Laws, Etc. Comply, and cause each of its
subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent contested in
good faith.
(c) Visitation Rights; Collateral Examination. At any reasonable time and
from time to time, permit the Agent or a Bank or any agents or representatives
thereof, to examine and make copies of and abstracts from the records and books
of account of, and visit the properties of, the Guarantor and any of its
subsidiaries, and to discuss the affairs, finances and accounts of the Guarantor
and any of its subsidiaries with any of their respective officers or directors.
(d) Working Capital. Maintain on a consolidated basis (i) an excess of
current assets over current liabilities of not less than $45,000,000 at all
times on or before May 1, 1994 and $55,000,000 at any time thereafter and (ii) a
ratio of current assets to current liabilities of not less than 1.25 to 1.00.
(e) Net Worth and Debt. Maintain on a consolidated basis (i) a Tangible
Net Worth (as hereinafter defined) of not less than $115,000,000, and (ii) a
ratio of Debt (as defined in subsection (f) below) to Tangible Net Worth of not
more than 2.50 to 1.00. "Tangible Net Worth" means the excess of total assets
over total liabilities, total assets and total liabilities each to be determined
in accordance with generally accepted accounting principles consistent with
those applied in the preparation of the financial statements referred to in
subsection 6(a), excluding, however, from the determination of total assets (i)
goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other similar intangibles, (ii) treasury stock and
capital stock, obligations or other securities of, or capital contributions to,
or investments in, any subsidiary, (iii) securities which are not readily
marketable, (iv) cash held in a sinking or other analogous fund established for
the purpose of redemption, retirement or prepayment of capital stock or Debt,
(v) any write-up in the book value of any asset resulting from a revaluation
thereof subsequent to the date hereof, and (vi) any items not included in
clauses (i) through (v) above which are treated as intangibles in conformity
with generally accepted accounting principles.
(f) Liens, Etc. Not create or suffer to exist, or permit any subsidiary
to create or suffer to exist, any lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement, upon or with respect
to any of its properties or its subsidiaries', whether now owned or hereafter
acquired, or assign any right to receive income, in each case to secure any Debt
(as defined below) of any person or entity, other than (i) purchase money liens
or purchase money security interests upon or in any property acquired or held by
the Guarantor or any of its subsidiaries in the ordinary course of business to
secure the purchase price of such property or to secure indebtedness incurred
solely for the purpose of financing the acquisition of such property, (ii) liens
or security interests existing on such property at the time of its acquisition,
or (iii) liens in existence on the date hereof and set forth on Schedule 6(f)
hereto, provided that the aggregate principal amount of the indebtedness secured
by the liens or security interests referred to in clauses (i), (ii) and (iii)
above shall not exceed $140,000,000 at any time outstanding.
"Debt" means (A) indebtedness for borrowed money or for the deferred
purchase price of property or services, (B) obligations as lessee under leases
which shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, (C) obligations under direct
or indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to in
clause (A) or (B) above, and (D) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of the Employee Retirement Income
Security Act of 1974 ("ERISA").
(g) Dividends, Etc. Not declare or pay any dividends, purchase or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such, or
permit any of its subsidiaries to purchase or otherwise acquire for value any
stock of any Borrower, except that it may declare and pay dividends on its
$10,000,000 principal amount of its 6.75% Cumulative Convertible Preferred Stock
in an aggregate amount not to exceed $675,000 during any fiscal year and except
that a Borrower may (i) declare and deliver dividends and distributions payable
in common stock of such Borrower and (ii) purchase or otherwise acquire shares
of its capital stock with the proceeds received from the issue of new shares of
its capital stock.
(h) Capital Expenditures. Not incur on a consolidated basis with its
subsidiaries, capital expenditures (other than expenditures for normal
replacements in the ordinary course of business) in the fiscal year ending May
1, 1994 in excess of $32,000,000 and for the period thereafter prior to the
Termination Date in excess of $20,000.00.
(i) Limitation on Types of Business. Not enter into or engage in, or
permit any subsidiary to enter or engage in, any business other than pork
production, hog farming and pork processing and with respect to Ed Kelly, Inc.,
the retail electronics business.
(j) Stock Repurchase. Not repurchase any of its capital stock at any
time.
(k) Funded Debt. Not permit Consolidated Funded Debt (as hereinafter
defined) at any time (i) during fiscal year 1994 to exceed an amount equal to
the product of (A) Consolidated Capitalization as of the last day of fiscal year
1994 multiplied by (B) 55%, (ii) during each fiscal year thereafter to exceed an
amount equal to the product of (A) Consolidated Capitalization as of the last
day of the respective fiscal year multiplied by (B) 50%. "Consolidated Funded
Debt" means, at any date, the aggregate amount of Debt of the Guarantor and/or
its subsidiaries which by its terms is due and payable on a date which is later
than one (1) year from such date. "Consolidated Capitalization" means the sum of
Consolidated Funded Debt plus Tangible Net Worth of the Guarantor and its
subsidiaries.
SECTION 7. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantor therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Majority Banks other than with respect to Section 6(d), (e), (h) and (k) which
shall require the signature of all of the Banks, and then, in any event, such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 8. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telex or
cable communication) and mailed, telegraphed, telexed, cabled or delivered, if
to the Guarantor, at its address at 501 North Church Street, Smithfield,
Virginia 23430, Attention: Aaron D. Trub, if to a Bank, at its address
specified in the Credit Agreement, or as to each party at such other address as
shall be designated by such party in a written notice to the other party. All
such notices and other communications shall, when mailed, telegraphed, telexed
or cabled, be effective when deposited in the mails, delivered to the telegraph
company, confirmed by telex answerback or delivered to the cable company,
respectively.
SECTION 9. No Waiver; Remedies. No failure on the part of the Agent or a
Bank to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 10. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default each Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Bank to
or for the credit or the account of the Guarantor against any and all of the
obligations of the Guarantor now or hereafter existing under this Guaranty,
irrespective of whether or not the Agent on behalf of the Banks shall have made
any demand under this Guaranty and although such deposits, indebtedness or
obligations may be unmatured or contingent. Such Bank agrees promptly to notify
the Guarantor after any such set-off and application, provided that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Bank may have.
SECTION 11. Continuing Guaranty; Transfer of Notes. This Guaranty is a
continuing guaranty and shall (i) remain in full force and effect until the
later of payment in full of the Obligations and all other amounts payable under
this Guaranty or the Termination Date, (ii) be binding upon the Guarantor, its
successors and assigns, and (iii) inure to the benefit of and be enforceable by
the Agent on behalf of the Banks and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), a Bank may assign
or otherwise transfer the Notes delivered under the Credit Agreement to any
other person or entity, and such other person or entity shall thereupon become
vested with all the rights in respect thereof granted to such Bank herein or
otherwise.
SECTION 12. Consent to Jurisdiction. (a) The Guarantor hereby
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in New York City in any action or proceeding arising out of or relating
to this Guaranty, and the Guarantor hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New
York State court or in such Federal court. The Guarantor hereby irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. The
Guarantor irrevocably consents to the service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding by the mailing of copies of such process to the Guarantor to its
address specified in Section 8. The Guarantor agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Nothing in this Section 12 shall affect the right of the Agent on
behalf of the Banks to serve legal process in any other manner permitted by law
or affect the right of the Agent on behalf of the Banks to bring any action or
proceeding against the Guarantor or its property in the courts of any other
jurisdictions.
SECTION 13. Governing Law. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 14. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
SMITHFIELD FOODS, INC.
By_________________________________
Title:
SCHEDULE 6(f)
Liens
Liens or security interests upon Gwaltney plants in Smithfield, Virginia
and Portsmouth, Virginia to secure the 9.85% John Hancock notes and upon The
Smithfield Packing Company, Incorporated plants in Smithfield, Virginia and
Kinston, North Carolina to secure the 9.80%, 10.25% and 10.75% John Hancock
notes.
[CONFORMED COPY]
SMITHFIELD FOODS, INC.
CAROLINA FOOD PROCESSORS, INC.
OMNIBUS AMENDMENT AGREEMENT
Dated as of December 1, 1993
$3,300,000 10.25% Secured Notes Due January 1, 1994
$6,000,000 11.00% Secured Notes Due October 1, 1994
$5,650,000 6.24% Senior Secured Notes Due November 1, 1998
$15,000,000 9.80% Secured Notes Due August 1, 2003
$15,000,000 10.75% Secured Notes Due August 1, 2005
$20,000,000 9.85% Secured Notes Due November 1, 2006
$25,000,000 8.41% Senior Secured Notes Due February 1, 2013
<PAGE>
OMNIBUS AMENDMENT AGREEMENT
OMNIBUS AMENDMENT AGREEMENT (this "Agreement"), dated as of December 1,
1993, by and among SMITHFIELD FOODS, INC., a Delaware corporation (the
"Guarantor"), CAROLINA FOOD PROCESSORS, INC., a Delaware corporation
("Carolina"), JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY ("John Hancock"),
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY ("MassMutual Life") and MML PENSION
INSURANCE COMPANY ("MML Pension") (John Hancock, MassMutual and MML Pension
herein sometimes referred to collectively as the "Noteholders").
SECTION 1. PRELIMINARY STATEMENT.
1.1. The Guarantor has entered into that certain Amendment and
Restatement of Existing 10.25% Guaranty Agreement, dated as of December 27, 1978
(as in effect prior to the effectiveness of this Agreement, the "Existing 10.25%
Guaranty Agreement," and, as amended by this Agreement, the "Amended 10.25%
Guaranty Agreement"), pursuant to which the Guarantor guaranteed to John Hancock
the Guarantied Obligations (as defined in the Existing 10.25% Guaranty
Agreement).
1.2. The Guarantor has entered into that certain Amendment and
Restatement of Existing 11.00% Guaranty Agreement, dated as of September 24,
1979 (as in effect prior to the effectiveness of this Agreement, the "Existing
11.00% Guaranty Agreement," and, as amended by this Agreement, the "Amended
11.00% Guaranty Agreement"), pursuant to which the Guarantor guaranteed to
MassMutual Life the Guarantied Obligations (as defined in the Existing 11.00%
Guaranty Agreement).
1.3. The Guarantor has entered into that certain Amendment and
Restatement of Existing 12.75% Guaranty Agreement, dated as of August 10, 1983,
reaffirmed as of November 1, 1993 with respect to the exchange by Gwaltney of
Smithfield, Ltd. of its outstanding 12.75% Secured Notes Due August 1, 1994 for
an equal aggregate amount of its 6.24% Senior Secured Notes Due November 1, 1998
(as in effect prior to the effectiveness of this Agreement, the "Existing 12.75%
Guaranty Agreement," and, as amended by this Agreement, the "Amended 12.75%
Guaranty Agreement"), pursuant to which the Guarantor guaranteed to John Hancock
the Guarantied Obligations (as defined in the Existing 12.75% Guaranty
Agreement).
1.4. The Guarantor has entered into that certain Amendment and
Restatement of Existing 9.80% Guaranty Agreement, dated as of July 29, 1988 (as
in effect prior to the effectiveness of this Agreement, the "Existing 9.80%
Guaranty Agreement," and, as amended by this Agreement, the "Amended 9.80%
Guaranty Agreement"), pursuant to which the Guarantor guaranteed to John Hancock
the Guarantied Obligations (as defined in the Existing 9.80% Guaranty
Agreement).
1.5. The Guarantor has entered into that certain Amendment and
Restatement of Existing 10.75% Guaranty Agreement, dated as of August 6, 1990
(as in effect prior to the effectiveness of this Agreement, the "Existing 10.75%
Guaranty Agreement," and, as amended by this Agreement, the "Amended 10.75%
Guaranty Agreement"), pursuant to which the Guarantor guaranteed to John Hancock
the Guarantied Obligations (as defined in the Existing 10.75% Guaranty
Agreement).
1.6. The Guarantor has entered into that certain Amendment and
Restatement of Existing 9.85% Guaranty Agreement, dated as of October 31, 1991
(as in effect prior to the effectiveness of this Agreement, the "Existing 9.85%
Guaranty Agreement," and, as amended by this Agreement, the "Amended 9.85%
Guaranty Agreement"), pursuant to which the Guarantor guaranteed to John Hancock
the Guarantied Obligations (as defined in the Existing 9.85% Guaranty
Agreement).
1.7. The Guarantor and Carolina have entered into separate Note
Purchase Agreements, each dated as of January 15, 1993 (collectively, as in
effect prior to the effectiveness of this Agreement, the "Existing 8.41% Note
Agreement," and, as amended by this Agreement, the "Amended 8.41% Note
Agreement"), pursuant to which Carolina issued and sold to the Noteholders and
the Noteholders purchased from Carolina an aggregate principal amount of Twenty
Five Million Dollars ($25,000,000) of Carolina's 8.41% Senior Secured Notes Due
February 1, 2013, and the Guarantor guaranteed to each of the Noteholders the
Guarantied Obligations (as defined in the Existing 8.41% Note Agreement).
1.8. The Existing 10.25% Guaranty Agreement, the Existing 11.00%
Guaranty Agreement, the Existing 12.75% Guaranty Agreement, the Existing 9.80%
Guaranty Agreement, the Existing 10.75% Guaranty Agreement, the Existing 9.85%
Guaranty Agreement and the Existing 8.41% Note Agreement are collectively
referred to herein as the "Existing Agreements." The Amended 10.25% Guaranty
Agreement, the Amended 11.00% Guaranty Agreement, the Amended 12.75% Guaranty
Agreement, the Amended 9.80% Guaranty Agreement, the Amended 10.75% Guaranty
Agreement, the Amended 9.85% Guaranty Agreement and the Amended 8.41% Note
Agreement are collectively referred to herein as the "Amended Agreements."
1.9. The Noteholders desire to amend certain provisions of the
Existing Agreements as set forth herein.
1.10. The terms used in Exhibit A1, Exhibit A2, Exhibit A3, Exhibit A4,
Exhibit A5, Exhibit A6 and Exhibit A7 hereto and not defined therein shall have
the meanings assigned to them in the respective Existing Agreement which such
Exhibit purports to amend.
SECTION 2. AMENDMENTS.
2.1. Amendments to Existing Agreements. Each of the Guarantor,
Carolina, and, subject to the satisfaction of the conditions set forth in
Section 4 hereof, the Noteholders hereby consents and agrees to the amendments
to the Existing Agreement to which it is a party, as set forth in Exhibit A1,
Exhibit A2, Exhibit A3, Exhibit A4, Exhibit A5, Exhibit A6 and Exhibit A7 to
this Agreement, respectively. Each such amendment is incorporated herein by
reference as if set forth verbatim in this Agreement. Notwithstanding the
foregoing, (i) at the request of any of the Noteholders or the Guarantor or
Carolina, each of the parties to each of the Amended Agreements will set forth
in a separate instrument their respective agreements to the amendments to each
of the Existing Agreements as set forth herein and (ii) each of the Guarantor,
Carolina and the Noteholders acknowledges and agrees that each of the Amended
Agreements are, and shall remain, separate and independent agreements between
the Guarantor on the one hand and the respective Noteholder on the other hand
who were parties to the Existing Agreement or, with respect to the Existing
8.41% Note Agreement, separate and independent agreements among the Guarantor
and Carolina on the one hand and the respective Noteholder on the other hand who
were parties to the Existing 8.41% Note Agreement.
2.2. Effect of Amendments. Except as expressly provided herein, (i)
no terms or provisions of any agreement are modified or changed by this
Agreement, (ii) the terms of this Agreement shall not operate as a waiver by the
Noteholders of, or otherwise prejudice the Noteholders' rights, remedies or
powers under, any of the Existing Agreements or under any applicable law and
(iii) the terms and provisions of the Existing Agreements shall continue in full
force and effect, including, without limitation, the cross-default provisions,
as affected by this Agreement.
2.3. Affirmation of Obligations. The Guarantor hereby acknowledges
and affirms all of its obligations under the terms of the Amended Agreements.
SECTION 3. WARRANTIES AND REPRESENTATIONS.
To induce the Noteholders to enter into this Agreement, each of the
Guarantor and Carolina warrants and represents to the Noteholders that as of the
Effective Date (as hereinafter defined):
3.1. Organization, Existence and Authority. The Guarantor and each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Guarantor and Carolina has all requisite power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
3.2. Litigation. There are no proceedings pending, or to the
knowledge of the Guarantor threatened, against or affecting the Guarantor or any
Subsidiary or any of their respective Properties in any court or before any
governmental authority or arbitration board or tribunal which, either
individually or in the aggregate, would conflict with or interfere with the
ability of the Guarantor or Carolina to execute and deliver this Agreement and
to perform their respective obligations hereunder and under the Amended
Agreements.
3.3. Authorization, Execution and Enforceability. The execution and
delivery by the Guarantor and Carolina of this Agreement and the performance of
their respective obligations hereunder and under the Amended Agreements have
been duly authorized by all necessary action on the part of the Guarantor and
Carolina. This Agreement constitutes a valid and binding obligation of the
Guarantor and Carolina, enforceable in accordance with its terms, except that
the enforceability hereof may be:
(a) limited by bankruptcy, insolvency or other similar laws
affecting the enforceability of creditors' rights generally; and
(b) subject to the availability of equitable remedies.
3.4. No Conflicts, etc. Neither the execution and delivery by the
Guarantor or Carolina of this Agreement, nor the performance by the Guarantor or
Carolina of their respective obligations hereunder, conflicts with, results in
any breach in any of the provisions of, constitutes a default under, violates
or, except for the Liens granted to, or for the benefit of, any Noteholder,
results in the creation of any Lien upon any Property of the Guarantor or
Carolina under the provisions of:
(a) any charter document, agreement with shareholders or
bylaws of the Guarantor or Carolina;
(b) any agreement, instrument or conveyance to which the
Guarantor or Carolina or any of their respective Properties may be bound
or affected; or
(c) any statute, rule or regulation or any order, judgment
or award of any court, tribunal or arbitrator by which the Guarantor or
Carolina or any of their respective Properties may be bound or affected.
3.5. Governmental Consent. Neither the execution and delivery by
the Guarantor and Carolina of this Agreement nor the performance by the
Guarantor and Carolina of their respective obligations hereunder, is such as to
require a consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the Guarantor or
Carolina as a condition thereto under the circumstances and conditions
contemplated by this Agreement.
3.6. Existence of Defaults. No event has occurred and no condition
exists which would constitute a Default or an Event of Default (as such terms
are defined in each of the Existing Agreements), and no event has occurred and
no condition exists which would constitute a Default or an Event of Default
under any of the Amended Agreements.
SECTION 4. CONDITIONS PRECEDENT.
The amendments of the Existing Agreements shall become effective on
December 28, 1993 (the "Effective Date"), if and when, and only if and when, all
of the following conditions precedent shall have been satisfied on or before the
Effective Date:
4.1. No Default; Representations And Warranties True. No Default or
Event of Default (as such terms are defined in each of the Amended Agreements)
shall exist; the warranties and representations set forth in Section 3 of this
Agreement shall be true and correct on the Effective Date; and the Noteholders
shall have received a certificate, substantially in the form of Exhibit B
hereto, from each of the Guarantor and Carolina, dated the Effective Date and
signed by two officers of each of the Guarantor and Carolina, to such effect and
certifying that all of the conditions specified in this Section 4 have been
satisfied and to such other matters as the Noteholders may reasonably request.
4.2. Authorization of Transactions. Each of the Guarantor and
Carolina shall have authorized, by all necessary corporate action, the execution
and delivery of this Agreement and each of the other documents and instruments
executed and delivered in connection herewith and the performance of all
obligations of, and the satisfaction of all conditions pursuant to this Section
4 by, and the consummation of all transactions contemplated by this Agreement
by, the Guarantor or Carolina, as applicable.
4.3. Expenses. The Guarantor shall have paid all costs and expenses
of the Noteholders relating to this Agreement in accordance with Section 6.4
hereof.
4.4. Proceedings Satisfactory. All proceedings taken in connection
with this Agreement and all documents and papers relating hereto shall be
satisfactory to the Noteholders and their special counsel. The Noteholders and
their special counsel shall have received copies of such documents and papers
(whether or not specifically referred to above in this Section 4) as they may
reasonably request in connection therewith, in form and substance satisfactory
to them.
