SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- -- ACT OF 1934
For the quarterly period ended July 28, 1996
or
- -- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from.......................to.....................
COMMISSION FILE NUMBER 0-2258
SMITHFIELD FOODS, INC.
900 Dominion Tower
999 Waterside Drive
Norfolk, Virginia 23510
(757) 365-3000
Delaware 52-0845861
(State of Incorporation) (I.R.S. Employer
Identification Number)
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
Shares outstanding
Class at September 6, 1996
----- --------------------
Common Stock, $.50
par value per share 18,017,015
1-13
<PAGE>
SMITHFIELD FOODS, INC.
CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - July 28, 1996 and
April 28, 1996 3-4
Consolidated Statements of Income - 13 Weeks Ended
July 28, 1996 and July 30, 1995 5
Consolidated Statements of Cash Flows - 13 Weeks Ended
July 28, 1996 and July 30, 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 8-9
PART II. OTHER INFORMATION
Item 2. Legal Proceedings. 10
Item 4. Submission of Matters to a Vote of Security Holders. 10-11
Item 6. Exhibits and Reports on Form 8-K. 11-12
2-13
<PAGE>
PART I. FINANCIAL INFORMATION
SMITHFIELD FOODS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 28, April 28,
(In thousands) 1996 1996
- -------------- ------------- ----------------
ASSETS (Unaudited)
<S> <C>
Current assets:
Cash $ 22,662 $ 28,529
Accounts receivable less allowances
of $1,258 and $1,084 168,848 144,956
Inventories 223,439 210,759
Advances to joint hog production
arrangements 7,608 7,578
Prepaid expenses and other current assets 35,167 28,585
---------- -----------
Total current assets 457,724 420,407
----------- -----------
Property, plant and equipment 553,143 536,589
Less accumulated depreciation (172,103) (163,866)
----------- -----------
Net property, plant and equipment 381,040 372,723
----------- -----------
Other assets:
Investments in partnerships 37,552 29,662
Other 35,229 34,827
----------- -----------
Total other assets 72,781 64,489
----------- -----------
$ 911,545 $ 857,619
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3-13
<PAGE>
SMITHFIELD FOODS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 28, April 28,
(In thousands) 1996 1996
- -------------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
<S> <C>
Current liabilities:
Notes payable $ 78,200 $ 110,563
Current portion of long-term debt
and capital lease obligations 9,184 13,392
Accounts payable 118,294 113,344
Accrued expenses and other current
liabilities 99,348 95,082
------------ -----------
Total current liabilities 305,026 332,381
------------ -----------
Long-term debt and capital lease
obligations 270,805 188,618
------------ -----------
Other noncurrent liabilities:
Pension and post-retirement benefits 57,285 59,128
Other 15,504 14,975
------------ -----------
Total other noncurrent liabilities 72,789 74,103
------------ -----------
Series C 6.75% cumulative convertible redeemable
preferred stock, $1.00 par value, 2,000 shares
authorized, issued and outstanding 20,000 20,000
------------ -----------
Stockholders' equity:
Preferred stock, $1.00 par value,
authorized 1,000,000 shares - -
Common stock, $.50 par value,
authorized 25,000,000 shares;
issued 18,453,015 shares 9,227 9,227
Additional paid-in capital 92,762 92,762
Retained earnings 148,579 148,171
Treasury stock, at cost, 437,000 shares (7,643) (7,643)
------------ -----------
Total stockholders' equity 242,925 242,517
------------ -----------
$ 911,545 $ 857,619
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4-13
<PAGE>
SMITHFIELD FOODS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks 13 Weeks
Ended Ended
(In thousands, except per share data) July 28, 1996 July 30, 1995
- ------------------------------------- ------------- -------------
<S> <C>
Sales $ 892,870 $ 367,328
Cost of sales 834,108 346,305
------------ ------------
Gross profit 58,762 21,023
Selling, general and administrative expenses 42,856 15,090
Depreciation expense 8,755 5,379
Interest expense 5,990 4,292
------------ ------------
Income (loss) from continuing operations
before income taxes 1,161 (3,738)
Income taxes (credit) 415 (1,144)
------------ ------------
Income (loss) from continuing operations 746 (2,594)
Loss from discontinued operations, net of tax - (1,800)
------------ ------------
Net income (loss) $ 746 $ (4,394)
============ ============
Net income (loss) available to common stockholders $ 408 $ (4,536)
============ ============
Income (loss) per common share:
Continuing operations $ .02 $ (.16)
Discontinued operations - (.11)
------------ ------------
Net income (loss) $ .02 $ (.27)
============ ============
Weighted average common shares outstanding 18,604 16,886
============ ============
</TABLE>
See accompanying notes to consolidated financial
statements.
5-13
<PAGE>
SMITHFIELD FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks 13 Weeks
Ended Ended
(In thousands) July 28, 1996 July 30, 1995
- -------------- ------------- -------------
<S> <C>
Cash flows from operating activities:
Net income $ 746 $ (4,394)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 9,528 5,991
Increase in accounts receivable (23,892) (12,046)
Increase in inventories (12,680) (30,011)
(Increase) decrease in prepaid expenses
and other current assets (6,582) 1,571
(Increase) decrease in other assets (1,174) 200
Increase in other liabilities 7,902 4,748
Loss on sale of property, plant
and equipment 4 339
----------- -----------
Net cash used in operating activities (26,148) (33,602)
----------- -----------
Cash flows from investing activities:
Capital expenditures (17,076) (23,405)
Proceeds from sale of property, plant
and equipment - 522
Investments in partnerships (7,890) (2,821)
(Increase) decrease in advances to joint
hog production arrangement (30) 4,060
----------- -----------
Net cash used in investing activities (24,996) (21,644)
----------- -----------
Cash flows from financing activities:
Net borrowings (repayments) on notes payable (32,363) 32,609
Proceeds from issuance of long-term debt 146,250 22,000
Principal payments on long-term debt
and capital lease obligations (68,272) (2,406)
Dividends on preferred stock (338) (169)
Exercise of common stock options - 6
----------- -----------
Net cash provided by (used in)
financing activities 45,277 52,040
----------- -----------
Net decrease in cash (5,867) (3,206)
Cash at beginning of period 28,529 14,790
----------- -----------
Cash at end of period $ 22,662 $ 11,584
=========== ===========
Supplemental disclosures of cash flow information:
Cash payments during period:
Interest (net of amount capitalized) $ 5,386 $ 3,529
=========== ===========
Income taxes $ 2,744 $ 358
=========== ===========
</TABLE>
See accompanying notes to consolidated financial
statements.
6-13
<PAGE>
SMITHFIELD FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) These statements should be read in conjunction with the Consolidated
Financial Statements and related notes which are included in the
Registrant's Annual Report for the fiscal year ended April 28, 1996.
(2) The financial information furnished herein is unaudited. The information
reflects all adjustments (which include only normal recurring adjustments)
which are, in the opinion of management, necessary to a fair statement of
the financial position and the results of operations for the periods
included in this report.
(3) Certain expenses previously classified as selling, general and
administrative have been reclassified as cost of sales.
(4) Inventories consist of the following:
<TABLE>
<CAPTION>
July 28, April 28,
(In thousands) 1996 1996
-------------- ----------- -------
<S> <C>
Fresh and processed meats $158,045 $154,110
Livestock and manufacturing supplies 60,197 51,145
Other 5,197 5,504
-------- --------
$223,439 $210,759
======== ========
</TABLE>
(5) On July 30, 1996, the Registrant privately placed $140,000,000 of senior
secured notes with a group of institutional lenders. The placement consists
of $40,000,000 of seven-year 8.34% notes and $100,000,000 of 10-year 8.52%
notes secured by four major processing plants.
7-13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
13 Weeks Ended July 28, 1996 -
13 Weeks Ended July 30, 1995
On December 20, 1995, the Registrant acquired all of the capital stock of John
Morrell & Co. ("John Morrell") for $58.0 million comprised of $25.0 million in
cash and $33.0 million of the Registrant's common stock plus the assumption of
all of John Morrell's liabilities. Accordingly, the Registrant's operating
results for the first quarter of fiscal 1997 include the results of operations
of John Morrell.
Sales in the first quarter of fiscal 1997 increased $525.5 million, or
143.1%, from the same quarter a year ago. The increase was primarily due to the
inclusion of the sales of John Morrell for the period. In addition, significant
increases in unit sales prices of both fresh pork and processed meats and
increased sales of fresh pork related to increased slaughter levels at the
Registrant's Bladen County, North Carolina, plant also contributed to the
increase in sales. The increase in sales was the result of a 93.9% increase in
sales tonnage, primarily the result of the inclusion of the sales of John
Morrell, combined with a 25.3% increase in unit sales prices related to higher
live hog costs. The increase in sales tonnage reflected a 115.7% increase in
fresh pork tonnage and a 74.5% increase in processed meats tonnage.
Cost of sales increased $487.8 million, or 140.9%, in the first quarter of
fiscal 1997, reflecting the increased sales tonnage and a 30.4% increase in live
hog costs. Gross profit in the first quarter of fiscal 1997 increased $37.7
million, or 179.5%, compared to the same quarter of fiscal 1996. The increase in
gross profit reflected lower margins on substantially higher sales tonnage of
fresh pork combined with increased sales tonnage and improved margins on
processed meats compared to the first quarter of fiscal 1996. In addition, gross
profit was favorably affected by a $6.5 million reduction in cost of sales as a
result of the performance of the Registrant's hog production operations and
joint hog production arrangements. In the same quarter of fiscal 1996, gross
profit was favorably affected by a $3.2 million reduction in cost of sales as a
result of the performance of these operations.
Selling, general and administrative expenses increased $27.8 million, or
184.0%, in the first quarter of fiscal 1997. The increase was primarily due to
the inclusion of the operations of John Morrell and higher selling and marketing
costs associated with the increase in fresh pork tonnage.
Depreciation expense increased $3.4 million, or 62.8%, in the first quarter
of fiscal 1997 from the same quarter a year ago. The increase was related to
completed capital projects at the Bladen County plant, additional hog production
facilities at Brown's of Carolina, Inc. ("Brown's") and the inclusion of the
operations of John Morrell.
Interest expense increased $1.7 million, or 39.6%, in the first quarter of
fiscal 1997, reflecting increased carrying costs on higher levels of inventories
and accounts receivable related to higher live hog costs and the interest
expense associated with the cash portion of the purchase price, financed with
short-term borrowings, related to the acquisition of John Morrell.
8-13
<PAGE>
The effective income tax rate for the first quarter of fiscal 1997
increased to 35.7% from 30.6% in the corresponding period a year ago, reflecting
the reduced impact of federal and state tax credits.
Income from continuing operations increased to $0.7 million in the first
quarter of fiscal 1997 compared to a loss from continuing operations of $2.6
million a year ago, reflecting the factors discussed above.
In fiscal 1996, the Registrant incurred a $1.8 million loss from
discontinued operations related to the disposition of the assets and business of
Ed Kelly, Inc., its former retail electronics subsidiary, which is reported
separately as discontinued operations in the Registrant's consolidated
statements of operations.
Reflecting the factors discussed above, the Registrant had net income of
$0.7 million in the first quarter of 1997 compared to a net loss of $4.4 million
in the same quarter of the prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the first quarter of fiscal 1997, the Registrant's cash used in
operations was $26.1 million, largely the result of an increase in the levels
of accounts receivable and inventories due to substantially higher live hog
costs.
Capital expenditures in the first quarter of fiscal 1997 totaled $17.1
million, consisting primarily of $5.7 million related to several plant
renovations and expansion projects at John Morrell and Patrick Cudahy
Incorporated, and $5.1 million related to hog production facilities and a
feedmill at Brown's.
On April 30, 1996, the Registrant consolidated its lines of credit into
a single line by increasing a previously existing $200.0 million line of credit
to $255.0 million. This line consists of a 364-day, $205.0 million revolving
credit facility and a two-year, $50.0 million revolving credit facility. The
Registrant is using the short-term facility for seasonal inventory and
receivable needs and the long-term facility for working capital and capital
expenditures. The Registrant funded its first quarter capital expenditures and
increased levels of inventories and accounts receivable with $42.4 million in
borrowings under the line of credit.
On July 30, 1996, the Registrant privately placed $140.0 million of senior
secured notes with a group of institutional lenders. The placement consists of
$40.0 million of seven-year 8.34% notes and $100.0 million of 10-year 8.52%
notes secured by four of the Registrant's major processing plants. The proceeds
of the financing were used to repay $65.2 million of long-term bank debt and
reduce short-term borrowings. As a result of the placement of these notes
shortly after the end of the current quarter, the Registrant reclassified
$74.8 million of short-term debt as long-term on the accompanying consolidated
balance sheet as of July 28, 1996.
As of July 28, 1996, the Registrant had definitive commitments of $37.6
million for capital expenditures for the remainder of fiscal 1997, related to
current capital projects underway at its meat processing plants and completion
of its hog production expansion program at Brown's. The Registrant intends to
fund these capital expenditures with internally generated funds.
9-13
<PAGE>
PART II - OTHER INFORMATION
Item 2. Legal Proceedings
Reference is made to the disclosure appearing in Part 1, Item 1 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended April 28,
1996, under the caption "BUSINESS - Regulation." On August 30, 1996, the
Virginia Department of Environmental Quality filed a civil suit against the
Registrant in the Circuit Court of the County of Isle of Wight, Virginia,
concerning water pollution permit violations at the Registrant's Smithfield
Packing and Gwaltney plants in Smithfield, Virginia. The Registrant reaffirms
its belief, based on its knowledge of the facts and circumstances surrounding
the violations and investigations, as summarized in prior disclosures, that the
ultimate resolution of these matters will not have a material adverse effect on
its financial position or annual results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) Annual Meeting of Stockholders held August 28, 1996.
(b) Not applicable.
(c) There were 18,016,015 shares of Registrant's Common Stock
outstanding as of July 12, 1996, the record date for the 1996
Annual Meeting of Stockholders. A total of 14,445,153 shares were
voted. All of management's nominees for directors of the
corporation were elected with the following vote:
<TABLE>
<CAPTION>
Votes Broker
Director Nominee Votes For Withheld Non-Votes
---------------- --------- -------- ---------
<S> <C>
Joseph W. Luter, III 13,973,338 471,815 0
Robert L. Burrus, Jr. 13,617,826 827,327 0
Thomas D. Davis 13,977,626 467,527 0
F. J. Faison, Jr. 13,973,826 471,327 0
Joel W. Greenberg 13,445,723 999,430 0
Cecil W. Gwaltney 13,978,403 466,750 0
George E. Hamilton, Jr. 13,978,353 466,800 0
Richard J. Holland 14,142,938 302,215 0
Roger R. Kapella 13,973,826 471,327 0
Lewis R. Little 13,983,026 462,127 0
Robert W. Manly, IV 13,974,326 470,827 0
H. Gordon Maxwell, III 13,975,926 469,227 0
Wendell H. Murphy 13,974,226 470,927 0
John O. Nielson 13,975,526 469,627 0
William H. Prestage 13,261,223 1,183,930 0
Joseph B. Sebring 13,928,726 516,427 0
Aaron D. Trub 13,973,338 471,815 0
</TABLE>
10-13
<PAGE>
The 1997 Incentive Bonus Plan applicable to the Registrant's President
and Chief Operating Officer was approved by the stockholders with the
following vote:
Broker
Votes For Votes Against Abstentions Non-Votes
- ---------- ------------- ----------- ---------
12,943,296 1,114,790 80,133 306,934
The appointment of Arthur Andersen LLP as independent public
accountants to audit and report on the Registrant's financial
statements for the fiscal year ending April 27, 1997 was ratified by
the stockholders with the following vote:
Broker
Votes For Votes Against Abstentions Non-Votes
- ---------- ------------- ----------- ---------
14,397,667 12,026 35,460 0
(d) Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits
Exhibit 4.6 - Fourth Amended, Restated and Continued
Revolving Credit Agreement dated as of April 30, 1996 among
Gwaltney of Smithfield, Ltd., The Smithfield Packing Company,
Incorporated, Patrick Cudahy Incorporated, Esskay, Inc.,
Brown's of Carolina, Inc., and John Morrell & Co., and
Cooperatieve Centrale RaiffeisenBoerenleenbank-B.A.,
"Rabobank Nederland", New York Branch, as agent, and each
bank a party thereto (incorporated by reference to Exhibit
4.6 to the Registrant's Form 10-K Annual Report for fiscal
year ended April 28, 1996); and a First Amendment to such
Credit Agreement dated as of July 29, 1996.
Exhibit 4.6(a) - Fourth Amended, Restated and Continued
Guaranty dated as of April 30, 1996, made by Smithfield
Foods, Inc. 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 therein (incorporated by reference to
Exhibit 4.6(a) to the Registrant's Form 10-K Annual Report
for the fiscal year ended April 28, 1996); and Amendment No.
1 to such Guaranty dated as of July 26, 1996; and Amendment
No. 2 to such Guaranty dated as of July 29, 1996.
Exhibit 4.7 - Note Purchase Agreement dated as of July 15,
1996, among Smithfield Foods, Inc. and each of the Purchasers
listed on Annex 1 thereto.
Exhibit 4-7(a) - Joint and Several Guaranty dated as of July
15, 1996, by Gwaltney of Smithfield, Ltd., John Morrell &
Co., The Smithfield Packing Company, Incorporated, SFFC,
Inc., Patrick Cudahy Incorporated, and Brown's of Carolina,
Inc.
11-13
<PAGE>
Exhibit 11 - Computation of Net Income (Loss) Per Share.
Exhibit 27 - Financial Data Schedule.
B. Reports on Form 8-K.
1. An Amended Current Report on Form 8-K for December 21, 1995
was filed with the Securities and Exchange Commission on
June 14, 1996, to report, under Items 2 and 7, the
acquisition by the Registrant from Chiquita Brands
International, Inc. of all of the outstanding capital stock
of John Morrell & Co.
2. A Current Report on Form 8-K for June 19, 1996, was filed
with the Securities and Exchange Commission on June 19,
1996, to report, under Item 5, that the Registrant had filed
with the Securities and Exchange Commission a Registration
Statement on Form S-3 to register the offer and resale of
any or all of the 1,094,273 common shares of the Registrant
held by Chiquita Brands International, Inc.
12-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SMITHFIELD FOODS, INC.
/s/ Aaron D. Trub
---------------------
Aaron D. Trub
Vice President, Secretary and
Treasurer
/s/ C. Larry Pope
------------------------
C. Larry Pope
Vice President and Controller
Date: September 9, 1996
13-13
EXECUTION COUNTERPART
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Agreement" or this
"Amendment"), dated as of July 29, 1996, is entered into by and among GWALTNEY
OF SMITHFIELD, LTD., a Delaware corporation (for itself and as successor by
merger to Esskay, Inc) ("Gwaltney"), THE SMITHFIELD PACKING COMPANY,
INCORPORATED, a Virginia corporation ("Packing"), PATRICK CUDAHY INCORPORATED, a
Delaware corporation ("Cudahy") BROWN'S OF CAROLINA, INC., a North Carolina
corporation ("Brown's") and JOHN MORRELL & CO., a Delaware Corporation
("Morrell"; Gwaltney, Packing, Cudahy, Brown's and Morrell 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 (individually, "Rabobank"), 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
(1) The Borrowers, the Agent and the Lenders have entered into a
Fourth Amended, Restated and Continued Credit Agreement, dated as of April 30,
1996 (as amended, the "Credit Agreement"). Capitalized terms used herein but not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement, as amended hereby.
(2) Effective June 13, 1996, Esskay, Inc., a Delaware corporation and
a Borrower under the Credit Agreement was merged into Gwaltney.
(3) The parties hereto desire to amend the Credit Agreement to extend
the Facility A Termination Date and the Facility B Termination Date.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
<PAGE>
ARTICLE I
FIRST AMENDMENT TO CREDIT AGREEMENT
SECTION 1.1. Amendment to Credit Agreement.
(a) The Credit Agreement shall be, effective as of the date hereof and
subject to the satisfaction of the conditions precedent set forth in Section
2.01 hereof, amended as follows:
(i) The date "July 29, 1996" in the fourth line of section
1.01(a) as the definition "Facility A Termination Date" is deleted and
the date August 28, 1996 is substituted therefor.
(ii) The date "July 29, 1997" in the fifth line of section
1.01(b) as the definition "Facility B Termination Date" is deleted and
the date August 28, 1997 is substituted therefor.
(iii) The date "July 30, 1996" in the first line of section
5.01(f) as the date prior to which the mergers of Morrell's
subsidiaries as described therein will be effected is deleted and the
date October 30, 1996 is substituted therefor.
(iv) Schedule 6.01(d) to the Credit Agreement is deleted
in its entirety and the Schedule 6.01(d) attached hereto is
substituted therefor.
(b) The Credit Agreement shall be, effective as of July 31, 1996 and
subject to the consummation of the closings of the Guarantor's sale of Notes in
the aggregate stated principal amount of $199,707,354 pursuant to certain Note
Purchase Agreements dated as of July 15, 1996 among the Guarantor and the
purchasers thereunder and further subject to the satisfaction of the conditions
precedent set forth in Section 2.01 hereof, further amended as follows:
(i) The date "August 28, 1996" in the fourth line of section
1.01(a) as the definition "Facility A Termination Date" (as such
definition shall have been amended by Section 1.01(a)(i) hereof) is
deleted and the date July 28, 1997 is substituted therefor.
(ii) The date "August 28, 1997" in the fifth line of section
1.01(b) as the definition "Facility B Termination Date" (as such
definition shall have been amended by Section 1.01(b)(i) hereof) is
deleted and the date July 29, 1998 is substituted therefor.
<PAGE>
ARTICLE II
CONDITIONS PRECEDENT
SECTION 2.1. Conditions of Effectiveness. This First Amendment shall
become effective on the date when, and only when, (a) the Agent shall have
received counterparts of this Amendment duly executed by each of the parties
hereto, (b) all outstanding fees and expenses of counsel to the Agent and the
Lenders shall have been paid in full to the extent due and payable after giving
effect to this Amendment, (c) the representations and warranties contained
herein shall be true on and as of the date of the effectiveness of this
Amendment (the "Effective Date"), there shall exist on the Effective Date, no
Event of Default or Default and there shall exist no material adverse change in
the financial condition, business operation or prospects of the Guarantor or its
Subsidiaries since April 28, 1996, and the Borrowers are in compliance with the
Borrowing Base requirements; and (d) the Agent additionally shall have received
all of the following documents, each (unless otherwise indicated) being dated
the date hereof, in form and substance satisfactory to the Agent and the
Lenders:
(i) Copies of all documents evidencing all requisite corporate
action of each Borrower (including any and all resolutions of the
Board of Directors of each Borrower) authorizing the execution,
delivery and performance of this First Amendment and the matters
contemplated hereby, certified by the Secretary or Assistant Secretary
of each Borrower;
(ii) Duly executed copies of the First Amendment to Guaranty,
in substantially the form of Exhibit A hereto;
(iii) A favorable opinion of McQuire, Woods, Battle & Booth,
special counsel for the Borrowers, in form and substance satisfactory
to the Agent and the Lenders.
(iv) An Officer's Certificate of each Borrower, dated the
Effective Date, to the effect that the representations and warranties
contained herein shall be true on and as of the Effective Date; there
shall exist on the Effective Date, no Event of Default or Default;
there shall exist no material adverse change in the financial
condition, business operation or prospects of such Borrower since
April 28, 1996; and the Borrowers are in compliance with the Borrowing
Base requirements; and
(v) Such other documents, instruments, approvals (and, if
required by the Agent, certified duplicates of executed copies
thereof) or opinions as the Agent or any Lender may reasonably
request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Borrowers. (a) Each
of the Borrowers hereby repeats and confirms each of the representations and
warranties made by it in the Credit Agreement, as amended hereby, as though made
on and as of the date hereof, with each reference therein to "this Agreement",
"hereof", "hereunder", "thereof", "thereunder" and words of like import being
deemed to be a reference to the Credit Agreement and the Loan Documents, in each
case, as amended hereby.
(b) Each of the Borrowers further represents and warrants as
follows:
(i) The execution, delivery and performance by such Borrower of
this First Amendment are within its corporate powers, have been duly
authorized by all necessary corporate action and do not contravene (A)
such Borrower's charter or by-laws, (B) any law or (C) any legal or
contractual restriction binding on or affecting such Borrower; and
such execution, delivery and performance do not or will not result in
or require the creation of any Lien upon or with respect to any of its
properties.
(ii) No governmental approval is required for the due execution,
delivery and performance by such Borrower of this First Amendment.
(iii) This First Amendment constitutes the legal, valid and
binding obligations of such Borrower enforceable against such Borrower
in accordance with its terms.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Reference to and Effect on the Loan Documents. (a) Upon
the effectiveness of this First Amendment, on and after the date hereof, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement and each reference in the
other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or words
of like import referring to the Credit Agreement, shall mean and be a reference
to the Credit Agreement, as amended hereby.
(b) Except as specifically amended above, the Credit Agreement and the
Notes and all other Loan Documents, are and shall continue to be in full force
and effect and are hereby in all respects ratified and confirmed. Without
limiting the generality of the foregoing, each Security Agreement and all of the
Collateral described therein do and shall continue to secure the payment of all
obligations of the Borrowers under the Credit Agreement, the Notes and the other
Loan Documents, in each case, as amended hereby.
(c) The execution, delivery and effectiveness of this First Amendment
shall not operate as a waiver of any right, power or remedy of any Lender or the
Agent under any of the Loan Documents, nor constitute a waiver of any provision
of any of the Loan Documents.
SECTION 4.2. Costs and Expenses/Fees. The Borrowers jointly and
severally agree to pay on demand all costs and expenses incurred by the Agent in
connection with the preparation, execution and delivery of this First Amendment
and the other documents to be delivered hereunder and thereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Agent with respect thereto and with respect to advising the Agent and
the Lenders as to their rights and responsibilities under this Amendment. The
Borrowers jointly and severally further agree to pay on demand all costs and
expenses, if any (including, without limitation, reasonable counsel fees and
expenses of counsel), incurred by the Agent and the Lenders in connection with
the enforcement (whether through negotiations, legal proceedings or otherwise)
of this First Amendment and the other documents to be delivered hereunder and
thereunder, including, without limitation, counsel fees and expenses in
connection with the enforcement of rights under this Section 4.02.
SECTION 4.3. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 4.4. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
GWALTNEY OF SMITHFIELD, LTD.
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
THE SMITHFIELD PACKING
COMPANY, INCORPORATED
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
PATRICK CUDAHY INCORPORATED
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
BROWN'S OF CAROLINA, INC.
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
<PAGE>
JOHN MORRELL & CO.
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK,
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH,
individually and as Agent
By /s/ Joanna Solowski
Authorized Officer
By /s/ Barbara Hyland
Authorized Officer
NATIONSBANK, N.A.
By /s/ Michael R. Williams
Title: Senior Vice President
<PAGE>
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK,
CAYMAN ISLANDS BRANCH
By /s/ [SIGNATURE ILLEGIBLE]
Title: Senior Vice President
By /s/ [SIGNATURE ILLEGIBLE]
Title: Assistant Vice President
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By /s/ [SIGNATURE ILLEGIBLE]
Title: Joint General Manager
SUNTRUST BANK, ATLANTA
By /s/ Robert Honeycutt
Title: Assistant Vice President
By /s/ Gregory L. Cannon
Title: Vice President
<PAGE>
CAISSE NATIONALE DE
CREDIT AGRICOLE
By_________________________________
Title:
BOATMEN'S FIRST NATIONAL
BANK OF KANSAS CITY
By /s/ Ellen Isch
Title: Vice President
<PAGE>
FARM CREDIT SERVICES OF THE MIDLANDS, PCA
PCA
By /s/ R. Cleary
Title: Vice President
<PAGE>
The undersigned as Guarantor under its Fourth Amended, Restated and
Continued Guaranty dated as of April 30, 1996, as amended by Amendment No.1 to
Guaranty dated as of July 26, 1996 and Amendment No. 2 to Guaranty dated as of
July 29, 1996 (each a "Guaranty") hereby consents and agrees to the foregoing
First Amendment. The undersigned hereby confirms and agrees that its Guaranty
is, and shall continue to be, in full force and effect and is hereby ratified
and confirmed in all respects except upon the effectiveness of the First
Amendment, each reference in the undersigned's Guaranty to "the Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Credit Agreement shall mean and be a reference to the Credit Agreement as
amended by such First Amendment. The undersigned agrees that no consent or
acknowledgment by the undersigned is or shall be required with respect to any
other amendment or modification of the Credit Agreement or any other Loan
Document in order to ensure the continued effectiveness and enforceability of
its Guaranty.
SMITHFIELD FOODS, INC.
By: /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Vice President, Secretary
and Treasurer
EXECUTION COUNTERPART
AMENDMENT NO. 1 TO GUARANTY
This AMENDMENT AGREEMENT NO. 1 TO GUARANTY (this "Agreement" or this
"Amendment"), dated as of July 26, 1996, is entered into by and between
SMITHFIELD FOODS, INC., a Delaware Corporation (the "Guarantor")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
(1) The Agent and the Banks have entered into that certain Fourth Amended,
Restated and Continued Revolving Credit Agreement dated as of April 30, 1996 (as
so amended hereby and from time to time hereafter, 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
John Morrell & Co. ("Morrell"; Gwaltney, Packing, Cudahy, Brown's and Morrell
being individually referred to as a "Borrower" and collectively referred to as
the "Borrowers").