SECTION 5. INTERPRETATION OF THIS AGREEMENT.
5.1. Terms Defined. As used in this Agreement, the following terms
have the respective meanings specified below (such definitions, unless otherwise
provided, to be equally applicable to both the singular and the plural forms of
the terms defined):
Agreement, this -- means this Omnibus Amendment Agreement, as it may be
amended from time to time.
Amended Agreements -- has the meaning assigned to such term in Section
1.8 hereof.
Amended 8.41% Note Agreement -- has the meaning assigned to such term in
Section 1.7 hereof.
Amended 11.00% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.2 hereof.
Amended 9.80% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.4 hereof.
Amended 9.85% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.6 hereof.
Amended 10.25% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.1 hereof.
Amended 10.75% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.5 hereof.
Amended 12.75% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.3 hereof.
Carolina -- has the meaning assigned to such term in the introductory
paragraph hereof.
Effective Date -- has the meaning assigned to such term in Section 4
hereof.
Existing Agreements -- has the meaning assigned to such term in Section
1.8 hereof.
Existing 8.41% Note Agreement -- has the meaning assigned to such term
in Section 1.7 hereof.
Existing 11.00% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.2 hereof.
Existing 9.80% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.4 hereof.
Existing 9.85% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.6 hereof.
Existing 10.25% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.1 hereof.
Existing 10.75% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.5 hereof.
Existing 12.75% Guaranty Agreement -- has the meaning assigned to such
term in Section 1.3 hereof.
Guarantor -- has the meaning assigned to such term in the introductory
paragraph hereof.
John Hancock -- has the meaning assigned to such term in the
introductory paragraph hereof.
Lien -- has the meaning assigned to such term in each of the Existing
Agreements.
Mass Mutual Life -- has the meaning assigned to such term in the
introductory paragraph hereof.
MML Pension -- has the meaning assigned to such term in the introductory
paragraph hereof.
Noteholders -- has the meaning assigned to such term in the introductory
paragraph hereof.
Property -- has the meaning assigned to such term in each of the
Existing Agreements.
5.2. Section Headings, etc. The titles of the Sections appear as a
matter of convenience only, do not constitute a part hereof and shall not affect
the construction hereof. The words "herein," "hereof," "hereunder," and
"hereto" refer to this Agreement as a whole and not to any particular Section or
other subdivision.
SECTION 6. MISCELLANEOUS.
6.1. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto. The provisions hereof are intended to be for the benefit of all
holders, from time to time, of notes guaranteed by the related Amended Agreement
and shall be enforceable by any such holder, whether or not an express
assignment to such holder of rights hereunder shall have been made by any
Noteholder or its successors or assigns. Notwithstanding the foregoing, neither
the Guarantor nor Carolina shall not assign its rights or delegate its
obligations under the Amended Agreements.
6.2. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL LAWS OF THE COMMONWEALTH OF VIRGINIA (WITHOUT
REGARD TO ANY CONFLICTS-OF-LAW PRINCIPLES).
6.3. Waivers and Amendments. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, or by any action
or inaction, but only by an instrument in writing signed by each of the parties
signatory hereto. The terms and provisions of the Amended Agreements may be
further amended or modified in accordance with the provisions of the Amended
Agreements.
6.4. Costs and Expenses. On the Effective Date, the Guarantor will
pay all costs and expenses of the Noteholders relating to this Agreement,
including, but not limited to, the statement for reasonable fees and
disbursements of the Noteholders' special counsel presented to the Guarantor on
the Effective Date. The Guarantor will also pay, upon receipt of any statement
thereof, each additional statement for reasonable fees and disbursements of the
Noteholders' special counsel rendered after the Effective Date in connection
with this Agreement.
6.5. Duplicate Originals, Execution in Counterpart. Two or more
originals of this Agreement may be signed by the parties, each of which shall be
an original but all of which together shall constitute one and the same
instrument. This Agreement may be executed in one or more counterparts and
shall be effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts which, collectively, show
execution by each party hereto shall constitute one duplicate original.
6.6. Entire Agreement. This Agreement constitutes the final written
expression of all of the terms hereof and is a complete and exclusive statement
of those terms.
[Remainder of page intentionally left blank; next page is signature page.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by a duly authorized officer or agent thereof, as the
case may be, as of the date first above written.
SMITHFIELD FOODS, INC.
By: /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Vice President, Secretary
& Treasurer
CAROLINA FOOD PROCESSORS, INC.
By: /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Secretary/Treasurer
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Jay M. Swanson
Name: Jay M. Swanson
Title: Second Vice President
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Richard C. Morrison
Name: Richard C. Morrison
Title: Vice President
MML PENSION INSURANCE COMPANY
By: /s/ Richard C. Morrison
Name: Richard C. Morrison
Title: Investment Officer
<PAGE>
EXHIBIT A1
AMENDMENT TO EXISTING 10.25% GUARANTY AGREEMENT
1. Amendment to Section 2.6(a). Section 2.6 of the Existing
10.25% Guaranty Agreement is hereby amended by adding the following sentence at
the end of clause (a):
"During the period of October 3, 1993 through May 1, 1994, the Guarantor
will not, and will not permit any Subsidiary to, incur any Funded Debt
other than (i) up to Three Million Two Hundred Thousand Dollars
($3,200,000) pursuant to the Master Lease Agreement dated May 14, 1993
between General Electric Capital Corporation and Brown's of Carolina,
Inc. and (ii) the Guaranty by the Guarantor of an amount no greater than
Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) in
connection with a new hog production venture between Brown's of
Carolina, Inc. and Fishing Creek Farm, Inc., so long as after giving
effect to such Guaranty, the Guarantor represents in writing to each of
the holders of the Notes that its good faith projection of Consolidated
Fixed Charges for the three hundred sixty five (365) day period
commencing on the date such Guaranty is incurred is not greater than
actual Consolidated Fixed Charges for the three hundred sixty five (365)
day period ending on such date such Guaranty is incurred."
2. Amendment to Section 2.8. Section 2.8 of the Existing 10.25%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated
Tangible Net Worth to be less than the result of
(a) One Hundred Million Dollars ($100,000,000),
plus
(b) the greater of
(i) Zero Dollars ($0) and
(ii) fifty percent (50%) of the sum of
Consolidated Net Income for each fiscal year
ended during the period beginning on May 3,
1993 and ended at such time (unless
Consolidated Net Income shall be a loss in any
fiscal year, in which event the amount
determined pursuant to this clause (ii) for
such fiscal year shall be zero)."
<PAGE>
3. Amendment to Section 2.9. Section 2.9 of the Existing 10.25%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated Net
Income Available for Fixed Charges for the period of eight (8) consecutive
fiscal quarters then most recently ended to be less than the percentage of
Consolidated Fixed Charges for such period as set forth in the following table:
If such period ends Percentage of Consolidated Fixed
Charges for such period
on or before October 30, 1994 150%
after October 30, 1994 200%
<PAGE>
EXHIBIT A2
AMENDMENT TO EXISTING 11.00% GUARANTY AGREEMENT
1. Amendment to Section 2.6(a). Section 2.6 of the Existing
11.00% Guaranty Agreement is hereby amended by adding the following sentence at
the end of clause (a):
"During the period of October 3, 1993 through May 1, 1994, the Guarantor
will not, and will not permit any Subsidiary to, incur any Funded Debt
other than (i) up to Three Million Two Hundred Thousand Dollars
($3,200,000) pursuant to the Master Lease Agreement dated May 14, 1993
between General Electric Capital Corporation and Brown's of Carolina,
Inc. and (ii) the Guaranty by the Guarantor of an amount no greater than
Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) in
connection with a new hog production venture between Brown's of
Carolina, Inc. and Fishing Creek Farm, Inc., so long as after giving
effect to such Guaranty, the Guarantor represents in writing to each of
the holders of the Notes that its good faith projection of Consolidated
Fixed Charges for the three hundred sixty five (365) day period
commencing on the date such Guaranty is incurred is not greater than
actual Consolidated Fixed Charges for the three hundred sixty five (365)
day period ending on such date such Guaranty is incurred."
2. Amendment to Section 2.8. Section 2.8 of the Existing 11.00%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated
Tangible Net Worth to be less than the result of
(a) One Hundred Million Dollars ($100,000,000),
plus
(b) the greater of
(i) Zero Dollars ($0) and
(ii) fifty percent (50%) of the sum of
Consolidated Net Income for each fiscal year
ended during the period beginning on May 3,
1993 and ended at such time (unless
Consolidated Net Income shall be a loss in any
fiscal year, in which event the amount
determined pursuant to this clause (ii) for
such fiscal year shall be zero)."
<PAGE>
3. Amendment to Section 2.9. Section 2.9 of the Existing 11.00%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated Net Income
Available for Fixed Charges for the period of eight (8) consecutive
fiscal quarters then most recently ended to be less than the percentage
of Consolidated Fixed Charges for such period as set forth in the
following table:
If such period ends Percentage of Consolidated Fixed
Charges for such period
on or before October 30, 1994 150%
after October 30, 1994 200%
<PAGE>
EXHIBIT A3
AMENDMENT TO EXISTING 12.75% GUARANTY AGREEMENT
1. Amendment to Section 2.6(a). Section 2.6 of the Existing
12.75% Guaranty Agreement is hereby amended by adding the following sentence at
the end of clause (a):
"During the period of October 3, 1993 through May 1, 1994, the Guarantor
will not, and will not permit any Subsidiary to, incur any Funded Debt
other than (i) up to Three Million Two Hundred Thousand Dollars
($3,200,000) pursuant to the Master Lease Agreement dated May 14, 1993
between General Electric Capital Corporation and Brown's of Carolina,
Inc. and (ii) the Guaranty by the Guarantor of an amount no greater than
Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) in
connection with a new hog production venture between Brown's of
Carolina, Inc. and Fishing Creek Farm, Inc., so long as after giving
effect to such Guaranty, the Guarantor represents in writing to each of
the holders of the Notes that its good faith projection of Consolidated
Fixed Charges for the three hundred sixty five (365) day period
commencing on the date such Guaranty is incurred is not greater than
actual Consolidated Fixed Charges for the three hundred sixty five (365)
day period ending on such date such Guaranty is incurred."
2. Amendment to Section 2.8. Section 2.8 of the Existing 12.75%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated
Tangible Net Worth to be less than the result of
(a) One Hundred Million Dollars ($100,000,000),
plus
(b) the greater of
(i) Zero Dollars ($0) and
(ii) fifty percent (50%) of the sum of
Consolidated Net Income for each fiscal year
ended during the period beginning on May 3,
1993 and ended at such time (unless
Consolidated Net Income shall be a loss in any
fiscal year, in which event the amount
determined pursuant to this clause (ii) for
such fiscal year shall be zero)."
<PAGE>
3. Amendment to Section 2.9. Section 2.9 of the Existing 12.75%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated Net Income
Available for Fixed Charges for the period of eight (8) consecutive
fiscal quarters then most recently ended to be less than the percentage
of Consolidated Fixed Charges for such period as set forth in the
following table:
If such period ends Percentage of Consolidated Fixed
Charges for such period
on or before October 30, 1994 150%
after October 30, 1994 200%
<PAGE>
EXHIBIT A4
AMENDMENT TO EXISTING 9.80% GUARANTY AGREEMENT
1. Amendment to Section 2.6(a). Section 2.6 of the Existing 9.80%
Guaranty Agreement is hereby amended by adding the following sentence at the end
of clause (a):
"During the period of October 3, 1993 through May 1, 1994, the Guarantor
will not, and will not permit any Subsidiary to, incur any Funded Debt
other than (i) up to Three Million Two Hundred Thousand Dollars
($3,200,000) pursuant to the Master Lease Agreement dated May 14, 1993
between General Electric Capital Corporation and Brown's of Carolina,
Inc. and (ii) the Guaranty by the Guarantor of an amount no greater than
Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) in
connection with a new hog production venture between Brown's of
Carolina, Inc. and Fishing Creek Farm, Inc., so long as after giving
effect to such Guaranty, the Guarantor represents in writing to each of
the holders of the Notes that its good faith projection of Consolidated
Fixed Charges for the three hundred sixty five (365) day period
commencing on the date such Guaranty is incurred is not greater than
actual Consolidated Fixed Charges for the three hundred sixty five (365)
day period ending on such date such Guaranty is incurred."
2. Amendment to Section 2.8. Section 2.8 of the Existing 9.80%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated
Tangible Net Worth to be less than the result of
(a) One Hundred Million Dollars ($100,000,000),
plus
(b) the greater of
(i) Zero Dollars ($0) and
(ii) fifty percent (50%) of the sum of
Consolidated Net Income for each fiscal year
ended during the period beginning on May 3,
1993 and ended at such time (unless
Consolidated Net Income shall be a loss in any
fiscal year, in which event the amount
determined pursuant to this clause (ii) for
such fiscal year shall be zero)."
<PAGE>
3. Amendment to Section 2.9. Section 2.9 of the Existing 9.80%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated Net Income
Available for Fixed Charges for the period of eight (8) consecutive
fiscal quarters then most recently ended to be less than the percentage
of Consolidated Fixed Charges for such period as set forth in the
following table:
If such period ends Percentage of Consolidated Fixed
Charges for such period
on or before October 30, 1994 150%
after October 30, 1994 200%
<PAGE>
EXHIBIT A5
AMENDMENT TO EXISTING 10.75% GUARANTY AGREEMENT
1. Amendment to Section 2.6(a). Section 2.6 of the Existing
10.75% Guaranty Agreement is hereby amended by adding the following sentence at
the end of clause (a):
"During the period of October 3, 1993 through May 1, 1994, the Guarantor
will not, and will not permit any Subsidiary to, incur any Funded Debt
other than (i) up to Three Million Two Hundred Thousand Dollars
($3,200,000) pursuant to the Master Lease Agreement dated May 14, 1993
between General Electric Capital Corporation and Brown's of Carolina,
Inc. and (ii) the Guaranty by the Guarantor of an amount no greater than
Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) in
connection with a new hog production venture between Brown's of
Carolina, Inc. and Fishing Creek Farm, Inc., so long as after giving
effect to such Guaranty, the Guarantor represents in writing to each of
the holders of the Notes that its good faith projection of Consolidated
Fixed Charges for the three hundred sixty five (365) day period
commencing on the date such Guaranty is incurred is not greater than
actual Consolidated Fixed Charges for the three hundred sixty five (365)
day period ending on such date such Guaranty is incurred."
2. Amendment to Section 2.8. Section 2.8 of the Existing 10.75%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated
Tangible Net Worth to be less than the result of
(a) One Hundred Million Dollars ($100,000,000),
plus
(b) the greater of
(i) Zero Dollars ($0) and
(ii) fifty percent (50%) of the sum of
Consolidated Net Income for each fiscal year
ended during the period beginning on May 3,
1993 and ended at such time (unless
Consolidated Net Income shall be a loss in any
fiscal year, in which event the amount
determined pursuant to this clause (ii) for
such fiscal year shall be zero)."
<PAGE>
3. Amendment to Section 2.9. Section 2.9 of the Existing 10.75%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated Net Income
Available for Fixed Charges for the period of eight (8) consecutive
fiscal quarters then most recently ended to be less than the percentage
of Consolidated Fixed Charges for such period as set forth in the
following table:
If such period ends Percentage of Consolidated Fixed
Charges for such period
on or before October 30, 1994 150%
after October 30, 1994 200%
<PAGE>
EXHIBIT A6
AMENDMENT TO EXISTING 9.85% GUARANTY AGREEMENT
1. Amendment to Section 2.6(a). Section 2.6 of the Existing 9.85%
Guaranty Agreement is hereby amended by adding the following sentence at the end
of clause (a):
"During the period of October 3, 1993 through May 1, 1994, the Guarantor
will not, and will not permit any Subsidiary to, incur any Funded Debt
other than (i) up to Three Million Two Hundred Thousand Dollars
($3,200,000) pursuant to the Master Lease Agreement dated May 14, 1993
between General Electric Capital Corporation and Brown's of Carolina,
Inc. and (ii) the Guaranty by the Guarantor of an amount no greater than
Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) in
connection with a new hog production venture between Brown's of
Carolina, Inc. and Fishing Creek Farm, Inc., so long as after giving
effect to such Guaranty, the Guarantor represents in writing to each of
the holders of the Notes that its good faith projection of Consolidated
Fixed Charges for the three hundred sixty five (365) day period
commencing on the date such Guaranty is incurred is not greater than
actual Consolidated Fixed Charges for the three hundred sixty five (365)
day period ending on such date such Guaranty is incurred."
2. Amendment to Section 2.8. Section 2.8 of the Existing 9.85%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated
Tangible Net Worth to be less than the result of
(a) One Hundred Million Dollars ($100,000,000),
plus
(b) the greater of
(i) Zero Dollars ($0) and
(ii) fifty percent (50%) of the sum of
Consolidated Net Income for each fiscal year
ended during the period beginning on May 3,
1993 and ended at such time (unless
Consolidated Net Income shall be a loss in any
fiscal year, in which event the amount
determined pursuant to this clause (ii) for
such fiscal year shall be zero)."
<PAGE>
3. Amendment to Section 2.9. Section 2.9 of the Existing 9.85%
Guaranty Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated Net Income
Available for Fixed Charges for the period of eight (8) consecutive
fiscal quarters then most recently ended to be less than the percentage
of Consolidated Fixed Charges for such period as set forth in the
following table:
If such period ends Percentage of Consolidated Fixed
Charges for such period
on or before October 30, 1994 150%
after October 30, 1994 200%
<PAGE>
EXHIBIT A7
AMENDMENT TO EXISTING 8.41% NOTE AGREEMENT
1. Amendment to Section 7.8(b). Section 7.8 of the Existing 8.41%
Note Agreement is hereby amended by adding the following sentence at the end of
clause (b):
"During the period of October 3, 1993 through May 1, 1994, the Guarantor
will not, and will not permit any Subsidiary to, incur any Funded Debt
other than (i) up to Three Million Two Hundred Thousand Dollars
($3,200,000) pursuant to the Master Lease Agreement dated May 14, 1993
between General Electric Capital Corporation and Brown's of Carolina,
Inc. and (ii) the Guaranty by the Guarantor of an amount no greater than
Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) in
connection with a new hog production venture between Brown's of
Carolina, Inc. and Fishing Creek Farm, Inc., so long as after giving
effect to such Guaranty, the Guarantor represents in writing to each of
the holders of the Notes that its good faith projection of Consolidated
Fixed Charges for the three hundred sixty five (365) day period
commencing on the date such Guaranty is incurred is not greater than
actual Consolidated Fixed Charges for the three hundred sixty five (365)
day period ending on such date such Guaranty is incurred."
2. Amendment to Section 7.10. Clause (b) of Section 7.10 of the
Existing 8.41% Note Agreement is hereby amended to read in its entirety as
follows:
"(b) Consolidated Net Worth. The Guarantor will not at any
time permit Consolidated Tangible Net Worth to be less than the result
of
(a) One Hundred Million Dollars ($100,000,000),
plus
(b) the greater of
(i) Zero Dollars ($0) and
(ii) fifty percent (50%) of the sum of
Consolidated Net Income for each fiscal year
ended during the period beginning on May 3,
1993 and ended at such time (unless
Consolidated Net Income shall be a loss in any
fiscal year, in which event the amount
determined pursuant to this clause (ii) for
such fiscal year shall be zero)."
<PAGE>
3. Amendment to Section 7.11. Section 7.11 of the Existing 8.41%
Note Agreement is hereby amended to read in its entirety as follows:
"The Guarantor will not at any time permit Consolidated Net Income
Available for Fixed Charges for the period of eight (8) consecutive
fiscal quarters then most recently ended to be less than the percentage
of Consolidated Fixed Charges for such period as set forth in the
following table:
If such period ends Percentage of Consolidated Fixed
Charges for such period
on or before October 30, 1994 150%
after October 30, 1994 200%
<PAGE>
EXHIBIT B
[FORM OF OFFICERS' CERTIFICATE]
[SMITHFIELD FOODS, INC./CAROLINA FOOD PROCESSORS, INC.]
CERTIFICATE OF OFFICERS
We, ____________ and ____________, each hereby certify that we are,
respectively, the ____________ and the ____________ of [SMITHFIELD FOODS,
INC./CAROLINA FOOD PROCESSORS, INC.], a Delaware corporation (the "Company"),
and that, as such, we have access to its corporate records and are familiar with
the matters herein certified, and we are authorized to execute and deliver this
certificate in the name and on behalf of the Company, and that:
1. This certificate is being delivered pursuant to Section 4.1 of
the Omnibus Amendment Agreement dated as of December 1, 1993 (the "Agreement"),
among the Company, [Smithfield Foods, Inc./Carolina Food Processors, Inc.] and
each of John Hancock Mutual Life Insurance Company, Massachusetts Mutual Life
Insurance Company and MML Pension Insurance Company. Capitalized terms used
herein and not otherwise defined herein have the meanings specified in the
Agreement.
2. No event has occurred and no condition exists that would
constitute a Default or an Event of Default (as such terms are defined in each
of the Amended Agreements) upon the effectiveness of each of the Amended
Agreements.
3. The warranties and representations set forth in Section 3 of
the Agreement are true and correct on the date hereof with the same effect as
though made at and as of the date hereof.
4. All of the conditions specified in Section 4 of the Agreement
required to be complied with by the Company on or before the Effective Date have
been satisfied on or before the date hereof.
IN WITNESS WHEREOF, we have executed this certificate in the name and on
behalf of the Company on December [__], 1993.
[SMITHFIELD FOODS, INC./CAROLINA
FOOD PROCESSORS, INC.]
By:________________________________
Name:
By:________________________________
Name:
[CONFORMED COPY]
THE SMITHFIELD PACKING COMPANY, INCORPORATED
SMITHFIELD FOODS, INC.
_________________________________________________
ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT
_________________________________________________
Dated as of May 1, 1994
$15,000,000 9.80% Secured Notes Due August 1, 2003
$15,000,000 10.75% Secured Notes Due August 1, 2005
$25,000,000 8.41% Senior Secured Notes Due February 1, 2013
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . 1
1.1 Background; Merger; Consent Agreement . . . . . . . . . . . 1
SECTION 2. ASSUMPTION; AMENDMENT; AFFIRMATION. . . . . . . . . . . . . 4
2.1 Assumption. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Affirmation . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. WARRANTIES AND REPRESENTATIONS. . . . . . . . . . . . . . . 5
3.1 Organization, Existence and Authority . . . . . . . . . . . 5
3.2 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Authorization, Execution and Enforceability . . . . . . . . 5
3.4 No Conflicts, etc . . . . . . . . . . . . . . . . . . . . . 5
3.5 Governmental Consent. . . . . . . . . . . . . . . . . . . . 6
3.6 Compliance with Law . . . . . . . . . . . . . . . . . . . . 6
3.7 Existence of Defaults . . . . . . . . . . . . . . . . . . . 6
3.8 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4. CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Execution and Delivery of the Amended Financing Documents . 7
4.2 Collateral Items. . . . . . . . . . . . . . . . . . . . . . 7
4.3 No Default; Representations And Warranties True . . . . . . 8
4.4 Authorization of Transactions . . . . . . . . . . . . . . . 8
4.5 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . 8
4.6 Merger Documents. . . . . . . . . . . . . . . . . . . . . . 8
4.7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.8 North Carolina Certificate of Authority . . . . . . . . . . 9
4.9 Proceedings Satisfactory. . . . . . . . . . . . . . . . . . 9
SECTION 5. INTERPRETATION OF THIS AGREEMENT. . . . . . . . . . . . . . 9
5.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Section Headings, etc.. . . . . . . . . . . . . . . . . . .11
SECTION 6. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .11
6.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . .11
6.2 Successors and Assigns. . . . . . . . . . . . . . . . . . .11
6.3 Waivers and Amendments. . . . . . . . . . . . . . . . . . .11
6.4 Costs and Expenses. . . . . . . . . . . . . . . . . . . . .11
6.5 Duplicate Originals, Execution in Counterpart . . . . . . .11
6.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . . .12
Annex 1 - Purchasers
Exhibit A - Waivers and Amendments to Existing 9.80% Note Agreement
Exhibit B - Waivers and Amendments to Existing 10.75% Note
Agreement
Exhibit C - Waivers and Amendments to Existing 8.41% Note Agreement
Exhibit D - Amendment to Existing 8.41% Security Agreement
Exhibit E - Amendment to Existing 8.41% Environmental
Indemnification Agreement
<PAGE>
THE SMITHFIELD PACKING COMPANY, INCORPORATED
SMITHFIELD FOODS, INC.
ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT
$15,000,000 9.80% Secured Notes Due August 1, 2003
$15,000,000 10.75% Secured Notes Due August 1, 2005
$25,000,000 8.41% Senior Secured Notes Due February 1, 2013
Dated as of May 1, 1994
To each of the Purchasers
listed on Annex 1 hereto
Ladies and Gentlemen:
THE SMITHFIELD PACKING COMPANY, INCORPORATED, a Virginia corporation
("Smithfield Packing"), and SMITHFIELD FOODS, INC., a Delaware corporation
("Smithfield Foods" and together with Smithfield Packing, individually, a
"Financing Party" and collectively, the "Financing Parties") each hereby agrees
with each of you as follows:
SECTION 1. PRELIMINARY STATEMENT
1.1 Background; Merger; Consent Agreement.
(a) Background.
(i) Smithfield Packing entered into that certain
Note Agreement, dated as of July 29, 1988 (as amended and as in
effect prior to the effectiveness of this Agreement, the
"Existing 9.80% Note Agreement," and, as amended by this
Agreement, the "Amended 9.80% Note Agreement") with John
Hancock Mutual Life Insurance Company ("John Hancock"),
pursuant to which Smithfield Packing issued and sold to John
Hancock an aggregate principal amount of Fifteen Million
Dollars ($15,000,000) of its 9.80% Secured Notes Due August 1,
2003 (the "9.80% Notes").
(ii) Smithfield Packing entered into that certain
Note Agreement, dated as of August 6, 1990 (as amended and as
in effect prior to the effectiveness of this Agreement, the
"Existing 10.75% Note Agreement," and, as amended by this
Agreement, the "Amended 10.75% Note Agreement") with John
Hancock, pursuant to which Smithfield Packing issued and sold
to John Hancock an aggregate principal amount of Fifteen
Million Dollars ($15,000,000) of its 10.75% Secured Notes Due
August 1, 2005 (the "10.75% Notes").
(iii) Carolina Food Processors, Inc. ("Carolina
Foods") and Smithfield Foods entered into separate Note
Purchase Agreements, each dated as of January 15, 1993
(collectively, as amended and as in effect prior to the
effectiveness of this Agreement, the "Existing 8.41% Note
Agreement," and, as amended by this Agreement, the "Amended
8.41% Note Agreement") with each of John Hancock, Massachusetts
Mutual Life Insurance Company ("MassMutual") and MML Pension
Insurance Company ("MML" and together with John Hancock and
MassMutual, individually, a "Purchaser" and collectively, the
"Purchasers"), pursuant to which Carolina Foods issued and sold
to John Hancock, MassMutual and MML an aggregate principal
amount of Twenty-Five Million Dollars ($25,000,000) of its
8.41% Senior Secured Notes Due February 1, 2013 (as in effect
prior to the effectiveness of this Agreement, the "Existing
8.41% Notes," and, as amended by this Agreement, the "Amended
8.41% Notes") and Smithfield Foods guarantied to each of John
Hancock, MassMutual and MML the "Guarantied Obligations" (as
defined in the Existing 8.41% Note Agreement).
(iv) Smithfield Foods entered into that certain
Amendment and Restatement of Existing 9.80% Guaranty Agreement,
dated as of July 29, 1988 (the "9.80% Guaranty Agreement")
pursuant to which Smithfield Foods guarantied to John Hancock
the "Guarantied Obligations" (as defined in the 9.80% Guaranty
Agreement).
(v) Smithfield Foods entered into that certain
Amendment and Restatement of Existing 10.75% Guaranty
Agreement, dated as of August 6, 1990 (the "10.75% Guaranty
Agreement"), pursuant to which Smithfield Foods guarantied to
John Hancock the "Guarantied Obligations" (as defined in the
10.75% Guaranty Agreement).
(vi) Kinston Ham Products, Inc. ("Kinston Ham")
entered into that certain Deed of Trust and Security Agreement,
dated as of December 27, 1978 (as amended, supplemented,
restated and consolidated, the "9.80%/10.75% NC Deed of Trust")
with Thomas E. Cabaniss and Laura R. Lucas, as trustees,
pursuant to which Kinston Ham granted to the trustees a lien
and security interest in the "Mortgaged Property" (as defined
in the 9.80%/10.75% NC Deed of Trust).
(vii) Carolina Foods entered into that certain Deed
of Trust, Security Agreement and Assignment of Rents and
Leases, dated as of January 15, 1993 (the "8.41% Deed of
Trust") with The Fidelity Company, as trustee, pursuant to
which Carolina Foods granted to the trustee a lien and security
interest in the "Property" (as defined in the 8.41% Deed of
Trust).
(viii) Carolina Foods entered into that certain
Security Agreement, dated as of January 15, 1993 (as in effect
prior to the effectiveness of this Agreement, the "Existing
8.41% Security Agreement," and, as amended by this Agreement,
the "Amended 8.41% Security Agreement") with NationsBank of
Virginia, N.A., as security trustee, pursuant to which Carolina
Foods granted to the security trustee a lien and security
interest in the "Collateral" (as defined in the Existing 8.41%
Security Agreement).
(ix) Carolina Foods entered into those certain
separate Environmental Indemnification Agreements, each dated
as of January 15, 1993 (collectively, as in effect prior to the
effectiveness of this Agreement, the "Existing 8.41%
Environmental Indemnification Agreement," and, as amended by
this Agreement, the "Amended 8.41% Environmental
Indemnification Agreement"), pursuant to which Carolina Foods
agreed to indemnify each of John Hancock, MassMutual and MML
against certain potential liabilities.
(x) The Existing 9.80% Note Agreement, the 9.80%
Notes, the Existing 10.75% Note Agreement, the 10.75% Notes,
the Existing 8.41% Note Agreement, the Existing 8.41% Notes,
the 9.80% Guaranty Agreement, the 10.75% Guaranty Agreement,
the 9.80%/10.75% NC Deed of Trust, the 8.41% Deed of Trust, the
Existing 8.41% Security Agreement and the Existing 8.41%
Environmental Indemnification Agreement are collectively
referred to herein as the "Existing Financing Documents." The
Amended 9.80% Note Agreement, the Amended 10.75% Note
Agreement, the Amended 8.41% Note Agreement, the Amended 8.41%
Notes, the Amended 8.41% Security Agreement and the Amended
8.41% Environmental Indemnification Agreement are collectively
referred to herein as the "Amended Financing Documents."
(b) Merger.
Pursuant to a Certificate of Agreement of Merger, filed with
the Secretary of State of the State of Delaware on April 27, 1994 (the
"Certificate of Agreement of Merger"), and Articles of Merger filed with
the Virginia State Corporation Commission on April 27, 1994 (the
"Articles of Merger"), Carolina Foods, Kinston Ham and
Smithfield-Wilson, Inc. were merged with and into Smithfield Packing
(the "Merger"). The effective date of the Merger is May 1, 1994.
(c) Consent Agreement.
The Financing Parties and the Purchasers entered into a Consent
Agreement, dated as of April 15, 1994 (the "Consent Agreement"),
pursuant to which (i) Smithfield Packing agreed, in connection with the
Merger, to succeed to and expressly assume all of the obligations,
liabilities and undertakings of (A) Carolina Foods under the Existing
8.41% Note Agreement, the Existing 8.41% Notes, the 8.41% Deed of Trust,
the Existing 8.41% Security Agreement and the Existing 8.41%
Environmental Indemnification Agreement and (B) Kinston Ham under the
9.80%/10.75% NC Deed of Trust, (ii) the Financing Parties agreed to
amend and modify the Existing Financing Documents and to do, or cause to
be done, on or prior to May 31, 1994, all things necessary in connection
with such amendments and modifications and (iii) in reliance upon the
undertakings of the Financing Parties as set forth in the preceding
clause (i) and clause (ii), the Purchasers consented to the Merger. In
furtherance of the foregoing, the Financing Parties and the Purchasers
desire to amend and modify the Existing Financing Documents to reflect
the aforesaid assumption and the amendments and modifications to the
Existing Financing Documents provided for herein.
SECTION 2. ASSUMPTION; AMENDMENT; AFFIRMATION
2.1 Assumption.
Smithfield Packing hereby authorizes its assumption of, and hereby
assumes and agrees to be fully liable in respect of, all of the liabilities,
obligations and undertakings of (i) Carolina Foods, whether now existing or
hereafter arising, provided for in (A) the Existing 8.41% Note Agreement and the
Existing 8.41% Notes, including, without limitation, the obligation to duly and
punctually pay the principal of (and Make-Whole Amount (as such term is defined
in the Existing 8.41% Note Agreement), if any), and interest on, the Existing
8.41% Notes (including any required prepayments of principal in respect of the
Existing 8.41% Notes) in accordance with the terms and provisions of the
Existing 8.41% Note Agreement and the Existing 8.41% Notes, (B) the 8.41% Deed
of Trust, (C) the Existing 8.41% Security Agreement and (D) the Existing 8.41%
Environmental Indemnification Agreement, and (ii) Kinston Ham, whether now
existing or hereafter arising, provided for in the 9.80%/10.75% NC Deed of
Trust. All amounts owing under, and evidenced by, the Existing 8.41% Notes as of
the Date of Assumption and Amendment shall continue to be outstanding under the
Existing 8.41% Notes, shall be the full and complete obligation of Smithfield
Packing and shall be payable in accordance with the provisions of the Existing
8.41% Note Agreement, without any exchange of the Existing 8.41% Notes or
notation thereon.
2.2 Amendments.
(a) Amendments to Existing Financing Documents. Each
Financing Party and, subject to the satisfaction of the conditions set
forth in Section 4, each Purchaser, hereby consents and agrees to the
amendments and modifications to the Existing Financing Documents to
which it is a party, as set forth in Exhibit A, Exhibit B, Exhibit C,
Exhibit D and Exhibit E, respectively. Each such amendment is
incorporated herein by reference as if set forth verbatim in this
Agreement. Notwithstanding the foregoing, (i) at the request of any of
the Purchasers or Financing Parties, each of the parties to each of the
Amended Financing Documents will set forth in a separate instrument
their respective agreements to the amendments to each of the Existing
Financing Documents as set forth herein and (ii) each of the Purchasers
and the Financing Parties acknowledges and agrees that each of the
Amended Financing Documents are, and shall remain, separate and
independent agreements.
(b) Effect of Amendments. Except as expressly provided
herein, (i) no terms or provisions of any agreement are modified or
changed by this Agreement, (ii) the terms of this Agreement shall not
operate as a waiver by the Purchasers of, or otherwise prejudice the
Purchasers' rights, remedies or powers under, any of the Existing
Financing Documents or under any applicable law and (iii) the terms and
provisions of the Existing Financing Documents shall continue in full
force and effect, as affected by this Agreement.
2.3 Affirmation.
Smithfield Foods hereby acknowledges and affirms all of its obligations
under the terms of the 9.80% Guaranty Agreement, the 10.75% Guaranty Agreement
and the Amended 8.41% Note Agreement.
SECTION 3. WARRANTIES AND REPRESENTATIONS
To induce the Purchasers to enter into this Agreement, each of
Smithfield Packing and Smithfield Foods warrants and represents to the
Purchasers that as of the Date of Assumption and Amendment:
3.1 Organization, Existence and Authority. Each of Smithfield
Packing and Smithfield Foods is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation.
Smithfield Packing is currently in the process of obtaining reinstatement of its
certificate of authority to transact business in the State of North Carolina.
The failure by Smithfield Packing to be in good standing as a foreign
corporation in the State of North Carolina does not and will not have a material
adverse effect on the business, prospects, profits, Properties or condition
(financial or otherwise) of Smithfield Packing, or the ability of Smithfield
Packing to perform its obligations set forth herein and under the Amended
Financing Documents. Each of Smithfield Packing and Smithfield Foods has all
requisite power and authority to execute and deliver this Agreement and to
perform its respective obligations hereunder.
3.2 Litigation. There are no proceedings pending, or to the
knowledge of either Smithfield Packing or Smithfield Foods threatened, against
or affecting Smithfield Packing or Smithfield Foods or any of their respective
Properties in any court or before any governmental authority or arbitration
board or tribunal that, either individually or in the aggregate, conflict with
or interfere with the ability of either Smithfield Packing or Smithfield Foods
to execute and deliver this Agreement and to perform its respective obligations
hereunder and under the Amended Financing Documents.
3.3 Authorization, Execution and Enforceability. The execution and
delivery by Smithfield Packing and Smithfield Foods of this Agreement and the
performance of their respective obligations hereunder and under the Amended
Financing Documents have been duly authorized by all necessary action on the
part of Smithfield Packing and Smithfield Foods. This Agreement constitutes a
valid and binding obligation of Smithfield Packing and Smithfield Foods,
enforceable in accordance with its terms, except that the enforceability hereof
may be:
(a) limited by bankruptcy, insolvency or other similar laws
affecting the enforceability of creditors' rights generally; and
(b) subject to the availability of equitable remedies.
3.4 No Conflicts, etc. Neither the execution and delivery by
Smithfield Packing and Smithfield Foods of this Agreement nor the performance by
Smithfield Packing and Smithfield Foods of their respective obligations
hereunder conflicts with, results in any breach in any of the provisions of,
constitutes a default under, violates, or results in the creation of any Lien
upon any Property of Smithfield Packing and Smithfield Foods under the
provisions of:
(a) any charter document, agreement with shareholders or
bylaws of Smithfield Packing or Smithfield Foods;
(b) any agreement, instrument or conveyance by which
Smithfield Packing or Smithfield Foods or any of their respective
Properties may be bound or affected; or
(c) any statute, rule or regulation or any order, judgment
or award of any court, tribunal or arbitrator by which Smithfield
Packing or Smithfield Foods or any of their respective Properties may be
bound or affected.
3.5 Governmental Consent. Neither the execution and delivery by
Smithfield Packing and Smithfield Foods of this Agreement nor the performance by
Smithfield Packing and Smithfield Foods of their respective obligations
hereunder, is such as to require a consent, approval or authorization of, or
filing, registration or qualification with, any governmental authority on the
part of Smithfield Packing or Smithfield Foods as a condition thereto under the
circumstances and conditions contemplated by this Agreement.
3.6 Compliance with Law. Neither Smithfield Packing nor Smithfield
Foods:
(a) is in violation of any law, ordinance, governmental
rule or regulation to which it is subject; or
(b) has failed to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of its
Property or to the conduct of its business;
which violation or failure to obtain might, either individually or in the
aggregate, have a material adverse effect on the business, prospects, profits,
Properties or condition (financial or otherwise) of Smithfield Packing or
Smithfield Foods, or the ability of Smithfield Packing or Smithfield Foods to
perform their respective obligations set forth herein and under the Amended
Financing Documents.
3.7 Existence of Defaults. No event has occurred and no condition
exists that constitutes a Default or an Event of Default (as such terms are
defined in each of the Existing Financing Documents), and no event has occurred
and no condition exists that would constitute a Default or an Event of Default
under any of the Amended Financing Documents.
3.8 Disclosure. Neither this Agreement nor any written statement
furnished by Smithfield Packing to the Purchasers in connection herewith
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact that Smithfield Packing or Smithfield Foods has not disclosed
to the Purchasers in writing that has had or, so far as Smithfield Packing or
Smithfield Foods can now reasonably foresee, could reasonably be expected to
have a material adverse effect on the business, prospects, profits, Properties
or condition (financial or otherwise) of Smithfield Packing or Smithfield Foods,
or the ability of Smithfield Packing or Smithfield Foods to perform their
respective obligations set forth herein and under the Amended Financing
Documents.