(2) Effective June 13, 1996, Esskay was merged into Gwaltney.
(3) Pursuant to that certain Fourth Amended, Restated and Continued
Guaranty dated as of April 30, 1996 made by the Guarantor in favor of the Agent,
as Agent of the Banks (the "Guaranty"), the Guarantor unconditionally guaranteed
the obligations of the Borrowers under the Credit Agreement.
(4) As requested by the Borrowers and the Guarantor, the Banks have agreed
to amend certain covenants in the Guaranty.
NOW, THEREFORE, in consideration of the premises, the parties hereto agree
as follows:
ARTICLE I
FIRST AMENDMENT TO GUARANTY
SECTION 1.1. Amendments to Guaranty The Guaranty shall be, effective as of
the date hereof and subject to the satisfaction of the conditions precedent set
forth in Section 2.01 hereof, amended as follows:
(a) Amendments to Section 6. Clauses (i) and (j) of Section 6 shall be
amended in their entirety to read as follows:
(i) 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, (iii) liens
(other than liens permitted by clause (iv) hereof or replaced with
liens permitted by clause (iv) hereof) in existence on the date hereof
and set forth on Schedule 6(f) hereto, (iv) liens on the Noteholder
Security as defined and described in that certain Intercreditor
Agreement dated as of July 15, 1996 by and among the Guarantor, the
Borrowers, SFFC, Inc., the Agent, the Banks and the Noteholders (as
such term is therein defined) and First Union Bank of Connecticut, as
security trustee for the Noteholders securing Debt outstanding under
one or more series of notes issued pursuant to separate Note Purchase
Agreements dated as of July 15, 1996 between the Guarantor and the
purchasers listed therein, in the aggregate stated principal amount of
$199,707,354, together with any and all Debt used to refinance or
repay such debt so long as the aggregate principal amount thereof is
not increased thereby, provided that the aggregate principal amount of
the indebtedness secured by the liens or security interests referred
to in clauses (i), (ii), (iii) and (iv) above shall not exceed
$300,000,000 at any time outstanding or (v) liens granted to the Agent
on behalf of the Banks.
(j) 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 declare or pay any
dividends, purchase or otherwise acquire for value any stock of any
Borrower, except that (i) it may declare and pay dividends on its
$20,000,000 principal amount of its Series C 6.75% Cumulative
Convertible Preferred Stock in an aggregate amount not to exceed
$1,350,000 during any fiscal year and (ii) a Borrower may declare and
deliver dividends and distributions payable in common stock of such
Borrower. Notwithstanding the foregoing, each and every Borrower may
declare or pay dividends, purchase or otherwise acquire for value any
of its capital stock now or hereafter outstanding, or make any
distribution of its assets to stockholders as may be necessary after
taking into account all such other dividends, purchases, acquisitions
and distributions made by any other Borrower to make any and all
payments due (including, without limitation, any and all amounts due
by way of acceleration, required or optional prepayment or otherwise)
in connection with the Guarantor's Debt outstanding under one or more
series of notes issued pursuant to a Note Purchase Agreement dated as
of July 15, 1996 among the Guarantor and the purchasers list
thereunder in the aggregate stated principal amount of $199,707,354,
together with any and all Debt used to refinance or repay such Debt
then outstanding, so long as, in any event, the aggregate principal
amount thereof and interest rate thereon is not increased.
ARTICLE II
CONDITIONS PRECEDENT
SECTION 2.1. Conditions of Effectiveness. This Amendment shall become
effective when, and only when, (a) the Agent shall have received counterparts of
this Amendment executed by each of the parties hereto, (b) all accrued but
unpaid interest, fees and expenses under the terms of the Credit Agreement, as
amended hereby, and all outstanding fees and expenses of counsel to the Agent,
shall have been paid in full to the extent due and payable after giving effect
to this Amendment, (c) the representations and warranties contained herein shall
be true on and as of the date of the effectiveness of this Amendment (the
"Effective Date"), there shall exist on the Effective Date, no Event of Default
or Default and there shall exist no material adverse change in the financial
condition, business operation or prospects of the Guarantor or its Subsidiaries
since April 28, 1996, and (d) the Agent additionally shall have received all of
the following documents, each (unless otherwise indicated) being dated the date
of receipt thereof by the Agent (which date shall be the same for all such
documents), in form and substance satisfactory to the Agent and the Banks:
(i) Copies of (A) all documents evidencing all requisite corporate
action of the Guarantor (including any and all resolutions of the Board of
Directors of the Guarantor) authorizing the execution, delivery and
performance of this Amendment and the matters contemplated hereby and
thereby and (B) all documents evidencing all Governmental Approvals, if
any, with respect to this Amendment and the matters contemplated hereby and
thereby.
(ii) A good standing certificate issued by the Secretary of State of
its incorporation and certificates of qualification to do business as a
foreign corporation for the Guarantor issued by the Secretary of State of
each State in which the Guarantor is required by law to be qualified to do
business, each dated as of a date not more than thirty days prior to the
date hereof.
(iii) A certificate of the Secretary or an Assistant Secretary of the
Guarantor certifying the names and true signatures of the officers
authorized to sign this Amendment on behalf of the Guarantor and any other
documents to be delivered by the Guarantor hereunder.
(iv) A favorable opinion of McGuire, Woods, Boothe & Battle, in form
and substance satisfactory to the Agent and the Banks.
(v) A true, correct and duly executed copy of each Note Purchase
Agreement, each dated July 15, 1996 between the Guarantor and each of the
noteholders (the "Note Agreements") including all schedules and exhibits
thereto and side letters, if any, effecting the terms thereof or otherwise
delivered in connection therewith, together with all amendments and waivers
thereto and any certificates executed in connection therewith accompanied
by an officer's certificate dated the closing date to such effect. The
transactions described in the Note Agreements which are to occur prior to
the closing date shall have been consummated in all material respects in
accordance with the terms and provisions thereof, and no material provision
of the Note Agreements shall have been amended, supplemented or otherwise
modified or waived without the prior written consent of the Banks.
(vi) An Officer's Certificate, dated the Effective Date, to the effect
that the representations and warranties contained herein shall be true on
and as of the Effective Date; there shall exist on the Effective Date, no
Event of Default or Default; and there shall exist no material adverse
change in the financial condition, business operation or prospects of the
Guarantor or its Subsidiaries since April 28, 1996; and
(vii) Such other documents, instruments, approvals (and, if required
by the Agent, certified duplicates of executed copies thereof) or opinions
as the Agent or any Bank may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. (a) The Guarantor hereby
repeats and confirms each of the representations and warranties made by it in
the Guaranty, as amended hereby, as though made on and as of the date hereof,
with each reference therein to "this Agreement", the "Loan Documents", "hereof",
"hereunder", "thereof", "thereunder" and words of like import being deemed to be
a reference to the Guaranty and the Loan Documents, in each case as amended
hereby.
(b) The Guarantor represents and warrants as follows:
(i) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation and
is duly qualified to do business in, and is in good standing in, all other
jurisdictions where the nature of its business or the nature of property
owned or used by it makes such qualification necessary.
(ii) The execution, delivery and performance by the Guarantor of this
Amendment are within its corporate powers, have been duly authorized by all
necessary corporate action and do not contravene (A) the Guarantor's
charter or by-laws, (B) law or (C) any legal or contractual restriction
binding on or affecting the Guarantor; and such execution, delivery and
performance do not or will not result in or require the creation of any
Lien upon or with respect to any of its properties.
(iii) No Governmental Approval is required for the due execution,
delivery and performance by the Guarantor of this Amendment, except for
such Governmental Approvals as have been duly obtained or made and which
are in full force and effect on the date hereof and not subject to appeal.
(iv) This Amendment constitutes the legal, valid and binding
obligations of the Guarantor enforceable against the Guarantor in
accordance with its terms; subject to the qualifications, however, that the
enforcement of the rights and remedies herein is subject to bankruptcy and
other similar laws of general application affecting rights and remedies of
creditors and that the remedy of specific performance or of injunctive
relief is subject to the discretion of the court before which any
proceedings therefor may be brought.
(v) There are no pending or threatened actions, suits or proceedings
affecting the Guarantor or the properties of the Guarantor or any of its
Subsidiaries before any court, governmental agency or arbitrator, that may,
if adversely determined, materially adversely affect the financial
condition, properties, business, operations or prospects of the Guarantor
and it Subsidiaries, considered as a whole, or affect the legality,
validity or enforceability of the Guaranty or any other Loan Document, in
each case as amended by this Amendment.
ARTICLE IV
WAIVER OF COVENANTS
SECTION 4.1. Waiver. Subject to the effectiveness of this Amendment
Agreement, each of the Banks, pursuant to the request of the Guarantor, hereby
waives solely with respect to the period commencing June 30, 1996 and ending on
the Effective Date hereof, the covenants contained in Section 6(d) of the
Guaranty and each of the Banks hereby waives Default Interest for such period.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Reference to and Effect on the Operative Documents. (a) Upon
the effectiveness of this Amendment, on and after the date hereof each reference
in the Guaranty to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Guaranty and each reference in the other Loan Documents
to "the Guaranty", "thereunder", "thereof" or words of like import referring to
the Guaranty, shall mean and be a reference to the Guaranty, as amended hereby.
(b) Except as specifically amended above, the Credit Agreement, the
Guaranty and all other Loan Documents, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed. Without
limiting the generality of the foregoing, the Security Documents and all of the
Collateral described therein do and shall continue to secure the payment of all
obligations of the Borrowers under the Credit Agreement and the other Loan
Documents.
(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Bank or the Agent under any of the Loan Documents, nor constitute
a waiver of any provision of any of the Loan Documents.
SECTION 5.2. Costs and Expenses. The Guarantor agrees to pay on demand all
costs and expenses incurred by the Agent and the Banks in connection with the
preparation, execution and delivery of this Amendment and the other documents to
be delivered hereunder and thereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent and the
Banks with respect thereto and with respect to advising the Agent and the Banks
as to their rights and responsibilities under this Amendment. The Guarantor
further agrees to pay on demand all costs and expenses, if any (including,
without limitation, reasonable counsel fees and expenses of counsel), incurred
by the Agent and the Banks in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Amendment and the other
documents to be delivered hereunder and thereunder, including, without
limitation, counsel fees and expenses in connection with the enforcement of
rights under this Section 6.02.
SECTION 5.3. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 5.4. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
[Signatures Commence on Next Page.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SMITHFIELD FOODS, INC.
By /s/ Aaron D. Trub
Title: Vice President, Secretary &
Treasurer
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK,
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH,
individually and as Agent
By /s/ Joanna M. Solowski
Authorized Officer
By /s/ Barbara Hyland
Authorized Officer
NATIONSBANK, N.A.
By /s/ Michael R. Williams
Title: Senior Vice President
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK,
CAYMAN ISLANDS BRANCH
By /s/ [SIGNATURE ILLEGIBLE]
Title: Senior Vice President
By /s/ [SIGNATURE ILLEGIBLE]
Title: Assistant Vice President
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By /s/ [SIGNATURE ILLEGIBLE]
Title: Joint General Manager
SUNTRUST BANK, ATLANTA
By /s/ Robert V. Honeycutt
Title: Assistant Vice President
By /s/ Gregory L. Cannon
Title: Vice President
CAISSE NATIONALE DE
CREDIT AGRICOLE
By_________________________________
Title:
BOATMEN'S FIRST NATIONAL
BANK OF KANSAS CITY
By /s/ Ellen M. Isch
Title: Vice President
FARM CREDIT SERVICES OF THE MIDLANDS, PCA
By /s/ R. Cleary
Title: Vice President
ACCEPTED AND AGREED:
GWALTNEY OF SMITHFIELD, LTD.
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
JOHN MORRELL & CO.
By /s/ Aaron D. Trub
Title: Secretary
THE SMITHFIELD PACKING
COMPANY, INCORPORATED
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
PATRICK CUDAHY INCORPORATED
By /s/ Aaron D. Trub
Title: Secretary
BROWN'S OF CAROLINA, INC.
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
<PAGE>
EXECUTION COUNTERPART
AMENDMENT NO. 2 TO GUARANTY
This AMENDMENT AGREEMENT NO. 2 TO GUARANTY (this "Agreement" or this
"Amendment"), dated as of July 29, 1996, is entered into by and between
SMITHFIELD FOODS, INC., a Delaware Corporation (the "Guarantor") 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
(1) The Agent and the Banks have entered into that certain Fourth
Amended, Restated and Continued Revolving Credit Agreement dated as of
April 30, 1996 (as so amended hereby and from time to time hereafter, 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 John Morrell & Co.
("Morrell"; Gwaltney, Packing, Cudahy, Brown's and Morrell being
individually referred to as a "Borrower" and collectively referred to as
the "Borrowers").
(2) Effective June 13, 1996, Esskay was merged into Gwaltney.
(3) Pursuant to that certain Fourth Amended, Restated and Continued
Guaranty dated as of April 30, 1996 made by the Guarantor in favor of the
Agent, as Agent of the Banks (the "Guaranty"), the Guarantor
unconditionally guaranteed the obligations of the Borrowers under the
Credit Agreement.
(4) As requested by the Borrowers and the Guarantor, the Banks have
agreed to amend certain covenants in the Guaranty.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
AMENDMENT NO. 2 TO GUARANTY
SECTION 1.1. Amendments to Guaranty The Guaranty shall be, effective
as of the date hereof and subject to the satisfaction of the conditions
precedent set forth in Section 2.01 hereof, amended as follows:
(a) Amendment to Section 6 (a). Clause (a) of Section 6 shall be
amended by deleting the word "and" at the end of subclause (v) thereof,
renumbering subclause (vi) to be subclause (vii) and inserting immediately
after subclause (v) a new subclause (vi) to read as follows:
(vi) at any time at least one Note Purchase Agreement
dated as of July 15, 1996 between the Guarantor and the
purchasers listed thereunder, providing for the purchase of the
Guarantor's Notes in the aggregate stated principal amount of
$199,707,354, is in effect, at the same time required thereby, a
copy of each item required to be furnished by the Guarantor or
any subsidiary pursuant thereto; and
(b) Amendments to Section 6 (d) through (f), (h) and (k). Clauses (d)
through (f) and (h) and (k) of Section 6 shall be amended in their entirety
to read as follows:
(d) Working Capital. Maintain on a consolidated basis at
all times (i) an excess of current assets over current
liabilities, in each case, as determined in accordance with
generally accepted accounting principles ("Working Capital") of
not less than the amount set forth below opposite the applicable
period (it being understood that the period shall include the
ending date thereof):
Period Amount
From 06/30/96 to 07/27/96 $115,000,000
From 07/28/96 to 10/26/96 $110,000,000
From 10/27/96 to 01/25/97 $110,000,000
From 01/26/97 to 04/26/97 $125,000,000
From 04/27/97 to 07/26/97 $115,000,000
From 07/27/97 to 10/25/97 $110,000,000
From 10/26/97 to 01/31/98 $110,000,000
From 02/01/98 to 05/02/98 $125,000,000
From 05/03/98 to 08/01/98 $115,000,000
and (ii) a ratio of current assets to current liabilities, in
each case, as determined in accordance with generally accepted
accounting principles, of not less than the ratios set forth
below opposite the applicable period (it being understood that
the period shall include the ending date thereof):
Period Ratio
From 06/30/96 to 07/27/96 1.25 to 1.0
From 07/28/96 to 10/26/96 1.15 to 1.0
From 10/27/96 to 01/25/97 1.15 to 1.0
From 01/26/97 to 04/26/97 1.30 to 1.0
From 04/27/97 to 07/26/97 1.30 to 1.0
From 07/27/97 to 10/25/97 1.15 to 1.0
From 10/26/97 to 01/31/98 1.15 to 1.0
From 02/01/98 to 05/02/98 1.30 to 1.0
From 05/03/98 to 08/01/98 1.30 to 1.0
(e) Net Worth and Debt. Maintain on a consolidated basis
at all times (i) a Consolidated Tangible Net Worth (as
hereinafter defined) of not less than the higher of
(a) $155,000,000, as of April 30, 1995, plus 75% of Consolidated
Net Income, (without taking into account any losses) on a
cumulative basis for each quarter ending after April 30, 1995 and
(b) the amount set forth below opposite the applicable period (it
being understood that the period shall include the ending date
thereof):
Period Amount
From 06/30/96 to 07/27/96 $185,000,000
From 07/28/96 to 10/26/96 $200,000,000
From 10/27/96 to 01/25/97 $210,000,000
From 01/26/97 to 04/26/97 $220,000,000
From 04/27/97 to 07/26/97 $230,000,000
From 07/27/97 to 10/25/97 $240,000,000
From 10/26/97 to 01/31/98 $250,000,000
From 02/01/98 to 05/02/98 $260,000,000
From 05/03/98 to 08/01/98 $270,000,000
and (ii) a ratio of Debt to Consolidated Tangible Net Worth of
not more than 2.50 to 1.00.
(f) Total Indebtedness to Total Capitalization Ratio.
Permit at any time the aggregate outstanding principal amount of
Consolidated Total Indebtedness to exceed at any time during the
period specified below the percentage of Consolidated Total
Capitalization set forth opposite such applicable period (it
being understood that the period shall include the ending date
thereof):
Period Percentage
From 06/30/96 to 07/27/96 71.0%
From 07/28/96 to 10/26/96 73.0%
From 10/27/96 to 01/25/97 73.0%
From 01/26/97 to 04/26/97 66.0%
From 04/27/97 to 07/26/97 67.0%
From 07/27/97 to 10/25/97 68.0%
From 10/26/97 to 01/31/98 68.0%
From 02/01/98 to 05/02/98 63.0%
From 05/03/98 to 08/01/98 63.0%
; provided, however, that if during the 30-day period prior to
the date of determination the average spot price quoted in the
Wall Street Journal for Iowa/South Minnesota hogs plus $3.00 (or
such other amount which is the average prevailing carcass merit
premium paid by the Borrowers during such period) equals or
exceeds $55 per hundredweight, the percentages shall be equal to
the following for such applicable period:
From 01/26/97 to 04/26/97 69.0%
From 04/27/97 to 07/26/97 69.0%
(h) Fixed Charge Coverage. Maintain at all times a Fixed
Charge Coverage of not less than the amount set forth below for
the consecutive four quarter period ending at the date set forth
opposite such amount:
Quarter Ending Coverage
July 28, 1996 .60
October 27, 1996 .70
January 26, 1997 .85
April 27, 1997 .95
July 27, 1997 and thereafter 1.00
(k) Capital Expenditures. Not incur on a consolidated basis
with its subsidiaries, Capital Expenditures in excess of the amount
for the period set forth below on a cumulative basis for each fiscal
year:
Quarter Ending Amount
July 28, 1996 $25,000,000
October 27, 1996 $35,000,000
January 26, 1997 Permitted Amount
April 27, 1997 Permitted Amount
July 27, 1997 $30,000,000
October 25, 1997 $40,000,000
January 31, 1998 Permitted Amount
May 2, 1998 Permitted Amount
August 1, 1998 $25,000,000
"Permitted Amount" shall mean an amount equal to the sum
(i) year-to-date after tax income plus (ii) year-to-date
depreciation plus (iii) year-to-date amortization, all as
calculated in accordance with generally accepted accounting
principles.
(c) Amendment to Schedule 6(f). Schedule 6(f) to the Guaranty is
deleted in its entirety and the Schedule 6.01(f) attached hereto is
substituted therefor.
ARTICLE II
CONDITIONS PRECEDENT
SECTION 2.1. Conditions of Effectiveness. This Amendment shall
become effective when, and only when, (a) the Agent shall have received
counterparts of this Amendment executed by each of the parties hereto, (b)
all accrued but unpaid interest, fees and expenses under the terms of the
Credit Agreement, as amended hereby, and all outstanding fees and expenses
of counsel to the Agent, shall have been paid in full to the extent due and
payable after giving effect to this Amendment, (c) the representations and
warranties contained herein shall be true on and as of the date of the
effectiveness of this Amendment (the "Effective Date"), there shall exist
on the Effective Date, no Event of Default or Default and there shall exist
no material adverse change in the financial condition, business operation
or prospects of the Guarantor or its Subsidiaries since April 28, 1996, and
(d) the Agent additionally shall have received all of the following
documents, each (unless otherwise indicated) being dated the date of
receipt thereof by the Agent (which date shall be the same for all such
documents), in form and substance satisfactory to the Agent and the Banks:
(i) Copies of (A) all documents evidencing all requisite
corporate action of the Guarantor (including any and all resolutions
of the Board of Directors of the Guarantor) authorizing the execution,
delivery and performance of this Amendment and the matters
contemplated hereby and thereby and (B) all documents evidencing all
Governmental Approvals, if any, with respect to this Amendment and the
matters contemplated hereby and thereby.
(ii) Duly executed copies of the Amendment No. 1 to Guaranty, in
substantially the form of Exhibit A hereto;
(iii) A good standing certificate issued by the Secretary of
State of its incorporation and certificates of qualification to do
business as a foreign corporation for the Guarantor issued by the
Secretary of State of each State in which the Guarantor is required by
law to be qualified to do business, each dated as of a date not more
than thirty days prior to the date hereof.
(iv) A certificate of the Secretary or an Assistant Secretary of
the Guarantor certifying the names and true signatures of the officers
authorized to sign this Amendment on behalf of the Guarantor and any
other documents to be delivered by the Guarantor hereunder.
(v) A favorable opinion of McGuire, Woods, Boothe & Battle, in
form and substance satisfactory to the Agent and the Banks.
(vi) A true, correct and duly executed copy of each Note Purchase
Agreement, each dated July 15, 1996 between the Guarantor and each of
the noteholders (the "Note Agreements") including all schedules and
exhibits thereto and side letters, if any, effecting the terms thereof
or otherwise delivered in connection therewith, together with all
amendments and waivers thereto and any certificates executed in
connection therewith accompanied by an officer's certificate dated the
closing date to such effect. The transactions described in the Note
Agreements which are to occur prior to the closing date shall have
been consummated in all material respects in accordance with the terms
and provisions thereof, and no material provision of the Note
Agreements shall have been amended, supplemented or otherwise modified
or waived without the prior written consent of the Banks.
(vii) An Officer's Certificate, dated the Effective Date, to
the effect that the representations and warranties contained herein
shall be true on and as of the Effective Date; there shall exist on
the Effective Date, no Event of Default or Default; and there shall
exist no material adverse change in the financial condition, business
operation or prospects of the Guarantor or its Subsidiaries since
April 28, 1996; and
(viii) Such other documents, instruments, approvals (and, if
required by the Agent, certified duplicates of executed copies
thereof) or opinions as the Agent or any Bank may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. (a) The Guarantor
hereby repeats and confirms each of the representations and warranties made
by it in the Guaranty, as amended hereby, as though made on and as of the
date hereof, with each reference therein to "this Agreement", the "Loan
Documents", "hereof", "hereunder", "thereof", "thereunder" and words of
like import being deemed to be a reference to the Guaranty and the Loan
Documents, in each case as amended hereby.
(b) The Guarantor represents and warrants as follows:
(i) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation and is duly qualified to do business in, and is in good
standing in, all other jurisdictions where the nature of its business
or the nature of property owned or used by it makes such qualification
necessary.
(ii) The execution, delivery and performance by the
Guarantor of this Amendment are within its corporate powers, have been
duly authorized by all necessary corporate action and do not
contravene (A) the Guarantor's charter or by-laws, (B) law or (C) any
legal or contractual restriction binding on or affecting the
Guarantor; and such execution, delivery and performance do not or will
not result in or require the creation of any Lien upon or with respect
to any of its properties.
(iii) No Governmental Approval is required for the due
execution, delivery and performance by the Guarantor of this
Amendment, except for such Governmental Approvals as have been duly
obtained or made and which are in full force and effect on the date
hereof and not subject to appeal.
(iv) This Amendment constitutes the legal, valid and binding
obligations of the Guarantor enforceable against the Guarantor in
accordance with its terms; subject to the qualifications, however,
that the enforcement of the rights and remedies herein is subject to
bankruptcy and other similar laws of general application affecting
rights and remedies of creditors and that the remedy of specific
performance or of injunctive relief is subject to the discretion of
the court before which any proceedings therefor may be brought.
(v) There are no pending or threatened actions, suits or
proceedings affecting the Guarantor or the properties of the Guarantor
or any of its Subsidiaries before any court, governmental agency or
arbitrator, that may, if adversely determined, materially adversely
affect the financial condition, properties, business, operations or
prospects of the Guarantor and it Subsidiaries, considered as a whole,
or affect the legality, validity or enforceability of the Guaranty or
any other Loan Document, in each case as amended by this Amendment.
ARTICLE IV
WAIVER OF COVENANTS
SECTION 4.1. Waiver. Subject to the effectiveness of this Amendment
Agreement, each of the Banks, pursuant to the request of the Guarantor,
hereby waives solely with respect to the period commencing June 30, 1996
and ending on the Effective Date hereof, the covenants contained in
Section 6(d) of the Guaranty and each of the Banks hereby waives Default
Interest for such period.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Reference to and Effect on the Operative Documents. (a)
Upon the effectiveness of this Amendment, on and after the date hereof each
reference in the Guaranty to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Guaranty and each reference in the
other Loan Documents to "the Guaranty", "thereunder", "thereof" or words of
like import referring to the Guaranty, shall mean and be a reference to the
Guaranty, as amended hereby.
(b) Except as specifically amended above, the Credit Agreement, the
Guaranty and all other Loan Documents, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
Without limiting the generality of the foregoing, the Security Documents
and all of the Collateral described therein do and shall continue to secure
the payment of all obligations of the Borrowers under the Credit Agreement
and the other Loan Documents.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Bank or the Agent under any of the Loan Documents,
nor constitute a waiver of any provision of any of the Loan Documents.
SECTION 5.2. Costs and Expenses. The Guarantor agrees to pay on
demand all costs and expenses incurred by the Agent and the Banks in
connection with the preparation, execution and delivery of this Amendment
and the other documents to be delivered hereunder and thereunder,
including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent and the Banks with respect thereto and
with respect to advising the Agent and the Banks as to their rights and
responsibilities under this Amendment. The Guarantor further agrees to pay
on demand all costs and expenses, if any (including, without limitation,
reasonable counsel fees and expenses of counsel), incurred by the Agent and
the Banks in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Amendment and the other documents
to be delivered hereunder and thereunder, including, without limitation,
counsel fees and expenses in connection with the enforcement of rights
under this Section 6.02.
SECTION 5.3. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.
SECTION 5.4. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
[Signatures Commence on Next Page.]
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of
the date first above written.
SMITHFIELD FOODS, INC.
By /s/ Aaron D. Trub
Title: Vice President, Secretary &
Treasurer
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK,
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH,
individually and as Agent
By /s/ Joanna M. Solowski
Authorized Officer
By /s/ Barbara Hyland
Authorized Officer
NATIONSBANK, N.A.
By /s/ Michael R. Williams
Title: Senior Vice President
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK,
CAYMAN ISLANDS BRANCH
By /s/ [SIGNATURE ILLEGIBLE]
Title: Senior Vice President
S-2
By /s/ [SIGNATURE ILLEGIBLE]
Title: Assistant Vice President
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By /s/ [SIGNATURE ILLEGIBLE]
Title: Joint General Manager
SUNTRUST BANK, ATLANTA
By /s/ Robert V. Honeycutt
Title: Assistant Vice President
By /s/ Gregory L. Cannon
Title: Vice President
CAISSE NATIONALE DE
CREDIT AGRICOLE
By_________________________________
Title:
BOATMEN'S FIRST NATIONAL
BANK OF KANSAS CITY
By /s/ Ellen M. Isch
Title: Vice President
S-3
FARM CREDIT SERVICES OF
THE MIDLANDS, PCA
By /s/ R. Cleary
Title: Vice President
ACCEPTED AND AGREED:
GWALTNEY OF SMITHFIELD, LTD.
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
JOHN MORRELL & CO.
By /s/ Aaron D. Trub
Title: Secretary
THE SMITHFIELD PACKING
COMPANY, INCORPORATED
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
PATRICK CUDAHY INCORPORATED
By /s/ Aaron D. Trub
Title: Secretary
S-4
BROWN'S OF CAROLINA, INC.
By /s/ Aaron D. Trub
Title: Secretary and Treasurer
EXHIBIT 4.7
SMITHFIELD FOODS, INC.
NOTE PURCHASE AGREEMENT
Dated as of July 15, 1996
$2,825,000 6.24% Series A Senior Secured Notes Due November 1, 1998
$9,852,942 8.41% Series B Senior Secured Notes Due August 1, 2006
$40,000,000 8.34% Series C Senior Secured Notes Due August 1, 2003
$9,000,000 9.80% Series D Senior Secured Notes Due August 1, 2003
$9,250,000 10.75% Series E Senior Secured Notes Due August 1, 2005
$100,000,000 8.52% Series F Senior Secured Notes Due August 1, 2006
$14,000,000 9.85% Series G Senior Secured Notes Due November 1, 2006
$14,779,412 8.41% Series H Senior Secured Note Due August 1, 2004
Guarantied By:
Gwaltney of Smithfield, Ltd.