SECTION 4. CONDITIONS
The amendments of the Existing Financing Documents shall become
effective on May 31, 1994 (the "Date of Assumption and Amendment"), and shall
apply retroactively to May 1, 1994, if and when, and only if and when, all of
the following conditions shall have been satisfied on or before the Date of
Assumption and Amendment, or, with respect to the conditions set forth in
Section 4.2(a)(ii), Section 4.2(b)(ii), Section 4.2(c) and Section 4.8, delivery
to the Purchasers of the items set forth therein no later than June 30, 1994:
4.1 Execution and Delivery of the Amended Financing Documents.
Each of Smithfield Packing and Smithfield Foods shall have executed and
delivered to the Purchasers a counterpart of each of the Amended Financing
Documents to which it is a party.
4.2 Collateral Items.
(a) 9.80%/10.75% NC Deed of Trust; Title Insurance.
(i) The Articles of Merger, certified by the Clerk
of the Virginia State Corporation Commission, and the
Certificate of Agreement of Merger, certified by the Secretary
of State of the State of Delaware, shall have been recorded in
the Lenoir County Land Records, to reflect the change in
ownership of the "Mortgaged Property" (as defined in the
9.80%/10.75% NC Deed of Trust), and
(ii) an endorsement to the title insurance policy
issued in connection with the 9.80%/10.75% NC Deed of Trust,
reflecting such change in ownership and amending the effective
date of such title insurance policy to the date of the
aforesaid recording of the Articles of Merger and Certificate
of Agreement of Merger, shall have been delivered to the
Purchasers.
(b) 8.41% Deed of Trust; Title Insurance.
(i) The Articles of Merger, certified by the Clerk
of the Virginia State Corporation Commission, and the
Certificate of Agreement of Merger, certified by the Secretary
of State of the State of Delaware, shall have been recorded in
the Bladen County Land Records, to reflect the change in
ownership of the "Property" (as defined in the 8.41% Deed of
Trust), and
(ii) an endorsement to the title insurance policy
issued in connection with the 8.41% Deed of Trust, reflecting
such change in ownership and amending the effective date of
such title insurance policy to the date of the aforesaid
recording of the Articles of Merger and Certificate of
Agreement of Merger, shall have been delivered to the
Purchasers.
(c) Financing Statements. Smithfield Packing shall have
filed all requisite financing statements necessary to continue the
security interests created by
(i) the 9.80%/10.75% NC Deed of Trust in the
"Mortgaged Property" (as defined in the 9.80%/10.75% NC Deed of
Trust),
(ii) the 8.41% Deed of Trust in the "Property" (as
defined in the 8.41% Deed of Trust), and
(iii) the Existing 8.41% Security Agreement in the
"Collateral" (as defined in the Existing 8.41% Security
Agreement),
and confirmation thereof shall have been received by the Purchasers.
4.3 No Default; Representations And Warranties True.
No Default or Event of Default (as such terms are defined in each of the
Amended Financing Documents) under the Amended Financing Documents shall exist;
the warranties and representations set forth in Section 3 shall be true and
correct on the Date of Assumption and Amendment; and each Purchaser shall have
received a certificate, dated as of the Date of Assumption and Amendment and
signed by the President or a Vice-President and the Controller, the Treasurer or
the Assistant Treasurer of each of Smithfield Packing and Smithfield Foods,
certifying that all of the conditions specified in this Section 4 have been
satisfied.
4.4 Authorization of Transactions.
Each of Smithfield Packing and Smithfield Foods shall have authorized,
by all necessary corporate action, the execution and delivery of each of the
Amended Financing Documents to which it is a party and the performance of all of
its respective obligations of, and the satisfaction of all closing conditions
pursuant to this Section 4 by, and the consummation of all transactions
contemplated by each of the Amended Financing Documents by, each of Smithfield
Packing and Smithfield Foods. Each Purchaser shall have received a certificate
from each of Smithfield Packing and Smithfield Foods, in form and substance
satisfactory to it and its special counsel, certifying the adoption of
resolutions by its respective board of directors authorizing such execution,
delivery, performance, satisfaction and consummation, which resolutions shall be
attached to each such certificate and shall be in full force and effect. Each
certificate shall indicate that there has been no resolution passed by the board
of directors of Smithfield Packing or Smithfield Foods, as the case may be,
which conflicts with, amends or rescinds such resolutions.
4.5 Opinion of Counsel.
The Purchasers shall have received from (a) McGuire Woods Battle &
Boothe, counsel for Smithfield Packing and Smithfield Foods, and (b) Ward and
Smith, P.A., special North Carolina counsel for Smithfield Packing, legal
opinions as to such matters as they may reasonably request.
4.6 Merger Documents.
The Purchasers shall have received true and correct copies of the
Certificate of Agreement of Merger, filed with the Secretary of State of the
State of Delaware on April 27, 1994, and Articles of Merger filed with the
Virginia State Corporation Commission on April 27, 1994.
4.7 Expenses.
Smithfield Packing shall have paid all costs and expenses of the
Purchasers relating to this Agreement and the transactions contemplated herein
in accordance with Section 6.4.
4.8 North Carolina Certificate of Authority.
The Purchasers shall have received a true and correct copy of a
Certificate of Authority from the Secretary of State of the State of North
Carolina certifying that Smithfield Packing is authorized to transact business
in the State of North Carolina.
4.9 Proceedings Satisfactory.
All proceedings taken in connection with the Amended Financing Documents
shall be satisfactory to the Purchasers and their special counsel. The
Purchasers and their special counsel shall have received copies of such
documents and papers as they may reasonably request in connection therewith, in
form and substance satisfactory to them.
SECTION 5. INTERPRETATION OF THIS AGREEMENT
5.1 Definitions.
The terms used in Exhibit A, Exhibit B, Exhibit C, Exhibit D and Exhibit
E and not defined therein shall have the meanings assigned to them in the
respective Existing Financing Document which such Exhibit purports to amend and
modify. As used in this Agreement, the following terms have the respective
meanings specified below or set forth in the Section hereof following such term
(such definitions, unless otherwise expressly provided, to be equally applicable
to both the singular and plural forms of the terms defined):
Agreement, this -- means this Agreement, as it may be amended from time
to time.
Amended 8.41% Environmental Indemnification Agreement -- Section
1.1(a)(ix).
Amended 8.41% Note Agreement -- Section 1.1(a)(iii).
Amended 8.41% Notes -- Section 1.1(a)(iii).
Amended 8.41% Security Agreement -- Section 1.1(a)(viii).
Amended Financing Documents -- Section 1.1(a)(x).
Amended 9.80% Note Agreement -- Section 1.1(a)(i).
Amended 10.75% Note Agreement -- Section 1.1(a)(ii).
Articles of Merger -- Section 1.1(b).
Carolina Foods -- Section 1.1(a)(iii).
Certificate of Agreement of Merger -- Section 1.1(b).
Consent Agreement -- Section 1.1(c).
Date of Assumption and Amendment -- Section 4.
8.41% Deed of Trust -- Section 1.1(a)(vii).
Existing 8.41% Environmental Indemnification Agreement -- Section
1.1(a)(ix).
Existing 8.41% Note Agreement -- Section 1.1(a)(iii).
Existing 8.41% Notes -- Section 1.1(a)(iii).
Existing 8.41% Security Agreement -- Section 1.1(a)(viii).
Existing Financing Documents -- Section 1.1(a)(x).
Existing 9.80% Note Agreement -- Section 1.1(a)(i).
Existing 10.75% Note Agreement -- Section 1.1(a)(ii).
Financing Parties -- introductory sentence.
John Hancock -- Section 1.1(a)(i).
Kinston Ham -- Section 1.1(a)(vi).
Lien -- has the meaning assigned to such term in each of the Existing
Financing Documents.
MassMutual -- Section 1.1(a)(iii).
MML -- Section 1.1(a)(iii).
Merger -- Section 1.1(b).
9.80%/10.75% Deed of Trust -- Section 1.1(a)(vi).
9.80% Guaranty Agreement -- Section 1.1(a)(iv).
9.80% Notes -- Section 1.1(a)(i).
Property -- has the meaning assigned to such term in each of the
Existing Financing Documents.
Purchasers -- Section 1.1(a)(iii).
Smithfield Foods -- introductory sentence.
Smithfield Packing -- introductory sentence.
10.75% Guaranty Agreement -- Section 1.1(a)(v).
10.75% Notes -- Section 1.1(a)(ii).
5.2 Section Headings, etc.
The titles of the Sections appear as a matter of convenience only, do
not constitute a part hereof and shall not affect the construction hereof. The
words "herein," "hereof," "hereunder" and "hereto" refer to this Agreement as a
whole and not to any particular Section or other subdivision.
SECTION 6. MISCELLANEOUS
6.1 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF VIRGINIA (WITHOUT
REGARD TO ANY CONFLICTS-OF-LAW PRINCIPLES).
6.2 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto. The provisions hereof are intended to be for the benefit of all
holders, from time to time, of notes issued in connection with the related
Amended Financing Document and shall be enforceable by any such holder, whether
or not an express assignment to such holder of rights hereunder shall have been
made. Notwithstanding the foregoing, neither Smithfield Packing nor Smithfield
Foods shall assign its rights or delegate its obligations under the Amended
Financing Documents.
6.3 Waivers and Amendments. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, or by any action
or inaction, but only by an instrument in writing signed by each of the parties
signatory hereto. The terms and provisions of the Amended Financing Documents
may be further amended or modified in accordance with the provisions of the
Amended Financing Documents.
6.4 Costs and Expenses. On the Date of Assumption and Amendment,
Smithfield Packing will pay all costs and expenses of the Purchasers relating to
this Agreement, including, but not limited to, the statement for reasonable fees
and disbursements of the Purchasers' special counsel presented to Smithfield
Packing on the Date of Assumption and Amendment. Smithfield Packing will also
pay, upon receipt of any statement thereof, each additional statement for
reasonable fees and disbursements of the Purchasers' special counsel rendered
after the Date of Assumption and Amendment in connection with this Agreement.
6.5 Duplicate Originals, Execution in Counterpart. Two or more
originals of this Agreement may be signed by the parties, each of which shall be
an original but all of which together shall constitute one and the same
instrument. This Agreement may be executed in one or more counterparts and
shall be effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts which, collectively, show
execution by each party hereto shall constitute one duplicate original.
6.6 Entire Agreement. This Agreement constitutes the final written
expression of all of the terms hereof and is a complete and exclusive statement
of those terms.
[Remainder of page intentionally left blank; next page is signature page.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by a duly authorized officer or agent thereof, as the
case may be, as of the date first above written.
Very truly yours,
THE SMITHFIELD PACKING COMPANY,
INCORPORATED
By /s/ George E. Hamilton, Jr.
Name: George E. Hamilton, Jr.
Title: President
SMITHFIELD FOODS, INC.
By /s/ Joseph W. Luter, III
Name: Joseph W. Luter, III
Title: President
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By /s/ Scott A. McFetridge
Name: Scott A. McFetridge
Title: Investment Officer
[Signature page for ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT, dated as of May
1, 1994, with respect to the Existing Financing Documents of THE SMITHFIELD
PACKING COMPANY, INCORPORATED and SMITHFIELD FOODS, INC.]
<PAGE>
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By /s/ Michael P. Hermsen
Name: Michael P. Hermsen
Title: Second Vice President
MML PENSION INSURANCE COMPANY
By /s/ Michael P. Hermsen
Name: Michael P. Hermsen
Title: Investment Officer
[Signature page for ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT, dated as of May
1, 1994, with respect to the Existing Financing Documents of THE SMITHFIELD
PACKING COMPANY, INCORPORATED and SMITHFIELD FOODS, INC.]
<PAGE>
ANNEX 1
PURCHASERS
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
MML Pension Insurance Company
c/o Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
EXHIBIT A
<PAGE>
WAIVERS AND AMENDMENTS TO EXISTING 9.80% NOTE AGREEMENT
5. Waiver of Section 6.5(b). John Hancock hereby reaffirms its
consent to the merger of Carolina Foods, Kinston Ham and Smithfield-Wilson, Inc.
with and into Smithfield Packing, as set forth in the Consent Agreement dated as
of April 15, 1994, among John Hancock and the other parties thereto, and agrees
that such consent shall operate as a waiver of the requirements set forth in
Section 6.5(b) of the Existing 9.80% Note Agreement.
2. Amendment to Section 6.7(a)(8). Section 6.7(a)(8) of the
Existing 9.80% Note Agreement is hereby amended to read in its entirety as
follows:
"(8) (i) the Deeds of Trust and related financing
statements, which shall constitute first and prior Liens on the
Mortgaged Property, and any Liens permitted by such
instruments, (ii) Liens granted to secure the Company's
obligations under the 10.75% Note due August 1, 2005 in the
original aggregate principal amount of Fifteen Million Dollars
($15,000,000), issued pursuant to the Note Agreement, dated as
of August 6, 1990, by and between the Company and John Hancock
and (iii) Liens granted to secure the Company's obligations
under the Assumed Debt, provided that such Liens comply with
the requirements set forth in the definition of Assumed Debt."
3. Amendment to Section 6.9. Section 6.9 of the Existing 9.80%
Note Agreement is hereby amended to read in its entirety as follows:
"6.9 Funded Debt.
The Company will not incur or in any manner be or
become liable in respect of any Funded Debt except (i) the 9.8%
Note, (ii) the 10.75% Note due August 1, 2005 in the original
aggregate principal amount of Fifteen Million Dollars
($15,000,000), issued pursuant to the Note Agreement, dated as
of August 6, 1990, by and between the Company and John Hancock,
(iii) the Assumed Debt and (iv) intercompany indebtedness to
SF Investments, Inc., in a principal amount not to exceed
Seventeen Million Five Hundred Thousand Dollars ($17,500,000),
so long as Smithfield Foods, Inc. directly or indirectly owns
and controls all of the capital stock of SF Investments, Inc."
4. Amendment to Section 6.11. Section 6.11 of the Existing 9.80%
Note Agreement is hereby amended to read in its entirety as follows:
"6.11 Net Worth.
The Company shall maintain its Net Worth in an amount
which, at all times, is at least Seventy-Five Million Dollars
($75,000,000)."
5. Amendment to Section 6.13. Section 6.13 of the Existing 9.80%
Note Agreement is hereby amended to read in its entirety as follows:
"6.13 Debt Ratio.
The Company will not at any time permit the ratio of
its Net Tangible Assets to its Funded Debt to be less than (i)
1.8 to 1.0 through April 28, 1996 and (ii) 2.0 to 1.0
commencing April 29, 1996."
6. Amendment to Section 9.1. Section 9.1 of the Existing 9.80%
Note Agreement is hereby amended by adding the following definition so as to
preserve the alphabetical ordering of the definitions set forth therein:
"Assumed Debt -- means the following obligations of
Carolina Food Processors, Inc. assumed by the Company pursuant to a
merger of Carolina Food Processors, Inc. with and into the Company as of
May 1, 1994:
(1) obligations under the 8.41% Senior
Secured Notes due February 1, 2013 in the original aggregate
principal amount of Twenty-Five Million Dollars ($25,000,000),
issued pursuant to the Note Purchase Agreement, dated as of
January 15, 1993, by and among Carolina Food Processors, Inc.,
the Guarantor and each of the purchasers listed on Annex 1
thereto;
(2) the guaranty of the obligations of the
Guarantor under a term loan by NationsBank of Virginia, N.A. to
the Guarantor so long as (x) the aggregate principal amount of
such obligations does not exceed Twenty-Five Million Dollars
($25,000,000), (y) any Liens granted in connection therewith
are junior to the Liens permitted under clause (a)(8)(i) and
clause (a)(8)(ii) of Section 6.7 and clause (1) of this
definition and (z) such obligations are repaid in full on or
prior to September 30, 1998; and
(3) a term loan by MetLife Capital
Corporation to Carolina Food Processors, Inc. so long as (x)
the aggregate principal amount of such obligations does not
exceed Two Million Eight Hundred Thousand Dollars ($2,800,000),
(y) any Lien granted in connection therewith only covers a
certain backup power generation unit entitled the Project Title
Generator System (project #9303C) acquired with the proceeds of
such term loan and does not extend to any other Property of the
Company and (z) such obligations are repaid in full on or prior
to August 30, 1998."
<PAGE> EXHIBIT B
WAIVERS AND AMENDMENTS TO EXISTING 10.75% NOTE AGREEMENT
1. Waiver of Section 6.5(b). John Hancock hereby reaffirms its
consent to the merger of Carolina Foods, Kinston Ham and Smithfield-Wilson, Inc.
with and into Smithfield Packing, as set forth in the Consent Agreement dated as
of April 15, 1994, among John Hancock and the other parties thereto, and agrees
that such consent shall operate as a waiver of the requirements set forth in
Section 6.5(b) of the Existing 10.75% Note Agreement.
2. Amendment to Section 6.7(a)(8). Section 6.7(a)(8) of the
Existing 10.75% Note Agreement is hereby amended to read in its entirety as
follows:
"(8)(i) the Deeds of Trust and related financing
statements, which shall constitute first and prior Liens on the
Mortgaged Property, and any Liens permitted by such
instruments, (ii) Liens granted by the Company to secure the
obligations of the Company under the 9.8% Note due August 1,
2003, issued pursuant to the Note Agreement, dated as of July
29, 1988, by and between the Company and John Hancock and (iii)
Liens granted to secure the Company's obligations under the
Assumed Debt, provided that such Liens comply with the
requirements set forth in the definition of Assumed Debt."
3. Amendment to Section 6.9. Section 6.9 of the Existing 10.75%
Note Agreement is hereby amended to read in its entirety as follows:
"6.9 Funded Debt.
The Company will not incur or in any manner be or
become liable in respect of any Funded Debt except (i) the
10.75% Note, (ii) the 9.8% Note due August 1, 2003 in the
original aggregate principal amount of Fifteen Million Dollars
($15,000,000), issued pursuant to the Note Agreement, dated as
of July 29, 1988, by and between the Company and John Hancock,
(iii) the Assumed Debt and (iv) intercompany indebtedness to
SF Investments, Inc., in a principal amount not to exceed
Seventeen Million Five Hundred Thousand Dollars ($17,500,000),
so long as Smithfield Foods, Inc. directly or indirectly owns
and controls all of the capital stock of SF Investments, Inc."
4. Amendment to Section 6.11. Section 6.11 of the Existing 10.75%
Note Agreement is hereby amended to read in its entirety as follows:
"6.11 Net Worth.
The Company shall maintain its Net Worth in an amount
which, at all times, is at least Seventy-Five Million Dollars
($75,000,000)."
5. Amendment to Section 6.13. Section 6.13 of the Existing 10.75%
Note Agreement is hereby amended and restated to read in its entirety as
follows:
"6.13 Debt Ratio.
The Company will not at any time permit the ratio of
its Net Tangible Assets to its Funded Debt to be less than (i)
1.8 to 1.0 through April 28, 1996 and (ii) 2.0 to 1.0
commencing April 29, 1996."
6. Amendment to Section 9.1. Section 9.1 of the Existing 10.75%
Note Agreement is hereby amended by adding the following definition so as to
preserve the alphabetical ordering of the definitions set forth therein:
"Assumed Debt -- means the following obligations of
Carolina Food Processors, Inc. assumed by the Company pursuant to a
merger of Carolina Food Processors, Inc. with and into the Company as of
May 1, 1994:
(1) obligations under the 8.41% Senior
Secured Notes due February 1, 2013 in the original aggregate
principal amount of Twenty-Five Million Dollars ($25,000,000),
issued pursuant to the Note Purchase Agreement, dated as of
January 15, 1993, by and among Carolina Food Processors, Inc.,
the Guarantor and each of the purchasers listed on Annex 1
thereto;
(2) the guaranty of the obligations of the
Guarantor under a term loan by NationsBank of Virginia, N.A. to
the Guarantor so long as (x) the aggregate principal amount of
such obligations does not exceed Twenty-Five Million Dollars
($25,000,000), (y) any Liens granted in connection therewith
are junior to the Liens permitted under clause (a)(8)(i) and
clause (a)(8)(ii) of Section 6.7 and clause (1) of this
definition and (z) such obligations are repaid in full on or
prior to September 30, 1998; and
(3) a term loan by MetLife Capital
Corporation to Carolina Food Processors, Inc. so long as (x)
the aggregate principal amount of such obligations does not
exceed Two Million Eight Hundred Thousand Dollars ($2,800,000),
(y) any Lien granted in connection therewith only covers a
certain backup power generation unit entitled the Project Title
Generator System (project #9303C) acquired with the proceeds of
such term loan and does not extend to any other Property of the
Company and (z) such obligations are repaid in full on or prior
to August 30, 1998."