John Morrell & Co.
The Smithfield Packing Company, Incorporated
SFFC, Inc.
Patrick Cudahy Incorporated
Brown's of Carolina, Inc.
<PAGE>
SMITHFIELD FOODS, INC.
NOTE PURCHASE AGREEMENT
$2,825,000 6.24% Series A Senior Secured Notes Due November 1, 1998
$9,852,942 8.41% Series B Senior Secured Notes Due August 1, 2006
$40,000,000 8.34% Series C Senior Secured Notes Due August 1, 2003
$9,000,000 9.80% Series D Senior Secured Notes Due August 1, 2003
$9,250,000 10.75% Series E Senior Secured Notes Due August 1, 2005
$100,000,000 8.52% Series F Senior Secured Notes Due August 1, 2006
$14,000,000 9.85% Series G Senior Secured Notes Due November 1, 2006
$14,779,412 8.41% Series H Senior Secured Notes Due August 1, 2004
Dated as of July 15, 1996
[Separately addressed to each of the
Purchasers listed on Annex 1]
Ladies and Gentlemen:
SMITHFIELD FOODS, INC., a Delaware corporation (together with its
successors and assigns, the "Company"), hereby agrees with you as follows:
1. PURCHASE AND SALE OF NOTES
1.1 Background.
(a) Existing 9.80% Notes. The Smithfield Packing Company, Incorporated
(together with its successors and assigns, "Packing"), a Wholly-Owned
Subsidiary, entered into that certain Note Agreement, dated as of July 29,
1988 (as amended, the "9.80% Note Agreement") with John Hancock Mutual Life
Insurance Company ("John Hancock"), pursuant to which Packing issued and
sold to John Hancock an aggregate principal amount of $15,000,000 of its
9.80% Secured Notes Due August 1, 2003 (as amended, the "Existing 9.80%
Notes").
(b) Existing 10.75% Notes. Packing entered into that certain Note
Agreement, dated as of August 6, 1990 (as amended, the "10.75% Note
Agreement") with John Hancock, pursuant to which Packing issued and sold to
John Hancock an aggregate principal amount of $15,000,000 of its 10.75%
Secured Notes Due August 1, 2005 (as amended, the "Existing 10.75% Notes").
(c) Existing 9.85% Notes. Gwaltney of Smithfield, Ltd. (together with
its successors and assigns, "Gwaltney"), a Wholly-Owned Subsidiary, entered
into that certain Note Agreement, dated as of October 31, 1991 (as amended,
the "9.85% Note Agreement") with John Hancock, pursuant to which Gwaltney
issued and sold to John Hancock an aggregate principal amount of
$20,000,000 of its 9.85% Secured Notes Due November 1, 2006 (as amended,
the "Existing 9.85% Notes").
(d) Existing 6.24% Notes. Gwaltney entered into that certain Note
Agreement, dated as of August 10, 1983 (as amended, the "12.75% Note
Agreement") with John Hancock, pursuant to which Gwaltney issued and sold
to John Hancock an aggregate principal amount of $12,000,000 of its 12.75%
Secured Notes Due August 1, 1994. Pursuant to an Amendment Agreement, dated
as of November 1, 1993, among Gwaltney, the Company and John Hancock,
Gwaltney exchanged its 12.75% Secured Notes Due August 1, 1994 for an equal
aggregate principal amount of its 6.24% Senior Secured Notes Due November
1, 1998 (as amended, the "Existing 6.24% Notes") (the 12.75% Note
Agreement, as amended by such Amendment Agreement, the "6.24% Note
Agreement").
(e) Existing 8.41% Notes. Carolina Food Processors, Inc. and the
Company entered into that certain Note Purchase Agreement, dated as of
January 15, 1993 (as amended, the "8.41% Note Agreement") with the
purchasers listed on Annex 1 thereto, pursuant to which Carolina Food
Processors, Inc. issued and sold to such purchasers an aggregate principal
amount of $25,000,000 of its 8.41% Senior Secured Notes Due February 1,
2013 (as amended, the "Existing 8.41% Notes"). Carolina Food Processors,
Inc. was merged into Packing, effective May 1, 1994, and pursuant to an
Assumption, Waiver and Amendment Agreement, dated as of May 1, 1994, among
the Company, Packing and the holders listed on Annex 1 thereto, Packing
assumed all of the liabilities, obligations and undertakings of Carolina
Food Processors, Inc. provided for in the 8.41% Note Agreement and the
Existing 8.41% Notes.
(f) Collective Definitions. The 9.80% Note Agreement, the 10.75% Note
Agreement, the 9.85% Note Agreement, the 6.24% Note Agreement and the 8.41%
Note Agreement are collectively referred to herein as the "Existing Note
Agreements". The Existing 9.80% Notes, the Existing 10.75% Notes, the
Existing 9.85% Notes, the Existing 6.24% Notes and the Existing 8.41% Notes
are collectively referred to herein as the "Existing Notes." The holders of
the Existing Notes are collectively referred to herein as the "Existing
Noteholders."
1.2 Exchange of Existing Notes.
Packing, as a Wholly-Owned Subsidiary and as the obligor with respect to
the Existing 9.80% Notes, the Existing 10.75% Notes and the Existing 8.41%
Notes, and Gwaltney, as a Wholly-Owned Subsidiary and as the obligor with
respect to the Existing 9.85% Notes and the Existing 6.24% Notes, and the
Company, as the guarantor of the Existing Notes, have requested that the
Existing Noteholders consent to the exchange of the Existing Notes for
newly-issued promissory notes of the Company, such exchanged promissory notes of
the Company, in each case, to be issued in the same principal amount as the
exchanged Existing Notes, to bear interest at the same rate of interest as the
exchanged Existing Notes and to have substantially the same payment terms as the
Existing Notes, all as further set forth herein. The Existing Noteholders, by
their execution and delivery of one or more Note Purchase Agreements and their
tendering of the Existing Notes held by them in exchange for newly-issued
promissory notes of the Company, as set forth herein, consent to the exchange of
the Existing Notes for the newly-issued promissory notes of the Company, the
cancellation of the Existing Notes and the termination of the Existing Note
Purchase Agreements.
1.3 Issuance of Notes.
The Company will authorize the issuance and sale of
(a) $2,825,000 in aggregate principal amount of its six and
twenty-four one-hundredths percent (6.24%) Series A Senior Secured Notes
Due November 1, 1998 (as they may be amended, restated or otherwise
modified from time to time, the "Series A Notes," such term to include each
Series A Note delivered from time to time in accordance with any of the
Note Purchase Agreements). The Series A Notes shall be substantially in the
form of Exhibit A1 and shall have the terms as herein and therein provided;
(b) $9,852,942 in aggregate principal amount of its eight and
forty-one one-hundredths percent (8.41%) Series B Senior Secured Notes Due
August 1, 2006 (as they may be amended, restated or otherwise modified from
time to time, the "Series B Notes," such term to include each Series B Note
delivered from time to time in accordance with any of the Note Purchase
Agreements). The Series B Notes shall be substantially in the form of
Exhibit A2 and shall have the terms as herein and therein provided;
(c) $40,000,000 in aggregate principal amount of its eight and
thirty-four one-hundredths percent (8.34%) Series C Senior Secured Notes
Due August 1, 2003 (as they may be amended, restated or otherwise modified
from time to time, the "Series C Notes," such term to include each Series C
Note delivered from time to time in accordance with any of the Note
Purchase Agreements). The Series C Notes shall be substantially in the form
of Exhibit A3 and shall have the terms as herein and therein provided;
(d) $9,000,000 in aggregate principal amount of its nine and eighty
one-hundredths percent (9.80%) Series D Senior Secured Notes Due August 1,
2003 (as they may be amended, restated or otherwise modified from time to
time, the "Series D Notes," such term to include each Series D Note
delivered from time to time in accordance with any of the Note Purchase
Agreements). The Series D Notes shall be substantially in the form of
Exhibit A4 and shall have the terms as herein and therein provided;
(e) $9,250,000 in aggregate principal amount of its ten and seventy
five one-hundredths percent (10.75%) Series E Senior Secured Notes Due
August 1, 2005 (as they may be amended, restated or otherwise modified from
time to time, the "Series E Notes," such term to include each Series E Note
delivered from time to time in accordance with any of the Note Purchase
Agreements). The Series E Notes shall be substantially in the form of
Exhibit A5 and shall have the terms as herein and therein provided;
(f) $100,000,000 in aggregate principal amount of its eight and
fifty-two one-hundredths percent (8.52%) Series F Senior Secured Notes Due
August 1, 2006 (as they may be amended, restated or otherwise modified from
time to time, the "Series F Notes," such term to include each Series F Note
delivered from time to time in accordance with any of the Note Purchase
Agreements). The Series F Notes shall be substantially in the form of
Exhibit A6 and shall have the terms as herein and therein provided;
(g) $14,000,000 in aggregate principal amount of its nine and
eighty-five one-hundredths percent (9.85%) Series G Senior Secured Notes
Due November 1, 2006 (as they may be amended, restated or otherwise
modified from time to time, the "Series G Notes," such term to include each
Series G Note delivered from time to time in accordance with any of the
Note Purchase Agreements). The Series G Notes shall be substantially in the
form of Exhibit A7 and shall have the terms as herein and therein provided;
and
(h) $14,779,412 in aggregate principal amount of its eight and
forty-one one-hundredths percent (8.41%) Series H Senior Secured Notes Due
August 1, 2004 (as they may be amended, restated or otherwise modified from
time to time, the "Series H Notes," such term to include each Series H Note
delivered from time to time in accordance with any of the Note Purchase
Agreements). The Series H Notes shall be substantially in the form of
Exhibit A8 and shall have the terms as herein and therein provided.
The Series A Notes, the Series B Notes, the Series C Notes, the Series D Notes,
the Series E Notes, the Series F Notes, the Series G Notes and the Series H
Notes are herein referred to, individually, as a "Note," and collectively, as
the "Notes".
1.4 The Closing.
(a) Purchase and Sale of Notes. The Company hereby agrees to sell to
you and you hereby agree to purchase from the Company, in accordance with
the provisions hereof, the aggregate principal amount of Notes set forth
below your name on Annex 1, of the Series set forth below your name, at a
price equal to one hundred percent (100%) of the principal amount thereof.
(b) The Closing. The closing (the "Closing") of the Company's sale of
Notes will be held on July 31, 1996 (the "Closing Date") at 10:00 a.m.,
eastern time, at the office of Hebb & Gitlin. At the Closing, the Company
will deliver to you one or more Notes (as set forth below your name on
Annex 1), of the Series and in the denominations indicated on Annex 1, in
the aggregate principal amount of your purchase, dated the Closing Date and
payable to you or payable as indicated on Annex 1, against payment as
follows:
(i) Series A Notes. If Series A Notes appear below your name on
Annex 1, then you shall pay for such Series A Notes by tendering to
the Company at the Closing Existing 6.24% Notes in an aggregate
principal amount equal to the aggregate principal amount of such
Series A Notes set forth below your name on Annex 1;
(ii) Series B Notes. If Series B Notes appear below your name on
Annex 1, then you shall pay for such Series B Notes by tendering to
the Company at the Closing Existing 8.41% Notes in an aggregate
principal amount equal to the aggregate principal amount of such
Series B Notes set forth below your name on Annex 1;
(iii) Series C Notes. If Series C Notes appear below your name on
Annex 1, then you shall pay for such Series C Notes by federal funds
wire transfer in immediately available funds of the purchase price
thereof as directed by the Company on Annex 2;
(iv) Series D Notes. If Series D Notes appear below your name on
Annex 1, then you shall pay for such Series D Notes by tendering to
the Company at the Closing Existing 9.80% Notes in an aggregate
principal amount equal to the aggregate principal amount of such
Series D Notes set forth below your name on Annex 1;
(v) Series E Notes. If Series E Notes appear below your name on
Annex 1, then you shall pay for such Series E Notes by tendering to
the Company at the Closing Existing 10.75% Notes in an aggregate
principal amount equal to the aggregate principal amount of such
Series E Notes set forth below your name on Annex 1;
(vi) Series F Notes. If Series F Notes appear below your name on
Annex 1, then you shall pay for such Series F Notes by federal funds
wire transfer in immediately available funds of the purchase price
thereof as directed by the Company on Annex 2;
(vii) Series G Notes. If Series G Notes appear below your name on
Annex 1, then you shall pay for such Series G Notes by tendering to
the Company at the Closing Existing 9.85% Notes in an aggregate
principal amount equal to the aggregate principal amount of such
Series G Notes set forth below your name on Annex 1; and
(viii) Series H Notes. If Series H Notes appear below your name
on Annex 1, then you shall pay for such Series H Notes by tendering to
the Company at the Closing Existing 8.41% Notes in an aggregate
principal amount equal to the aggregate principal amount of such
Series H Notes set forth below your name on Annex 1.
(c) Other Purchasers. Contemporaneously with the execution and
delivery hereof, the Company is entering into a separate Note Purchase
Agreement identical (except for the name, address and signature of the
purchaser) hereto (this Agreement and such other separate Note Purchase
Agreements, collectively, as may be amended from time to time, the "Note
Purchase Agreements") with each other purchaser (individually, an "Other
Purchaser," and collectively, the "Other Purchasers") listed on Annex 1,
providing for the sale to each Other Purchaser of Notes in the aggregate
principal amount set forth below its name on such Annex. The sales of the
Notes to you and to each Other Purchaser are to be separate sales.
1.5 Purchase of Notes.
(a) Purchase for Investment. You represent to the Company that
(i) you are purchasing the Notes for investment for your own
account or for the account of an insurance company, for a separate
account (as such term is used in Rule 144A, 17 C.F.R.
(SECTION)230.144A), for the account of another for which you have
sole investment discretion or for a trust of which you are the
trustee, and
(ii) you are not purchasing the Notes with a view to or for sale
in connection with any distribution thereof within the meaning of the
Securities Act;
provided, that this representation shall not be deemed to prejudice your
right to
(x) sell or otherwise dispose of all or any part of the Notes
in compliance with the Securities Act or the rules and regulations
thereunder; and
(y) have control over the disposition of all of your assets to
the fullest extent permitted or required by any applicable law.
(b) ERISA. You represent that:
(i) you are acquiring the Notes for your own account with funds
from your "insurance company general account" (as defined in
Department of Labor Prohibited Transaction Exemption 95-60 (60 FR
35925, July 12, 1995)) or for the insurance company general account of
another insurance company and that there is no "employee benefit plan"
(as defined in section 3 of ERISA and section 4975(e)(1) of the IRC,
treating as a single plan all plans maintained by the same employer or
employee organization) with respect to which the amount of the general
account reserves and liabilities of all contracts held by or on behalf
of such employee benefit plan exceed ten percent (10%) of the total
reserves and liabilities of such general account (exclusive of
separate account liabilities) plus surplus, as set forth in the NAIC
Annual Statement filed with your state of domicile; or
(ii) if any part of the funds being used by you to purchase the
Notes shall come from assets of an employee benefit plan or plan,
that:
(A) (1) if such funds are attributable to a "separate
account" (as defined in section 3 of ERISA), then
(aa) all requirements for an exemption under
Department of Labor Prohibited Transaction Class
Exemption 90-1, issued January 29, 1990 are met with
respect to the use of such funds to purchase the
Notes, or
(bb) the employee benefit plans with an interest
in such separate account have been identified in a
writing delivered by you to the Company;
(2) if such funds are attributable to a "separate
account" (as defined in section 3 of ERISA) that is
maintained solely in connection with fixed contractual
obligations of an insurance company, any amounts payable, or
credited, to any employee benefit plan having an interest in
such account and to any participant or beneficiary of such
plan (including an annuitant) are not affected in any manner
by the investment performance of the separate account; or
(3) if such funds are attributable to an investment
fund managed by a qualified professional asset manager (as
such terms are defined in Part V of Department of Labor
Prohibited Transaction Class Exemption 84-14, issued March
13, 1984), all requirements for an exemption under such
Exemption are met with respect to the use of such funds to
purchase the Notes; or
(B) such employee benefit plan is excluded from the
provisions of section 406 of ERISA by virtue of section 4(b) of
ERISA; or
(iii) the funds being used by you to purchase the Notes do
not include assets of any employee benefit plan.
1.6 Failure To Deliver, Failure of Conditions.
If at the Closing the Company fails to tender to you the Notes to be
purchased by you thereat (whether such purchase is designated to be by federal
funds wire transfer or by delivery of Existing Notes), or if the conditions
specified in Section 3 to be fulfilled at the Closing have not been fulfilled,
you may thereupon elect to be relieved of all further obligations hereunder,
and, with respect to the Existing Notes and without any action on the part of
any Person, the Existing Note Agreements, the Existing Notes and all documents
and instruments delivered in connection therewith by the Company or any
Subsidiary shall continue to be in full force and effect and the Company and the
Subsidiaries party thereto shall continue to be obligated thereunder. Nothing in
this Section 1.6 shall operate to relieve the Company from any of its
obligations hereunder or to waive any of your rights against the Company.
1.7 Expenses.
(a) Generally. Whether or not the Notes are sold, the Company will
promptly (and in any event within thirty (30) days of receiving any
statement or invoice therefor) pay all fees, expenses and costs relating
hereto, including but not limited to:
(i) the cost of reproducing the Financing Documents;
(ii) the fees and disbursements of your special counsel;
(iii) the fees and disbursements of the Security Trustee
and its counsel;
(iv) the fees, expenses and costs incurred complying with each
of the conditions to closing set forth in Section 3;
(v) all other expenses incurred in connection with the
transactions contemplated by the Financing Documents, including, but
not limited to, all charges for title examinations, mortgagee title
insurance premiums, surveys, appraisals, environmental audits,
recording and filing fees, taxes and expenses; and
(vi) the expenses relating to the consideration, negotiation,
preparation or execution of any amendments, waivers or consents
pursuant to the provisions hereof and of the other Financing
Documents, whether or not any such amendments, waivers or consents are
executed.
(b) Counsel. Without limiting the generality of the foregoing, it is
agreed and understood that the Company will pay, at the Closing, the
statement for fees and disbursements of your special counsel presented at
the Closing and the Company will also pay upon receipt of any statement
thereof, each additional statement for fees and disbursements of your
special counsel rendered after the Closing in connection with the issuance
of the Notes or the matters referred to in Section 1.7(a)(vi).
(c) Survival. The obligations of the Company under this Section 1.7
shall survive the payment or prepayment of the Notes and the termination
hereof.
2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to purchase the Notes listed
on Annex 1 below your name, the Company warrants and represents, as of the
Closing Date, as follows:
2.1 Nature of Business.
The Placement Memorandum (a copy of which previously has been delivered to
you) correctly describes the general nature of the business and principal
Properties of the Company and the Subsidiaries as of the Closing Date.
2.2 Financial Statements; Debt; Material Adverse Change.
(a) Financial Statements. The Company has provided you with the
financial statements described in Part 2.2(a) of Annex 3. All such
financial statements have been prepared in accordance with GAAP
consistently applied and present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
subsidiaries as of such dates and the results of their operations and cash
flows for the periods specified therein. Except as set forth on Part 2.2(a)
of Annex 3, all Subsidiaries were subsidiaries during all of the periods
covered by such financial statements.
(b) Debt. Part 2.2(b) of Annex 3 lists all Debt of the Company and the
Subsidiaries as of the Closing Date (prior to giving effect to the
transactions contemplated to occur on the Closing Date) which Debt is of an
outstanding amount, in each case, in excess of $50,000, and provides the
following information with respect to each item of such Debt:
(i) the obligor in respect thereof,
(ii) the holder thereof,
(iii) the outstanding amount thereof and the interest rate
or rates applicable thereto,
(iv) the portion thereof classified as current in accordance
with GAAP,
(v) the final maturity thereof, and
(vi) the collateral securing such Debt, if any.
The aggregate amount of Debt of the Company and the Subsidiaries as of the
Closing Date that is not set forth on Part 2.2(b) of Annex 3 does not
exceed $2,500,000.
(c) Material Adverse Change. Since April 28, 1996 there has been no
change in the business, prospects, profits, Properties or condition
(financial or otherwise) of the Company, except changes that, in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(d) Summary and Pro Forma Financial Information. All statements or
summaries of historical financial condition and performance of the Company
and the Subsidiaries included in the Placement Memorandum have been derived
from financial statements and information prepared on a basis of accounting
consistent with GAAP and with the accounting principles currently used by
the Company and the Subsidiaries, to the extent applicable, except as noted
therein. All pro forma information with respect to the Company and the
Subsidiaries included in the Placement Memorandum has been derived from
financial statements and information prepared on a basis of accounting
consistent with GAAP and with the accounting principles currently used by
the Company and the Subsidiaries, except as noted therein.
2.3 Subsidiaries and Affiliates.
Part 2.3 of Annex 3 states:
(a) the name of each of the Subsidiaries, its jurisdiction of
incorporation and the percentage of its Voting Stock owned by the
Company and each other Subsidiary; and
(b) the name of each of the Affiliates and the nature of the
affiliation.
Each of the Company and the Subsidiaries has good and marketable title to
all of the shares it purports to own of the stock of each Subsidiary, free and
clear in each case of any Lien. All such shares have been duly issued and are
fully paid and nonassessable. Esskay, Inc., formerly a Delaware corporation, all
of the capital stock of which was owned and held by the Company on April 30,
1996, was merged with or into Gwaltney after that date and prior to the Closing
Date, and Gwaltney is the successor corporation resulting from such merger.
2.4 Pending Litigation.
(a) Pending Litigation. There are no proceedings, actions or
investigations pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary in any court or before
any Governmental Authority or arbitration board or tribunal that, in the
aggregate for all such proceedings, actions and investigations, could
reasonably be expected to have a Material Adverse Effect.
(b) No Defaults. Neither the Company nor any Subsidiary is in default
with respect to any judgment, order, writ, injunction or decree of any
court, Governmental Authority, arbitration board or tribunal that, in the
aggregate for all such defaults, could reasonably be expected to have a
Material Adverse Effect.
2.5 Title to Properties; UCC Matters.
(a) Title to Properties. The Company and the Subsidiaries have valid
title to all of the Property reflected in the most recent audited
consolidated balance sheet referred to in Part 2.2(a) of Annex 3 (except as
sold or otherwise disposed of in the ordinary course of business), except
for such failures to have valid title as are immaterial in the context of
such balance sheet and that, in the aggregate for all such failures, could
not reasonably be expected to have a Material Adverse Effect.
(b) Leases. All leases necessary for the conduct of the business of
the Company and the Subsidiaries are valid and subsisting and are in full
force and effect, except for such failures to be valid and subsisting that,
in the aggregate for all such failures, could not reasonably be expected to
have a Material Adverse Effect.
(c) Liens. All Property of the Company and the Subsidiaries is
free from Liens not permitted by Section 6.13.
(d) UCC Matters. Part 2.5(d) of Annex 3 sets forth with respect
to the Company and each Guarantor:
(i) each name under which such Person conducts or has
conducted all or a portion of its business operations, and
(ii) the location of the principal executive office of each
such Person.
Neither the Company nor any Guarantor other than Morrell has changed its
name or the name under which it conducts its business operations within the
immediately preceding period of five (5) years. To the best of the
Company's knowledge, Morrell has not changed its name or the name under
which it conducts its business operations within the immediately preceding
period of five (5) years.
2.6 Patents, Trademarks, Licenses, etc.
Except as set forth on Part 2.6 of Annex 3, each of the Company and the
Subsidiaries owns, possesses or has the right to use all of the patents,
trademarks, service marks, trade names, copyrights and licenses, and rights with
respect thereto, necessary for the present and currently planned future conduct
of its business, without any known conflict with the rights of others. The
Trademark Subsidiaries own all such patents, trademarks, service marks, trade
names, copyrights and licenses. Part 2.6 of Annex 3 sets forth the identity of
each of the Trademark Subsidiaries on the Closing Date.
2.7 Taxes.
(a) Returns Filed; Taxes Paid. All tax returns required to be filed by
each of the Company and the Subsidiaries and any other Person with which
the Company or any Subsidiary files or has filed a consolidated return in
any jurisdiction have in fact been filed on a timely basis, and all taxes,
assessments, fees and other governmental charges upon each of the Company
and the Subsidiaries and any such Person, and upon any of their respective
Properties, income or franchises, that are due and payable have been paid.
All liabilities of the Company and the Subsidiaries with respect to federal
income taxes have been finally determined except with respect to the fiscal
years disclosed on Part 2.7 of Annex 3, which are the only fiscal years not
closed by the completion of an audit or the expiration of the statute of
limitations. There is currently in effect no tax sharing, tax allocation or
similar agreement providing for the manner in which tax payments (whether
in respect of federal or state income or other taxes) owing by the members
of the affiliated group of which the Company is the "common parent" (as
defined in section 1504 of the IRC) are allocated between any member of
such group and any Person other than the Company or a Subsidiary.
(b) Book Provisions Adequate.
(i) The amount of the liability for taxes reflected in the most
recent balance sheet referred to in Part 2.2(a) of Annex 3 is an
adequate provision for taxes as of the date of such balance sheet
(including, without limitation, any payment due pursuant to any tax
sharing agreement) as are or may become payable by any one or more of
the Company, any Subsidiary and the other Persons consolidated with
the Company in such financial statements in respect of all tax periods
ending on or prior to such dates.
(ii) Neither the Company nor any Subsidiary knows of any proposed
additional tax assessment against it or any such Person that is not
reflected in full in the most recent balance sheet referred to in Part
2.2(a) of Annex 3.
2.8 Full Disclosure.
The financial statements referred to in Part 2.2(a) of Annex 3 do not, nor
does any Financing Document, the Placement Memorandum or any written statement
furnished by or on behalf of the Company or any Subsidiary to you in connection
with the negotiation or the closing of the sale of the Notes, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein not misleading when viewed in the aggregate. There
is no fact that the Company has not disclosed to you in writing that has had or,
so far as the Company can now reasonably foresee, could reasonably be expected
to have a Material Adverse Effect.
2.9 Corporate Organization and Authority.
The Company and each Subsidiary:
(a) is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation;
(b) has all legal and corporate power and authority to own and
operate its Properties and to carry on its business as now conducted and
as presently proposed to be conducted;
(c) has all necessary licenses, certificates and permits to own and
operate its Properties and to carry on its business as now conducted and as
presently proposed to be conducted, except where the failure to have such
licenses, certificates and permits, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect; and
(d) has duly qualified or has been duly licensed, and is authorized to
do business and is in good standing, as a foreign corporation, in each
state in the United States of America and in each other jurisdiction where
the failure to be so qualified or licensed and authorized and in good
standing, in the aggregate for all such failures, could reasonably be
expected to have a Material Adverse Effect.
2.10 Restrictions on Company and Subsidiaries.
Neither the Company nor any Subsidiary:
(a) is a party to any contract or agreement, or subject to any
charter, bylaw or other corporate restriction that, in the aggregate for
all such contracts, agreements and corporate restrictions (assuming that
all such contracts and agreements are performed in accordance with their
respective terms) could reasonably be expected to have a Material Adverse
Effect;
(b) is a party to any contract or agreement that restricts the right
or ability of such corporation to incur Debt, other than this Agreement and
the agreements listed in Part 2.10(b) of Annex 3 (none of which restricts
the issuance and sale of the Notes or the performance of the Company
hereunder or under the Notes and none of which restricts the guaranty of
the Notes by any of the Guarantors under the Joint and Several Guaranty);
or
(c) has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its Property, whether now
owned or hereafter acquired, to be subject to a Lien not permitted by
Section 6.13.
2.11 Compliance with Law.
Neither the Company nor any Subsidiary:
(a) is in violation of any law, ordinance, governmental rule or
regulation to which it is subject (including, without limitation, those
relating to zoning and planning, building, subdivision, inland wetland and
environmental and hazardous waste disposal); or
(b) has failed to obtain any license, certificate, permit, franchise
or other governmental authorization necessary to the ownership of its
Property or to the conduct of its business (including, without limitation,
to the extent required, building, zoning, subdivision, traffic and
environmental approvals and certificates of occupancy);
which violations or failures to obtain, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
2.12 Pension Plans.
(a) Disclosure. Part 2.12(a) of Annex 3 identifies all ERISA
Affiliates and all "employee benefit plans" with respect to which the
Company or any "affiliate" of the Company is a "party-in-interest" or in
respect of which the Notes could constitute an "employer security"
("employee benefit plan" and "party-in-interest" have the meanings
specified in section 3 of ERISA and "affiliate" and "employer security"
have the meanings specified in section 407(d) of ERISA).
(b) Prohibited Transactions. The execution and delivery of this
Agreement and the issuance and sale of the Notes hereunder will not involve
any transaction that is subject to the prohibitions of section 406 of ERISA
or in connection with which a tax could be imposed pursuant to section
4975(c)(1)(A) through section 4975(D), inclusive, of the IRC. The
representation by the Company in the immediately preceding sentence is made
in reliance upon the representations in Section 1.5(b) as to the source of
funds used by you.
(c) Relationship of Vested Benefits to Pension Plan Assets. Except as
set forth on Part 2.12(c) of Annex 3, the present value of all benefits,
determined as of the most recent valuation date for such benefits (as
provided in Section 6.21(c)), vested under each Pension Plan does not
exceed the value of the assets of such Pension Plan allocable to such
vested benefits, determined as of the most recent valuation date (as
provided in Section 6.21(c)).