<PAGE> EXHIBIT C
WAIVERS AND AMENDMENTS TO EXISTING 8.41% NOTE AGREEMENT
1. Waiver of Section 7.4(a). Each of John Hancock, MassMutual and
MML hereby reaffirms its consent to the merger of Carolina Foods, Kinston Ham
and Smithfield-Wilson, Inc. with and into Smithfield Packing, as set forth in
the Consent Agreement dated as of April 15, 1994, among John Hancock,
MassMutual, MML and the other parties thereto, and agrees that such consent
shall operate as a waiver of the requirements set forth in Section 7.4(a) of the
Existing 8.41% Note Agreement.
2. Amendment to Section 7.2(a). Section 7.2(a) of the Existing
8.41% Note Agreement is hereby amended to read in its entirety as follows:
"(a) Property -- maintain its Property in good condition,
ordinary wear and tear excepted, and make all necessary
renewals, replacements, additions, betterments and improvements
thereto; and, in addition to the foregoing, the Company will,
during each year commencing January 1, 1994 and during each
year thereafter, either expend or invest an amount equal to at
least fifty percent (50%) of Depreciation for the then most
recently ended fiscal year of the Company on repairs,
maintenance or capital improvements to the "Property" (as such
term is defined in the Deed of Trust);"
3. Amendment to Section 7.8(a). Section 7.8(a) of the Existing
8.41% Note Agreement is hereby restated to read in its entirety as follows:
"(a) Company Debt Ratio. The Company will not at
any time permit the ratio of its Net Tangible Assets to its
Funded Debt to be less than (i) 1.8 to 1.0 through April 28,
1996 and (ii) 2.0 to 1.0 commencing April 29, 1996."
4. Amendment to Section 7.10(a). Section 7.10(a) of the Existing
8.41% Note Agreement is hereby amended to read in its entirety as follows:
"(a) Company Net Worth. The Company will not at any
time permit Tangible Net Worth of the Company to be less than
Seventy-Five Million Dollars ($75,000,000)."
5. Amendments to Section 10.1.
(a) Section 10.1 of the Existing 8.41% Note Agreement is
hereby amended by replacing the definition of "Company" with the
following:
"Company -- means The Smithfield Packing Company,
Incorporated, a Virginia corporation."
(b) Section 10.1 of the Existing 8.41% Note Agreement is
hereby amended by adding the following definitions so as to preserve the
alphabetical ordering of the definitions set forth therein:
"Current Liabilities -- means, with respect to any
Person, at any time, the amount of liabilities that must be
paid or satisfied (or normally would be paid or satisfied)
within one year (excluding deferred taxes) and which would be
shown on a balance sheet of such Person at such time."
"Depreciation -- means, for any fiscal year of the
Company, the amount shown on the Company's annual statement of
income as depreciation of its property, plant and equipment for
such fiscal year."
"Net Tangible Assets -- means, with respect to any
Person, at any time, the result of
(a) the net book value (after deducting
related depreciation, obsolescence, amortization,
valuation and other proper reserves) of the Tangible
Assets of such Person, as would be shown on a balance
sheet of such Person at such time; minus
(b) an amount equal to the Current
Liabilities of such Person at such time."
6. Amendment to Section 10.5. Section 10.5 of the Existing 8.41%
Note Agreement is hereby amended to read in its entirety as follows:
"10.5 Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL VIRGINIA
LAW."
The equivalent provision in the Existing 8.41% Notes shall be deemed to be
amended in accordance with the foregoing amendment to Section 10.5.
7. References to the "Company".
All references to the "Company" in the Existing 8.41% Note Agreement and
the Existing 8.41% Notes shall be deemed a reference to the "Company," as
amended pursuant to Paragraph 5(a) of this Exhibit C.
<PAGE> EXHIBIT D
AMENDMENT TO EXISTING 8.41% SECURITY AGREEMENT
1. Amendment to Section 1.1. Section 1.1 of the Existing 8.41%
Security Agreement is hereby amended by replacing the definition of "Company"
with the following:
"Company -- means The Smithfield Packing Company,
Incorporated, a Virginia corporation."
2. References to the "Company".
All references to the "Company" in the Existing 8.41% Security Agreement
shall be deemed a reference to the "Company," as amended pursuant to Paragraph 1
of this Exhibit D. EXHIBIT E
<PAGE>
AMENDMENT TO EXISTING 8.41% ENVIRONMENTAL INDEMNIFICATION AGREEMENT
1. Amendment. The Existing 8.41% Environmental Indemnification
Agreement is hereby amended by replacing Carolina Food Processors, Inc. with The
Smithfield Packing Company, Incorporated as the "Grantor." All references to
the "Grantor" in the Existing 8.41% Environmental Indemnification Agreement
shall be deemed a reference to The Smithfield Packing Company, Incorporated.
This instrument prepared by and after recording mail to: Laura R. Lucas,
Esquire, McGuire, Woods, Battle & Boothe, 9000 World Trade Center, Norfolk,
VA 23510.
LOAN MODIFICATION AGREEMENT
This LOAN MODIFICATION AGREEMENT (this "Modification Agreement") is
made as of April 30, 1994 among SMITHFIELD FOODS, INC. a Delaware
corporation (the "Company"), CAROLINA FOOD PROCESSORS, INC., a Delaware
corporation (the "Guarantor"), THE SMITHFIELD PACKING COMPANY,
INCORPORATED, a Virginia corporation ("Packing") and NATIONSBANK OF
VIRGINIA, N.A. (the "Bank").
RECITALS
A. The Bank and the Company are parties to an Amended and Restated
Credit Agreement dated as of June 28, 1993 (the "Credit Agreement").
Pursuant to the Credit Agreement, the Company delivered to the Bank its
Amended and Restated Term Note dated as of June 28, 1993 (the "Note"). The
Note is guaranteed by the Guarantor pursuant to an Amended and Restated
Guarantee dated as of June 28, 1993 (the "Guarantee"). The Note and the
Guarantee are secured by (i) an Amended and Restated Deed of Trust and
Security Agreement dated as of June 28, 1993, among the Guarantor, TIM,
Inc., a North Carolina corporation, as Trustee, and the Bank, recorded in
the Office of the Register of Deeds for Bladen County, North Carolina (the
"Register's Office") in Deed Book 330 at page 45 (the "Deed of Trust") and
(ii) an Amended and Restated Security Agreement dated as of June 28, 1993,
between the Guarantor and the Bank (the "Security Agreement"). The Credit
Agreement, the Note, the Guarantee, the Deed of Trust, and the Security
Agreement, as any of them may be amended, supplemented, replaced, or
otherwise modified from time to time, are referred to collectively as the
"Loan Documents."
B. The Guarantor, Kinston Ham Products, Inc., a Delaware
corporation, and Smithfield-Wilson, Inc., a Delaware corporation
(collectively, the "Merging Corporations") plan to merge into Packing (the
"Merger") pursuant to a Plan and Agreement of Merger effective as of May 1,
1994. The effective date of the Merger is referred to as the "Merger
Date." Packing will be the surviving corporation in the Merger.
C. The parties now wish to amend the Loan Documents to provide for
the Merger.
AGREEMENT
The parties agree as follows:
1. Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Loan Documents.
2. The definition of "Guarantor" in Section 1.1 of the Credit
Agreement is deleted and the following substituted therefor:
" "Guarantor": until the Merger Date, Carolina Food
Processors, Inc., a Delaware corporation and a wholly owned
Subsidiary of the Company; upon and after the Merger Date, The
Smithfield Packing Company, Incorporated, a Virginia corporation
and a wholly owned Subsidiary of the Company."
3. The following definitions are added to Section 1.1 of the Credit
Agreement:
" "Merger": the merger of Carolina Food Processors,
Inc., a Delaware corporation, Kinston Ham Products, Inc., a
Delaware corporation, and Smithfield-Wilson, Inc., a Delaware
corporation, into The Smithfield Packing Company, Incorporated, a
Virginia corporation, pursuant to the Plan and Agreement of
Merger effective as of May 1, 1994.
"Merger Date": the effective date of the Merger."
4. Section 6.4 of the Credit Agreement is deleted and the following
substituted therefor:
" 6.4 Prohibition of Fundamental Changes. Except for the
Merger and as permitted by the Note Purchase Agreement, enter
into any transaction of merger or consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business or assets or stock
in a Subsidiary, whether now owned or hereafter acquired
(including, without limitation, receivables and leasehold
interests but excluding obsolete or worn out property, or
inventory disposed of in the ordinary course of business), or
acquire by purchase or otherwise all or substantially all the
business or assets of, or stock or other evidence of beneficial
ownership of, any Person, or make any material change in its
present method of conducting business."
5. Section 8 of the Deed of Trust is deleted and the following
substituted therefor:
" 8. Transfer or Mortgage of Premises. Except as the legal
or equitable title or ownership of the Premises is affected by
the merger (the "Merger") of the Guarantor, Kinston Ham Products,
Inc., a Delaware corporation, and Smithfield-Wilson, Inc., a
Delaware corporation, into The Smithfield Packing Company,
Incorporated, a Virginia corporation ("Packing"), pursuant to the
Plan and Agreement of Merger effective as of May 1, 1994, the
Guarantor will not voluntarily, or involuntarily by operation of
law, sell, convey, transfer, mortgage, encumber, lease or
otherwise dispose of or alienate the Premises or any part thereof
or any interest therein, whether legal or equitable, without the
prior written consent of the Bank, which consent shall be given
or not given in the Bank's sole discretion. Any change in the
legal or equitable title of the Premises or in the beneficial
ownership of the Premises (including, without limitation, the
sale, conveyance, transfer or other disposition of any interest
in the Guarantor), whether or not of record and whether or not
for consideration, shall be deemed to be a transfer of an
interest in the Premises."
6. Section 9 of the Deed of Trust is deleted and the following
substituted therefor:
" 9. Maintenance of Entity. The Guarantor will maintain its
existence in good standing with the same form and control as in
effect on the date hereof, provided however, that it shall not be
a default or event of default for the Guarantor to enter into the
Merger as set forth in Paragraph 8 herein. After the effective
date of the Merger, it is a requirement of this Deed of Trust
that Packing maintain its existence in good standing with the
same form and control as in effect on the effective date of the
Merger."
7. Section 6(m) of the Security Agreement is deleted and the
following substituted therefor:
" (m) Name Change. The Guarantor will not change its
name or conduct its business under any other name without giving
the Bank 120 days prior written notice and, in the event of any
name change, shall execute and deliver to the Bank appropriate
amendments to the UCC financing statement concurrently with the
date of such change in name. Notwithstanding the foregoing, it
shall not be a default or event of default hereunder for the
Guarantor to change its name in connection with its merger into
The Smithfield Packing Company, Incorporated, a Virginia
corporation, pursuant to the Plan and Agreement of Merger
effective as of May 1, 1994, so long as the Guarantor delivers
appropriate amendments to the UCC financing statements
concurrently with the effective date of the merger."
8. Section 9(b) of the Guarantee is deleted and the following
substituted therefor:
" (b) Engage in business of the same general type as now
conducted by the Guarantor, and preserve, renew and keep in full
force and effect its corporate existence and take all reasonable
action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business,
provided however, that it shall not be a default or event of
default hereunder for the Guarantor to merge into The Smithfield
Packing Company, Incorporated, a Virginia corporation, pursuant
to the Plan and Agreement of Merger effective as of May 1, 1994;
comply with all contractual obligations and Requirements of Law
except to the extent that the failure to comply therewith could
not, in the aggregate, have a material adverse effect on the
business, operations, property or financial or other condition of
the Guarantor;"
9. The introductory paragraph of Section 10 of the Guarantee is
deleted and the following substituted therefor:
" 10. Except for and in connection with the merger of the
Guarantor into The Smithfield Packing Company, Incorporated, a
Virginia corporation, pursuant to the Plan and Agreement of
Merger effective as of May 1, 1994, the Guarantor hereby agrees
that, so long as the Agreement remains in effect or the Note or
any other Obligation remains outstanding, the Guarantor shall
not, directly or indirectly:"
10. Sections 10(g), 10(h), and 10(i) of the Guarantee are deleted and
the following substituted therefor:
" (g) Fail to comply with the terms of any financial
covenants applicable to the Guarantor under any loan agreements
or related documents, as such agreements or documents are amended
from time to time, in connection with any loans or credit
facilities made to the Guarantor or an affiliated entity by John
Hancock Mutual Life Insurance Company, a Massachusetts
corporation, its successors and assigns."
11. The approval of the Bank to the amendments and terms of this
Modification Agreement is subject to the following conditions precedent:
a. The Bank shall have received certified true copies of all
consents, licenses and approvals required or advisable in connection with
the Merger from all other lenders and Persons as may be required by the
terms and conditions of any loan documents, agreements, or contracts to
which any of the Company, Packing, or the Guarantor is a party, including
without limitation, written consents from each of the Purchasers, as
defined in and pursuant to (i) the Note Purchase Agreement dated as of
January 15, 1993, among the Company, the Guarantor, and the Purchasers, as
amended by the Amendment Agreement dated as of June 15, 1993, the "Note
Purchase Agreement" and (ii) the Current Note Agreements, as defined in the
Note Purchase Agreement. Such consents, licenses and approvals shall be in
full force and effect and be satisfactory in form and substance to the
Bank.
b. The Bank shall have received a certified copy of the
Certificate of Merger issued in connection with the Merger and such other
evidence of the consummation of the Merger as the Bank may reasonably
require.
c. Any documents (including, without limitation, this Loan
Modification Agreement, amendments to Uniform Commercial Code financing
statements and notices or certificates of merger) required to be filed,
registered or recorded in order to maintain, in favor of the Bank, a
perfected second Lien on the collateral described in the Security Documents
shall have been properly filed, registered or recorded in each office in
each jurisdiction in which such filings, registrations and recordations are
required; the Bank shall have received acknowledgment copies of all such
filings, registrations and recordations stamped by the appropriate filing,
registration or recording officer (or, in lieu thereof, other evidence
satisfactory to the Bank that all such filings, registrations and
recordations have been made); and the Bank shall have received evidence
that all necessary filing, subscription and inscription fees and all
recording and other similar fees, and all taxes and other expenses related
to such filings, registrations and recordings have been paid in full by or
on behalf of the Company.
d. The Bank shall have received an endorsement to its
mortgagee's title policy insuring this Loan Modification Agreement,
reflecting amendments to the Mortgage and containing such other matters as
may be deemed necessary by the Bank. The Bank shall also have received
evidence satisfactory to it that all premiums in respect of such
endorsements have been paid by or on behalf of the Company.
e. No Default or Event of Default shall have occurred and be
continuing hereunder or after giving effect to the Merger and this
Modification Agreement.
f. The Bank shall have received, such additional information and
materials which it shall have reasonably requested, including, without
limitation, copies of any debt agreements, security agreements and other
material contracts.
g. All corporate and other proceedings and all other documents
and legal matters in connection with the transactions contemplated by this
Modification Agreement shall be reasonably satisfactory in form and
substance to the Bank and its counsel.
12. The Company, Packing, and the Guarantor jointly and severally
represent and warrant that the consummation of the Merger will not violate
or breach any of the terms or covenants of any loans, agreements, or
contracts to which any of them are parties, except for agreements pursuant
to which proper consents have been delivered to the Bank as required by
paragraph 11.a. herein.
13. Packing acknowledges and agrees that upon and after the Merger
Date, it will assume all of the obligations and liabilities of the
Guarantor, including without limitation, all of the Guarantor's obligations
under the Loan Documents.
14. Upon and after the Merger Date, all references to Guarantor in
all of the Loan Documents will be deemed to be references to Packing.
15. TIM, Inc., trustee under the Deed of Trust, has executed this
Loan Modification Agreement at the instruction of the Bank.
16. All terms and conditions of the Loan Documents shall remain in
full force and effect, as specifically modified hereby.
Witness the signatures and seals on the following pages:
<PAGE>
Attest: CAROLINA FOOD PROCESSORS, INC.
__________________________ By:__________________________
Title:____________________ Title:_______________________
STATE OF ___________________
COUNTY/CITY OF ___________________
I, ______________________________, a Notary Public of the
________________of______________, certify that Aaron D. Trub personally
came before me this day and acknowledged that he is the Secretary of
Carolina Food Processors, Inc., a Delaware corporation, and that by
authority duly given and as the act of the corporation, the foregoing
instrument was signed in its name by its Vice President, sealed with its
corporate seal and attested by himself as its Secretary.
Witness my hand and official seal or stamp, this ____ day of
_________________, 1994.
Notary Seal or Stamp __________________________________
Notary Public
My commission expires:____________________
<PAGE>
Attest: TIM, INC.
__________________________ By:__________________________
Title:____________________ Title:_______________________
STATE OF ___________________
COUNTY/CITY OF ____________________
I, ______________________________, a Notary Public of the
________________of______________, certify that _________________ personally
came before me this day and acknowledged that he is the _________ of Tim,
Inc., a North Carolina corporation, and that by authority duly given and as
the act of the corporation, the foregoing instrument was signed in its name
by its ______________, sealed with its corporate seal and attested by
himself as its _________.
Witness my hand and official seal or stamp, this ____ day of
_________________, 1994.
Notary Seal or Stamp __________________________________
Notary Public
My commission expires:____________________
<PAGE>
Attest: NATIONSBANK OF VIRGINIA, N.A.
_____________________ By:________________________ Allison L.
Gilliam
Title: Assistant Secretary Title:_____________________
STATE OF ____________________
COUNTY/CITY OF __________________
I, ______________________________, a Notary Public of the
________________of______________, certify that Allison L. Gilliam
personally came before me this day and acknowledged that she is the
Assistant Secretary of NationsBank of Virginia, N.A., a national banking
association, and that by authority duly given and as the act of the
association, the foregoing instrument was signed in its name by its
______________, sealed with its corporate seal and attested by herself as
its Assistant Secretary.
Witness my hand and official seal or stamp, this ____ day of
_________________, 1994.
Notary Seal or Stamp __________________________________
Notary Public
My commission expires:____________________
<PAGE>
Attest: SMITHFIELD FOODS, INC.
By:__________________________
_____________________ Title:_______________________
Title:__________________
STATE OF ___________________
COUNTY/CITY OF ____________________
I, ______________________________, a Notary Public of the
________________of______________, certify that _________________ personally
came before me this day and acknowledged that he is the _______________ of
Smithfield Foods, Inc., a Delaware corporation, and that by authority duly
given and as the act of the corporation, the foregoing instrument was
signed in its name by its _________________, sealed with its corporate seal
and attested by himself as its ______________.
Witness my hand and official seal or stamp, this ____ day of
_________________, 1994.
Notary Seal or Stamp __________________________________
Notary Public
My commission expires:____________________
<PAGE>
Attest: THE SMITHFIELD PACKING COMPANY,
INCORPORATED
By:__________________________
_____________________ Title:_______________________
Title:__________________
STATE OF ___________________
COUNTY/CITY OF ____________________
I, ______________________________, a Notary Public of the
________________of______________, certify that _________________ personally
came before me this day and acknowledged that he is the _______________ of
The Smithfield Packing Company, Incorporated, a Virginia corporation, and
that by authority duly given and as the act of the corporation, the
foregoing instrument was signed in its name by its _________________,
sealed with its corporate seal and attested by himself as its
______________.
Witness my hand and official seal or stamp, this ____ day of
_________________, 1994.
Notary Seal or Stamp __________________________________
Notary Public
My commission expires:____________________
EXHIBIT 11
SMITHFIELD FOODS, INC.