(d) ERISA Requirements. Each of the Company and the ERISA
Affiliates:
(i) has fulfilled all obligations under the minimum funding
standards of ERISA and the IRC with respect to each Pension Plan that
is not a Multiemployer Plan;
(ii) is in compliance in all material respects with all other
applicable provisions of ERISA and the IRC with respect to each
Pension Plan and each Multiemployer Plan; and
(iii) has not incurred any liability under Title IV of ERISA to
the PBGC (other than in respect of required insurance premiums, all of
which that are due having been paid), with respect to any Pension
Plan, any Multiemployer Plan or any trust established thereunder.
(e) Accumulated Funding Deficiency. Except as set forth in Part
2.12(e) of Annex 3, no accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the IRC), whether or not waived,
exists with respect to any Pension Plan.
(f) Reportable Events. No Pension Plan or trust created thereunder has
been terminated, and there have been no "reportable events" (as such term
is defined in section 4043 of ERISA), with respect to any Pension Plan or
trust created thereunder or with respect to any Multiemployer Plan, which
reportable event or events will or could result in the termination of such
Pension Plan or Multiemployer Plan and give rise to a liability of the
Company or any ERISA Affiliate in respect thereof.
(g) Multiemployer Plans. Other than as set forth on Part 2.12(g) of
Annex 3, neither the Company nor any ERISA Affiliate is an employer
required to contribute to any Multiemployer Plan. Neither the Company nor
any ERISA Affiliate has incurred, nor is expected to incur, any withdrawal
liability (that has not previously been fully satisfied) under ERISA with
respect to any Multiemployer Plan, the effect of which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect. No Multiemployer Plans have been terminated under section 4041A of
ERISA, have been placed in reorganization status under Title IV of ERISA,
or have been determined to be "insolvent" (as such term is defined in
section 4245 of ERISA).
(h) Multiple Employer Pension Plans. Neither the Company nor any ERISA
Affiliate is a "contributing sponsor" (as such term is defined in section
4001 of ERISA) in any Multiple Employer Pension Plan and neither the
Company nor any ERISA Affiliate has incurred (without fully satisfying the
same), or reasonably expects to incur, withdrawal liability in respect of
any Multiple Employer Pension Plan, which withdrawal liability could
reasonably be expected to have a Material Adverse Effect.
(i) Foreign Pension Plan. No Foreign Pension Plans presently
exist and neither the Company nor any Subsidiary has any present or
future obligations in respect of any Foreign Pension Plan.
2.13 Certain Laws.
The issuance and sale of the Notes, the execution and delivery of the Joint
and Several Guaranty, the incurrence of the Debt evidenced by the Notes and the
Joint and Several Guaranty, and the performance under the Financing Documents by
the Company and the Subsidiaries:
(a) is not subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as
amended, the Transportation Acts, as amended, or the Federal Power Act, as
amended, and
(b) does not violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.
2.14 Environmental Compliance.
(a) Compliance. Except as set forth in Part 2.14(a) of Annex 3,
neither the Company nor any Subsidiary is in violation of any Environmental
Protection Law in effect in any jurisdiction where it currently is doing
business or owns Property, except for such violations that, in the
aggregate for all such violations, could not reasonably be expected to have
a Material Adverse Effect.
(b) Liability. Except as set forth in Part 2.14(b) of Annex 3, neither
the Company nor any Subsidiary is subject to any liability under any
Environmental Protection Law that, in the aggregate for all such
liabilities, could reasonably be expected to have a Material Adverse
Effect.
(c) Notices. Except as set forth in Part 2.14(c) of Annex 3,
neither the Company nor any Subsidiary has received any:
(i) notice from any Governmental Authority by which any of its
currently or previously owned or leased Properties has been identified
in any manner by any Governmental Authority as a hazardous substance
disposal or removal site, "Super Fund" clean-up site, or other
clean-up site or candidate for removal or closure pursuant to any
Environmental Protection Law;
(ii) notice of any Lien arising under or in connection with any
Environmental Protection Law that has attached to any revenues of, or
to, any of its currently or previously owned or leased Properties; or
(iii) any communication from any Governmental Authority
concerning any action or omission by the Company or such Subsidiary in
connection with its currently or previously owned or leased Properties
resulting in the release of any Hazardous Substance or resulting in
any violation of any Environmental Protection Law;
in each case where the effect of which, in the aggregate for all such
notices and communications, could reasonably be expected to have a Material
Adverse Effect.
2.15 Sale is Legal and Authorized; Obligations are Enforceable.
(a) Sale is Legal and Authorized. Each of the issuance, sale and
delivery of the Notes by the Company, the execution and delivery of the
Financing Documents to which it is a party by the Company and each of the
Guarantors, and compliance by the Company and each of the Guarantors with
all of their respective obligations under the Financing Documents:
(i) is within the corporate powers of the Company and each of
the Guarantors;
(ii) is legal and does not conflict with, result in any breach in
any of the provisions of, constitute a default under, or result in the
creation of any Lien upon any Property of the Company or any
Subsidiary under the provisions of, any agreement, charter instrument,
bylaw or other instrument to which it is a party or by which it or any
of its Property may be bound; and
(iii) does not give rise to a right or option of any other Person
under any agreement or other instrument, which right or option could
reasonably be expected to have a Material Adverse Effect.
(b) Obligations are Enforceable. Each of the Financing Documents has
been duly authorized by all necessary action on the part of each Obligor
party thereto, has been executed and delivered by one or more duly
authorized officers of each Obligor party thereto and constitutes a legal,
valid and binding obligation of each Obligor party thereto, enforceable in
accordance with its terms, except that the enforceability of the Financing
Documents may be:
(i) limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium or other similar laws affecting
the enforceability of creditors' rights generally; and
(ii) subject to the availability of equitable remedies.
2.16 Governmental Consent.
Neither the nature of the Company or any Subsidiary, or of any of their
respective businesses or Properties, nor any relationship between the Company or
any Subsidiary and any other Person, nor any circumstance in connection with the
offer, issuance, sale or delivery of the Notes and the execution and delivery of
the Financing Documents, 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 Company or any Guarantor as a
condition to the execution and delivery of any Financing Document or the offer,
issuance, sale or delivery of the Notes.
2.17 Private Offering.
(a) Neither the Company, any Guarantor nor John Hancock (the only
Person assisting the Company in connection with the offering or sale of the
Notes, the Joint and Several Guaranty or any similar Security of the
Company or any Guarantor, other than employees of the Company) has offered
any of the Notes or the Joint and Several Guaranty or any similar Security
of the Company or any Guarantor for sale to, or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, other than not more than nine (9)
institutional investors (including the Purchasers), each of whom was
offered all or a portion of the Notes and the Joint and Several Guaranty at
private sale for investment. All fees due to John Hancock in respect of
such offering have been paid.
(b) Neither the Company nor any of the Subsidiaries, nor any agent
acting on behalf of any of them, has taken any action that would subject
the issuance or sale of the Notes or the Joint and Several Guaranty to the
registration provisions of section 5 of the Securities Act or to the
registration, qualification or other similar provisions of any securities
or "blue sky" law of any applicable jurisdiction.
2.18 No Defaults.
(a) The Notes. No event has occurred and no condition exists
that, upon the issuance of the Notes and the execution and delivery of
the Financing Documents, would constitute a Default or an Event of
Default.
(b) Charter Instruments, Other Agreements. Neither the Company nor any
Subsidiary is in violation in any respect of any term of any charter
instrument, bylaw or other constitutive document or instrument. Neither the
Company nor any Subsidiary is in violation in any respect of any term in
any agreement or other instrument to which it is a party or by which it or
any of its Property may be bound except for such violations that, in the
aggregate for all such violations, could not reasonably be expected to have
a Material Adverse Effect.
2.19 Use of Proceeds.
(a) Use of Proceeds. The Company will apply the proceeds from the sale
of the Notes for the purposes specified in Part 2.19(a) of Annex 3.
(b) Margin Securities. None of the transactions contemplated by the
Financing Documents (including, without limitation, the use of the proceeds
from the sale of the Notes) violates, will violate or will result in a
violation of section 7 of the Exchange Act, or any regulations issued
pursuant thereto, including, without limitation, Regulations G, T and X of
the Board of Governors of the United States of America Federal Reserve
System, 12 C.F.R., Chapter II. The Company does not intend to use the
proceeds of the sale of the Notes to own, carry or purchase, or refinance
borrowings that were used to own, carry or purchase, any Margin Security,
including Margin Securities originally issued by the Company or any
Subsidiary. The Financing Documents will not be secured by any Margin
Security, and no Notes are being sold on the basis of any such collateral.
(c) Absence of Foreign or Enemy Status. Neither the sale of the Notes
nor the use of proceeds from the sale thereof will result in a violation of
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended), or any ruling
issued thereunder or any enabling legislation or Presidential Executive
Order in connection therewith.
2.20 Appraisal of Collateral.
On the Closing Date, the ratio of the aggregate principal amount of the
Notes to the appraised value of the Property constituting the Fixed Asset
Collateral (as set forth in the appraisals delivered to you pursuant to Section
3.12) shall be less than or equal to 0.75:1.0.
2.21 Company and the Guarantors.
The Company and the Guarantors are operated as part of one consolidated
business entity and are directly dependent upon each other for and in connection
with their respective business activities and their respective financial
resources. The Company and each of the Guarantors will receive direct economic
and financial benefits from the Debt incurred under the Note Purchase Agreements
by the Company and the incurrence of such Debt is in the best interests of the
Company and each of the Guarantors.
2.22 Solvency.
The fair value of the business and assets of the Company and each Guarantor
will be in excess of the amount that will be required to pay its liabilities
(including, without limitation, contingent, subordinated, unmatured and
unliquidated liabilities on existing debts, as such liabilities may become
absolute and matured), in each case after giving effect to the transactions
contemplated by the Financing Documents. Neither the Company nor any Guarantor,
after giving effect to the transactions contemplated by the Financing Documents,
will be engaged in any business or transaction, or about to engage in any
business or transaction, for which such Person has unreasonably small assets or
capital (within the meaning of applicable law, including, without limitation,
Section 548 of the United States Bankruptcy Code), and neither the Company nor
any Guarantor has any intent to
(a) hinder, delay or defraud any entity to which it is, or will
become, on or after the Closing Date, indebted, or
(b) incur debts that would be beyond its ability to pay as they
mature.
2.23 True and Correct Copies.
The Company has delivered to you or your special counsel true and correct
copies of all Revolving Credit Agreements (including, without limitation, all
schedules and exhibits thereto and all agreements delivered in connection
therewith) in effect on the Closing Date.
3. CLOSING CONDITIONS
Your obligation to purchase and pay for the Notes to be delivered to you at
the Closing is subject to the following conditions precedent:
3.1 Opinions of Counsel.
You shall have received from
(a) McGuire, Woods, Battle & Boothe, counsel for the Company and
the Subsidiaries,
(b) Hebb & Gitlin, a Professional Corporation, your special
counsel,
(c) Shipman & Goodwin, counsel for the Security Trustee,
(d) Ward and Smith, P.A., North Carolina counsel for the Company
and the Subsidiaries, and
(e) Boyce, Murphy, McDowell & Greenfield, South Dakota counsel for
the Company and the Subsidiaries,
closing opinions, each dated as of the Closing Date, and substantially in
the forms set forth in Exhibit B1 through Exhibit B5, respectively, and as
to such other matters as you may reasonably request. The Company hereby
requests and directs its counsel named in the foregoing clause (a), clause
(d) and clause (e) to deliver such closing opinions to you and the Other
Purchasers. The Company hereby acknowledges that in purchasing the Notes
listed on Annex 1 below your name you will be relying on, among other
things, the closing opinions of such counsel for the Company.
3.2 Warranties and Representations True.
The warranties and representations contained in Section 2 shall be true on
the Closing Date with the same effect as though made on and as of that date.
3.3 No Defaults.
No "Default" or "Event of Default" (as such terms are defined in the
Existing Note Purchase Agreements) shall exist in respect of the Existing Notes
or the Existing Note Purchase Agreements.
3.4 Officers' Certificates.
You shall have received:
(a) a certificate dated the Closing Date and signed by the President
or a Vice-President and the Controller, the Treasurer or an Assistant
Treasurer of the Company, substantially in the form of Exhibit C1,
certifying that the conditions specified in Section 3.2, Section 3.3 and
Section 3.18 have been fulfilled and that no Default or Event of Default
exists on the Closing Date;
(b) separate certificates dated the Closing Date and signed by the
President or a Vice-President and the Controller, the Treasurer or an
Assistant Treasurer of each of Packing and Gwaltney, substantially in the
form of Exhibit C2, with respect to the matters set forth therein;
(c) a certificate dated the Closing Date and signed by the President
or a Vice-President and the Controller, the Treasurer or an Assistant
Treasurer of each of the Guarantors other than Packing and Gwaltney,
substantially in the form of Exhibit C3, with respect to the matters set
forth therein;
(d) a certificate dated the Closing Date and signed by the Secretary
or an Assistant Secretary of the Company, substantially in the form of
Exhibit D1, with respect to the matters set forth therein; and
(e) separate certificates dated the Closing Date and signed by the
Secretary or an Assistant Secretary of each the Guarantors, substantially
in the form of Exhibit D2, with respect to the matters set forth therein.
3.5 Legality.
The Notes shall on the Closing Date qualify as a legal investment for you
under applicable insurance law (without regard to any "basket" or "leeway"
provisions), and the acquisition thereof shall not subject you to any penalty or
other onerous condition pursuant to any such law or regulation, and you shall
have received such evidence as you may reasonably request to establish
compliance with this condition.
3.6 Private Placement Numbers.
The Company shall have obtained or caused to be obtained a private
placement number for each Series of Notes from the CUSIP Service Bureau of
Standard & Poor's and you shall have been informed of such private placement
numbers.
3.7 Other Purchasers.
None of the Other Purchasers shall have failed to execute and deliver a
Note Purchase Agreement or to accept delivery of or make payment for the Notes
to be purchased by it on the Closing Date.
3.8 Expenses.
All fees and disbursements required to be paid on or before the Closing
Date pursuant to Section 1.7 shall have been paid in full.
3.9 Joint and Several Guaranty.
Each of the Guarantors shall have executed and delivered to you a guaranty
agreement with respect to the Notes (as amended from time to time, the "Joint
and Several Guaranty"), in the form of Exhibit E.
3.10 Security Documents; Collateral.
(a) Trust Agreement. The Company and the Guarantors shall have
executed and delivered to the Security Trustee a trust agreement (as
amended from time to time, the "Trust Agreement"), in the form of Exhibit
F.
(b) Packing Deeds of Trust and Security Agreement. Packing shall
have executed and delivered to the Security Trustee:
(i) an Amended, Restated and Consolidated Deed of Trust, Security
Agreement and Assignment of Rents and Leases substantially in the form
of Exhibit G1 (the "Packing-Smithfield Deed of Trust"), securing
Packing's indebtedness and obligations under the Joint and Several
Guaranty with a first-priority deed of trust encumbering the
Packing-Smithfield Property;
(ii) an Amended and Restated Deed of Trust, Security Agreement
and Assignment of Rents and Leases substantially in the form of
Exhibit G2 (the "Packing-Bladen Deed of Trust"), securing Packing's
indebtedness and obligations under the Joint and Several Guaranty with
a first-priority deed of trust encumbering the Packing-Bladen
Property; and
(iii) a first-priority lien on and security interest in certain
personal property of Packing pursuant to a security agreement (as
amended from time to time, the "Packing Security Agreement"),
substantially in the form of Exhibit H.
(c) Gwaltney Deed of Trust and Security Agreement. Gwaltney shall
have executed and delivered to the Security Trustee:
(i) an Amended, Restated and Consolidated Deed of Trust, Security
Agreement and Assignment of Rents and Leases substantially in the form
of Exhibit G3 (the "Gwaltney-Smithfield Deed of Trust"), securing
Gwaltney's indebtedness and obligations under the Joint and Several
Guaranty with a first-priority deed of trust encumbering the
Gwaltney-Smithfield Property; and
(ii) a first-priority lien on and security interest in certain
personal property of Gwaltney pursuant to a security agreement (as
amended from time to time, the "Gwaltney Security Agreement"),
substantially in the form of Exhibit H.
(d) Morrell Deed of Trust and Security Agreement. Morrell shall
have executed and delivered to the Security Trustee:
(i) a Mortgage, Security Agreement and Assignment of Rents and
Leases, substantially in the form of Exhibit G4, (the "Morrell
Mortgage"), securing Gwaltney's indebtedness and obligations under the
Joint and Several Guaranty with a first-priority mortgage encumbering
the Morrell-South Dakota Property; and
(ii) a first-priority lien on and security interest in certain
personal property of Morrell pursuant to a security agreement (as
amended from time to time, the "Morrell Security Agreement"),
substantially in the form of Exhibit H.
(e) SFFC Pledge Agreement. SFFC shall have executed and delivered to
the Security Trustee a note pledge agreement with respect to the promissory
notes received from the Guarantors in respect of the obligations of such
Guarantors to SFFC (as amended from time to time, the "SFFC Pledge
Agreement"), substantially in the form of Exhibit I.
(f) Collateral. The Security Documents shall be in full force and
effect and there shall be no defaults or events of default thereunder and
as defined therein. All actions necessary to perfect the Liens of the
Security Trustee in the Collateral (including, without limitation, the
filing of all appropriate financing statements and the recording of all
appropriate documents with appropriate public officials) shall have been
taken in accordance with the terms and provisions of the Security Documents
and confirmation thereof received by you. The Liens of the Security Trustee
in the Collateral shall be valid, enforceable and perfected and the
Collateral shall be subject to no other Liens not otherwise acceptable to
you. All recording, subscription and other similar fees, and all taxes and
other expenses related to such filings, registrations and recordings shall
have been paid, or caused to be paid, in full by the Company.
3.11 Collateral Matters.
(a) Survey and Environmental Information. You shall have received a
survey and an environmental site assessment report with respect to each of
(i) the Packing-Smithfield Property, (ii) the Packing-Bladen Property,
(iii) the Gwaltney-Smithfield Property and (iv) the MorrellSouth Dakota
Property (collectively, the "Mortgaged Properties"), each in form and
substance satisfactory to you and your special counsel; provided, that if a
survey has not been completed with respect to the Packing-Smithfield
Property and the Gwaltney-Smithfield Property on or prior to the Closing
Date, the Company shall deliver each of such surveys to you within 30 days
after the Closing Date, which surveys shall be in form and substance
satisfactory to you and your special counsel.
(b) Environmental Indemnification. Each of the Company, Packing,
Gwaltney and Morrell shall have delivered to you, the Security Trustee and
each "Trustee" (as such term is defined in each of the Deeds of Trust) one
or more environmental indemnification agreements (collectively, as amended
from time to time, the "Environmental Indemnification Agreement"),
substantially in the form of Exhibit J.
(c) Title Insurance; Other Insurance. The Security Trustee shall
have received (and copies shall have been delivered to you), with
respect to each of the Mortgaged Properties:
(i) a loan policy of title insurance (or an irrevocable
commitment therefor with all conditions thereto having been marked
satisfied or omitted), in form and substance satisfactory to you and
your special counsel, with such endorsements as you may reasonably
request, insuring the validity and priority of the liens of the deeds
of trust and mortgages granted in favor of the Security Trustee
encumbering the Mortgaged Properties, subject only to such exceptions
to and exclusions from coverage as may be acceptable to you, and all
premiums, charges, fees, costs and expenses of the title insurer shall
have been paid in full; and
(ii) insurance policies insuring each such Mortgaged Property
against all insurable hazards, casualties and contingencies;
each in form and substance satisfactory to you and your special counsel.
3.12 Appraisals.
The Company shall have delivered to you copies of one or more appraisals of
the current value of the Fixed Asset Collateral, all in form and substance
satisfactory to you and your special counsel.
3.13 Uniform Commercial Code Items.
Packing, Gwaltney, Morrell and SFFC shall have executed and delivered, and
there shall have been filed, such financing statements as may be necessary or
desirable to evidence the Liens granted by each of them pursuant to the Security
Documents, all in form and substance satisfactory to you and your special
counsel.
3.14 Payment of Interest on Existing Notes.
All interest accrued to the Closing Date with respect to each of the
Existing Notes shall have been paid to the holders of such Existing Notes.
3.15 Consents Under the Revolving Credit Agreement.
The Company and the Guarantors shall have delivered to you copies of
consents (in form and substance satisfactory to you and your special counsel)
under the Revolving Credit Agreements in effect on the Closing Date permitting
the issuance of the Notes and the performance by each of the Company and the
Guarantors of their respective obligations hereunder and under the other
Financing Documents.
3.16 Intercreditor Agreement.
The Company, the Guarantors, the Security Trustee and the other parties
thereto shall have executed and delivered to you an intercreditor agreement (as
amended from time to time, the "Intercreditor Agreement"), substantially in the
form of Exhibit K.
3.17 Compliance with this Agreement.
Each of the Company and the Guarantors shall have performed and complied
with all agreements and conditions contained herein that are required to be
performed or complied with by the Company and the Guarantors on or prior to the
Closing Date, and such performance and compliance shall remain in effect on the
Closing Date.
3.18 Proceedings Satisfactory.
All proceedings taken in connection with the sale of the Notes and the
other transactions evidenced hereby and all documents and papers relating
thereto shall be satisfactory to you and your special counsel. You and your
special counsel shall have received copies of such documents and papers as you
or they may reasonably request in connection therewith or in connection with
your special counsel's closing opinion, all in form and substance satisfactory
to you and your special counsel.
4. PAYMENTS
4.1 Interest Payments.
Interest shall accrue on the unpaid principal balance of the Notes on the
basis of a 360-day year of twelve 30-day months:
(a) Series A Notes. With respect to the Series A Notes, at the rate of
6.24% per annum and shall be payable to the holders of the Series A Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series A Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal),
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
on any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 8.24% per annum,
(b) Series B Notes. With respect to the Series B Notes, at the rate of
8.41% per annum and shall be payable to the holders of the Series B Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series B Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal),
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
on any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 10.41% per annum,
(c) Series C Notes. With respect to the Series C Notes, at the rate of
8.34% per annum and shall be payable to the holders of the Series C Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series C Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal),
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
on any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 10.34% per annum,
(d) Series D Notes. With respect to the Series D Notes, at the rate of
9.80% per annum and shall be payable to the holders of the Series D Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series D Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal),
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
on any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 11.80% per annum,
(e) Series E Notes. With respect to the Series E Notes, at the rate of
10.75% per annum and shall be payable to the holders of the Series E Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series E Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal),
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
on any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 12.75% per annum,
(f) Series F Notes. With respect to the Series F Notes, at the rate of
8.52% per annum and shall be payable to the holders of the Series F Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series F Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal),
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
on any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 10.52% per annum, and
(g) Series G Notes. With respect to the Series G Notes, at the rate of
9.85% per annum and shall be payable to the holders of the Series G Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series G Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal),
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
on any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 11.85% per annum, and
(h) Series H Notes. With respect to the Series H Notes, at the rate of
8.41% per annum and shall be payable to the holders of the Series H Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series H Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal),
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
on any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 10.41% per annum.
4.2 Scheduled Required Prepayments.
(a) Series A Notes. In addition to paying the entire then outstanding
principal amount and the interest due on the Series A Notes on the maturity
date thereof (November 1, 1998), the Company shall prepay, and there shall
become due and payable, two hundred eighty-two thousand five hundred
dollars ($282,500) in aggregate principal amount of the Series A Notes on
the first day of February, May, August and November in each year,
commencing on August 1, 1996 and ending on August 1, 1998, inclusive. Each
such prepayment shall be at one hundred percent (100%) of the amount
prepaid, together with interest accrued thereon to the date of prepayment.
(b) Series B Notes. In addition to paying the entire then outstanding
principal amount and the interest due on the Series B Notes on the maturity
date thereof (August 1, 2006), the Company shall prepay, and there shall
become due and payable, seven hundred fifty-eight thousand dollars
($758,000) in aggregate principal amount of the Series B Notes on the first
day of February, May, August and November in each year, commencing on
August 1, 2003 and ending on May 1, 2006, inclusive. Each such prepayment
shall be at one hundred percent (100%) of the amount prepaid, together with
interest accrued thereon to the date of prepayment.
(c) Series C Notes. There shall no required prepayments in respect of
the Series C Notes. The entire principal amount of the Series C Notes
remaining outstanding on August 1, 2003, together with accrued unpaid
interest thereon, shall be due and payable on such date.
(d) Series D Notes. In addition to paying the entire then outstanding
principal amount and the interest due on the Series D Notes on the maturity
date thereof (August 1, 2003), the Company shall prepay, and there shall
become due and payable, one hundred eighty-seven thousand five hundred
dollars ($187,500.00) in aggregate principal amount of the Series D Notes
on the first day of February, May, August and November in each year,
commencing on August 1, 1996 and ending on May 1, 2003, inclusive. Each
such prepayment shall be at one hundred percent (100%) of the amount
prepaid, together with interest accrued thereon to the date of prepayment.
(e) Series E Notes. In addition to paying the entire then outstanding
principal amount and the interest due on the Series E Notes on the maturity
date thereof (August 1, 2005), the Company shall prepay, and there shall
become due and payable, two hundred fifty thousand dollars ($250,000.00) in
aggregate principal amount of the Series E Notes on the first day of
February, May, August and November in each year, commencing on August 1,
1996 and ending on May 1, 2005, inclusive. Each such prepayment shall be at
one hundred percent (100%) of the amount prepaid, together with interest
accrued thereon to the date of prepayment.
(f) Series F Notes. There shall be no required prepayments in respect
of the Series F Notes. The entire principal amount of the Series F Notes
remaining outstanding on August 1, 2006, together with accrued unpaid
interest thereon, shall be due and payable on such date.
(g) Series G Notes. In addition to paying the entire then outstanding
principal amount and the interest due on the Series G Notes on the maturity
date thereof (November 1, 2006), the Company shall prepay, and there shall
become due and payable, three hundred thirty-three thousand three hundred
thirty-three and 33/100 dollars ($333,333.33) in aggregate principal amount
of the Series G Notes on the first day of February, May, August and
November in each year, commencing on August 1, 1996 and ending on August 1,
2006, inclusive. Each such prepayment shall be at one hundred percent
(100%) of the amount prepaid, together with interest accrued thereon to the
date of prepayment.
(h) Series H Notes. In addition to paying the entire then outstanding
principal amount and the interest due on the Series H Notes on the maturity
date thereof (August 1, 2004), the Company shall prepay, and there shall
become due and payable, seven million three hundred eighty-nine thousand
seven hundred six dollars ($7,389,706) in aggregate principal amount of the
Series H Notes on August 1, 2002. Such prepayment shall be at one hundred
percent (100%) of the amount prepaid, together with interest accrued
thereon to the date of prepayment.
4.3 Offer to Prepay upon Change in Control.
(a) Notice and Offer. In the event of either
(i) a Change in Control, or
(ii) the obtaining of knowledge of a Control Event by any
officer of the Company,
then the Company will, within three Business Days of (x) such Change in
Control or (y) the obtaining of knowledge of such Control Event (including
via the receipt of notice of a Control Event from any holder of Notes), as
the case may be, give written notice of such Change in Control or Control
Event to each holder of Notes by registered mail and, simultaneously with
the sending of such written notice, give telephonic advice of such Change
in Control or Control Event to an investment officer or other similar
representative or agent of each such holder specified on Annex 1 at the
telephone number specified thereon, or to such other Person at such other
telephone number as any holder of a Note may specify to the Company in
writing. In the event of a Change in Control, such written notice shall
contain, and such written notice shall constitute, an irrevocable offer to
prepay all, but not less than all, of the Notes of each Series held by such
holder on a date specified in such notice (the "Control Prepayment Date")
that is not less than thirty (30) days and not more than sixty (60) days
after the date of such notice. (If the Control Prepayment Date shall not be
specified in such notice, the Control Prepayment Date shall be the
thirtieth (30th) day after the date of such notice.)
(b) Acceptance and Payment. To accept such offered prepayment, a
holder of Notes shall cause a notice of such acceptance (which notice of
acceptance may be in respect of one or more Series of Notes held by such
holder, but which notice need not treat Notes of all Series held by such
holder in the same manner) to be delivered to the Company not later than
fourteen (14) days after the date of receipt by such holder of the written
offer of such prepayment. If so accepted, such offered prepayment shall be
due and payable on the Control Prepayment Date. Such offered prepayment
shall be made at one hundred percent (100%) of the principal amount of such
Notes, together with (i) an amount equal to the Make-Whole Amount, if any,
at the time applicable with respect to the principal amount of the Notes
then being prepaid and (ii) interest on the Notes then being prepaid
accrued to the Control Prepayment Date.