COMPUTATION OF NET INCOME PER SHARE
Income and the number of shares used in the computation of net income per common
and common equivalent shares were computed as follows:
52 Weeks 52 Weeks 53 Weeks
Ended Ended Ended
Income May 1, 1994 May 2, 1993 May 3, 1992
Net income $19,702,000 $ 3,989,000 $21,635,000
Dividends accumulated for
Series B preferred stock (675,000) (365,000) -
Net income available to
common stockholders $19,027,000 $ 3,624,000 $21,635,000
Shares
Weighted average shares:
Outstanding 16,276,000 15,842,000 14,749,000
Incremental shares for
outstanding stock options
and warrants 492,000 530,000 1,064,000
Shares for computation 16,768,000 16,372,000 15,813,000
Net income per share $1.13 $ .22 $1.37
FINANCIAL DISCUSSION
OPERATIONS
Fiscal 1994 Compared to Fiscal 1993
Sales in fiscal 1994 increased $304.8 million, or 26.7%, from fiscal 1993.
The increase was the result of a 20.2% increase in sales tonnage and a 4.8%
increase in unit sales prices. The increase in sales tonnage was the result of a
39.4% increase in fresh pork tonnage combined with a 4.8% increase in processed
meats tonnage. The substantial increase in fresh pork tonnage reflected the
operation of the Company's fresh pork facility in Bladen County, North Carolina
for the full 12 months of the year compared with six months of operation in
fiscal 1993.
Cost of sales increased $242.0 million, or 24.3%, in fiscal 1994, primarily
due to the increased sales tonnage and a 3.3% increase in the cost of live hogs.
Gross profit (sales less cost of sales) increased $62.8 million, or 43.4%, in
fiscal 1994 compared to fiscal 1993. This increase in gross profit resulted from
the increased sales tonnage of both fresh pork (46.9% of total dollar sales) and
processed meats (46.3% of total dollar sales), and increased margins on sales of
both fresh pork and processed meats.
Gross profit in fiscal 1994 was favorably affected by a $10.3 million
reduction in cost of sales as a result of the performance of Brown's of
Carolina, Inc. ("Brown's") and the Smithfield-Carroll's joint hog production
arrangement ("Smithfield-Car roll's"). In fiscal 1993, the performance of
these operations resulted in a reduction in cost of sales of $4.0 million. The
Company obtained 11.4% of the hogs which it processed in fiscal 1994 from
Brown's and Smithfield-Car roll's, compared with 9.4% in fiscal 1993.
Selling, general and administrative expenses increased $28.2 million, or
25.5%, in fiscal 1994, reflecting sharply increased distribution costs related
to increased sales tonnage of fresh pork produced at the Bladen County plant,
increased marketing costs associated with increased sales tonnage of both
fresh pork and processed meats and increased storage and warehousing costs
related to an overall increase in business levels.
Depreciation expense increased $3.0 million, or 16.0%, in fiscal 1994,
reflecting the high levels of capital expenditures in recent years related to
the expansion of the Company's hog production facilities and modernization and
expansion of its meat processing plants. In light of the Company's aggressive
capital expenditure programs over the past four fiscal years during which the
Company invested $218.6 million in new plant and equipment, the Company reviewed
the estimated useful lives of these most recently acquired assets which were
being used for depreciation purposes. As a result of this review, effective
November 1, 1993, the Company revised these lives to more accurately reflect the
economic useful lives of these assets and to better align them with those
generally used in the meat processing industry. This change in accounting
estimate increased net income in fiscal 1994 by $2.3 million ($.14 per share)
and will continue to have a positive impact on net income and net income per
share in future years.
Interest expense increased $5.5 million, or 81.8%, reflecting significantly
higher carrying costs on long-term debt related to the funding of capital
projects, including the Bladen County plant, and the impact of replacing short-
term borrowings with long-term debt at somewhat higher interest rates.
Minority interest increased $1.4 million in fiscal 1994, reflecting
increased profitability at Brown's and Patrick Cudahy Incorporated, each of
which had minority ownership at year end. The Company purchased the minority
interest in Patrick Cudahy in June 1994.
In fiscal 1993, the Company recorded a nonrecurring pre-tax charge of $3.6
million related to
23
<PAGE>
FINANCIAL DISCUSSION
the closing of Esskay, Inc.'s meat processing plant in Baltimore, Maryland.
The effective income tax rate in fiscal 1994 increased to 39.6% from 33.7%
in the prior year, reflecting the impact of an increase in the statutory rate at
the federal level and the reduced impact of tax credits on the overall effective
rate for the year.
The increase in net income in fiscal 1994 was largely attributable to
improved sales margins and operating efficiencies at Gwaltney of Smithfield,
Ltd. ("Gwaltney") and The Smithfield Packing Company, Incorporated ("Smithfield
Packing") during the second half of the year. The improvement in financial
results also reflected generally improved conditions in the pork processing
industry. The Bladen County plant is currently operating at capacity on a one-
shift basis. The Company currently plans to begin processing hogs on a second
shift in the fourth quarter of fiscal 1995.
The results of Ed Kelly, Inc. ("Kelly"), the Company's retail consumer
electronics subsidiary, while not significant, contributed to the Company's
overall profitability in fiscal 1994.
Reflecting the factors discussed above, net income increased $15.7 million
in fiscal 1994, up sharply from $4.0 million in the prior fiscal year. Net
income in fiscal 1993 included the cumulative effect of a change in accounting
principle associated with the adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," effective May 4, 1992. The
Company had no valuation allowance related to income tax assets as of May 1,
1994, and there was no change in the valuation allowance during fiscal 1994.
Fiscal 1993 Compared to Fiscal 1992
Sales in fiscal 1993 increased $91.9 million, or 8.8%, from fiscal 1992. The
increase was the result of a 13.9% increase in sales tonnage offset by a
3.1% decrease in unit sales prices. The increase in sales tonnage was the
result of an 8.1% increase in processed meats tonnage combined with a 15.4%
increase in fresh pork tonnage. The percentage changes in sales tonnage and unit
prices were computed on comparable 52-week periods.
The $87.4 million, or 9.6%, increase in cost of sales was primarily the
result of increased sales tonnage offset by a 2.5% decrease in the cost of live
hogs. Gross profit (sales less cost of sales) increased $4.5 million, or 3.2%,
in fiscal 1993 compared to fiscal 1992. This increase in gross profit resulted
from the increased sales tonnage of both processed meats (54.8% of total dollar
sales) and fresh pork (41.4% of total dollar sales), offset by lower margins on
overall sales. Additionally, gross profit reflected substantial start-up losses
at the Company's new fresh pork facility in Bladen County, North Carolina, which
began operations in October 1992, as well as operating inefficiencies associated
with plant expansion projects at several of the Company's other locations.
Gross profit in fiscal 1993 was favorably affected by a $4.0 million
reduction in cost of sales as a result of the performance of Brown's and
Smithfield-Carroll's. In fiscal 1992, the performance of these operations
resulted in a reduction in cost of sales of $2.1 million. The Company obtained
9.4% of the hogs which it processed in fiscal 1993 from Brown's and Smithfield-
Carroll's.
Selling, general and administrative expenses increased $18.3 million, or
19.8%, in fiscal 1993, reflecting increased marketing and distribution costs
related to increased sales tonnage, expenses at the Bladen County plant and the
inclusion of the operations of Kelly for a full fiscal year.
Depreciation expense increased $5.9 million, or 46.2%, reflecting the
opening of the Bladen
24
<PAGE>
FINANCIAL DISCUSSION
County plant and significant plant expansion projects at Gwaltney and
Smithfield Packing.
Interest expense increased $2.6 million, or 62.0%, largely the result of
increased short-term borrowings associated with increased working capital needs
and the financing of large capital expenditures.
In fiscal 1993, the Company recorded a nonrecurring pre-tax charge of $3.6
million related to the closing of Esskay, Inc.'s meat processing plant in
Baltimore, Maryland. In fiscal 1992, the Company recognized a non-recurring pre-
tax gain of $2.8 million on the sale of marketable securities.
Net income before the cumulative effect of an accounting change decreased
$18.8 million, or 86.8%, in fiscal 1993, reflecting the factors discussed above.
During fiscal 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes," which requires the use of the liability method in accounting for
income taxes. The cumulative effect of adopting this change as of May 2, 1993
totaled $1.1 million and has been reflected in the statements of income as the
cumulative effect of a change in accounting principle. The Company had no
valuation allowance related to income tax assets as of May 2, 1993, and there
was no change in the valuation allowance during fiscal 1993.
The operating efficiencies at the Bladen County plant steadily improved and
at year end approached levels comparable to those at the Company's other
slaughtering facilities. Throughout fiscal 1993, the Company as well as the pork
processing industry experienced depressed fresh pork margins which adversely
affected profitability.
FINANCIAL CONDITION
The pork processing industry is characterized by high sales tonnage and
rapid turnover of inventories and accounts receivable. Because of the rapid
turnover rate, the Company considers its inventories and accounts receivable
highly liquid and readily convertible into cash. Borrowings under lines of
credit are used to finance increases in the levels of inventories and accounts
receivable resulting from seasonal and other market-related fluctuations in raw
material costs. The demand for seasonal borrowings usually peaks in early
November when ham inventories are at their highest levels, and borrowings are
repaid in January when accounts receivable generated by sales of these hams
are collected. As of May 1, 1994, the Company had aggregate lines of credit of
$120.0 million. Borrowings under the lines of credit are secured by
substantially all of the Company's inventories and accounts receivable.
Weighted average borrowings under the lines were $66.6 million in fiscal 1994,
$79.2 million in fiscal 1993 and $29.4 million in fiscal 1992 at weighted
average interest rates of approximately 4%, 4% and 6%, respectively. Maximum
borrowings were $105.1 million in fiscal 1994, $105.7 million in fiscal 1993
and $56.0 million in fiscal 1992. The outstanding balances under these lines
totaled $52.1 million and $93.0 million as of May 1, 1994 and May 2, 1993 at
weighted average interest rates of 5% and 4%, respectively.
The decrease in fiscal 1994 in weighted average borrowings under the lines
was attributable to the funding of a $23.7 million sale and leaseback
arrangement for hog production facilities at Brown's and the placement of a
five-year $25.0 million bank term loan, the proceeds of which were used to
reduce short-term borrowings. The decrease was moderated to some extent by
increased working capital needs related to increased levels of inventories and
accounts receivable associated with increased levels of business activity.
25
<PAGE>
FINANCIAL DISCUSSION
In connection with its strategy of vertical integration, the Company
expended $14.9 million on the construction of hog production facilities at
Brown's in fiscal 1994. In addition, the Company expended a total of $13.4
million for additional plant and equipment at its various operating companies,
primarily to improve plant operating efficiencies and reduce operating costs. In
the fourth quarter of fiscal 1994, the Company invested $1.0 million for a 25%
interest in the Circle Four joint hog production arrangement based in Milford,
Utah.
In fiscal 1995, the Company plans to expend approximately $85.0 million in
capital improvements, consisting of $45.0 million at the Bladen County plant to
accommodate the second shift, improve fresh pork quality and increase production
capacity for value-added fresh pork products; $24.0 million for additional hog
production facilities at Brown's; an additional investment of $4.0 million in
the Circle Four joint hog production arrangement, and $12.0 million as part
of an ongoing plant modernization program.
These capital expenditures will be funded with the proceeds of a $50.0
million long-term financing which will be placed in the second quarter of fiscal
1995 and anticipated cash flow from operations.
The Company's various debt agreements contain covenants regarding working
capital, current ratio, fixed charges coverage and net worth, and, among other
restrictions, limit additional borrowings, the acquisition, disposition and
leasing of assets, and payments of dividends to stockholders. Additionally,
existing loan covenants contain provisions which substantially limit the amount
of funds available for transfer from its subsidiaries to Smithfield Foods, Inc.
without the consent of certain lenders.
26
<PAGE>
FINANCIAL DISCUSSION
Graphs not incorporated by reference
27
<PAGE>
FINANCIAL SUMMARY
Smithfield Foods, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(Dollars in thousands, except per share data) May 1, 1994 May 2, 1993 May 3, 1992
<S> <C> <C> <C>
Operations
Sales $1,447,300 $1,142,489 $1,050,558
Cost of sales 1,239,740 997,714 910,298
Selling, general and administrative expenses 138,599 110,434 92,163
Interest 12,177 6,697 4,134
Income before extraordinary loss and change in
accounting for income taxes 19,702 2,851 21,635
Extraordinary loss and change in
accounting for income taxes -- 1,138(1) --
Net income 19,702 3,989 21,635
Financial Position
Working capital $ 81,529 $ 64,671 $ 26,672
Total assets 452,279 399,567 277,685
Long-term debt and capital lease obligations 118,942 124,517 49,091
Stockholders' equity 154,950 135,770 113,754
Financial Ratios
Current ratio 1.56 1.57 1.27
Long-term debt to total capitalization 41.9% 46.1% 30.1%
Return on average stockholders' equity 13.1% 2.9% 23.4%
Per Common Share
Income per share before extraordinary loss
and change in accounting for income taxes $ 1.13 $ .15 $ 1.37
Extraordinary loss and change in
accounting for income taxes -- .07(1) --
Net income per common share 1.13 .22 1.37
Book value per common share 9.43 8.32 7.55
Weighted average common shares outstanding 16,768 16,372 15,813
Other Information
Capital expenditures(4) $ 29,291 $ 87,992 $ 74,793
Depreciation expense 21,636 18,652 12,759
Common stockholders of record 1,796 1,867 1,544
Number of employees 8,000 7,000 5,400
</TABLE>
1 Change in accounting principle (see Note 4 to Consolidated Financial
Statements).
2 Extraordinary loss.
3 Computed using income before extraordinary loss.
4 Excludes capital expenditures related to acquisitions.
28
<PAGE>
<TABLE>
<CAPTION>
April 28, 1991 April 29, 1990 April 30, 1989 May 1, 1988 May 3, 1987 April 27, 1986 April 28, 1985
<S> <C> <C> <C> <C> <C> <C>
$1,071,791 $853,401 $774,790 $916,328 $1,046,642 $864,324 $669,138
931,489 755,897 679,814 810,308 948,079 778,186 605,960
81,052 71,831 67,042 67,150 66,377 59,773 45,289
7,739 6,346 4,130 4,670 5,628 5,986 6,004
28,658 7,060 9,814 15,152 9,743 9,193 2,887
-- -- -- -- (2,097)(2) (4,533)(2) --
28,658 7,060 9,814 15,152 7,646 4,660 2,887
$ 35,288 $ 14,991 $ 25,337 $ 21,747 $ 21,419 $ 23,280 $ 22,991
200,797 164,886 152,150 132,933 134,924 130,014 121,594
37,392 28,193 27,596 18,469 26,137 33,591 41,064
71,081 45,359 43,829 48,471 37,055 27,312 21,641
1.46 1.20 1.43 1.41 1.39 1.43 1.47
34.5% 38.3% 38.6% 31.4% 41.7% 55.2% 65.5%
49.1% 15.8% 23.2% 39.1% 30.3%3 40.5%3 13.8%
$ 1.99 $ .48 $ .60 $ .85 $ .55 $ .47 $ .13
-- -- -- -- (.12)(2) (.22)(2) --
1.99 .48 .60 .85 .43 .25 .13
5.29 3.20 2.92 2.60 2.13 1.69 1.23
14,402 14,818 16,242 17,900 18,220 20,184 25,528
$ 26,518 $ 19,555 $ 16,034 $ 6,941 $ 11,094 $ 6,602 $ 6,818
11,382 9,912 8,564 8,643 8,099 7,325 6,990
1,148 1,239 1,334 1,414 1,523 1,395 1,744
5,000 4,200 3,900 4,100 4,700 4,800 4,300
</TABLE>
29
<PAGE>
CONSOLIDATED BALANCE SHEETS
Smithfield Foods, Inc. and Subsidiaries
<TABLE>
<CAPTION>
(In thousands) May 1, 1994 May 2, 1993
<S> <C> <C>
ASSETS
Current assets:
Cash $ 12,350 $ 3,079
Accounts receivable less allowances of $458 and $407 60,586 50,823
Inventories 119,269 94,822
Advances to joint hog production arrangements 20,178 19,830
Prepaid expenses and other current assets 13,946 9,417
Total current assets 226,329 177,971
Property, plant and equipment:
Land 8,039 8,501
Buildings and improvements 108,901 96,180
Machinery and equipment 203,443 192,637
Construction in progress 9,750 10,248
330,133 307,566
Less accumulated depreciation (124,112) (103,127)
Net property, plant and equipment 206,021 204,439
Other assets:
Cost in excess of net assets acquired less accumulated
amortization of $1,456 and $1,411 4,385 4,572
Investments in partnerships 10,672 8,415
Other 4,872 4,170
Total other assets 19,929 17,157
$452,279 $399,567
</TABLE>
The accompanying notes are an integral part of these balance sheets.
30
<PAGE>
<TABLE>
<CAPTION>
(In thousands) May 1, 1994 May 2, 1993
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 52,135 $ 47,813
Current portion of long-term debt and capital lease
obligations 9,655 6,655
Accounts payable 48,017 33,378
Accrued expenses and other current liabilities 31,840 25,454
Income taxes payable 3,153 --
Total current liabilities 144,800 113,300
Long-term debt and capital lease obligations 118,942 124,517
Other noncurrent liabilities:
Deferred income taxes 11,767 5,590
Pension and post-retirement benefits 5,220 6,814
Minority interest 3,836 2,173
Other 2,764 1,403
Total other noncurrent liabilities 23,587 15,980
Commitments and contingencies
Series B 6.75% cumulative convertible redeemable preferred
stock, $1.00 par value, 1,000 shares issued and outstanding 10,000 10,000
Stockholders' equity:
Preferred stock, $1.00 par value, authorized 1,000,000
shares -- --
Common stock, $.50 par value, authorized 25,000,000
shares; issued 16,713,126 and 16,699,626 shares 8,357 8,350
Additional paid-in capital 47,964 47,818
Retained earnings 106,272 87,245
Treasury stock, at cost, 437,000 shares (7,643) (7,643)
Total stockholders' equity 154,950 135,770
$452,279 $399,567
</TABLE>
31
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Smithfield Foods, Inc. and Subsidiaries
52 Weeks Ended 52 Weeks Ended 53 Weeks Ended
(In thousands, except per share data) May 1, 1994 May 2, 1993 May 3, 1992
<S> <C> <C> <C>
Sales $1,447,300 $1,142,489 $1,050,558
Costs and expenses:
Cost of sales 1,239,740 997,714 910,298
Selling, general and administrative 138,599 110,434 92,163
Depreciation 21,636 18,652 12,759
Interest 12,177 6,697 4,134
Minority interest 2,525 1,093 684
Plant closing costs -- 3,598 --
Gain on sale of marketable securities -- -- (2,830)
1,414,677 1,138,188 1,017,208
Income before income taxes 32,623 4,301 33,350
Income taxes 12,921 1,450 11,715
Income before cumulative effect of change in
accounting for income taxes 19,702 2,851 21,635
Cumulative effect of change in accounting for
income taxes 1,138
Net income $ 19,702 $ 3,989 $ 21,635
Net income available to common stockholders $ 19,027 $ 3,624 $ 21,635
Income per share:
Before cumulative effect of change in
accounting for income taxes $ 1.13 $ .15 $ 1.37
Cumulative effect of change in
accounting for income taxes -- .07 --
Net income $ 1.13 $ .22 $ 1.37
</TABLE>
The accompanying notes are an integral part of these statements.