(c) Officer's Certificate. Each offer to prepay the Notes pursuant to
this Section 4.3 will be accompanied by an officer's certificate, executed
by a Senior Officer and dated the date of such offer, specifying:
(i) the Control Prepayment Date;
(ii) the principal amount of each Note offered to be prepaid;
(iii) the interest to be paid on each such Note, accrued
to the Control Prepayment Date;
(iv) the calculation of an estimated Make-Whole Amount, if any
(assuming the date of prepayment was the date of such notice), due in
connection with such prepayment, accompanied by a copy of the
Applicable H.15 used in determining the Make-Whole Discount Rate in
respect thereof;
(v) that the conditions of this Section 4.3 have been
fulfilled; and
(vi) in reasonable detail, the nature and date or proposed
date of the Change in Control.
Contemporaneously with any such prepayment the Company shall deliver to
each holder of Notes a certificate of a Senior Financial Officer specifying
the calculation of such Make-Whole Amount as of the specified prepayment
date, accompanied by a copy of the Applicable H.15 used in determining the
Make-Whole Discount Rate in respect thereof.
(d) Effect of Prepayments. Each prepayment of principal of the Notes
of any Series pursuant to this Section 4.3 shall be applied to reduce the
principal amount of the Notes of such Series due on the maturity date of
the Notes of such Series and to reduce each remaining scheduled required
prepayment of principal (if any) applicable to each such Series required by
Section 4.2, apportioned on a ratable basis (based on the principal amount
due on each such date) among all such amounts.
4.4 Optional Prepayments.
(a) Optional Prepayments. The Company may at any time after the
Closing Date prepay the principal amount of the Notes, in part, in integral
multiples of five million dollars ($5,000,000), or in whole, in each case
together with:
(i) an amount equal to the Make-Whole Amount at such time in
respect of the principal amount of the Notes being so prepaid; and
(ii) interest on such principal amount then being prepaid accrued
to the prepayment date.
(b) Effect of Prepayments. Each prepayment of principal of the Notes
pursuant to Section 4.4(a) shall be applied first, to the principal amount
of the Notes of each Series due on the maturity date of the Notes of such
Series and second, to the scheduled required prepayments of principal (if
any) applicable to such Series required by Section 4.2, in the inverse
order of the maturity thereof.
4.5 Notice of Optional Prepayment.
The Company will give notice of any optional prepayment of the Notes to
each holder of the Notes not less than thirty (30) days or more than sixty (60)
days before the date fixed for prepayment, specifying:
(a) such date;
(b) that such prepayment is being made pursuant to Section 4.4;
(c) the principal amount of such holder's Notes to be prepaid on such
date with respect to each Series of Notes held by such holder;
(d) the interest to be paid on each such Note, accrued to the date
fixed for prepayment; and
(e) the calculation of an estimated Make-Whole Amount, if any
(assuming the date of prepayment was the date of such notice) due in
connection with such prepayment with respect to each Series of Notes held
by such holder, accompanied by a copy of the Applicable H.15 used in
determining the Make-Whole Discount Rate in respect thereof.
Such notice of prepayment shall also certify all facts that are conditions
precedent to any such prepayment. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice, together with
the Make-Whole Amount, if any, and accrued interest thereon shall become due and
payable on the specified prepayment date. Contemporaneously with such prepayment
the Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date, accompanied by a copy of the Applicable H.15 used in
determining the MakeWhole Discount Rate in respect thereof.
4.6 Pro Rata Payments.
(a) Scheduled Required Prepayments. If, at the time of any required
prepayment of the principal of Notes of any Series made pursuant to Section
4.2 there is more than one Note of such Series outstanding, the aggregate
principal amount of such required prepayment shall be allocated among the
Notes of such Series at the time outstanding pro rata in proportion to the
respective unpaid principal amounts of all such outstanding Notes of such
Series.
(b) Optional Prepayments. If, at the time of any optional prepayment
of the principal of Notes made pursuant to Section 4.4 there is more than
one Note outstanding, the aggregate principal amount of such optional
prepayment shall be allocated among the Notes at the time outstanding pro
rata in proportion to the respective unpaid principal amounts of all such
outstanding Notes, without regard to the Series of such Notes.
4.7 Notation of Notes on Prepayment.
Upon any partial prepayment of a Note, such Note may, at the option of
the holder thereof, be
(a) surrendered to the Company pursuant to Section 5.2 in exchange for
a new Note of the same Series, in a principal amount equal to the principal
amount remaining unpaid on the surrendered Note,
(b) made available to the Company for notation thereon of the
portion of the principal so prepaid, or
(c) marked by such holder with a notation thereon of the portion
of the principal so prepaid.
In case the entire principal amount of any Note is prepaid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the prepaid principal amount of any Note.
4.8 No Other Optional Prepayments.
Except as provided in Section 4.4, the Company may not make any optional
prepayment (whether directly or indirectly by purchase or acquisition) in
respect of the Notes.
5. REGISTRATION; SUBSTITUTION OF NOTES
5.1 Registration of Notes.
The Company will cause to be kept at its office, maintained pursuant to
Section 6.3, a register for the registration and transfer of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in the
register. The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes hereof.
5.2 Exchange of Notes.
(a) Upon surrender of any Note at the office of the Company maintained
pursuant to Section 6.3 duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note
or its attorney duly authorized in writing, the Company will execute and
deliver, at the Company's expense (except as provided below), new Notes of
the same Series in exchange therefor, in denominations of at least five
hundred thousand dollars ($500,000) (except as may be necessary to reflect
any principal amount not evenly divisible by five hundred thousand dollars
($500,000)), in an aggregate principal amount equal to the unpaid principal
amount of the surrendered Note. Each such new Note shall be payable to such
Person as such holder may request, shall be of the same Series as the
surrendered Note and shall be substantially in the form of the Exhibit in
Exhibit A1 through Exhibit A8 corresponding to the Series of the
surrendered Note. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to cover any
stamp or other issuance tax or governmental charge imposed in respect of
any such transfer of Notes.
(b) The Company will pay the cost of delivering to or from such
holder's home office or custodian bank from or to the Company, insured to
the reasonable satisfaction of such holder, the surrendered Note and any
Note issued in substitution or replacement for the surrendered Note.
5.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership (or of ownership by such
Institutional Investor's nominee) and such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to the Company (provided that if the holder of such Note is an
Institutional Investor or a nominee of an Institutional Investor, such
Institutional Investor's own unsecured letter agreement of indemnity shall
be deemed to be satisfactory for such purpose), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense will execute and, within five (5) Business Days
after such receipt, deliver, in lieu thereof, a new Note of the same Series,
dated and bearing interest from the date to which interest shall have been paid
on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
5.4 Issuance Taxes.
The Company will pay all taxes (if any) due in connection with and as the
result of the initial issuance and sale of the Notes and/or the execution and
delivery of the other Financing Documents and in connection with any
modification, amendment or waiver of any Financing Document and shall save each
holder of Notes harmless without limitation as to time against any and all
liabilities with respect to all such taxes. The obligations of the Company under
this Section 5.4 shall survive the payment or prepayment of the Notes and the
termination hereof.
6. GENERAL COVENANTS
The Company covenants and agrees that on and after the Closing Date and
thereafter for so long as any of its obligations under the Note Purchase
Agreements and the Notes shall be outstanding:
6.1 Payment of Taxes and Claims.
The Company shall, and shall cause each Subsidiary to, pay before they
become delinquent,
(a) all taxes, assessments and governmental charges or levies
imposed upon it or its Property, and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons that, if unpaid, might
result in the creation of a Lien upon its Property,
provided, that items of the foregoing description need not be paid (x) while
being contested in good faith and by appropriate proceedings diligently pursued
as long as adequate book reserves have been established and maintained and exist
with respect thereto, and (y) so long as the title of the Company or the
Subsidiary, as the case may be, to, and its right to use, such Property, is not
materially adversely affected thereby.
6.2 Maintenance of Properties and Corporate Existence.
The Company shall, and shall cause each Subsidiary to,
(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 Guarantors shall collectively, during each year, either
expend or invest an aggregate amount equal to at least fifty percent (50%)
of Depreciation determined for the then most recently ended fiscal year of
the Company on repairs, maintenance or capital improvements to the
"Improvements" (as such term is defined in the Deeds of Trust);
(b) Insurance -- maintain, with financially sound and reputable
insurers accorded a rating by A.M. Best Company of "A" or better and a size
rating of "XII" or better (or comparable ratings by any comparable
successor rating agency), insurance (including, without limitation, the
insurance required by the Security Documents) with respect to its Property
and business against such casualties and contingencies, of such types
(including, without limitation, insurance with respect to losses arising
out of Property loss or damage, public liability, business interruption,
larceny, workers' compensation, embezzlement or other criminal
misappropriation) and in such amounts as is customary in the case of
corporations of established reputations engaged in the same or a similar
business and similarly situated; provided that the Company and the
Subsidiaries may maintain one or more systems of self-insurance if adequate
reserves are maintained with respect thereto and if such systems are
implemented and operated in a manner consistent with the sound financial
practices of similarly situated corporations of established reputations
that maintain similar systems of self-insurance.
(c) Financial Records -- maintain sound accounting policies and an
adequate and effective system of accounts and internal accounting controls
that will safeguard assets, properly record income, expenses and
liabilities and assure the production of proper financial statements in
accordance with GAAP;
(d) Corporate Existence and Rights -- do or cause to be done all
things necessary
(i) to preserve and keep in full force and effect its
existence, rights and franchises,
(ii) to ensure that the Company legally and beneficially owns
eighty-six percent (86%) of the capital stock of each class of Brown's
and one hundred percent (100%) of the capital stock of each of the
other Guarantors, and
(iii) to maintain each Subsidiary as a Subsidiary, except
as otherwise permitted by Section 6.14 and Section 6.15(b); and
(e) Compliance with Law -- not be in violation of any law, ordinance
or governmental rule or regulation to which it is subject (including,
without limitation, any Environmental Protection Law) and not fail to
obtain any license, permit, franchise or other governmental authorization
necessary to the ownership of its Properties or to the conduct of its
business if such violation or failure to obtain could be reasonably
expected to have a Material Adverse Effect.
6.3 Payment of Notes and Maintenance of Office.
The Company shall punctually pay, or cause to be paid, the principal of and
interest (and Make-Whole Amount, if any) to become due in respect of, the Notes,
as and when the same shall become due according to the terms hereof and of the
Notes, and shall maintain an office at the address of the Company set forth in
Section 10.1 where notices, presentations and demands in respect hereof and of
the Notes may be made upon it. Such office shall be maintained at such address
until such time as the Company shall notify the holders of the Notes of any
change of location of such office, which shall in any event be located within
the United States of America.
6.4 Current Ratio.
The Company shall not at any time permit the ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than 1.15 to 1.00.
6.5 Consolidated Working Capital.
The Company shall not at any time permit Consolidated Working Capital to be
less than one hundred ten million dollars ($110,000,000).
6.6 Funded Debt.
The Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, create, assume, incur or Guaranty or otherwise become or be liable
in respect of any Funded Debt other than:
(a) Funded Debt represented by the Notes;
(b) Funded Debt outstanding on the Closing Date and described on
Part 2.2(b) of Annex 3;
(c) Funded Debt of a Wholly-Owned Subsidiary to the Company or to
any other Wholly-Owned Subsidiary;
(d) Funded Debt of the Company to a Wholly-Owned Subsidiary; and
(e) additional Funded Debt of the Company and the Subsidiaries if,
after giving effect thereto and to any concurrent application of the
proceeds of such Funded Debt, Consolidated Funded Debt at such time would
not exceed the applicable percentage of Consolidated Total Capitalization
at such time set forth with respect to such time in the following table:
If such time is: the applicable percentage is:
--------------------------- -----------------------------
On or before April 27, 1997 57.5%
After April 27, 1997 55.0%
6.7 Guarantor Net Worth.
The Company shall not at any time permit Guarantor Tangible Net Worth of
any Guarantor, determined at such time, to be less than the amount with respect
to such Guarantor at such time calculated as set forth below:
(a) If such time is on or before May 3, 1998, the sum of
(i) seventy-five percent (75%) of Guarantor Tangible Net
Worth of such Guarantor as of April 28, 1996, plus
(ii) the sum of the Guarantor Fiscal Year Net Worth Increase
Amounts with respect to such Guarantor calculated for all fiscal years
of such Guarantor ended on or after the Closing Date.
(b) If such time is after May 3, 1998, the sum of
(i) one hundred percent (100%) of Guarantor Tangible Net
Worth of such Guarantor as of April 28, 1996, plus
(ii) the sum of the Guarantor Fiscal Year Net Worth Increase
Amounts with respect to such Guarantor calculated for all fiscal years
of such Guarantor ended after May 3, 1998.
"Guarantor Fiscal Year Net Worth Increase Amount" means, with respect to any
Guarantor, for any fiscal year of such Guarantor, the greater of
(i) twenty-five percent (25%) of Guarantor Net Income for such
fiscal year with respect to such Guarantor and
(ii) zero dollars ($0).
6.8 Fixed Charges Coverage.
The Company shall not at any time permit the ratio of Consolidated Net
Income Available for Fixed Charges (calculated with respect to the period of
eight (8) consecutive fiscal quarters of the Company then most recently ended)
to Consolidated Fixed Charges (calculated with respect to such period) to be
less than 1.50 to 1.00.
6.9 Restrictions on Dividends, etc.
The Company shall not, and shall not permit any Subsidiary to, create or
otherwise cause or suffer to exist or become effective any restriction or
encumbrance (other than statutory, regulatory or common law restrictions) on the
right or power of any Subsidiary to
(a) pay dividends or make any other distributions on such
Subsidiary's stock to the Company or any Subsidiary,
(b) pay any indebtedness owed by such Subsidiary to the Company or
any Subsidiary,
(c) make loans or pay advances to the Company or any Subsidiary,
or
(d) transfer any of its Property to the Company or any Guarantor;
provided, however, that a Subsidiary may be subject to restrictions on the
payment of dividends or the making of other distributions on its stock to the
Company or the other Subsidiaries so long as such restrictions permit the
payment of such dividends and the making of such other distributions that are
necessary in order to make any and all payments due (including, without
limitation, any and all amounts due by way of acceleration, required or optional
prepayment or otherwise) in connection with the Notes, the Note Purchase
Agreements and the other Financing Documents, and any and all indebtedness used
to refinance or repay such indebtedness (without increase as to principal amount
or interest rate of such refinancing indebtedness).
6.10 Consolidated Tangible Net Worth.
The Company shall not at any time permit Consolidated Tangible Net Worth,
determined at such time, to be less than the sum of
(a) two hundred million dollars ($200,000,000), plus
(b) the sum of the Company Fiscal Year Net Worth Increase Amounts
calculated for all fiscal years of the Company ended on or after the
Closing Date.
"Company Fiscal Year Net Worth Increase Amount" means, for any fiscal year of
the Company, the greater of
(i) fifty percent (50%) of Consolidated Net Income for such fiscal
year and
(ii) zero dollars ($0).
6.11 Total Liabilities.
The Company shall not at any time permit the ratio of Consolidated Total
Liabilities at such time to Consolidated Tangible Net Worth at such time to
exceed the applicable ratio set forth with respect to such time in the following
table:
If such time is: the applicable ratio is:
-------------------------------- ------------------------
On or before October 27, 1996 2.85 to 1.00
After October 27, 1996 and before
May 3, 1998 2.75 to 1.00
On or after May 3, 1998 2.00 to 1.00
6.12 Restricted Payments and Restricted Investments.
(a) Limitation on Restricted Payments and Restricted Investments. The
Company shall not, and shall not permit any Subsidiary to, at any time
declare or make or incur any liability to declare or make any Restricted
Payment (other than Restricted Payments comprised solely of Distributions
to the Company or a Wholly-Owned Subsidiary in respect of the capital stock
of a Subsidiary ("Permitted Distributions")) or make or authorize any
Restricted Investment, unless
(i) immediately after giving effect to the proposed Restricted
Payment or Restricted Investment, the aggregate amount of all
Restricted Payments (other than Permitted Distributions) and
Restricted Investments made or authorized after the Closing Date does
not exceed the sum of
(A) twenty-five million dollars ($25,000,000); plus
(B) twenty-five percent (25%) of the aggregate Consolidated
Net Income (or, in case such aggregate Consolidated Net Income
shall be a deficit, minus one hundred percent (100%) of such
deficit) for the period commencing on the Closing Date and ending
on the date of such proposed transaction; plus
(C) one hundred percent (100%) of the aggregate net cash
proceeds received by the Company after the Closing Date from the
issuance or sale of shares of capital stock of the Company (other
than Mandatory Redeemable Stock);
(ii) immediately prior to, and immediately after giving effect to
the proposed Restricted Payment or Restricted Investment, the Company
would be permitted by Section 6.6(e) to incur at least one dollar
($1.00) of additional Funded Debt owed to a Person other than a
Subsidiary; and
(iii) immediately prior to, and immediately after giving effect
to, the proposed Restricted Payment or Restricted Investment, no
Default or Event of Default exists or would exist.
(b) Time of Payment of Distributions. The Company shall not, and shall
not permit any Subsidiary to, authorize a Distribution on its capital stock
that is not payable within sixty (60) days of authorization.
(c) Subsidiaries. Each corporation that becomes a Subsidiary after the
Closing Date shall be deemed to have made, at the time it becomes a
Subsidiary, all Restricted Investments of such corporation existing
immediately after it becomes a Subsidiary.
6.13 Liens.
(a) Negative Pledge. The Company shall not, and shall not permit any
Subsidiary to, cause or permit, or agree or consent to cause or permit in
the future (upon the happening of a contingency or otherwise), any of their
Property, whether now owned or hereafter acquired, to be subject to a Lien
except:
(i) Liens securing taxes, assessments or governmental charges or
levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, provided that the
payment thereof is not at the time required by Section 6.1 or by any
provision of the other Financing Documents;
(ii) Liens incurred or deposits made in the ordinary course of
business
(A) in connection with workers' compensation, unemployment
insurance, social security and other like laws, and
(B) to secure the performance of letters of credit, bids,
tenders, sales contracts, leases, statutory obligations, surety
and performance bonds (of a type other than set forth in Section
6.13(a)(iii)) and other similar obligations not incurred in
connection with the borrowing of money, the obtaining of advances
or the payment of the deferred purchase price of Property;
(iii) Liens
(A) arising from judicial attachments and judgments,
(B) securing appeal bonds, supersedeas bonds, or
(C) arising in connection with court proceedings (including,
without limitation, surety bonds and letters of credit or any
other instrument serving a similar purpose),
provided that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings, and provided
further that the aggregate amount so secured shall not at any time
exceed one million dollars ($1,000,000);
(iv) Liens in the nature of reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other similar title exceptions or
encumbrances affecting real Property, provided that such exceptions
and encumbrances do not in the aggregate materially detract from the
value of such Properties or materially interfere with the use of such
Properties in the ordinary conduct of the owning Person's business;
(v) (A) Liens in existence on the Closing Date, more
specifically described on Part 6.13(a)(v) of Annex 3; and
(B) Liens securing renewals, extensions and refinancings of
Debt secured by the Liens permitted by clause (A) immediately
above, provided that the amount of Debt secured by each such Lien
is not increased in excess of the amount of Debt outstanding on
the date of such renewal, extension or refinancing, and none of
such Liens is extended to include any additional Property of the
Company or any Subsidiary;
(vi) Liens on the Collateral
(A) in favor of the Security Trustee for the benefit of the
holders of the Notes that secure obligations under any of the
Financing Documents, and
(B) constituting Permitted Exceptions;
(vii) Liens on Property other than the Collateral created
in connection with the issuance or assumption of Funded Debt
permitted by Section 6.6;
(viii) Purchase Money Liens, if, after giving effect
thereto and to any concurrent transactions:
(A) each such Purchase Money Lien secures Debt in an amount
not exceeding the cost of acquisition or construction of the
particular Property to which such Debt relates; and
(B) no Default or Event of Default would exist; and
(ix) Liens on Property of the Subsidiaries primarily constituting
inventory or accounts that secure obligations arising under Revolving
Credit Agreements.
(b) Collateral. Nothing in this Section 6.13 shall be deemed to permit
the Company to cause or permit, or agree or consent to cause or permit in
the future (upon the happening of a contingency or otherwise), any of the
Collateral, whether now owned or hereafter acquired, to be subject to a
Lien in violation of the terms of the Security Documents.
(c) Stock. Notwithstanding anything to the contrary in Section
6.13(a), the Company shall not, and shall not permit any Subsidiary to
cause or permit, or agree or consent to cause or permit in the future (upon
the happening of a contingency or otherwise), any of the capital stock of
any Subsidiary, whether now owned or hereafter acquired, to be subject to a
Lien.
(d) Equal and Ratable Lien; Equitable Lien. In case any Property not
otherwise the subject of a prior perfected Lien in favor of the Security
Trustee shall be subjected to a Lien in violation of this Section 6.13, the
Company shall forthwith make or cause to be made, to the fullest extent
permitted by applicable law, provision whereby the Notes shall be secured
equally and ratably with all other obligations secured thereby pursuant to
such agreements and instruments as shall be approved by the Required
Holders, and the Company shall cause to be delivered to each holder of a
Note an opinion of independent counsel to the effect that such agreements
and instruments are enforceable in accordance with their terms, and in any
such case the Notes shall have the benefit, to the full extent that, and
with such priority as, the holders may be entitled thereto under applicable
law, of an equitable Lien on such Property securing the Notes. Such
violation of this Section 6.13 shall constitute an Event of Default
hereunder, whether or not any such provision is made pursuant to this
Section 6.13(d).
(e) Financing Statements. The Company shall not, and shall not permit
any Subsidiary to, sign or file a financing statement under the Uniform
Commercial Code of any jurisdiction that names the Company or such
Subsidiary as debtor, or sign any security agreement authorizing any
secured party thereunder to file any such financing statement, except, in
any such case, a financing statement filed or to be filed to perfect or
protect a security interest that the Company or such Subsidiary is entitled
to create, assume or incur, or permit to exist, under the foregoing
provisions of this Section 6.13 or to evidence for informational purposes a
lessor's interest in Property leased to the Company or any such Subsidiary.
6.14 Merger; Acquisition.
(a) Merger and Consolidation. The Company shall not, and shall not
permit any Subsidiary to, merge with or into, consolidate with, or sell,
lease as lessor, transfer or otherwise dispose of all or substantially all
of its Property to, any other Person or permit any other Person to merge
with or into or consolidate with it (except that a Subsidiary other than a
Guarantor may merge into, consolidate with, or sell, lease, transfer or
otherwise dispose of all or substantially all of its assets to, the Company
or a Wholly-Owned Subsidiary other than a Guarantor); provided that the
foregoing restriction does not apply to the merger or consolidation of the
Company with or into, or the sale, lease, transfer or other disposition by
the Company of all or substantially all of its Property to, another
corporation, if:
(i) the corporation that results from such merger or
consolidation or that purchases, leases, or acquires all or
substantially all of such Property (the "Surviving Corporation") is
organized under the laws of, and has substantially all of its Property
located in, the United States of America or any jurisdiction thereof;
(ii) the due and punctual payment of the principal of and
Make-Whole Amount, if any, and interest on all of the Notes, according
to their tenor, and the due and punctual performance and observance of
all the covenants herein and in the other Financing Documents to be
performed and observed by the Company, are expressly assumed by the
Surviving Corporation pursuant to such agreements or instruments as
shall be satisfactory to the Required Holders, and the Company shall
cause to be delivered to each holder of Notes an opinion of
independent counsel (which opinion and counsel are satisfactory to the
Required Holders) to the effect that such agreements and instruments
are enforceable in accordance with their terms;
(iii) immediately prior to, and immediately after the
consummation of such transaction, and after giving effect thereto, the
Company would be permitted by Section 6.6(e) to incur at least one
dollar ($1.00) of additional Funded Debt owed to a Person other than a
Subsidiary; and
(iv) immediately prior to, and immediately after the consummation
of such transaction, and after giving effect thereto, no Default or
Event of Default exists or would exist.
(b) Acquisition of Stock. The Company shall not, and shall not permit
any Subsidiary to, acquire any stock of any corporation if upon completion
of such acquisition such corporation would be a Subsidiary, or acquire all
of the assets of, or such of the assets as would permit the transferee to
continue any one or more integral business operations of, any Person
unless, immediately after the consummation of such acquisition, and after
giving effect thereto, no Default or Event of Default exists or would exist
under any provision hereof.
6.15 Transfers of Property; Subsidiary Stock.
(a) Transfers of Property. The Company shall not, and shall not permit
any Subsidiary to, sell (including, without limitation, any sale and
subsequent leasing as lessee of such Property), lease as lessor, transfer,
or otherwise dispose of any Property (individually, a "Transfer" and
collectively, "Transfers"), except
(i) Transfers of inventory, obsolete or worn-out Property or
excess equipment no longer useful in the business of the Company or
such Subsidiary, in each case in the ordinary course of business of
the Company or such Subsidiary;
(ii) Transfers from a Subsidiary to the Company or to any
Guarantor and Transfers from the Company to any Guarantor; and
(iii) any other Transfer (including a Transfer of Property to any
Person and the concurrent rental or lease of such transferred Property
from such Person) at any time of any Property to a Person, other than
an Affiliate, for an Acceptable Consideration, if each of the
following conditions would be satisfied with respect to such Transfer:
(A) the sum of
(I) the current book value of such Property, plus
(II) the aggregate book value of all other Property of
the Company and the Subsidiaries Transferred (other than in
Transfers referred to in the foregoing clause (i) and clause
(ii) (collectively, "Excluded Transfers")) during the period
beginning on the first day of the then current fiscal year
of the Company and ended immediately prior to the date of
such Transfer,
would not exceed five percent (5%) of Consolidated Total Assets
determined as at the end of the most recently ended fiscal year
of the Company prior to giving effect to such Transfer,
(B) the sum of
(I) the current book value of such Property, plus
(II) the aggregate book value of all other Property of
the Company and the Subsidiaries Transferred (other than in
Excluded Transfers) during the period commencing on the
Closing Date and ended at the time of such Transfer,
would not exceed ten percent (10%) of Consolidated Total Assets
determined as at the end of the most recently ended fiscal year
of the Company prior to giving effect to such Transfer, and
(C) immediately prior to, and immediately after the
consummation of such transaction, and after giving effect
thereto, no Default or Event of Default exists or would exist,
provided, that all or any portion of the assets which are the
subject of any Transfer of Property shall be excluded for
purposes of clause (A) and clause (B) of this Section
6.15(a)(iii) if, within three hundred sixty (360) days after
such Transfer, the entire proceeds of such Transfer (net of
ordinary and reasonable transaction costs and expenses
incurred in connection with such Transfer) are applied by the
Company or such Subsidiary to:
(y) the purchase of operating assets of the Company or any
Subsidiary reasonably equal in value to the Property which is the
subject of such Transfer, so long as each such investment shall
not have been included in the calculation of any other exclusion
of any other Transfer proposed to be excluded from the operation
of clause (A) or clause (B) of this Section 6.15(a)(iii), or
(z) an optional prepayment of Notes pursuant to Section
4.4.
Notwithstanding anything to the contrary contained herein, the Company
shall not, and shall not permit any Subsidiary to, sell, lease as lessor,
transfer or otherwise dispose of any of the Collateral except as expressly
permitted by Section 6.15(c). Nothing in this Section 6.15(a) shall be
deemed to permit the Company or any Subsidiary to violate any provisions of
Section 6.16.
(b) Transfers of Subsidiary Stock. The Company shall not, and shall
not permit any Subsidiary to, Transfer any shares of the capital stock (or
any warrants, rights or options to purchase stock or other Securities
exchangeable for or convertible into capital stock) of a Subsidiary (such
capital stock, warrants, rights, options and other Securities herein called
"Subsidiary Stock"), nor shall any Subsidiary issue, sell or otherwise
dispose of any shares of its own Subsidiary Stock, provided that the
foregoing restrictions do not apply to:
(i) the issuance by a Subsidiary of shares of its own
Subsidiary Stock to the Company or a Wholly-Owned Subsidiary;
(ii) Transfers by the Company or a Subsidiary of shares of
Subsidiary Stock to the Company or a Wholly-Owned Subsidiary;
(iii) the issuance by a Subsidiary of directors'
qualifying shares; and
(iv) the Transfer of all of the Subsidiary Stock of a
Subsidiary owned by the Company and the other Subsidiaries if
(A) such Transfer satisfies the requirements of Section
6.15(a)(iii);
(B) in connection with such Transfer the entire investment
(whether represented by stock, Debt, claims or otherwise) of the
Company and the other Subsidiaries in such Subsidiary is
Transferred to a Person other than the Company or a Subsidiary
not simultaneously being disposed of;
(C) the Subsidiary being disposed of has no continuing
investment in any other Subsidiary not simultaneously being
disposed of or in the Company; and
(D) immediately prior to, and immediately after the
consummation of such Transfer, and after giving effect thereto,
no Default or Event of Default exists or would exist.
For purposes of determining the book value of Property constituting
Subsidiary Stock being Transferred as provided in clause (iv) above, such
book value shall be deemed to be the aggregate book value of all assets of
the Subsidiary that shall have issued such Subsidiary Stock.
Nothing in this Section 6.15(b) shall be deemed to permit the Company or
any Subsidiary to (x) sell any shares of capital stock of any Subsidiary in
violation of Section 6.2(d)(ii) or (y) violate any of the provisions of
Section 6.16.
WVf Transfers of Collateral. The Company shall not, and shall not
permit any Subsidiary to, sell or otherwise Transfer any Property
constituting Collateral, except Transfers for an Acceptable Consideration
of obsolete or worn-out equipment constituting Collateral, or excess
equipment constituting Collateral, in each case that is no longer useful in
the business of the Company or such Subsidiary, if each of the following
conditions would be satisfied with respect to such Transfer:
(i) the sum of
(A) the current book value of such Property, plus
(B) the aggregate book value of all other Property of the
Company and the Subsidiaries Transferred pursuant to this Section
6.15(c) during the period beginning on the first day of the then
current fiscal year of the Company and ended immediately prior to
the date of such Transfer,
would not exceed five million dollars ($5,000,000),
(ii) the sum of
(A) the current book value of such Property, plus
(B) the aggregate book value of all other Property of the
Company and the Subsidiaries Transferred pursuant to this Section
6.15(c) during the period commencing on the Closing Date and
ended at the time of such Transfer,
would not exceed twenty million dollars ($20,000,000), and
(iii) immediately prior to, and immediately after the
consummation of such transaction, and after giving effect thereto, no
Default or Event of Default exists or would exist,
provided, that all or any portion of the assets which are the subject of
any Transfer of Property shall be excluded for purposes of clause (i) and
clause (ii) of this Section 6.15(c) if, within three hundred sixty (360)
days after such Transfer, the entire proceeds of such Transfer (net of
ordinary and reasonable transaction costs and expenses incurred in
connection with such Transfer) are applied by the Company or such
Subsidiary to:
(y) the purchase of equipment of the Company or any Subsidiary
reasonably equal in value or use to the Property which is the subject
of such Transfer, so long as (1) such equipment is subject to a
perfected first-priority security interest in favor of the Security
Trustee for the benefit of the holders from time to time of the Notes,
(2) such equipment constitutes Collateral and (3) each such investment
shall not have been included in the calculation of any other exclusion
of any other Transfer proposed to be excluded from the operation of
clause (i) or clause (ii) of this Section 6.15(c), or
(z) an optional prepayment of Notes pursuant to Section 4.4.
6.16 Trademark Subsidiaries.
(a) Generally. The Company shall not, and shall not permit any
Subsidiary other than a Trademark Subsidiary to, own any patents,
trademarks, service marks, trade names, copyrights and other similar
licenses and intangibles used or useful in the conduct of the business of
the Company or any Subsidiary.
(b) Ownership of Trademark Subsidiaries. The Company shall at all
times, maintain each Trademark Subsidiary as a Wholly-Owned Subsidiary.
(c) No Sale or Merger. The Company shall not permit any Trademark
Subsidiary to merge with or into, consolidate with, or sell, lease,
transfer or otherwise dispose of all or substantially all of its Property
to, any other Person other than another Trademark Subsidiary, or permit any
other Person other than a Trademark Subsidiary to merge with or into or
consolidate with it. The Company shall not permit any Trademark Subsidiary
to sell, lease as lessor, transfer or otherwise dispose of any patents,
trademarks, service marks, trade names, copyrights and licenses.
(d) No Debt or Liens. The Company shall not permit any Trademark
Subsidiary to cause or permit, or agree or consent to cause or permit in
the future (upon the happening of a contingency or otherwise), any of its
Property, whether now owned or hereafter acquired, to be subject to a Lien.
The Company shall not at any time permit any Trademark Subsidiary to be or
become liable for any Debt or to issue any Mandatorily Redeemable Stock.
6.17 Environmental Compliance.
(a) Compliance. The Company shall, and shall cause each Subsidiary to,
comply with all Environmental Protection Laws in effect in each
jurisdiction where it is doing business and where the failure to comply
with which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
(b) Liability. The Company shall not, and shall not permit any
Subsidiary to, permit itself to be subject to any liability under any
Environmental Protection Laws that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(c) Morrell. The Company shall cause Morrell to use its best efforts
to comply with all reasonable environmental testing, hazard prevention and
remediation recommendations of its environmental consultants with respect
to the Morrell-South Dakota Property.
6.18 Line of Business.
The Company shall not, and shall not permit any Subsidiary to, engage in
any business other than businesses engaged in by the Company and the
Subsidiaries on the Closing Date.
6.19 Transactions with Affiliates.
The Company shall not, and shall not permit any Subsidiary to, enter into
any transaction, including, without limitation, the purchase, sale or exchange
of Property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Company's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.
6.20 Tax Consolidation.
The Company shall not file or consent to the filing of a consolidated tax
return with any Person other than a Subsidiary, or permit the filing of any
consolidated tax return by any Subsidiary with any Person other than the Company
or another Subsidiary.
6.21 ERISA.
(a) Compliance. The Company shall, and shall cause each ERISA
Affiliate to, at all times with respect to each Pension Plan,
(i) make timely payment of contributions required
(A) to meet the minimum funding standard set forth in
ERISA or the IRC with respect thereto, or
(B) to be paid as provided for by section 515 of ERISA,
and
(ii) comply with all other applicable provisions of ERISA.
(b) Relationship of Vested Benefits to Pension Plan Assets.
(i) The Company shall not at any time permit the present value of
all employee benefits vested under all Morrell Pension Plans to exceed
the assets of such Morrell Pension Plans allocable to such vested
benefits at such time by more than seventy-seven million five hundred
thousand dollars ($77,500,000), in each case determined pursuant to
Section 6.21(c).
(ii) The Company shall not at any time permit the present value
of all employee benefits vested under all Pension Plans other than
Morrell Pension Plans to exceed the assets of all such Pension Plans
other than Morrell Pension Plans allocable to such vested benefits at
such time by more than five million dollars ($5,000,000), in each case
determined pursuant to Section 6.21(c).
(c) Valuations. All assumptions and methods used to determine the
actuarial valuation of vested employee benefits under Pension Plans and the
present value of assets of Pension Plans shall be reasonable in the good
faith judgment of the Company and shall comply with all requirements of
law.
(d) Prohibited Actions. The Company shall not, and shall not
permit any ERISA Affiliate to:
(i) engage in any "prohibited transaction" (as such term is
defined in section 406 of ERISA or section 4975 of the IRC) or
"reportable event" (as such term is defined in section 4043 of ERISA)
that would result in the imposition of a material tax or penalty;
(ii) incur with respect to any Pension Plan any "accumulated
funding deficiency" (as such term is defined in section 302 of ERISA),
whether or not waived;
(iii) terminate any Pension Plan in a manner that could
result in
(A) the imposition of a Lien on the Property of the
Company or any Subsidiary pursuant to section 4068 of ERISA or
(B) the creation of any liability under section 4062 of
ERISA;
(iv) fail to make any payment required by section 515 of
ERISA; or
(v) be an "employer" (as such term is defined in section 3 of
ERISA) required to contribute to any Multiemployer Plan or a
"substantial employer" (as such term is defined in section 4001 of
ERISA) required to contribute to any Multiple Employer Pension Plan
if, at such time, it could reasonably be expected that the Company or
any Subsidiary will incur withdrawal liability in respect of such
Multiemployer Plan and such liability, if incurred, together with the
aggregate amount of all other withdrawal liability as to which there
is a reasonable expectation of incurrence by the Company or any
Subsidiary under any one or more Multiemployer Plans, could reasonably
be expected to have a Material Adverse Effect.
(e) Foreign Pension Plans. To the extent that the Company or any
Subsidiary is subject to any requirements of any Foreign Pension Plan, the
Company shall, and shall cause each such Subsidiary to, comply with such
requirements if the failure to so comply would have, either individually or
in the aggregate, a Material Adverse Effect.
6.22 Guaranties.
(a) The Company shall not, and shall not permit any Subsidiary to,
be or become liable in respect of any Guaranty except
(i) Guaranties of Consolidated Funded Debt;
(ii) Guaranties of obligations incurred in the ordinary course
of business of the Company and the Subsidiaries;
(iii) Guaranties of Consolidated Current Liabilities (including,
without limitation, Guaranties of obligations of the Company and the
Subsidiaries under Revolving Credit Agreements to the extent such
Guaranties are not permitted by clause (i) above); and
(iv) Guaranties of amounts payable with respect to Operating
Rentals constituting a portion of Consolidated Fixed Charges.
(b) Notwithstanding the provisions of clause (a) above, the
Company shall not permit any Subsidiary to
(i) be or become liable for any Guaranty of Debt of the
Company, any other Subsidiary or any Affiliate, or
(ii) issue any Mandatorily Redeemable Stock,
in each case unless such Subsidiary enters into an enforceable and
unconditional Guaranty of the obligations of the Company under the Notes,
upon terms and conditions satisfactory to the Required Holders.
Notwithstanding the foregoing, in no event shall the Company or any
Subsidiary be or become liable in respect of any Guaranty if the
indebtedness or other liabilities that are the subject of such Guaranty
would not be permitted pursuant to Section 6.6.
6.23 Private Offering.
The Company shall not, and shall not permit any Subsidiary or any Person
acting on its behalf to, offer the Notes or any part thereof or any similar
Securities for issuance or sale to, or solicit any offer to acquire any of the
same from, any Person so as to bring the issuance and sale of the Notes within
the provisions of section 5 of the Securities Act.
7. INFORMATION AS TO COMPANY AND THE GUARANTOR
7.1 Financial and Business Information.
The Company shall deliver to each holder of Notes:
(a) Company Quarterly Statements -- as soon as practicable after the
end of each quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such fiscal year), and
in any event within forty-five (45) days thereafter, duplicate copies of:
(i) consolidated and consolidating balance sheets of the
Company and its consolidated subsidiaries, and of the Company and
the Subsidiaries, as at the end of such quarter, and
(ii) consolidated and consolidating statements of income and cash
flows of the Company and its consolidated subsidiaries, and of the
Company and the Subsidiaries, for such quarter and (in the case of the
second and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified as complete and correct, subject to
changes resulting from year-end adjustments, by a Senior Financial Officer,
accompanied by the certificate required by Section 7.2;
(b) Company Annual Statements -- as soon as practicable after the end
of each fiscal year of the Company, and in any event within ninety (90)
days thereafter, duplicate copies of:
(i) consolidated and consolidating balance sheets of the
Company and its consolidated subsidiaries, and of the Company and
the Subsidiaries, as at the end of such year, and
(ii) consolidated and consolidating statements of income, changes
in shareholders' equity and cash flows of the Company and its
consolidated subsidiaries, and of the Company and the Subsidiaries,
for such year,
setting forth in each case in comparative form the figures for the
immediately preceding fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by
(A) in the case of such consolidated financial statements, an
audit report thereon of independent certified public accountants of
recognized national standing, which opinion shall state, without
qualification, that such financial statements present fairly, in all
material respects, the consolidated financial position of the
companies being reported upon and their consolidated results of
operations and cash flows and have been prepared in conformity with
GAAP, and that the examination of such accountants in connection with
such financial statements has been made in accordance with generally
accepted auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances,
(B) a certification by a Senior Financial Officer of the Company
that such consolidated statements are complete and correct, and
(C) the certificates required by Section 7.2 and Section 7.3;
(c) Audit Reports -- promptly upon receipt thereof, a copy of each
other report submitted to the Company or any Subsidiary by independent
accountants in connection with any management report, special audit report
or comparable analysis prepared by them with respect to the books of the
Company or any Subsidiary;
(d) SEC and Other Reports -- promptly upon their becoming available, a
copy of each financial statement, report (including, without limitation,
each Quarterly Report on Form 10-Q, each Annual Report on Form 10-K and
each Current Report on Form 8-K), notice or proxy statement sent by the
Company or any Subsidiary to stockholders generally and of each regular or
periodic report and any registration statement, prospectus or written
communication (other than transmittal letters), and each amendment thereto,
in respect thereof filed by the Company or any Subsidiary with, or received
by, such Person in connection therewith from, the National Association of
Securities Dealers, any securities exchange or the Securities and Exchange
Commission or any successor agency;
(e) ERISA --
(i) promptly (and in any event, within five (5) Business
Days) after any officer of the Company becoming aware of any
(A) "reportable event" (as defined in section 4043 of
ERISA), or
(B) "prohibited transaction" (as defined in section 406
of ERISA or section 4975 of the IRC),
in connection with any Pension Plan or any trust created thereunder, a
written notice specifying the nature thereof, what action the Company
is taking or proposes to take with respect thereto and, when known,
any action taken by the IRS, the Department of Labor or the PBGC with
respect thereto, and
(ii) promptly (and in any event, within five (5) Business Days)
after any officer of the Company becoming aware thereof, written
notice of and, where applicable, a description of
(A) any notice from the PBGC in respect of the commencement
of any proceedings pursuant to section 4042 of ERISA to terminate
any Pension Plan or for the appointment of a trustee to
administer any Pension Plan,
(B) any distress termination notice delivered to the PBGC
under section 4041 of ERISA in respect of any Pension Plan, and
any determination of the PBGC in respect thereof,
(C) the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA,
(D) any Multiemployer Plan becoming "insolvent" (as defined
in section 4245 of ERISA) under Title IV of ERISA, or
(E) the whole or partial withdrawal of the Company or any
ERISA Affiliate from any Multiemployer Plan and the withdrawal
liability incurred in connection therewith;
(f) Actions, Proceedings -- promptly after the commencement thereof,
notice of any action or proceeding relating to the Company or any
Subsidiary in any court or before any Governmental Authority or arbitration
board or tribunal as to which there is a reasonable probability of an
adverse determination and that, if adversely determined, would have a
Material Adverse Effect;
(g) Certain Environmental Matters -- prompt written notice of and a
description of any event or circumstance that, had such event or
circumstance occurred or existed prior to the Closing Date, would have been
required to be disclosed as an exception to any statement set forth in
Section 2.14 and a description of the action that the Company is taking or
proposes to take with respect thereto;
(h) Notice of Default or Event of Default -- within five (5) Business
Days of any Senior Officer of the Company becoming aware of the existence
of any condition or event that constitutes a Default or an Event of
Default, a written notice specifying the nature and period of existence
thereof and what action the Company is taking or proposes to take with
respect thereto;
(i) Notice of Claimed Default -- within five (5) Business Days of any
Senior Officer of the Company becoming aware that the holder of any Note,
or of any Debt or any Security of the Company or any Subsidiary, shall have
given notice or taken any other action with respect to a claimed Default,
Event of Default, default or event of default, a written notice specifying
the notice given or action taken by such holder and the nature of the
claimed Default, Event of Default, default or event of default and what
action the Company is taking or proposes to take with respect thereto;
(j) Information Furnished Under Revolving Credit Agreement -- at any
time that at least one Revolving Credit Agreement is in effect, at the same
time required thereby, a copy of each item required to be furnished by the
Company or any Subsidiary pursuant thereto;
(k) Other Creditors -- promptly upon the request of any holder of
Notes, copies of any statement, report or certificate furnished to any
holder of Debt of the Company or any Subsidiary to the extent that the
information contained in such statement, report or certificate has not
already been delivered to each holder of Notes;
(l) Rule 144A -- with reasonable promptness, upon the request of any
holder of Notes, information required to comply with 17 C.F.R.
(SECTION)230.144A, as amended from time to time; and
(m) Requested Information -- with reasonable promptness, such other
data and information as from time to time may be reasonably requested by
any holder of Notes.
7.2 Officer's Certificates.
Each set of financial statements delivered to each holder of Notes pursuant
to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a
Senior Financial Officer of the Company setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 6.4 through Section 6.8,
inclusive, and Section 6.10 through Section 6.15, inclusive, during the
period covered by the income statement then being furnished (including with
respect to each such Section, where applicable, the calculations of the
maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the
amounts, ratio or percentage then in existence); and
(b) Event of Default -- a statement that the signer has reviewed the
relevant terms of the Financing Documents and has made, or caused to be
made, under his or her supervision, a review of the transactions and
conditions of the Company and the Subsidiaries from the beginning of the
accounting period covered by the income statements being delivered
therewith to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or event
that constitutes a Default or an Event of Default or, if any such condition
or event existed or exists, specifying the nature and period of existence
thereof and what action the Company shall have taken or proposes to take
with respect thereto.
7.3 Accountants' Report.
Each set of annual financial statements delivered pursuant to Section
7.1(b) shall be accompanied by a certificate of the accountants who certify such
financial statements, stating that they have reviewed this Agreement and stating
further, whether, in making their audit, such accountants have become aware of
any condition or event that then constitutes a Default or an Event of Default,
and, if such accountants are aware that any such condition or event then exists,
specifying the nature and period of existence thereof.
7.4 Inspection.
The Company shall permit the representatives of each holder of Notes (at
the expense of the Company) to visit and inspect any of the Properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants (former and present) (and
by this provision the Company authorizes all such accountants to discuss the
finances and affairs of the Company and the Subsidiaries) all at such reasonable
times and as often as may be reasonably requested.
8. EVENTS OF DEFAULT
8.1 Nature of Events.
An "Event of Default" shall exist if any of the following occurs and is
continuing:
(a) Principal and Make-Whole Amount Payments -- the Company shall fail
to make any payment of principal or Make-Whole Amount on any Note on or
before the date such payment is due; or
(b) Interest Payments -- the Company shall fail to make any payment of
interest on any Note on or before the date such payment is due; or
(c) Warranties or Representations -- any warranty, representation or
other material statement by or on behalf of the Company or any Subsidiary
contained herein or in any instrument furnished in compliance with or in
reference hereto or any of the other Financing Documents shall have been
false or misleading when made or deemed made; or
(d) Particular Covenant Defaults -- the Company or any Subsidiary
shall fail to perform or observe any covenant contained in Section 6.4
through Section 6.18, inclusive, Section 6.22, Section 7.1(h) or Section
7.1(i); or
(e) Other Defaults -- the Company or any Subsidiary shall fail to
comply with any other provision hereof, and such failure continues for more
than 10 days after such failure shall first become known to any officer of
the Company; or
(f) Default on Debt or Other Security --
(i) the Company or any Subsidiary shall fail to make any
payment on any Debt when due;
(ii) any event shall occur or any condition shall exist in
respect of any Debt or any Security of the Company or any Subsidiary,
or under any agreement securing or relating to such Debt or Security,
that immediately or with the passage of time or the giving of notice
or both:
(A) causes (or permits any one or more of the holders
thereof or a trustee therefor to cause) such Debt or Security, or
a portion thereof, to become due prior to its stated maturity or
prior to its regularly scheduled date or dates of payment;
(B) permits any one or more of the holders thereof or a
trustee therefor to elect any of the directors on the Board of
Directors of the Company or such Subsidiary; or
(C) permits any one or more of the holders thereof or a
trustee therefor to require the Company or any Subsidiary to
repurchase such Debt or Security from such holder;
provided that the aggregate amount of all obligations in respect of all
such Debt and Securities referred to in this clause (f) exceeds at such
time $3,000,000; or
(iii) an "Event of Default" shall have occurred under, and
as defined in, any of the other Financing Documents and be
continuing; or
(g) Involuntary Bankruptcy Proceedings --
(i) a receiver, liquidator, custodian or trustee of the Company
or any Subsidiary, or of all or any of the Collateral or any material
Property of the Company or any Subsidiary, shall be appointed by court
order and such order remains in effect for more than 30 days; or an
order for relief shall be entered with respect to the Company or any
Subsidiary, or the Company or any Subsidiary, shall be adjudicated
insolvent;
(ii) any of the Collateral or any material Property of the
Company or any Subsidiary shall be sequestered by court order and such
order remains in effect for more than 30 days; or
(iii) a petition shall be filed against the Company or any
Subsidiary under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect, and shall not be
dismissed within 30 days after such filing; or
(h) Voluntary Petitions -- the Company or any Subsidiary shall file a
petition in voluntary bankruptcy or seeking relief under any provision of
any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or shall consent to the filing of any petition against
it under any such law; or
(i) Assignments for Benefit of Creditors, etc. -- the Company or any
Subsidiary shall make an assignment for the benefit of its creditors, or
shall admit in writing its inability, or shall fail, to pay its debts
generally as they become due, or shall consent to the appointment of a
receiver, liquidator or trustee of the Company or any Subsidiary or of all
or any part of the Property of them; or
(j) Undischarged Final Judgments -- final judgment or judgments for
the payment of money aggregating in excess of $250,000 is or are
outstanding against one or more of the Company and the Subsidiaries and any
one of such judgments shall have been outstanding for more than 10 days
from the date of its entry and shall not have been discharged in full or
stayed; or
(k) Certain Obligations -- the undertakings of any Guarantor under the
Joint and Several Guaranty shall at any time cease to constitute the legal,
valid and binding obligation of such Guarantor, or any Guarantor or any
Person acting by or on behalf of any Guarantor shall deny or disaffirm such
Guarantor's obligations under the Joint and Several Guaranty or any
undertaking of the Company hereunder shall at any time cease to constitute
the legal, valid and binding obligation of the Company, enforceable against
the Company.
If any action, condition, event or other matter would, at any time, constitute
an Event of Default under any provision of this Section 8.1, then an Event of
Default shall exist, regardless of whether the same or a similar action,
condition, event or other matter is addressed in a different provision of this
Section 8.1 and would not constitute an Event of Default at such time under such
different provision.
8.2 Default Remedies.
(a) Acceleration on Event of Default. If an Event of Default specified
in clause (g), (h) or (i) of Section 8.1 shall exist, all of the Notes at
the time outstanding shall automatically become immediately due and payable
together with interest accrued thereon and, to the extent permitted by law,
the Make-Whole Amount at such time with respect to the principal amount of
such Notes, and all other amounts due under the Financing Documents,
without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived, and, if any other Event of Default shall
exist, the holder or holders of at least thirty-five percent (35%) in
principal amount of the Notes then outstanding (exclusive of Notes then
owned by any one or more of the Company, any Subsidiary and any Affiliate)
may exercise any right, power or remedy permitted to such holder or holders
by law, and shall have, in particular, without limiting the generality of
the foregoing, the right to declare the entire principal of, and all
interest accrued on, all the Notes then outstanding to be, and such Notes
shall thereupon become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are hereby
expressly waived, and the Company shall forthwith pay to the holder or
holders of all the Notes then outstanding the entire principal of, and
interest accrued on, the Notes and, to the extent permitted by law, the
Make-Whole Amount at such time with respect to such principal amount of
such Notes.
(b) Acceleration on Payment Default. During the existence of an Event
of Default described in Section 8.1(a) or Section 8.1(b), and irrespective
of whether the Notes then outstanding shall have been declared to be due
and payable pursuant to Section 8.2(a), any holder of Notes who or that
shall have not consented to any waiver with respect to such Event of
Default may, at its option, by notice in writing to the Company, declare
the Notes then held by such holder to be, and such Notes shall thereupon
become, forthwith due and payable together with all interest accrued
thereon, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, and the Company shall
forthwith pay to such holder the entire principal of and interest accrued
on such Notes and, to the extent permitted by law, the Make-Whole Amount at
such time with respect to such principal amount of such Notes and all other
amounts due under the Financing Documents.
(c) Valuable Rights. The Company acknowledges, and the parties hereto
agree, that the right of each holder to maintain its investment in the
Notes free from repayment by the Company (except as herein specifically
provided for) is a valuable right and that the provision for payment of a
Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default is intended to provide
compensation for the deprivation of such right under such circumstances.
(d) Other Remedies. During the existence of an Event of Default and
irrespective of whether the Notes then outstanding shall have been declared
to be due and payable pursuant to Section 8.2(a) or Section 8.2(b) and
irrespective of whether any holder of Notes then outstanding shall
otherwise have pursued or be pursuing any other rights or remedies, but
subject to the terms and conditions of the Trust Agreement, any holder of
Notes may proceed to protect and enforce its rights hereunder, under such
Notes and under the other Financing Documents by exercising such remedies
as are available to such holder in respect thereof under applicable law,
either by suit in equity or by action at law, or both, whether for specific
performance of any agreement contained herein or in aid of the exercise of
any power granted herein, provided that the maturity of such holder's Notes
may be accelerated only in accordance with Section 8.2(a) and Section
8.2(b).
(e) Nonwaiver and Expenses. No course of dealing on the part of any
holder of Notes nor any delay or failure on the part of any holder of Notes
to exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers and remedies. If the Company shall
fail to pay when due any principal of, or Make-Whole Amount or interest on,
any Note, or shall fail to comply with any other provision of the Financing
Documents, the Company shall pay to each holder of Notes, to the extent
permitted by law, such further amounts as shall be sufficient to cover the
costs and expenses, including but not limited to reasonable attorneys'
fees, incurred by such holder in collecting any sums due on such Notes or
in otherwise assessing, analyzing or enforcing any rights or remedies that
are or may be available to it.
8.3 Annulment of Acceleration of Notes.
If a declaration is made pursuant to Section 8.2(a), then and in every such
case, the holders of sixty-six percent (66%) in aggregate principal amount of
the Notes then outstanding (exclusive of Notes then owned by any one or more of
the Company, any Subsidiary and any Affiliate) may, by written instrument filed
with the Company, rescind and annul such declaration, and the consequences
thereof, provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for the payment
of any moneys due on or pursuant hereto or the Notes;
(b) all arrears of interest upon all the Notes and all other sums
payable hereunder and under the Notes (except any principal of, or interest
or Make-Whole Amount on, the Notes that shall have become due and payable
by reason of such declaration under Section 8.2(a)) shall have been duly
paid; and
(c) each and every other Default and Event of Default shall have been
waived pursuant to Section 10.5 or otherwise made good or cured;
and provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
9. INTERPRETATION OF THIS AGREEMENT
9.1 Terms Defined.
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section following such term:
Acceptable Consideration -- means, with respect to any Transfer of any
Property of the Company or any Subsidiary, cash consideration, promissory notes
or such other consideration (or any combination of the foregoing) as is, in each
case, determined by the Board of Directors of the Company or such Subsidiary, in
its good faith opinion, to be in the best interests of the Company and to
reflect the Fair Market Value of such Property.
Affiliate -- means, at any time, a Person (other than a Subsidiary)
(a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Company,
(b) that beneficially owns or holds five percent (5%) or more of
any class of the Voting Stock of the Company, or
(c) five percent (5%) or more of the Voting Stock (or in the case of a
Person that is not a corporation, five percent (5%) or more of the equity
interest) of which is beneficially owned or held by the Company or a
Subsidiary,
at such time.
As used in this definition:
Control -- means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
Agreement, this -- means this agreement, as it may be amended or restated
from time to time.
Applicable H.15 -- means, at any time, United States Federal Reserve
Statistical Release H.15(519) or its successor publication most recently
published and available to the public at such time, or if no such successor
publication is available, then any other source of current information in
respect of interest rates on securities of the United States of America that is
generally available and, in the sole judgment of the Required Holders, provides
information reasonably comparable to the H.15(519) report.
Board of Directors -- means, at any time with respect to any Person, the
board of directors of such Person, or any committee thereof which, in the
instance, shall have the lawful power to exercise the power and authority of
such board of directors.
Brown's -- means Brown's of Carolina, Inc., a North Carolina corporation,
and its successors and assigns.
Business Day -- means
(a) with respect to any payment to be made to the holder of any Note
under any of the Financing Documents, a day other than a Saturday, a Sunday
or a day on which the bank designated by such holder to receive for such
holder's account payments on such Note is required by law (other than a
general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed, and
(b) for all other purposes, a day other than a Saturday, a Sunday or a
day on which the national banks located in New York City, New York, are
required by law (other than a general banking moratorium or holiday for a
period exceeding four (4) consecutive days) to be closed.
Capital Lease -- means a lease with respect to which the lessee is required
to recognize the acquisition of an asset and the incurrence of a liability in
accordance with GAAP, or for which the amount of the asset and the liability
thereunder, as if so capitalized, should be disclosed in a note to such balance
sheet.
Capital Lease Obligation -- means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease that would appear as a liability on a balance sheet of such Person
prepared in accordance with GAAP.
Change in Control -- means the acquisition at any time after the Closing
Date by any Person or group of related Persons of beneficial ownership of more
than fifty percent (50%) of the Voting Stock of the Company outstanding
(excluding for such purpose Persons who own shares through any employee benefit
plan of the Company or any trust in connection therewith) at such time.
Closing -- Section 1.4.
Closing Date -- Section 1.4.
Collateral -- shall have the meaning assigned to such term in the Trust
Agreement.
Company -- has the meaning specified in the introductory sentence.
Company Fiscal Year Net Worth Increase Amount -- Section 6.10.
Consolidated Current Assets -- means, at any time, the aggregate amount at
which the current assets of the Company and the Subsidiaries would be shown on a
consolidated balance sheet for such Persons at such time.
Consolidated Current Liabilities -- means, at any time, the aggregate
amount at which the current liabilities of the Company and the Subsidiaries
would be shown on a consolidated balance sheet for such Persons at such time.
Consolidated Fixed Charges -- means, with respect to any fiscal period,
the sum of
(a) the amount payable in respect of such fiscal period with respect
to interest due on, or with respect to, Debt (including, without
limitation, the Notes) owing by or guaranteed by any one or more of the
Company and the Subsidiaries and including, without limitation,
amortization of debt discount and expense and imputed interest in respect
of Capital Lease Obligations of the Company and the Subsidiaries, plus
(b) the amount payable in respect of such fiscal period with respect
to Operating Rentals payable by any one or more of the Company and the
Subsidiaries,
determined on a consolidated basis for the Company and the Subsidiaries for
such period.