32
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Smithfield Foods, Inc. and Subsidiaries
<TABLE>
<CAPTION>
52 Weeks Ended 52 Weeks Ended 53 Weeks Ended
(In thousands) May 1, 1994 May 2, 1993 May 3, 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 19,702 $ 3,989 $ 21,635
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 23,010 20,055 13,064
Loss on sale of property, plant
and equipment 1,088 1,169 184
(Increase) decrease in accounts receivable (9,763) (13,899) 3,395
(Increase) decrease in inventories (24,447) (43,327) 8,007
(Increase) decrease in prepaid expenses and
other current assets (4,529) 2,432 (1,869)
Increase in other assets (1,398) (3,489) (1,986)
Increase in accounts payable, accrued
expenses and other liabilities 23,945 7,023 9,886
Cumulative effect of change in accounting
for income taxes -- (1,138) --
Increase (decrease) in deferred income taxes 6,177 (1,023) --
Other -- -- 20
Net cash provided by (used in) operating activities 33,785 (28,208) 52,336
Cash flows from investing activities:
Capital expenditures (29,291) (87,992) (75,693)
Proceeds from sale of property, plant and equipment 4,494 1,112 1,156
Investments in partnerships (2,257) (100) (750)
Advances to joint hog production arrangements (20,178) (19,830) (23,330)
Repayments of advances to joint hog
production arrangements 19,830 23,330 --
Net cash used in investing activities (27,402) (83,480) (98,617)
Cash flows from financing activities:
Net borrowings on notes payable to banks 4,322 6,627 12,152
Proceeds from issuance of long-term debt
and capital lease obligations 5,341 83,036 20,000
Principal payments on long-term debt
and capital lease obligations (7,916) (5,303) (7,682)
Minority interest 1,663 644 (141)
Proceeds from sale of preferred stock -- 10,000 --
Proceeds from sale of common stock -- 16,750 24,999
Proceeds from exercise of options and warrants 153 1,642 3,682
Dividends on preferred stock (675) (365) --
Purchase of treasury stock -- -- (7,643)
Net cash provided by financing activities 2,888 113,031 45,367
Net increase (decrease) in cash 9,271 1,343 (914)
Cash at beginning of year 3,079 1,736 2,650
Cash at end of year $ 12,350 $ 3,079 $ 1,736
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amount capitalized $ 12,379 $ 9,037 $ 5,213
Income taxes $ 5,574 $ 5,018 $ 10,823
</TABLE>
The accompanying notes are an integral part of these statements.
33
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Smithfield Foods, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained Treasury
(In thousands) Stock Capital Earnings Stock
<S> <C> <C> <C> <C>
Balance, April 28, 1991 $6,266 $ 2,829 $ 61,986 $ --
Net income -- -- 21,635 --
Sale of common stock 625 24,374 -- --
Exercise of stock options and warrants 884 2,798 -- --
Purchase of treasury stock -- -- -- (7,643)
Balance, May 3, 1992 7,775 30,001 83,621 (7,643)
Net income -- -- 3,989 --
Sale of common stock 500 16,250 -- --
Exercise of stock options 75 1,567 -- --
Dividends on preferred stock -- -- (365) --
Balance, May 2, 1993 8,350 47,818 87,245 (7,643)
Net income -- -- 19,702 --
Exercise of stock options 7 146 -- --
Dividends on preferred stock -- -- (675) --
Balance, May 1, 1994 $8,357 $47,964 $106,272 $ (7,643)
</TABLE>
The accompanying notes are an integral part of these statements.
34
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Smithfield Foods, Inc. and Subsidiaries
NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Smithfield Foods, Inc., and subsidiaries (the "Company"). The Company's
principal subsidiaries include Brown's of Carolina, Inc. ("Brown's"), Esskay,
Inc. ("Esskay"), Gwaltney of Smithfield, Ltd. ("Gwaltney"), Patrick Cudahy
Incorporated ("Patrick Cudahy") and The Smithfield Packing Company,
Incorporated ("Smithfield Packing"). All material inter company balances and
transactions have been eliminated.
Fiscal Year
The Company's fiscal year is the 52 or 53 week period which ends on the
Sunday nearest April 30.
Inventories
The Company's inventories are valued at the lower of first-in, first-out
(FIFO) cost or market. Inventories consist of the following:
(In thousands) May 1, 1994 May 2, 1993
Fresh and processed meats $ 90,219 $75,273
Livestock and manufacturing
supplies 19,809 12,976
Other 9,241 6,573
$119,269 $94,822
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Buildings and improvements
are depreciated over periods from 10 to 40 years. Machinery and equipment is
depreciated over periods from 3 to 25 years. Maintenance and repairs are charged
to expense as incurred. Improvements and betterments are capitalized. Gains and
losses from dispositions or retirements of property, plant and equipment are
recognized currently.
In fiscal 1994, the Company revised the estimated useful lives of certain
assets to more accurately reflect their economic useful lives and to better
align them with those generally used in the meat processing industry. This
change was made to assets acquired after April 1990 and is reflected on a
prospective basis beginning in November 1993. The lives of the newly acquired
buildings and improvements were revised from 10 to 40 years to 20 to 40 years.
The lives of the newly acquired machinery and equipment were revised from 3 to
12 years to 10 to 25 years. This change reduced depreciation charges and
increased net income by $3,868,000 and $2,336,000, respectively, in fiscal 1994.
Interest on capital projects is capitalized during the construction period.
Total interest capitalized was $612,000 in fiscal 1994, $1,860,000 in fiscal
1993 and $1,328,000 in fiscal 1992. Repair and maintenance expenses totaled
$40,713,000, $36,830,000 and $31,731,000 in fiscal 1994, 1993 and 1992,
respectively.
Other Assets
Cost in excess of net assets acquired is amortized over periods ranging from
10 to 40 years. Organization costs are amortized over a five-year period.
Deferred debt issuance costs are amortized over the terms of the related loan
agreements. Start-up costs associated with hog production are amortized over a
three-year period.
Environmental Expenditures
Environmental expenditures that relate to current or future revenues are
expensed or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations and do not contribute to current or future
revenue generation are expensed. Liabilities are recorded when environmental
assessments and/or cleanups are probable and the cost can be reasonably
estimated. Generally, the timing of these accruals coincides with the Company's
commitment to a formal plan of action.
Self-Insurance Programs
The Company is self-insured for certain levels of general and vehicle
liability, worker's compensation and health care coverage. Estimated costs of
these self-insurance programs are accrued based upon projected settlements for
known and anticipated claims. Any resulting adjustments to previously recorded
reserves are reflected in current operating results.
Commodity Futures
In connection with its hog production activities and meat processing
operations, the Company, from time-to-time, enters into commodity futures
contracts to reduce the risk of adverse price changes on the profitability of
hog production and future sales commitments. Gains and losses resulting from
changes in market value are recognized in income currently. As of May 1, 1994,
the Company had open contracts for all commodities with a total market value
of $42,067,000 and deposits with brokers for commodity futures contracts of
$2,232,000.
Income Taxes
In fiscal 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes." Under SFAS No. 109,
35
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Smithfield Foods, Inc. and Subsidiaries
the difference between the financial statement and income tax bases of
assets and liabilities using the enacted marginal tax rate. Deferred income tax
expenses or credits are based on the changes in the asset or liability from
period to period. Prior to fiscal 1993, deferred income tax expenses or credits
were recorded to reflect the tax consequences of timing differences between the
recording of income and expensesfor financial reporting purposes and for
purposes of filing federal income tax returns at income tax rates in effect when
the differences arose.
Income Per Share
Income per share is computed using the weighted average shares of common
stock and dilutive common stock equivalents (options and warrants) outstanding
during the respective periods. Net income available to common stockholders is
net income less dividends on preferred stock. The number of weighted average
shares used in calculating income per share was 16,768,000 in fiscal 1994,
16,372,000 in fiscal 1993 and 15,813,000 in fiscal 1992.
Reclassifications
Certain prior year balances have been reclassified to conform to 1994
presentations.
NOTE 2 - JOINT HOG PRODUCTION
ARRANGEMENTS
Smithfield-Carroll's
The Company has an arrangement with affiliates of Carroll's Foods, Inc.
("CFI") to produce hogs for the Company's meat processing plants. The
arrangement involves: (1) Smithfield-Carroll's Farms, a partnership owned
jointly by the Company and Carroll's Farms of Virginia, Inc. ("CFAV"), which
owns the hog raising facilities, and (2) a long-term purchase contract between
the Company and Carroll's Foods of Virginia, Inc. ("CFOV"), which leases and
operates the facilities, that obligates the Company to purchase all the hogs
produced by CFOV at prices which are equivalent to market at the time of
delivery. A director of the Company is the president and a director of CFI, CFAV
and CFOV. In addition, the Company has a long-term agreement to purchase hogs
from CFI at prices which, in the opinion of management, are equivalent to
market.
As of May 1, 1994 and May 2, 1993, the Company had investments of $7,757,000
and $7,701,000, respectively, in the partnership which are accounted for using
the equity method. In addition, as of May 1, 1994, the Company had $18,640,000
of working capital and construction loans outstanding to the partnership. These
demand loans are expected to be repaid in the next fiscal year. Shown below
is unaudited summarized financial information relative to the partnership.
(In thousands) May 1, 1994 May 2, 1993
Current assets $ 847 $ 1,436
Property and equipment 66,448 69,209
Other assets 383 503
$67,678 $71,148
Current liabilities $25,461 $22,927
Long-term debt 26,812 32,920
Partners' equity 15,405 15,301
$67,678 $71,148
Substantially all revenues of the partnership consist of lease payments
from CFOV which cover debt service, depreciation charges and other operating
expenses. For the fiscal years 1994, 1993 and 1992, revenues were $9,706,000,
$8,242,000 and $6,545,000, respectively.
Pursuant to the long-term purchase contract, the Company purchased
$62,348,000, $52,871,000 and $42,002,000 of live hogs from CFOV in fiscal years
1994, 1993 and 1992, respectively. The contract resulted in decreased raw
material costs (as compared to market costs) of $2,223,000, $2,892,000 and
$2,585,000 in fiscal 1994, 1993 and 1992, respectively.
Pursuant to the agreement with CFI, the Company purchased $127,849,000,
$87,477,000 and $62,993,000 of hogs in fiscal 1994, 1993 and 1992, respectively.
Circle Four
In fiscal 1994, the Company entered into a joint hog production arrangement
with three of its principal hog suppliers to produce hogs in the state of Utah.
The chief executive officers of two of the suppliers serve as directors of the
Company. Each of the participants invested $1,000,000 in exchange for an equal
25% interest in the arrangement. The Company accounts for its interest using the
equity method. In fiscal 1994, the Company transferred certain real estate and
related costs to the arrangement for an aggregate sales price of $1,694,000,
which represented the historical cost of the assets to the Company.
B & G
In April 1994, Brown's entered into a joint hog production arrangement with
a company owned by the daughter and son-in-law of the chairman, president and
chief executive officer of the Company. The arrangement involves the leasing of
hog production facilities to
36
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Smithfield Foods, Inc. and Subsidiaries
Brown's and the production of hogs by Brown's on a
contractual basis. Profits and losses are shared equally
under the arrangement. Each participant invested
$1,200,000 and loaned an additional $1,100,000 to the
arrangement. In fiscal 1994, Brown's sold hog produc-
tion facilities to the arrangement for $3,302,000 which
represents the historical cost of the facilities to Brown's.
As of May 1, 1994, the arrangement had advanced
$1,295,000 to Brown's for working capital. All hogs pro-
duced by the arrangement will be sold to the Company.
There were no sales during fiscal 1994.
NOTE 3 - DEBT
Long-Term
Debt Long-term debt consists of the following:
(In thousands) May 1, 1994 May 2, 1993
Notes payable to institutional lenders:
6.24% notes, payable through
November 1998 $ 5,085 $ --
7.00% notes, payable through
September 1998 2,521 --
7.15% notes, payable through
October 1997 6,628 8,239
8.41% notes, payable through
February 2013 25,000 25,000
9.80% notes, payable through
August 2003 10,688 11,438
9.85% notes, payable through
November 2006 16,667 18,000
10.25% notes, payable through
January 1994 -- 454
10.75% notes, payable through
August 2005 11,250 12,250
11.00% notes, payable through
October 1994 500 1,000
12.75% notes, payable through
August 1994 -- 5,950
Notes payable to banks:
6.48% bank term loan,
payable through
September 1998 24,100 --
7.10% bank term loan,
payable through
September 1997 3,198 3,606
Commitments classified as
long-term debt -- 45,235
105,637 131,172
Less current portion (8,885) (6,655)
$ 96,752 $124,517
Scheduled maturities of long-term debt are as follows:
(In thousands)
Fiscal year
1995 $ 8,885
1996 8,980
1997 11,510
1998 12,894
1999 19,591
Thereafter 43,777
$105,637
In fiscal 1994, the Company placed a five-year 6.48% $25,000,000 term loan
with a bank and a five-year 7.00% $2,800,000 loan with an institutional lender.
In addition, the Company refinanced its 12.75% notes with five-year 6.24% notes.
In fiscal 1993, the Company placed a 20-year 8.41% $25,000,000 loan, a five-year
7.15% $9,000,000 loan and a five-year 7.10% $3,800,000 loan with institutional
lenders. Notes payable to institutional lenders and banks are collateralized by
substantially all of the assets of Gwaltney and Smithfield Packing.
The fair value of long-term debt as of May 1, 1994 was $99,926,000, based on
the market value of debt with similar maturities and covenants.
Lines of Credit
The Company has aggregate lines of credit of $120,000,000. The lines have no
material compensating balance requirements, but require commitment fees based on
the unused portions of the lines. Borrowings under the lines of credit are
secured by substantially all of the Company's inventories and accounts
receivable. Weighted average borrowings under the lines were $66,586,000 in
fiscal 1994, $79,206,000 in fiscal 1993 and $29,439,000 in fiscal 1992 at
weighted average interest rates of 4%, 4% and 6%, respectively. Maximum
borrowings were $105,079,000 in fiscal 1994, $105,653,000 in fiscal 1993 and
$55,982,000 in fiscal 1992. The outstanding balances under these lines totaled
$52,135,000 and $93,048,000 as of May 1, 1994 and May 2, 1993 at weighted
average interest rates of 5% and 4%, respectively.
Debt Covenants
The Company's various debt agreements contain covenants regarding current
ratio, fixed charges coverage, net worth, and, among other restrictions, limit
additional borrowings, the acquisition, disposition and leasing of assets and
payments of dividends to
37
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Smithfield Foods, Inc. and Subsidiaries
stockholders. Additionally, existing loan covenants contain provisions which
substantially limit the amount of funds available for transfer from subsidiaries
to the parent company without the consent of certain lenders.
NOTE 4 - INCOME TAXES
Income tax expense consists of the following:
May 1, May 2, May 3,
(In thousands) 1994 1993 1992
Current tax expense:
Federal $ 7,559 $2,197 $12,152
State 1,727 16 935
9,286 2,213 13,087
Deferred tax expense
(benefit):
Federal 3,035 (1,079) (1,195)
State 600 316 (177)
3,635 (763) (1,372)
$12,921 $1,450 $11,715
A reconciliation of taxes computed at the federal statutory rate to the
provision for income taxes is as follows:
May 1, May 2, May 3,
(In thousands) 1994 1993 1992
Federal income taxes at
statutory rate $11,418 $1,462 $11,339
State income taxes, net of
federal tax benefit 1,513 219 500
Employment incentive
tax credits (226) (77) (116)
Reduction in tax reserves -- (250) --
Other 216 96 (8)
$12,921 $1,450 $11,715
Deferred taxes result from temporary differences in the recognition of
revenues and expenses for income tax and financial reporting purposes.
The sources of these differences and the related tax effects are as follows:
May 1, May 2, May 3,
(In thousands) 1994 1993 1992
Accelerated depreciation $3,685 $3,765 $ 177
Alternative minimum tax -- (2,516) --
Accrual of employee
benefit costs (156) (577) (1,315)
Accrual of casualty
insurance (1,038) (529) --
Plant closing costs 661 (727) --
Start-up costs 467 427 --
Inventory cost capitalization (71) (295) 64
Other 87 (311) (298)
$3,635 $ (763) $(1,372)
The tax effects of temporary differences consist of the following:
May 1, May 2,
1994 1993
Deferred tax assets:
Employee benefits $ 7,003 $ 5,252
Alternative minimum
tax credit 2,540 2,516
Plant closing costs 83 727
Net operating loss
carryforwards 867 --
Inventories 814 542
Accrued expenses 1,071 794
$12,378 $ 9,831
Deferred tax liabilities:
Property, plant and
equipment $13,791 $ 9,601
Investment in subsidiary 715 715
Start-up costs 1,033 572
$15,539 $10,888
During fiscal 1993, as discussed in Note 1, the Company adopted SFAS No.
109, "Accounting for Income Taxes," which requires the use of the liability
38
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Smithfield Foods, Inc. and Subsidiaries
method in accounting for income taxes. The cumulative effect of adopting
this change totaled $1,138,000 ($.07 per share) and has been reflected in the
statements of income as the cumulative effect of a change in accounting for
income taxes.
As of May 1, 1994 and May 2, 1993, the Company had $8,470,000 and
$4,533,000, respectively, of deferred taxes assets included in prepaid expenses
and other current assets. The Company had no valuation allowance related to
income tax assets as of May 1, 1994 or May 2, 1993, and there was no change in
the valuation allowance during fiscal 1994 or 1993.
NOTE 5 - ACCRUED EXPENSES AND
OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
(In thousands) May 1, 1994 May 2, 1993
Payroll and related benefits $11,599 $ 9,119
Self-insurance reserves 11,690 8,876
Pension costs 702 530
Other 7,849 6,929
$31,840 $25,454
NOTE 6 - STOCKHOLDERS' EQUITY
AND PREFERRED STOCK
Issuance of Common Stock
In fiscal 1993, the Company issued 1,000,000 shares of its common stock for
$16,750,000 in a private transaction (see Note 9). In fiscal 1992, the Company
issued 1,250,000 shares of its common stock in a public offering.
Preferred Stock
The Company has 1,000,000 shares of $1.00 par value preferred stock
authorized, of which 999,000 shares are unissued. The Board of Directors is
authorized to issue preferred stock in series and to fix by resolution the
designation, dividend rate, redemption provisions, liquidation rights, sinking
fund provisions, conversion rights and voting rights of each series of preferred
stock.
In fiscal 1993, the Company authorized and issued 1,000 shares of Series B
6.75% cumulative convertible redeemable preferred stock in a private transaction
for $10,000,000. These shares are convertible into 465,000 shares of the
Company's common stock at $21.50 per share. The shares are mandatorily
redeemable in fiscal 2003 at $10,000 per share plus accumulated and unpaid
dividends and have an equivalent liquidation preference.
In fiscal 1992, the Board of Directors authorized 25,000 shares of Series A
junior participating preferred stock as discussed below.
Stock Options and Warrants
Under the Company's 1984 Stock Option Plan ("1984 Plan"), officers and
certain key employees were granted incentive and nonstatutory stock options to
purchase shares of the Company's common stock for periods not exceeding 10 years
at prices that were not less than the fair market value of the common stock on
the dates of option grants. Stock appreciation rights which are exercisable upon
a change in control of the Company are attached to the options granted pursuant
to the 1984 Plan. The Company granted options for 1,400,000 shares of common
stock under the 1984 Plan, which expired in May 1994.
In fiscal 1993, the Company adopted the 1992 Stock Incentive Plan ("1992
Plan"). Under the plan, management and other key employees may be granted
nonstatutory stock options to purchase shares of the Company's common stock for
periods not exceeding 10 years at prices that are not less than 150% of the
fair market value of the common stock on the dates of the option grants. The
Company has reserved 1,250,000 shares of common stock under the 1992 Plan. In
fiscal 1994, the Company granted options for 755,500 shares of common stock
under the 1992 Plan which vest after five years.
The following is a summary of transactions for the 1984 Plan and 1992 Plan
during fiscal 1993 and 1994.
Number of Shares Per Share Range
Outstanding options
at May 3, 1992 1,060,500 $ 5.50-8.13
Exercised (150,500) 5.50-8.13
Outstanding options
at May 2, 1993 910,000 5.50-8.13
Granted 755,500 23.06
Exercised (13,500) 8.13
Outstanding options
at May 1, 1994 1,652,000 $5.50-23.06
Options exercisable
at May 1, 1994 896,500 $ 5.50-8.13
In fiscal 1992, warrants to purchase 1,666,666 shares of the Company's
common stock were exercised at $.75 per share.
39
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Smithfield Foods, Inc. and Subsidiaries
Preferred Share Purchase Rights
In fiscal 1992, the Company adopted a preferred share purchase rights plan
(the "Rights Plan") and declared a dividend of one preferred share purchase
right (a "Right") on each outstanding share of common stock. Under the terms of
the Rights Plan, if the Company is acquired in a merger or other business
combination transaction, each Right will entitle its holder to purchase, at the
Right's then current exercise price, a number of the acquiring company's common
shares having a market value of twice such price. In addition, if a person or
group acquires 20% (or other applicable percentage, as summarized in the Rights
Plan) or more of the outstanding common stock, each Right will entitle its
holder (other than such person or members of such group) to purchase, at the
Right's then current exercise price, a number of shares of common stock having a
market value of twice such price.