Consolidated Funded Debt -- means, at any time, the aggregate amount of
Funded Debt of the Company and the Subsidiaries, determined on a consolidated
basis for such Persons at such time.
Consolidated Intangible Assets -- means, at any time, the aggregate amount
of Intangible Assets of the Company and the Subsidiaries, determined on a
consolidated basis at such time.
Consolidated Net Income -- means, with respect to any fiscal period, net
earnings (or loss) after income taxes of the Company and the Subsidiaries
determined on a consolidated basis for such Persons for such period.
Consolidated Net Income Available for Fixed Charges -- means, with respect
to any fiscal period, the sum of
(a) Consolidated Net Income, plus
(b) the aggregate amount of
(i) income taxes, and
(ii) Consolidated Fixed Charges,
(to the extent, and only to the extent, that such aggregate amount was
reflected in the computation of Consolidated Net Income),
in each case accrued for such period by the Company and the Subsidiaries,
determined on a consolidated basis for such Persons.
Consolidated Shareholders' Equity -- means, at any time, the sum of
(a) the aggregate amount of shareholders' equity (other than with
respect to Specified Preferred Stock) of the Company and the Subsidiaries
at such time, determined on a consolidated basis, plus, without
duplication,
(b) the aggregate amount of Specified Preferred Stock outstanding at
such time that is not redeemable within one year of such time, up to a
maximum amount determined with respect to up to 2,000 shares of Specified
Preferred Stock.
Consolidated Tangible Net Worth -- means, at any time, the result of
(a) Consolidated Shareholders' Equity, minus
(b) Consolidated Intangible Assets
determined in each case at such time.
Consolidated Total Assets -- means, at any time, the aggregate amount at
which all assets of the Company and the Subsidiaries would be shown on a
consolidated balance sheet for such Persons at such time.
Consolidated Total Capitalization -- means, at any time, the sum of
(a) Consolidated Tangible Net Worth, plus
(b) Consolidated Funded Debt,
determined in each case at such time.
Consolidated Total Liabilities -- means, at any time, the aggregate amount
at which all liabilities of the Company and the Subsidiaries (including, without
limitation, (a) all Guaranties of Debt by such Persons and (b) all amounts
attributable to Mandatorily Redeemable Stock of the Company and the Subsidiaries
to the extent that such Mandatorily Redeemable Stock is redeemable within one
year of such time) would be shown on a consolidated balance sheet for such
Persons at such time.
Consolidated Working Capital -- means, at any time, the result of
(a) Consolidated Current Assets, minus
(b) Consolidated Current Liabilities,
determined in each case at such time.
Control Event -- means
(a) the execution by the Company, any Subsidiary or any Affiliate of
any letter of intent with respect to any proposed transaction or event or
series of transactions or events that, individually or in the aggregate,
could reasonably be expected to result in a Change in Control,
(b) the execution of any written agreement that, when fully
performed by the parties thereto, would result in a Change in Control,
or
(c) the making of any written offer by any Person to the holders of
Voting Stock of the Company which offer, if accepted by the requisite
number of such holders, would result in a Change in Control.
Control Prepayment Date -- Section 4.3.
Debt -- means, at any time, with respect to any Person, without
duplication:
(a) all obligations of such Person for borrowed money (including,
without limitation, all obligations of such Person evidenced by any
debenture, bond, note, commercial paper or Security, but also including all
such obligations for borrowed money not so evidenced);
(b) all obligations of such Person to pay the deferred purchase price
of Property or services, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreements,
provided that accounts payable incurred in the ordinary course of business
of such Person shall be excluded from this clause (b);
(c) all Capital Lease Obligations of such Person;
(d) all obligations for borrowed money secured by any Lien existing on
Property owned by such Person (whether or not such obligations have been
assumed by such Person or recourse in respect thereof is available against
such Person); and
(e) any Guaranty of such Person of any obligation or liability of
another Person of a type described in any of clause (a) through clause (d),
inclusive, of this definition.
Debt of a Person shall include all obligations of such Person of the character
described in clause (a) through clause (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
Deeds of Trust -- means, collectively, the Packing-Smithfield Deed of
Trust, the Packing-Bladen Deed of Trust, the Gwaltney-Smithfield Deed of Trust
and the Morrell Mortgage.
Default -- means an event or condition the occurrence of which would, with
the lapse of time or the giving of notice or both, become an Event of Default.
Depreciation -- means, for any fiscal year of the Company, the aggregate
amount of depreciation that would be shown on a statement of income prepared in
respect of the Company and the Subsidiaries on a consolidated basis for such
fiscal year.
Distribution -- means
(a) any dividend or other distribution, direct or indirect, on account
of capital stock of the Company or any Subsidiary (except dividends payable
solely in shares of capital stock other than Mandatorily Redeemable Stock
of the Company or such Subsidiary), and
(b) any redemption, retirement, purchase or other acquisition, direct
or indirect, of any capital stock of the Company or any Subsidiary, or of
any warrants, rights or other options to acquire any shares of such capital
stock.
8.41% Note Agreement -- Section 1.1.
Environmental Indemnification Agreement -- Section 3.11.
Environmental Protection Law -- means any federal, state, county, regional
or local law, statute, or regulation (including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Superfund Amendments and
Reauthorization Act, all amendments to any of the foregoing and all rules and
regulations issued in connection therewith) enacted in connection with or
relating to the protection or regulation of the environment, including, without
limitation, those laws, statutes, and regulations regulating the disposal,
removal, production, storing, refining, handling, transferring, processing, or
transporting of Hazardous Substances, and any regulations, issued or promulgated
in connection with such statutes by any Governmental Authority and any orders,
decrees or judgments issued by any court of competent jurisdiction in connection
with any of the foregoing.
ERISA -- means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
ERISA Affiliate -- means any corporation or trade or business that
(i) is a member of the same controlled group of corporations
(within the meaning of section 414(b) of the IRC) as the Company, or
(ii) is under common control (within the meaning of section 414(c) of
the IRC) with the Company.
Event of Default -- Section 8.1.
Exchange Act -- means the Securities Exchange Act of 1934, as amended from
time to time.
Excluded Transfers -- Section 6.15.
Existing 8.41% Notes -- Section 1.1.
Existing Note Agreements -- Section 1.1.
Existing Noteholders -- Section 1.1.
Existing Notes -- Section 1.1.
Existing 9.80% Notes -- Section 1.1.
Existing 9.85% Notes -- Section 1.1.
Existing 6.24% Notes -- Section 1.1.
Existing 10.75% Notes -- Section 1.1.
Fair Market Value -- means, at any time, with respect to any Property, the
sale value of such Property that would be realized in an arm's-length sale at
such time between an informed and willing buyer, and an informed and willing
seller, under no compulsion to buy or sell, respectively.
Financing Documents -- means the Note Purchase Agreements, the Notes, the
Joint and Several Guaranty, the Security Documents, the Intercreditor Agreement,
the Environmental Indemnification Agreements and the other agreements and
instruments to be executed pursuant to the terms of each of such Financing
Documents, as each may be amended from time to time.
Fixed Asset Collateral -- means that portion of the Collateral not
consisting of promissory notes, instruments or other evidences of indebtedness.
Foreign Pension Plan -- means any plan, fund or other similar program
(a) established or maintained outside of the United States of America
by any one or more of the Company or the Subsidiaries primarily for the
benefit of the employees (substantially all of whom are aliens not residing
in the United States of America) of the Company or such Subsidiaries which
plan, fund or other similar program provides for retirement income for such
employees or results in a deferral of income for such employees in
contemplation of retirement, and
(b) not otherwise subject to ERISA.
Funded Debt -- means, at any time, with respect to any Person, without
duplication:
(a) all Debt of such Person (including, without limitation, the
current portion thereof) that by its terms or by the terms of any
instrument or agreement relating thereto matures, or that is otherwise
payable or unpaid, more than one (1) year from, or is directly or
indirectly renewable or extendible at the option of such Person to a date
more than one (1) year (including, without limitation, an option of the
debtor under a revolving credit or similar agreement obligating the lender
or lenders to extend credit over a period of more than one (1) year) from,
the date of the creation of such Debt (notwithstanding that such Debt may
under certain contingencies be payable on demand or within one (1) year
after such date of creation);
(b) all Capital Lease Obligations of such Person; and
(c) all Debt of such Person of the type specified in clause (e) of the
definition of "Debt," provided that such Debt of such Person is in respect
of or in support of Funded Debt of another Person.
GAAP -- means generally accepted accounting principles as set forth from
time to time in the statements, opinions and pronouncements of the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board or in such statements, opinions and pronouncements of such other entities
as shall be approved by a significant segment of the accounting profession in
the United States of America.
Governmental Authority -- means
(a) the government of
(i) the United States of America and any State or other
political subdivision thereof, or
(ii) any jurisdiction (A) in which the Company or any Subsidiary
conducts all or any part of its business or (B) that asserts
jurisdiction over the conduct of the affairs or Properties of the
Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
Guarantor -- means each of Packing, Gwaltney, Morrell, SFFC, Patrick Cudahy
Incorporated, a Delaware corporation, Brown's and each other Person that becomes
a "Guarantor" pursuant to the Joint and Several Guaranty.
Guarantor Fiscal Year Net Worth Increase Amount -- Section 6.7.
Guarantor Net Income -- means, with respect to any Guarantor for any fiscal
period of such Guarantor, net earnings (or loss) after income taxes of such
Guarantor for such period.
Guarantor Tangible Net Worth -- means, with respect to any Guarantor 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 Guarantor, excluding any amount attributable to
write-ups of such assets, minus
(b) the amount of all liabilities (other than capital stock and
surplus) of such Guarantor, including as liabilities all reserves for
contingencies and other potential liabilities,
determined for such Guarantor in each case at such time.
Guaranty -- means with respect to any Person (for the purposes of this
definition, the "Subject Guarantor") any obligation (except the endorsement in
the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person (the "Primary
Obligor") in any manner (including, without limitation, obligations that arise
as a matter of law or otherwise as a result of such Person's status as a general
partner in a partnership or a holder of equity or other Property interest in a
corporation, partnership, limited liability company or other business operation
commonly referred to as a "joint venture"), whether directly or indirectly,
including (without limitation) obligations incurred through an agreement,
contingent or otherwise, by the Subject Guarantor:
(a) to purchase such indebtedness or obligation or any Property or
assets constituting security therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such indebtedness or
obligation, or
(ii) to maintain working capital or other balance sheet condition
or any income statement condition of the Primary Obligor or otherwise
to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
(c) to lease Property or to purchase Securities or other Property or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of the Primary Obligor to make
payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the indebtedness or obligation of
the Primary Obligor against loss in respect thereof.
For purposes of computing the amount of any Guaranty, in connection with any
computation of indebtedness or other liability, it shall be assumed that the
indebtedness or other liabilities that are the subject of such Guaranty are
direct obligations of the Subject Guarantor.
Gwaltney -- Section 1.1.
Gwaltney Security Agreement -- Section 3.10.
Gwaltney-Smithfield Deed of Trust -- Section 3.10.
Gwaltney-Smithfield Property -- means the real Property of Gwaltney
identified in the Gwaltney-Smithfield Deed of Trust.
Hazardous Substances -- means any and all pollutants, contaminants, toxic
or hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, radon gas, urea formaldehyde foam
insulation, polychlorinated biphenyls, radioactive materials, petroleum and
petroleum derivatives and by-products).
Institutional Investor -- means the Purchasers, any affiliate of any of the
Purchasers, and any holder of Notes that is an "accredited investor" as defined
in Section 2(15) of the Securities Act.
Intangible Assets - means, with respect to any Person at any time, the
following:
(a) patents, copyrights, trademarks, trade names, service marks, brand
names, franchises, goodwill, experimental expenses and other similar
intangibles;
(b) deferred assets (other than prepaid taxes, prepaid insurance,
prepaid contract payments, prepaid license fees and other prepaid expenses
which are refundable);
(c) unamortized debt discount and expense; and
(d) all other Property which would be considered to be intangible
under GAAP.
Intercreditor Agreement -- Section 3.16.
Investment -- means any investment, made in cash or by delivery of
Property, by the Company or any Subsidiary:
(a) in any Person, whether by acquisition of stock, indebtedness or
other obligation or Security, or by loan, Guaranty, advance, capital
contribution or otherwise; or
(b) in any Property.
IRC -- means the Internal Revenue Code of 1986, together with all rules and
regulations promulgated pursuant thereto, as amended from time to time.
IRS -- means the Internal Revenue Service and any successor agency.
John Hancock -- Section 1.1.
Joint and Several Guaranty -- Section 3.9.
Lien -- means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the security interest lien arising from a mortgage, deed of trust,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes, and the filing of any financing statement
under the Uniform Commercial Code of any jurisdiction, or an agreement to give
any of the foregoing. The term "Lien" includes reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting Property. For the purposes of this
definition, each of the Company and the Subsidiaries is deemed to be the owner
of any Property that it shall have acquired or holds subject to a conditional
sale agreement, Capital Lease or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for security
purposes, and such retention or vesting is deemed a Lien. The term "Lien" does
not include negative pledge clauses in agreements relating to the borrowing of
money.
Make-Whole Amount -- means, at any time, with respect to a principal amount
of Notes being prepaid (in whole or in part) or accelerated, the greater of
(a) Zero Dollars ($0), and
(b) the remainder of
(i) the sum of the present values of the then remaining scheduled
payments of principal and interest that would be payable but for the
prepayment or acceleration of such principal amount of Notes being
prepaid or accelerated, minus
(ii) the sum of
(A) the aggregate principal amount of the Notes so
prepaid or accelerated, plus
(B) interest on such principal amount accrued during the
period beginning on the most nearly preceding scheduled interest
payment date preceding prepayment or acceleration and ending on
the date such principal amount was prepaid or accelerated.
In determining such present values, a discount rate equal to the Make-Whole
Discount Rate at such time with respect to such principal amount of Notes being
prepaid or accelerated divided by four (4), and a discount period of three (3)
months of thirty (30) days each shall be used.
Make-Whole Discount Rate -- means, at any time, with respect to a principal
amount of Notes being prepaid or accelerated,
(a) the per annum percentage rate (rounded to the nearest three
decimal places) equal to
(i) the annual yield to maturity at such time of the United
States Treasury obligation listed in the then Applicable H.15 for the
most recently available day in such Applicable H.15 with a Treasury
Constant Maturity (as such term is defined in such Applicable H.15)
equal to the Weighted Average Life to Maturity of the principal amount
of the Notes then being prepaid or accelerated, or, if no such United
States Treasury obligation is so listed, then
(ii) the annual yield to maturity at such time determined
by interpolating between
(A) the annual yield to maturity of the United States
Treasury obligations listed in such Applicable H.15 with a
Treasury Constant Maturity (as such term is defined in such
Applicable H.15) most nearly equal to and less than the Weighted
Average Life to Maturity of the principal amount of Notes then
being prepaid or accelerated, and
(B) the annual yield to maturity of the United States
Treasury obligations listed in such Applicable H.15 with a
Treasury Constant Maturity (as such term is defined in such
Applicable H.15) most nearly equal to and greater than the
Weighted Average Life to Maturity of the principal amount of
Notes then being prepaid or accelerated, plus
(b) fifty one-hundredths percent (0.50%) per annum.
As used in this definition:
Remaining Dollar-Years -- at any time with respect to any indebtedness
for borrowed money means the product obtained by
(a) multiplying
(i) the amount of each then remaining required principal
payment (including repayment of principal at final maturity) of
such borrowing unpaid immediately prior to such time, by
(ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such time and the date each
such required principal payment is due, and
(b) calculating the sum of the products obtained in the
preceding subsection (a).
Weighted Average Life to Maturity -- at any time with respect to any
indebtedness for borrowed money means the number of years obtained by
dividing the then Remaining Dollar-Years of such indebtedness at such time
by the then outstanding principal amount of such indebtedness.
Mandatorily Redeemable Stock -- means, with respect to any Person, each
share of such Person's capital stock to the extent that it is (a) redeemable,
payable or required to be purchased or otherwise retired or extinguished, or
convertible into Debt of such Person (i) at a fixed or determinable date,
whether by operation of a sinking fund or otherwise, (ii) at the option of any
Person other than such Person or (iii) upon the occurrence of a condition not
solely within the control of such Person, such as redemption required to be made
out of future earnings or (b) convertible into other Mandatorily Redeemable
Stock of such Person.
Margin Security -- means "margin stock" within the meaning of Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R., Chapter II, as amended from time to time.
Material Adverse Effect -- means, with respect to any event or circumstance
(either individually or in the aggregate with all other events and
circumstances), an effect caused thereby or resulting therefrom that would be
materially adverse as to, or in respect of
(a) the business, prospects, profits, Properties or condition
(financial or otherwise) of the Company (individually) or the Company
and the Subsidiaries (taken as a whole),
(b) the ability of the Company to perform its obligations set forth
herein and in the Notes or the ability of any Guarantor to perform its
obligations under the Joint and Several Guaranty, or
(c) any of the rights or remedies of the holders of the Notes under
any Financing Document or the enforceability of any Financing Document
against the Company or any Guarantor.
Morrell -- means John Morrell & Co., a Delaware corporation, and its
successors and assigns.
Morrell Mortgage -- Section 3.10.
Morrell Pension Plans -- means, collectively, the defined benefit Pension
Plan administered for salaried employees of Morrell and the defined benefit
Pension Plan administered for hourly employees of Morrell, in each case as
maintained on the Closing Date by Morrell.
Morrell Security Agreement -- Section 3.10.
Morrell-South Dakota Property -- means the real Property of Morrell
identified in the Morrell Mortgage.
Mortgaged Properties -- Section 3.11.
Multiemployer Plan -- means any multiemployer plan (as defined in Section
3(37) of ERISA) in respect of which the Company or any ERISA Affiliate is an
"employer" (as such term is defined in Section 3(5) of ERISA).
Multiple Employer Pension Plan -- means any employee benefit plan within
the meaning of Section 3(3) of ERISA (other than a Multiemployer Plan), subject
to Title IV of ERISA, to which the Company or any ERISA Affiliate and an
employer (as such term is defined in Section 3 of ERISA) other than an ERISA
Affiliate or the Company contribute.
9.80% Note Agreement -- Section 1.1.
9.85% Note Agreement -- Section 1.1.
Note -- Section 1.3.
Note Purchase Agreements -- Section 1.4.
Obligors -- means the Company and the Guarantors.
Operating Lease -- means, with respect to any Person, any lease other than
a Capital Lease.
Operating Rentals -- means, at any time, all fixed and contingent payments
(other than amounts constituting the purchase price payable by the lessee to
acquire title to the Property which is the subject of a lease) that the lessee
is required to make by the terms of any Operating Lease.
Other Purchasers -- Section 1.4.
Packing -- Section 1.1.
Packing Security Agreement -- Section 3.10.
Packing-Smithfield Deed of Trust -- Section 3.10.
Packing-Smithfield Property -- means the real Property of Packing
identified in the Packing-Smithfield Deed of Trust.
Packing-Bladen Deed of Trust -- Section 3.10.
Packing-Bladen Property -- means the real Property of Packing identified in
the Packing-Bladen Deed of Trust.
PBGC -- means the Pension Benefit Guaranty Corporation and any successor
corporation or governmental agency.
Pension Plan -- means, at any time, any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA) maintained at such time by the
Company or any ERISA Affiliate for employees of the Company or such ERISA
Affiliate, excluding any Multiemployer Plan, but including, without limitation
any Multiple Employer Pension Plan.
Permitted Distributions -- Section 6.12.
Permitted Exceptions -- shall have the meaning assigned to such term in the
Deed of Trust.
Person -- means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
Placement Memorandum -- means the Confidential Memorandum dated April 1996
prepared by John Hancock in connection with the offering of the Notes,
including, without limitation, all appendices thereto.
Property -- means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
Purchase Money Lien -- means:
(a) a Lien held by any Person (whether or not the seller of such
Property) on tangible Property (or a group of related items of Property the
substantial portion of which are tangible) acquired or constructed by the
Company or any Subsidiary, which Lien secures all or a portion of the
related purchase price or construction costs of such Property, provided
that such Lien
(i) is created contemporaneously with, or within one hundred
eighty (180) days of, such acquisition or construction,
(ii) encumbers only Property purchased or constructed after the
Closing Date and acquired with the proceeds of the Debt secured
thereby, and
(iii) is not thereafter extended to any other Property;
and
(b) any Lien existing on Property of any corporation at the time
it becomes a Subsidiary, provided that
(i) no such Lien shall extend to or cover any Property other than
the Property subject to such Lien at the time of any such transaction,
and
(ii) such Lien was not created in contemplation of any such
transaction.
Purchaser -- means the Persons listed as purchasers of Notes on Annex 1
hereto.
Required Holders -- means, at any time, the holder or holders of at least
sixty-six and two-thirds percent (66-2/3%) in principal amount of the Notes at
the time outstanding (exclusive of Notes then owned by any one or more of the
Company, any Subsidiary or any Affiliate), without regard to Series of such
outstanding Notes.
Restricted Investments -- means, at any time, all Investments except the
following:
(a) Investments in existence on the Closing Date and described on
Part 9.1(RI) of Annex 3;
(b) Investments in certificates of deposit, repurchase agreements and
banker's acceptances issued by an Acceptable Bank, provided that such
obligations mature within one (1) year from the date of acquisition
thereof;
(c) Investments in commercial paper that (i) is rated either "P-1" or
higher by Moody's Investor Services, Inc. or "A-1" or higher by Standard &
Poor's Corporation (or comparable ratings by any comparable successor
agency) and (ii) mature not more than two hundred seventy (270) days from
the date of creation thereof;
(d) Investments in direct obligations of the United States of America,
or any agency thereof, or obligations unconditionally guaranteed by the
United States of America, provided that such obligations mature within one
(1) year from the date of acquisition thereof;
(e) Investments in Property to be used in the ordinary course of
business of the Company and the Subsidiaries; and
(f) Investments in one or more Subsidiaries or in any corporation
that concurrently with such Investment becomes a Subsidiary;
As used in this definition:
Acceptable Bank -- means any commercial bank
(x) that is organized under the laws of the United States of
America or any state thereof,
(y) that has capital, surplus and undivided profits
aggregating at least Five Hundred Million Dollars ($500,000,000),
and
(z) whose long-term unsecured debt obligations (or the long-term
unsecured debt obligations of the bank holding company owning all of
the capital stock of such bank) shall be rated "A3" or higher by
Moody's Investor Services, Inc. or "A-" or higher by Standard & Poor's
Corporation (or comparable ratings by any comparable successor
agency).
Restricted Payment -- means
(a) any Distribution and
(b) any Subordinated Payment.
Revolving Credit Agreement -- means, with respect to the Company or any
Subsidiary, a credit or loan agreement to which the Company or such Subsidiary
is a party and pursuant to which the Company or such Subsidiary is entitled to
obtain working capital loans from the commercial bank or commercial banks party
thereto.
Securities Act -- means the Securities Act of 1933, as amended.
Security -- means "security" as defined by Section 2(1) of the Securities
Act.
Security Agreements -- means, collectively, the Packing Security
Agreement, the Gwaltney Security Agreement and the Morrell Security
Agreement.
Security Documents -- means the Trust Agreement, the Deeds of Trust, the
Security Agreements, the SFFC Pledge Agreement and the other agreements and
instruments to be executed pursuant to the terms of each of such Security
Documents, as each may be amended from time to time.
Security Trustee -- shall have the meaning assigned to such term in the
Trust Agreement.
Senior Financial Officer -- means the chief financial officer, the
principal accounting officer, the controller or the treasurer of the Company.
Senior Officer -- means the chairman of the Board of Directors, the chief
executive officer, the chief operating officer, the president, the chief
financial officer, the general counsel or any vice president of the Company.
Series -- means a series of Notes.
Series A Notes -- Section 1.3.
Series B Notes -- Section 1.3.
Series C Notes -- Section 1.3.
Series D Notes -- Section 1.3.
Series E Notes -- Section 1.3.
Series F Notes -- Section 1.3.
Series G Notes -- Section 1.3.
Series H Notes -- Section 1.3.
SFFC -- means SFFC, Inc. a Delaware corporation, and its successors and
assigns.
SFFC Pledge Agreement -- Section 3.10.
6.24% Note Agreement -- Section 1.1.
Specified Preferred Stock -- means, at any time, the Company's 6.75%
cumulative convertible redeemable preferred stock, Series C.
Subordinated Payment -- means payments of interest on, or payments or
prepayments of principal of, or the setting apart of money for a sinking or
other analogous fund for the purchase, redemption, retirement or other
acquisition of any principal or interest on (a) Debt of the Company or any
Guarantor which is subordinate or junior in right of payment or otherwise to the
Debt evidenced by the Notes or the Joint and Several Guaranty or (b) Debt owing
to any Affiliate.
Subsidiary -- means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
Subsidiary Stock -- Section 6.15.
Surviving Corporation -- Section 6.14.
Tangible Assets -- means, with respect to any Person at any time, all
assets of such Person (including, without duplication, the capitalized value of
any leasehold interest of such Person with respect to Capital Leases) except:
(a) deferred assets, other than prepaid insurance, prepaid taxes,
prepaid contract items, prepaid license fees and other similar prepaid
items;
(b) patents, copyrights, trademarks, trade names, franchises,
goodwill, experimental expense and other similar intangible assets;
(c) Restricted Investments of such Person;
(d) unamortized debt discount and expense; and
(e) assets located, and notes and receivables due from obligors
domiciled, outside the United States of America;
at such time.
10.75% Note Agreement -- Section 1.1.
Trademark Subsidiary -- means a Subsidiary that has no material assets
other than:
(a) patents, trademarks, service marks, trade names, copyrights and
other similar licenses and intangibles used or useful in the conduct of the
business of the Company or any Subsidiary; and
(b) intercompany obligations in its favor obtained in respect of the
granting of rights to the Company and the other Subsidiaries with respect
to the patents, trademarks, service marks, trade names, copyrights and
other similar licenses and intangibles held by it.
Transfer -- Section 6.15.
Trust Agreement -- Section 3.10.
12.75% Note Agreement -- Section 1.1.
Voting Stock -- means capital stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
Wholly-Owned Subsidiary -- means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity Securities (except directors' qualifying
shares) and voting Securities of which are owned by any one or more of the
Company and the other Wholly-Owned Subsidiaries at such time.
9.2 GAAP.
Where the character or amount of any asset or liability or item of income
or expense, or any consolidation or other accounting computation is required to
be made for any purpose hereunder, it shall be done in accordance with GAAP as
in effect on the date of, or at the end of the period covered by, the financial
statements from which such asset, liability, item of income, or item of expense,
is derived, or, in the case of any such computation, as in effect on the date as
of which such computation is required to be determined, provided, that if any
term defined herein includes or excludes amounts, items or concepts that would
not be included in or excluded from such term if such term were defined with
reference solely to GAAP, such term will be deemed to include or exclude such
amounts, items or concepts as set forth herein.
9.3 Directly or Indirectly.
Where any provision herein refers to action to be taken by any Person, or
that such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person, including
actions taken by or on behalf of any partnership in which such Person is a
general partner.
9.4 Section Headings, Table of Contents and Construction.
The titles of the Sections and the Table of Contents 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. Unless otherwise specified, references to Sections are to Sections
of this Agreement, references to Annexes are to Annexes to this Agreement,
references to Attachments are to Attachments to this Agreement and references to
Exhibits are to Exhibits to this Agreement. Each covenant contained herein shall
be construed (absent an express contrary provision herein) as being independent
of each other covenant contained herein, and compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
9.5 Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, INTERNAL VIRGINIA LAW, EXCLUDING CHOICE-OF-LAW
PROVISIONS OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
10. MISCELLANEOUS
10.1 Communications.
(a) Method; Address. All communications hereunder or under the
Notes shall be in writing and shall be hand delivered, deposited into
the United States mail (registered or certified mail), postage prepaid,
or sent by overnight courier, and shall be addressed,
(i) if to the Company,
Smithfield Foods, Inc.
900 Dominion Tower
999 Waterside Drive
Norfolk, Virginia 23510
Attention: Mr. Aaron D. Trub
or at such other address as the Company shall have furnished in
writing to all holders of the Notes at the time outstanding,
(ii) if to any Guarantor
c/o Smithfield Foods, Inc.
900 Dominion Tower
999 Waterside Drive
Norfolk, Virginia 23510
Attention: Mr. Aaron D. Trub
or at such other address as such Guarantor shall have furnished in
writing to all holders of the Notes at the time outstanding,
(iii) if to any of the holders of the Notes,
(A) if such holders are the Purchasers, at their respective
addresses set forth on Annex 1, and further including any parties
referred to on Annex 1 that are required to receive notices in
addition to such holders of the Notes, and
(B) if such holders are not the Purchasers, at their
respective addresses set forth in the register for the
registration and transfer of Notes maintained pursuant to Section
5.1,
or to any such party at such other address as such party may designate
by notice duly given in accordance with this Section 10.1 to the
Company and the Guarantor (which other address shall be entered in
such register).
(b) When Given. Any communication so addressed and deposited in the
United States mail, postage prepaid, by registered or certified mail (in
each case, with return receipt requested) shall be deemed to be received on
the third (3rd) succeeding Business Day after the day of such deposit (not
including the date of such deposit). Any communication so addressed and
delivered otherwise shall be deemed to be received when actually received
at the address of the addressee.