Each Right will entitle its holder to buy five ten-thousandths of a share of
Series A junior participating preferred stock, par value $1.00 per share, at an
exercise price of $75 subject to adjustment. Each share of Series A junior
participating preferred stock will entitle its holder to 1,000 votes and will
have an aggregate dividend rate of 1,000 times the amount, if any, paid to
holders of common stock. Currently, 25,000 shares of Series A junior
participating preferred stock have been reserved. The Rights will expire
in fiscal 2002 unless previously exercised or redeemed at the option of the
Board of Directors for $.005 per Right. Generally, each share of common stock
issued after May 31, 1991 will have one Right attached.
NOTE 7 - RETIREMENT PLANS
The Company and its subsidiaries sponsor several defined benefit pension
plans covering substantially all employees. Pension expense for fiscal 1994,
1993 and 1992 was $2,078,000, $2,301,000 and $2,925,000, respectively. It is the
Company's policy to fund the plans based on the minimum contribution required
under ERISA. The plans' assets consist of listed corporate stocks, corporate
and government bonds, insurance contracts and cash and cash equivalents. The
status of the Company's plans is as follows:
<TABLE>
<CAPTION>
May 1, 1994 May 2, 1993
Overfunded Underfunded Overfunded Underfunded
(In thousands) Plans Plans Plans Plans
<S> <C> <C> <C> <C>
Accumulated benefit obligation $ 14,537 $22,952 $12,071 $ 22,914
Vested benefit obligation $ 12,510 $22,367 $10,394 $ 22,401
Plan assets at fair value $ 22,595 $17,830 $19,500 $ 18,116
Projected benefit obligation (21,005) (23,120) (18,185) (23,105)
Plan assets in excess of (less than) projected benefit
obligation 1,590 (5,290) 1,315 (4,989)
Items not recorded on balance sheet:
Unrecognized net assets at transition (362) -- (453) --
Unrecognized net loss (gain) due to past experience
different from assumptions made 1,413 (288) (539) (574)
Prior service cost (benefit) not yet recognized in
net periodic pension cost (640) 1,107 1,251 1,138
Prepaid (accrued) pension costs $ 2,001 $ (4,471) $1,574 $ (4,425)
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Net pension expense included the following:
Service costs-benefits earned during the year $ 1,690 $1,585 $ 1,684
Interest cost on projected benefit obligation 2,890 2,912 2,775
Actual return on plan assets (3,185) (3,303) (3,247)
Amortization of net assets at transition and
deferred gains 683 1,107 1,713
Net pension expense $ 2,078 $2,301 $ 2,925
</TABLE>
40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Smithfield Foods, Inc. and Subsidiaries
In determining the projected benefit obligation in fiscal 1994 and 1993, the
weighted average assumed discount rate was 7% and 7.5%, respectively, while the
assumed rate of increase in future compensation was 6% in both years. The
weighted average expected long-term rate of return on plan assets was 7.5% in
each of fiscal 1994 and 1993. In determining net periodic pension cost,
unrecognized gains or losses and prior service costs or benefits are amortized
over the weighted average service lives of the employees.
In fiscal 1993, the Company curtailed certain pension plans covering
substantially all of the former bargaining and non-bargaining employees of
Esskay. Due to the maturity of these plans, the curtailment caused no
significant change in their status, and, therefore, no curtailment gains or
losses were recognized.
The Company provides health care and life insurance benefits for certain
retired employees at Esskay and Patrick Cudahy. Certain vested benefits for
employees retiring at Esskay were recorded at the date of acquisition. The
liabilities of Esskay and Patrick Cudahy are accrued. The total cost to provide
retiree benefits was $994,000, $746,000 and $928,000 in fiscal 1994, 1993 and
1992, respectively. The adoption of SFAS No. 106, "Employers' Accounting for
Post-Retirement Benefits Other Than Pensions" in fiscal 1994 resulted in no
additional expense and is not material to the Company on an overall basis.
NOTE 8 - LEASE AND SERVICE
OBLIGATIONS
The Company leases transportation equipment under operating leases ranging
from one to 10 years with options to cancel at earlier dates. In addition, the
Company has a long-term maintenance agreement related to this equipment.
Maintenance fees are based upon fixed monthly charges for each vehicle and the
maintenance facility itself and contingent fees based upon transportation
equipment usage. The amounts shown below as minimum rental commitments do not
include contingent maintenance fees.
The Company has an agreement, expiring in fiscal 2004, to use a cold storage
warehouse owned by a company, 18% of whose capital stock is owned by a group of
the Company's officers and directors. The Company has agreed to pay prevailing
competitive rates for use of the facility, subject to a guaranteed minimum
annual fee of $1,200,000. In fiscal 1994, 1993 and 1992, the Company paid
$2,474,000, $2,390,000 and $2,237,000, respectively, in fees for use of the
facility.
The Company has an agreement, expiring in fiscal 2008, to use a cold storage
warehouse owned by a partnership, 50% of which is owned by the Company. The
Company has agreed to pay prevailing competitive rates for use of the facility,
subject to a guaranteed minimum annual fee of $2,150,000. In fiscal 1994 and
1993, the Company paid $2,810,000 and $1,569,000, respectively, in fees for use
of the facility. As of May 1, 1994 and May 2, 1993, the Company had investments
of $645,000 and $714,000, respectively, in the partnership which is accounted
for using the equity method. Under certain conditions, the Company is obligated
to purchase the other 50% partnership interest for $750,000.
Minimum rental commitments under all noncancelable operating leases and
maintenance agreements as of May 1, 1994 are as follows:
(In thousands)
Fiscal year
1995 $ 9,939
1996 8,969
1997 6,615
1998 5,708
1999 2,879
Thereafter 6,579
$40,689
Rental expense was $12,159,000 in fiscal 1994, $10,525,000 in fiscal 1993
and $8,964,000 in fiscal 1992. Rental expense in fiscal 1994, 1993 and 1992
included $2,137,000, $1,955,000 and $1,660,000 of contingent maintenance fees,
respectively.
In fiscal 1994, the Company entered into a 12-year sale and leaseback
arrangement for certain hog production facilities at Brown's. These lease
agreements provide for an early termination at predetermined amounts after 10
years.
Property, plant and equipment under capital leases as of May 1, 1994 consist
of land of $1,906,000, buildings and improvements of $15,215,000 and machinery
and equipment of $6,555,000, net of accumulated amortization of $2,053,000.
41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Smithfield Foods, Inc. and Subsidiaries
Future minimum lease payments for assets under capital leases and the
present value of the net minimum lease payments as of May 1, 1994 are as
follows:
(In thousands)
Fiscal year
1995 $ 2,659
1996 2,750
1997 2,822
1998 2,900
1999 3,016
Thereafter 22,238
36,385
Less amounts representing interest (13,425)
Present value of net minimum obligations 22,960
Less current portion (770)
Long-term capital lease obligations $ 22,190
NOTE 9 - RELATED PARTY
TRANSACTIONS
The Company's chairman, president and chief executive officer is an officer
and the majority owner of the capital stock of a company to which the Company
made sales of fresh pork and processed meat products totaling $321,000, $349,000
and $487,000 in fiscal 1994, 1993 and 1992, respectively. In fiscal 1994, 1993
and 1992, the Company purchased raw materials totaling $8,159,000, $7,986,000
and $5,132,000, respectively, from a company which is 48% owned by the
chairman's children.
A director of the Company is the chairman of the board of a company from
which the Company made purchases of automotive parts and equipment, as well as
maintenance and leasing services, totaling $515,000, $526,000 and $256,000 in
fiscal 1994, 1993 and 1992, respectively. In addition, the Company leases
substantially all of its automobiles under three-year leases arranged by this
company. As of May 1, 1994, the Company was obligated to make a total of
$777,000 in future lease payments under these leases.
In fiscal 1993, the Company sold 1,000,000 shares of its common stock in a
private transaction to CFI (see Notes 2 and 6) for $16,750,000.
In fiscal 1992, the Company purchased 200,000 shares of its common stock
from CFI (see Note 2) for $3,600,000. A director of the Company is the
chairman and chief executive officer and a director of Murphy Farms, Inc.
("MFI"). The Company has a long-term agreement to purchase hogs from MFI at
prices, which in the opinion of management, are equivalent to market. Pursuant
to this agreement with MFI, the Company purchased $197,997,000, $159,153,000
and $100,274,000 of hogs in fiscal 1994, 1993 and 1992, respectively.
NOTE 10 - COMMITMENTS AND
CONTINGENCIES
As of May 1, 1994, the Company had outstanding commitments for construction
of hog production facilities and plant expansion projects of approximately
$30,900,000.
The Company and its subsidiaries are defendants in various lawsuits and
claims arising in the ordinary course of business. In the opinion of management,
any ultimate liability with respect to these matters will not have a material
effect on the Company's consolidated financial position.
Like other participants in the meat processing industry, the Company is
subject to various laws and regulations administered by federal, state and other
government entities, including the Environmental Protection Agency and
corresponding state agencies such as the Virginia State Water Control Board
("SWCB"), the North Carolina Division of Environmental Management, the United
States Department of Agriculture and the Occupational Safety and Health
Administration. Management believes that the Company complies with all such laws
and regulations in all material respects, except as set forth immediately below,
and that continued compliance with these standards will not have a material
effect on the Company's financial position.
The wastewater discharge permits for the Company's major manufacturing
plants in Smithfield, Virginia, currently impose more stringent phosphorous and
ammonia effluent limitations than the plants can meet. The plants are currently
being operated in compliance with less stringent effluent limitations under an
administrative consent order entered into with the SWCB, pending reissuance of
the permits, for which timely applications have been filed. In May 1991, the
Company elected to comply with the SWCB's
42
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Smithfield Foods, Inc. and Subsidiaries
regulations by agreeing to connect the Company's wastewater treatment plants
to the regional sewer system operated by the Hampton Roads Sanitation District.
The Company will incur sewer charges in addition to the existing costs of
effluent treatment beginning in approximately two years. The sewer charges that
will be incurred will be accounted for as current period charges in the year in
which such costs are incurred. The Company expects to incur approximately
$2,000,000 in capital costs to upgrade the existing systems and connect to the
regional sewer system.
NOTE 11 - PLANT CLOSING COSTS
In fiscal 1993, the Company recorded a nonrecurring charge of $3,598,000
related to the closing of Esskay's Baltimore, Maryland plant.
NOTE 12 - GAIN ON SALE OF
MARKETABLE SECURITIES
In fiscal 1992, the Company recorded nonrecurring gains on the sale of
marketable securities of $2,830,000.
NOTE 13 - QUARTERLY RESULTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter
(In thousands, except per share data) First Second Third Fourth
<S> <C> <C> <C> <C>
1994
Sales $299,230 $354,873 $428,982 $364,215
Gross profit 38,686 46,038 66,393 56,443
Net income (loss) (369) 923 11,749 7,399
Net income (loss) per share (.03) .04 .69 .43
1993
Sales $228,256 $265,598 $339,425 $309,210
Gross profit 29,461 35,173 40,524 39,617
Income before cumulative effect of change
in accounting for income taxes 1,546 261 508 536
Cumulative effect of change in accounting
for income taxes 1,138 -- -- --
Net income 2,684 261 508 536
Net income per share:
Before cumulative effect of change in
accounting for income taxes .10 .02 .02 .02
Cumulative effect of change in
accounting for income taxes .07 -- -- --
Net income per share .17 .02 .02 .02
</TABLE>
43
<PAGE>
REPORT OF MANAGEMENT
The management of Smithfield Foods, Inc. and its subsidiaries has the
responsibility for preparing the accompanying financial statements and for their
integrity and objectivity. The statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis. The
financial statements include amounts that are based on management's best
estimates and judgments. Management also prepared the other information in the
annual report and is responsible for its accuracy and consistency with the
financial statements.
The Company's financial statements have been audited by Arthur Andersen &
Co., independent public accountants, elected by the stockholders. Management
has made available to Arthur Andersen & Co. all of the Company's financial
records and related data as well as the minutes of stockholders' and directors'
meetings. Furthermore, management believes that all representations made to
Arthur Andersen & Co. during its audits were valid and appropriate.
Management has established and maintains a system of internal control that
provides reasonable assurance as to the integrity and reliability of the
financial statements, the protection of assets from unauthorized use or
disposition and the prevention and detection of fraudulent financial reporting.
The system of internal control provides for appropriate division of
responsibilities among employees and is based upon policies and procedures that
are communicated to those with significant roles in the financial reporting
process. Management continually monitors the system of internal control for
compliance and updates this system as it deems necessary.
Management believes that, as of June 7, 1994, the Company's system of
internal control is adequate to accomplish the objectives discussed herein.
(Signature - of Joseph W. Luter, III)
JOSEPH W. LUTER, III
Chairman, President and Chief Executive Officer
(Signature - of Aaron D. Trub)
AARON D. TRUB
Vice President, Secretary and Treasurer
(Signature - of C. Larry Pope)
C. LARRY POPE
Controller
44
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Smithfield Foods, Inc.:
We have audited the accompanying consolidated balance sheets of Smithfield
Foods, Inc. (a Delaware corporation) and subsidiaries as of May 1, 1994 and May
2, 1993, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended May 1, 1994.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an 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 financial position of Smithfield Foods, Inc. and
subsidiaries as of May 1, 1994 and May 2, 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
May 1, 1994, in conformity with generally accepted accounting principles.
As discussed in notes 1 and 4 to the consolidated financial statements,
effective May 4, 1992, the Company changed its method of accounting for income
taxes.
(Signature - of Arthur Andersen & Co.)
ARTHUR ANDERSEN & CO.
Richmond, Virginia,
June 7, 1994.
45
<PAGE>
<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS
<S> <C> <C> <C>
OFFICERS Richard S. Patrick Aaron D. Trub DIRECTORS
Vice President, Secretary
Corporate Foodservice
Dean W. Jacobson Joseph W. Luter, III
Assistant Vice President, Chairman of the Board, President
Joseph W. Luter, III Timothy A. Seely Refinery and Chief Executive Officer
Chairman, President and Vice President, Smithfield Foods, Inc.
Chief Executive Officer Sales and Marketing,
Fresh Meats F. J. Faison, Jr.
Elaine C. Abicht THE SMITHFIELD PACKING President
Vice President, Aaron D. Trub COMPANY, INCORPORATED Carroll's Foods, Inc.,
Purchasing Secretary and Treasurer Warsaw, NC,
hog and turkey producer
Jeffrey M. Luckman Norman B. Fisher Joseph W. Luter, III
Vice President, Assistant Vice President, Chairman and Chief
Livestock Procurement Human Resources Executive Officer Joel W. Greenberg
Commodity Analyst
James D. Schloss Bobby L. Johnson, Jr. Robert W. Manly Alaron Trading Corp.,
Vice President, Assistant Vice President, President and Chief Chicago, IL,
Marketing, Distribution Operating Officer commodities brokerage firm
Design Foods
P . Scott Pesesky Henry L. Morris Cecil W. Gwaltney
Wendell R. Skinner Assistant Vice President, Executive Vice President Chairman of the Board
Vice President, Controller Gwaltney Motor Co.,
Distribution Lloyd R. Enix, Jr. Smithfield, VA,
Larry R. Seekford Vice President, automobile dealership
Aaron D. Trub, Assistant Vice President, Operations
Vice President, Financial Analysis
Secretary and Treasurer William B. Hunter George E. Hamilton, Jr.
Walter H. Voorhies, II Vice President, Retired; Former President and
Carl J. Wood, Jr. Assistant Vice President, Sales and Marketing, Chief Operating Officer
Vice President, Quality Assurance Processed Meats The Smithfield Packing
Engineering Company, Incorporated
Thomas L. Ross
C. Larry Pope PATRICK CUDAHY Vice President, Richard J. Holland
Controller INCORPORATED Human Resources Chairman of the Board
The Farmers Bank,
Raymond L. Edwards J. Michael Townsley Windsor, VA
Assistant Vice President, Joseph W. Luter, III Vice President,
Corporate Accounting Chairman and Chief Sales and Marketing, Roger R. Kapella
Executive Officer Fresh Meats President and Chief
Lawrence D. Lively Operating Officer
Assistant Vice President, Roger R. Kapella Aaron D. Trub Patrick Cudahy Incorporated
Environmental Affairs President and Chief Secretary and Treasurer
Operating Officer Lewis R. Little
Jeffrey A. Deel Jere T. Null President and Chief
Assistant Controller Dan W. Habighorst Controller Operating Officer
Vice President, Gwaltney of Smithfield, Ltd.
Human Resources Milton Z. Bailey
Assistant Vice President, Robert W. Manly
Operating Companies Carolina Food Processors President and Chief
Kenneth V . Nelson Division Operating Officer
Vice President, The Smithfield Packing
GWALTNEY OF Operations and Labor Company, Incorporated
SMITHFIELD, LTD. Joseph T. Greskevitch, Jr.
Peter Y. Ni Assistant Vice President,
Joseph W. Luter, III Vice President, Cost Accounting Wendell H. Murphy
Chairman and Chief Manufacturing Chairman of the Board and
Executive Officer Jean D. Moody Chief Executive Officer
James E. Steinke Assistant Vice President, Murphy Farms, Inc.,
Lewis R. Little Vice President, Credit Rose Hill, NC,
President and Chief Sales and Marketing hog producer
Operating Officer John R. Moody
Stephen W. Rodey Assistant Vice President,
H. Dean Garrett Treasurer Fresh Meats Aaron D. Trub
Vice President, Vice President,
Operations David J. Schulz G. K. Nelms, III Secretary and Treasurer
Controller Assistant Vice President, Smithfield Foods, Inc.
Paul L. Harp Landover Division
Vice President,
Sales and Marketing, John A. Oliver
Processed Meats Assistant Vice President,
Kinston Division
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
CORPORATE INFORMATION
<S> <C>
Corporate Headquarters Form 10-K Report
501 North Church Street Copies of the Company's Form 10-K Annual Report
Smithfield, VA 23430 are available without charge, upon written request to:
Corporate Secretary, Smithfield Foods, Inc.,
Transfer Agent and Registrar 501 North Church Street, Smithfield, VA 23430.
First Union National Bank
Shareholder Services Group Common Stock Data
Two First Union Center The Common Stock of the Company is traded in the
Charlotte, NC 28288 national over-the-counter market and is authorized
for quotation on The Nasdaq National Market under
Independent Public Accountants the symbol "SFDS." The following table shows the
Arthur Andersen & Co. high and low sales prices of the Common Stock
Richmond, VA 23219 on The Nasdaq National Market for each quarter of
fiscal 1994 and 1993.
Annual Meeting
The Annual Meeting of Stockholders
will be held on August 31, 1994,
at 2 p.m. at the Omni Richmond
Hotel, 100 South 12th Street,
Richmond, VA 23219.
</TABLE>
<TABLE>
<CAPTION>
1994 1993
Quarter High Low High Low
<S> <C> <C> <C> <C>
First $17.25 $14.00 $18.75 $14.00
Second 18.00 14.75 21.75 15.88
Third 20.75 14.75 21.25 16.63
Fourth 24.75 19.63 18.00 12.75
</TABLE>
Smithfield Foods, Inc. has not paid dividends on
its common stock since its incorporation.
(Recycle Logo) The majority of this Annual Report was printed on recycled
paper.
Project and Editorial Coordination: Readmore Communications, Inc.
Phoenix Communications, Ltd., Design: VSA Partners, Illustrations;
James Noel Smith
EXHIBIT 21
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
Set forth below is a list of Smithfield Foods, Inc.'s subsidiaries (other
than subsidiaries whose names may be omitted in accordance with Regulation S-K
Item 601(21)(ii)) and their respective jurisdictions of organization.
Brown's of Carolina, Inc................................ North Carolina
Ed Kelly, Inc........................................... North Carolina
Esskay, Inc............................................. Maryland
Gwaltney of Smithfield, Ltd............................. Delaware
Patrick Cudahy Incorporated............................. Delaware
The Smithfield Packing Company, Incorporated............ Virginia