10.2 Reproduction of Documents.
This Agreement and the other Financing Documents, and all documents
relating hereto and thereto, including, without limitation, (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by you at the closing of your purchase of the Notes (except the Notes
themselves) and (c) financial statements, certificates and other information
previously or hereafter furnished to you or any other holder of Notes, may be
reproduced by any holder of Notes by any photographic, photostatic, microfilm,
micro-card, miniature photographic, digital or other similar process and each
holder of Notes may destroy any original document so reproduced. The Company and
the Guarantors agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by such holder of Notes in the regular course of business)
and that any enlargement, facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence.
10.3 Survival.
All warranties, representations, certifications and covenants made by the
Company and the Guarantors herein and in the other Financing Documents or in any
certificate or other instrument delivered by the Company or the Guarantors or on
their behalf pursuant to any of the Financing Documents shall be considered to
have been relied upon by you and shall survive the delivery to you of the Notes
regardless of any investigation made by you or on your behalf. All statements in
any such certificate or other instrument shall constitute warranties and
representations by the Company and the Guarantors hereunder.
10.4 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, 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 you or your successor or
assign.
10.5 Amendment and Waiver.
(a) Requirements. This Agreement may be amended, and the observance of
any term hereof may be waived, with (and only with) the written consent of
the Company and the Required Holders; provided that no such amendment or
waiver of any of the provisions of Section 1 through Section 4 hereof,
inclusive, shall be effective as to any holder of Notes unless consented to
by such holder in writing; and provided further that no such amendment or
waiver shall, without the written consent of the holders of all Notes
(exclusive of Notes held by the Company or any Subsidiary) at the time
outstanding,
(i) subject to Section 8.2, change the amount or time of
any prepayment or payment of principal or Make-Whole Amount or the
rate or time of payment of interest,
(ii) amend Section 8,
(iii) amend this Section 10.5, or
(iv) release any Guarantor from its obligations set forth in
the Joint and Several Guaranty.
The holder of any Note may specify that any such written consent executed
by it shall be effective only with respect to a portion of the Notes held
by it (in which case it shall specify, by dollar amount, the aggregate
principal amount of Notes with respect to which such consent shall be
effective) and in the event of any such specification such holder shall be
deemed to have executed such written consent only with respect to the
portion of the Notes so specified.
(b) Solicitation of Noteholders.
(i) Solicitation. The Company will not negotiate with any holder
of the Notes with respect to a material matter, nor will it solicit,
request or negotiate in writing with respect to any proposed waiver or
amendment of any of the provisions hereof or the Notes or any other
Financing Document, unless each holder of the Notes (irrespective of
the amount of Notes then owned by it) shall be informed thereof by the
Company with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of
any waiver or consent effected pursuant to the provisions of this
Section 10.5 shall be delivered by the Company to each holder of
outstanding Notes forthwith following the date on which the same shall
have been executed and delivered by all holders of outstanding Notes
required to consent or agree to such waiver or consent.
(ii) Payment. The Company shall not, directly or indirectly, pay
or cause to be paid any remuneration, whether by way of supplemental
or additional interest, fee or otherwise, or grant any security, to
any holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of any
of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same
terms, ratably to the holders of all Notes then outstanding.
(iii) Scope of Consent. Any consent made pursuant to this Section
10.5 by a holder of Notes that has transferred or has agreed to
transfer its Notes to the Company, any Subsidiary or any Affiliate and
has provided or has agreed to provide such written consent as a
condition to such transfer shall be void and of no force and effect
except solely as to such holder, and any amendments effected or
waivers granted or to be effected or granted that would not have been
or would not be so effected or granted but for such consent (and the
consents of all other holders of Notes that were acquired under the
same or similar conditions) shall be void and of no force and effect,
retroactive to the date such amendment or waiver initially took or
takes effect, except solely as to such holder.
(c) Binding Effect. Except as provided in Section 10.5(b), any
amendment or waiver consented to as provided in this Section 10.5 shall
apply equally to all holders of Notes and shall be binding upon them and
upon each future holder of any Note and upon the Company whether or not
such Note shall have been marked to indicate such amendment or waiver. No
such amendment or waiver shall extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon.
10.6 Payments, When Received.
(a) Payments Due on Holidays. If any payment due on, or with respect
to, any Note shall fall due on a day other than a Business Day, then such
payment shall be made on the first Business Day following the day on which
such payment shall have so fallen due; provided that if all or any portion
of such payment shall consist of a payment of interest, for purposes of
calculating such interest, such payment shall be deemed to have been
originally due on such first following Business Day, and such interest
shall accrue and be payable to (but not including) the actual date of
payment.
(b) Payments, When Received. Any payment actually received by you
before 11:00 a.m., New York time, by federal funds wire transfer on any
Business Day, shall be deemed to have been received by you on such day. Any
payment actually received by you at or after 11:00 a.m., New York time, by
federal funds wire transfer on any Business Day, shall be deemed to have
been received on the next following Business Day. All payments received by
you on a day other than a Business Day, or in a manner other than by
federal funds wire transfer, shall be deemed to have been received by you
on the Business Day such amounts actually become available to you prior to
11:00 a.m., New York time.
10.7 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.
10.8 Duplicate Originals, Execution in Counterpart.
Two or more duplicate originals hereof 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.
[Remainder of page intentionally blank; next page is signature page.]
<PAGE>
If this Agreement is satisfactory to you, please so indicate by signing the
acceptance at the foot of a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding among us in
accordance with its terms.
Very truly yours,
SMITHFIELD FOODS, INC.
By /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Vice President, Secretary and
Treasurer
Accepted:
[Separately executed by each of the
following Purchasers]
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By /s/ Scott A. McFetridge
Name: Scott A. McFetridge
Title: Investment Officer
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By /s/ Anthony C. Urick
Name: Anthony C. Urick
Title: Vice President
MELLON BANK, N.A., solely in its capacity as Trustee for the NYNEX MASTER
PENSION TRUST, (as directed by John Hancock Mutual Life Insurance Company), and
not in its individual capacity
By /s/ Robert F. Sass
Name: Robert F. Sass
Title: Vice President
The decision to participate in the investment, any representations made herein
by the participant, and any actions taken hereunder by the participant has/have
been made solely at the direction of the investment fiduciary who has sole
investment discretion with respect to this investment.
Examined and approved as to form [initialled by] Legal Department.
MELLON BANK, N.A., solely in its capacity as Trustee for the AT&T MASTER PENSION
TRUST, (as directed by John Hancock Mutual Life Insurance Company), and not in
its individual capacity
By /s/ Robert F. Sass
Name: Robert F. Sass
Title: Vice President
The decision to participate in the investment, any representations made herein
by the participant, and any actions taken hereunder by the participant has/have
been made solely at the direction of the investment fiduciary who has sole
investment discretion with respect to this investment.
Examined and approved as to form [initialled by] Legal Department.
THE MARITIME LIFE ASSURANCE COMPANY
By /s/ Byron Corner
Name: Byron Corner
Title: Vice President and Chief Actuary
By /s/ Phil Pothier
Name: Phil Pothier
Title: Senior Vice President and C.F.O.
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
By /s/ Gary A. Poliner
Name: Gary A. Poliner
Title: Vice President
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By /s/ Julia S. Tucker
Name: Julia S. Tucker
Title: Investment Officer
INDEPENDENT LIFE AND ACCIDENT INSURANCE COMPANY
By /s/ Julia S. Tucker
Name: Julia S. Tucker
Title: Investment Officer
ACADEMY LIFE INSURANCE COMPANY
By /s/ Curt M. Burns
Name: Curt M. Burns
Title: Second Vice President - Investments
PEOPLES SECURITY LIFE INSURANCE COMPANY
By /s/ Curt M. Burns
Name: Curt M. Burns
Title: Second Vice President - Investments
UNITED OF OMAHA LIFE INSURANCE COMPANY
By /s/ Edwin H. Garrison Jr.
Name: Edwin H. Garrison Jr.
Title: First Vice President
COMPANION LIFE INSURANCE COMPANY
By /s/ Edwin H. Garrison Jr.
Name: Edwin H. Garrison Jr.
Title: First Vice President
By /s/ Richard A. Witt
Name: Richard A. Witt
Title: Second Vice President & Assistant Treasurer
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By /s/ John B. Joyce
Name: John B. Joyce
Title: Managing Director
UNICARE LIFE & HEALTH INSURANCE COMPANY
By Massachusetts Mutual Life Insurance
Company, its Investment Manager
By /s/ John B. Joyce
Name: John B. Joyce
Title: Managing Director
CM LIFE INSURANCE COMPANY
By /s/ John B. Joyce
Name: John B. Joyce
Title: Managing Director
EXHIBIT 4.7(A)
JOINT AND SEVERAL GUARANTY
THIS JOINT AND SEVERAL GUARANTY, dated as of July 15, 1996 (as amended or
restated from time to time, this "Guaranty"), by each of Gwaltney of Smithfield,
Ltd., a Delaware corporation (together with its successors and assigns,
"Gwaltney"), John Morrell & Co., a Delaware corporation (together with its
successors and assigns, "Morrell"), The Smithfield Packing Company,
Incorporated, a Virginia corporation (together with its successors and assigns,
"Packing"), SFFC, Inc., a Delaware corporation (together with its successors and
assigns, "SFFC"), Patrick Cudahy Incorporated, a Delaware corporation (together
with its successors and assigns, "Cudahy") and Brown's of Carolina, Inc., a
North Carolina corporation (together with its successors and assigns, "Brown's,"
and together with Gwaltney, Morrell, Packing, SFFC and Cudahy, individually, a
"Guarantor" and collectively, the "Guarantors"), in favor of each of the
Noteholders (as such term is hereinafter defined).
11. PRELIMINARY STATEMENT.
11.1 Smithfield Foods, Inc. (together with its successors and assigns, the
"Company"), a Delaware corporation, has authorized, pursuant to those certain
Note Purchase Agreements (collectively, as may be amended or restated from time
to time, the "Note Purchase Agreement"), each dated as of July 15, 1996, entered
into separately between the Company and, respectively, each of the purchasers of
the Notes named on Annex 1 to the Note Purchase Agreement (the "Purchasers"),
the issuance of:
(a) $2,825,000 in aggregate principal amount of its six and
twenty-four one-hundredths percent (6.24%) Series A Senior Secured Notes
Due November 1, 1998 (as they may be amended, restated or otherwise
modified from time to time, the "Series A Notes," such term to include each
Series A Note delivered from time to time in accordance with any of the
Note Purchase Agreements);
(b) $9,852,942 in aggregate principal amount of its eight and
forty-one one-hundredths percent (8.41%) Series B Senior Secured Notes Due
August 1, 2006 (as they may be amended, restated or otherwise modified from
time to time, the "Series B Notes," such term to include each Series B Note
delivered from time to time in accordance with any of the Note Purchase
Agreements);
(c) $40,000,000 in aggregate principal amount of its eight and
thirty-four one-hundredths percent (8.34%) Series C Senior Secured Notes
Due August 1, 2003 (as they may be amended, restated or otherwise modified
from time to time, the "Series C Notes," such term to include each Series C
Note delivered from time to time in accordance with any of the Note
Purchase Agreements);
(d) $9,000,000 in aggregate principal amount of its nine and eighty
one-hundredths percent (9.80%) Series D Senior Secured Notes Due August 1,
2003 (as they may be amended, restated or otherwise modified from time to
time, the "Series D Notes," such term to include each Series D Note
delivered from time to time in accordance with any of the Note Purchase
Agreements);
(e) $9,250,000 in aggregate principal amount of its ten and seventy
five one-hundredths percent (10.75%) Series E Senior Secured Notes Due
August 1, 2005 (as they may be amended, restated or otherwise modified from
time to time, the "Series E Notes," such term to include each Series E Note
delivered from time to time in accordance with any of the Note Purchase
Agreements);
(f) $100,000,000 in aggregate principal amount of its eight and
fifty-two one-hundredths percent (8.52%) Series F Senior Secured Notes Due
August 1, 2006 (as they may be amended, restated or otherwise modified from
time to time, the "Series F Notes," such term to include each Series F Note
delivered from time to time in accordance with any of the Note Purchase
Agreements);
(g) $14,000,000 in aggregate principal amount of its nine and
eighty-five one-hundredths percent (9.85%) Series G Senior Secured Notes
Due November 1, 2006 (as they may be amended, restated or otherwise
modified from time to time, the "Series G Notes," such term to include each
Series G Note delivered from time to time in accordance with any of the
Note Purchase Agreements); and
(h) $14,779,412 in aggregate principal amount of its eight and
forty-one one-hundredths percent (8.41%) Series H Senior Secured Notes Due
August 1, 2004 (as they may be amended, restated or otherwise modified from
time to time, the "Series H Notes," such term to include each Series H Note
delivered from time to time in accordance with any of the Note Purchase
Agreements).
The Series A Notes, the Series B Notes, the Series C Notes, the Series D Notes,
the Series E Notes, the Series F Notes, the Series G Notes and the Series H
Notes are herein referred to, individually, as a "Note," and collectively, as
the "Notes."
11.2 In order to induce the Purchasers to purchase the Notes, the Company
has agreed, pursuant to the Note Purchase Agreement, that the Guarantors will be
required to guaranty unconditionally all of the obligations of the Company under
and in respect of the Notes and the Note Purchase Agreement pursuant to the
terms and provisions hereof.
11.3 The Guarantors and the Company are operated as part of one
consolidated business entity and are directly dependent upon each other for and
in connection with their respective business activities and their respective
financial resources. Each Guarantor will receive direct and indirect economic,
financial and other benefits from the indebtedness incurred under the Note
Purchase Agreement and the Notes by the Company, and under this Guaranty by such
Guarantor, and the incurrence of such indebtedness is in the best interests of
such Guarantor. The Company and the Guarantors have explicitly induced the
Purchasers to purchase the Notes based on and in reliance on the consolidated
financial condition of the Company and its subsidiaries, including the
Guarantors.
11.4 All acts and proceedings required by law and by the certificates or
articles of incorporation, as the case may be, and bylaws of each Guarantor
necessary to constitute this Guaranty a valid and binding agreement for the uses
and purposes set forth herein in accordance with its terms have been done and
taken, and the execution and delivery hereof has been in all respects duly
authorized by each Guarantor.
12. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
12.1 Guarantied Obligations.
Each Guarantor, in consideration of the execution and delivery of the Note
Purchase Agreement by the Purchasers and the purchase of the Notes and/or
exchange of certain promissory notes previously issued by certain of the
Guarantors for the Notes, hereby irrevocably, unconditionally, absolutely,
jointly and severally guarantees, on a continuing basis, to each Noteholder, as
and for such Guarantor's own debt, until final and indefeasible payment has been
made:
(a) the due and punctual payment by the Company of the principal of,
and interest, and the Make-Whole Amount (if any) on, the Notes at any time
outstanding and the due and punctual payment of all other amounts payable,
and all other indebtedness owing, by the Company to the Noteholders under
the Note Purchase Agreement and the Notes, in each case when and as the
same shall become due and payable, whether at maturity, pursuant to
mandatory or optional prepayment, by acceleration or otherwise, all in
accordance with the terms and provisions hereof and thereof; it being the
intent of each Guarantor that the guaranty set forth herein shall be a
continuing guaranty of payment and not a guaranty of collection; and
(b) the punctual and faithful performance, keeping, observance, and
fulfillment by the Company of all duties, agreements, covenants and
obligations of the Company contained in the Note Purchase Agreement and the
Notes.
All of the obligations set forth in subsection (a) and subsection (b) of this
Section 2.1 are referred to herein as the "Guarantied Obligations" and the
guaranty thereof contained herein is referred to herein as the "Unconditional
Guaranty". This Unconditional Guaranty is a primary, original and immediate
obligation of each Guarantor and is an absolute, unconditional, continuing and
irrevocable guaranty of payment and performance and shall remain in full force
and effect until the full, final and indefeasible payment of the Guarantied
Obligations.
12.2 Performance Under the Note Purchase Agreement.
In the event the Company fails to pay, perform, keep, observe, or fulfill
any Guarantied Obligation in the manner provided in the Notes or in the Note
Purchase Agreement, each of the Guarantors shall cause forthwith to be paid the
moneys, or to be performed, kept, observed, or fulfilled each of such
obligations, in respect of which such failure has occurred in accordance with
the terms and provisions of the Note Purchase Agreement and the Notes. In
furtherance of the foregoing, if an Event of Default shall exist, all of the
Guarantied Obligations shall, in the manner and subject to the limitations
provided in the Note Purchase Agreement for the acceleration of the maturity of
the Notes, forthwith become due and payable without notice, regardless of
whether the acceleration of the maturity of the Notes shall be stayed, enjoined,
delayed or otherwise prevented.
12.3 Undertakings in Note Purchase Agreement.
Each of the Guarantors will comply with each of the undertakings of the
Company in the Note Purchase Agreement in respect of which the Company
undertakes to cause the Guarantors (in their capacity as Guarantors and as
Subsidiaries) to comply with such undertakings, as if such undertakings (as they
apply to the Guarantors) were set forth at length herein as the undertakings of
each such Guarantor.
12.4 Releases.
Each of the Guarantors consents and agrees that, without any notice
whatsoever to or by the Guarantors and without impairing, releasing, abating,
deferring, suspending, reducing, terminating or otherwise affecting the
obligations of any of the Guarantors hereunder, each Noteholder, by action or
inaction, may:
(a) compromise or settle, renew or extend the period of duration or
the time for the payment, or discharge the performance of, or may refuse
to, or otherwise not, enforce, or may, by action or inaction, release all
or any one or more parties to, any one or more of this Guaranty, the Notes,
the Note Purchase Agreement, any other guaranty or agreement or instrument
related thereto or hereto;
(b) assign, sell or transfer, or otherwise dispose of, any one or
more of the Notes;
(c) grant waivers, extensions, consents and other indulgences of any
kind whatsoever to the Company or any other guarantor in respect of any one
or more of this Guaranty, the Notes, the Note Purchase Agreement, any other
guaranty or any agreement or instrument related thereto or hereto;
(d) amend, modify or supplement in any manner whatsoever and at any
time (or from time to time) any one or more of the Notes, the Note Purchase
Agreement, any other guaranty or any agreement or instrument related
hereto;
(e) release or substitute any one or more of the endorsers or
guarantors of the Guarantied Obligations, whether parties hereto or not;
and
(f) sell, exchange, release, surrender or enforce, by action or
inaction, any Property at any time pledged or granted as security in
respect of the Guarantied Obligations in accordance with the terms and
conditions of the agreements and instruments pursuant to which such
Property was pledged or granted (as such agreements and instruments may be
amended from time to time, and without any requirement of notice of such
amendment to any Guarantor), whether so pledged or granted by the Company,
any Guarantor or another guarantor of the Company's obligations under the
Note Purchase Agreement, the Notes, any other guaranty or any agreement or
instrument related hereto.
12.5 Waivers.
To the fullest extent permitted by law, each of the Guarantors does hereby
waive:
(a) any notice of
(i) acceptance of this Unconditional Guaranty;
(ii) any purchase of the Notes under the Note Purchase Agreement,
or the creation, existence or acquisition of any of the Guarantied
Obligations, or the amount of the Guarantied Obligations, subject to
the Guarantors' right to make inquiry of each Noteholder to ascertain
the amount of the Guarantied Obligations owing to such Noteholder at
any reasonable time, provided that the Guarantors will look solely to
the Company for the determination of the identities of the
Noteholders;
(iii) any transfer of Notes from one holder to another;
(iv) any adverse change in the financial condition of the Company
or any other fact that might increase, expand or affect any of the
Guarantors' risk hereunder;
(v) presentment for payment, demand, protest, and notice
thereof as to the Notes or any other instrument;
(vi) any Default or Event of Default; and
(vii) any kind or nature whatsoever to which any of the
Guarantors might otherwise be entitled, other than those specifically
required to be given to each of such Guarantors pursuant to the terms
of this Guaranty;
(b) the right by statute or otherwise to require any Noteholder to
institute suit against the Company, any Guarantor, or any other guarantor
or to exhaust the rights and remedies of any Noteholder against the
Company, any Guarantor or any other guarantor;
(c) the benefit of any stay (except in connection with a pending
appeal), valuation, appraisal, redemption or extension law now or at any
time hereafter in force which, but for this waiver, might be applicable to
any sale of Property of any Guarantor made under any judgment, order or
decree based on this Guaranty, and each Guarantor covenants that it will
not at any time insist upon or plead, or in any manner claim or take the
benefit or advantage of such law;
(d) any defense or objection to the absolute, primary, continuing
nature, or the validity, enforceability or amount, of this Unconditional
Guaranty, including, without limitation, any defense based on (and the
primary, continuing nature, and the validity, enforceability and amount, of
this Unconditional Guaranty shall be unaffected by), any of the following:
(i) any change in future conditions;
(ii) any change of law;
(iii) any invalidity or irregularity with respect to the issuance
or assumption of any obligations (including, without limitation, the
Note Purchase Agreement, the Notes or any agreement or instrument
related hereto) by the Company or any other Person;
(iv) the execution and delivery of any agreement at any time
hereafter (including, without limitation, the Note Purchase Agreement,
the Notes or any agreement or instrument related hereto) of the
Company or any other Person,
(v) the genuineness, validity, regularity or enforceability
of any of the Guarantied Obligations;
(vi) any default, failure or delay, willful or otherwise, in
the performance of any obligations by the Company or any Guarantor;
(vii) any creditors' rights, bankruptcy, receivership or other
insolvency proceeding of the Company or any Guarantor, or
sequestration or seizure of any Property of the Company or any
Guarantor, or any merger, consolidation, reorganization, dissolution,
liquidation or winding up or change in corporate constitution or
corporate identity or loss of corporate identity of the Company or any
Guarantor;
(viii) any disability or other defense of the Company or any
Guarantor to payment and performance of all Guarantied Obligations
other than the defense that the Guarantied Obligations shall have been
fully and finally performed and indefeasibly paid;
(ix) the cessation from any cause whatsoever of the liability
of the Company or any Guarantor in respect of the Guarantied
Obligations;
(x) impossibility or illegality of performance on the part of
the Company or any Guarantor under the Note Purchase Agreement, the
Notes or this Guaranty;
(xi) any change in the circumstances of the Company, any
Guarantor or any other Person, whether or not foreseen or foreseeable,
whether or not imputable to the Company or any Guarantor, including,
without limitation, impossibility of performance through fire,
explosion, accident, labor disturbance, floods, droughts, embargoes,
wars (whether or not declared), civil commotions, acts of God or the
public enemy, delays or failure of suppliers or carriers, inability to
obtain materials, economic or political conditions, or any other
causes affecting performance, or any other force majeure, whether or
not beyond the control of the Company or any Guarantor and whether or
not of the kind hereinbefore specified;
(xii) any attachment, claim, demand, charge, Lien, order,
process, encumbrance or any other happening or event or reason,
similar or dissimilar to the foregoing, or any withholding or
diminution at the source, by reason of any taxes, assessments,
expenses, indebtedness, obligations or liabilities of any character,
foreseen or unforeseen, and whether or not valid, incurred by or
against any Person, or any claims, demands, charges, Liens or
encumbrances of any nature, foreseen or unforeseen, incurred by any
Person, or against any sums payable under the Note Purchase Agreement
or the Notes or any agreement or instrument related hereto so that
such sums would be rendered inadequate or would be unavailable to make
the payment as herein provided;
(xiii) any change in the ownership of the equity securities
of the Company, any Guarantor or any other Person liable in respect
of the Notes; or
(xiv) any other action, happening, event or reason whatsoever
that shall delay, interfere with, hinder or prevent, or in any way
adversely affect, the performance by the Company or any Guarantor of
any of its obligations under the Note Purchase Agreement, the Notes or
this Guaranty.
12.6 Certain Waivers of Subrogation, Reimbursement and Indemnity.
Until the Guarantied Obligations have been finally and indefeasibly paid,
none of the Guarantors shall have any right of subrogation, reimbursement, or
indemnity whatsoever in respect of the Guarantied Obligations, and no right of
recourse to or with respect to any assets or Property of the Company or any
other Guarantor.
12.7 Invalid Payments.
To the extent the Company makes a payment or payments to any Noteholder,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required, for any of the
foregoing reasons or for any other reason, to be repaid or paid over to a
custodian, trustee, receiver or any other party or officer under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, state or federal law, or any common law or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof intended to be satisfied shall be revived and continued in full
force and effect as if said payment had not been made and each Guarantor shall
be primarily liable for such obligation.
12.8 Marshaling.
Neither any Noteholder nor any Person acting for the benefit of any
Noteholder shall be under any obligation to marshal any assets in favor of any
of the Guarantors or against or in payment of any or all of the Guarantied
Obligations.
12.9 Subordination.
In the event that, for any reason whatsoever, the Company or a Person
obligated in respect of the Guarantied Obligations pursuant to another
agreement, is now or hereafter becomes indebted to any Guarantor in any manner
(such indebtedness referred to as an "Affiliate Obligation"), the amount of such
Affiliate Obligation, interest thereon, and all other amounts due with respect
thereto, shall, at all times during the existence of a Default or an Event of
Default, be subordinate as to time of payment and in all other respects to all
the Guarantied Obligations, and such Guarantor shall not be entitled to enforce
or receive payment thereof until all sums then due and owing to the Noteholders
in respect of the Guarantied Obligations shall have been paid in full, except
that such Guarantor may enforce (and shall enforce, at the request of the
Required Holders, and at such Guarantor's expense) any obligations in respect of
any such Affiliate Obligation owing to such Guarantor from the Company or such
indebted Person so long as all proceeds in respect of any recovery from such
enforcement shall be held by such Guarantor in trust for the benefit of the
Noteholders, to be paid to the Noteholders as promptly as reasonably possible.
If any other payment, other than pursuant to the immediately preceding sentence,
shall have been made to any Guarantor by the Company or such indebted Person on
any such Affiliate Obligation during any time that a Default or an Event of
Default exists and there are Guarantied Obligations outstanding, such Guarantor
shall hold in trust all such payments for the benefit of the Noteholders, to be
paid to the Noteholders as promptly as reasonably possible.
12.10 Setoff, Counterclaim or Other Deductions.
Except as otherwise required by law, each payment by any one or more of the
Guarantors shall be made without setoff, counterclaim or other deduction.
12.11 Election by Guarantors to Perform Obligations.
Any election by any one or more of the Guarantors to pay or otherwise
perform any of the obligations of the Company under the Notes, the Note Purchase
Agreement or any agreement or instrument related hereto shall not release the
Company, any of the Guarantors or any other guarantor from such obligations or
any of such Person's other obligations under the Notes, the Note Purchase
Agreement or any agreement or instrument related hereto.
12.12 No Election of Remedies by Noteholders.
To the extent provided in the Note Purchase Agreement, each Noteholder
shall, individually or collectively, have the right to seek recourse against
each of the Guarantors to the fullest extent provided for herein for such
Guarantor's obligations under this Guaranty in respect of the Guarantied
Obligations. No election to proceed in one form of action or proceeding, or
against any party, or on any obligation, shall constitute a waiver of such
Noteholder's right to proceed in any other form of action or proceeding or
against other parties unless such Noteholder has expressly waived such right in
writing. Specifically, but without limiting the generality of the foregoing, no
action or proceeding by any Noteholder against the Company or any Guarantor
under any document or instrument evidencing obligations of the Company or any
Guarantor to such Noteholder shall serve to diminish the liability of any
Guarantor under this Guaranty, except to the extent that such Noteholder finally
and unconditionally shall have realized payment by such action or proceeding.
12.13 Separate Action; Other Enforcement Rights.
Each of the rights and remedies granted under this Guaranty to each
Noteholder in respect of the Notes held by such Noteholder may be exercised by
such Noteholder without notice by such Noteholder to, or the consent of or any
other action by, any other Noteholder. Each Noteholder may proceed to protect
and enforce this Unconditional Guaranty by suit or suits or proceedings in
equity, at law or in bankruptcy, and whether for the specific performance of any
covenant or agreement contained herein or in execution or aid of any power
herein granted or for the recovery of judgment for the obligations hereby
guarantied or for the enforcement of any other proper, legal or equitable remedy
available under applicable law.
12.14 Noteholder Setoff.
Each Noteholder shall have, to the fullest extent permitted by law and this
Guaranty, a right of set-off against any and all credits and any and all other
Property of each or all of the Guarantors, now or at any time whatsoever, with
or in the possession of, such Noteholder, or anyone acting for such Noteholder,
to ensure the full performance of any and all obligations of the Guarantors
hereunder.
12.15 Delay or Omission; No Waiver.
No course of dealing on the part of any Noteholder and no delay or failure
on the part of any such Person to exercise any right hereunder shall impair such
right or operate as a waiver of such right or otherwise prejudice such Person's
rights, powers and remedies hereunder. Every right and remedy given by this
Unconditional Guaranty or by law to any Noteholder may be exercised from time to
time as often as may be deemed expedient by such Person.
12.16 Restoration of Rights and Remedies.
If any Noteholder shall have instituted any proceeding to enforce any right
or remedy under this Unconditional Guaranty or under any Note held by such
Noteholder, and such proceeding shall have been dismissed, discontinued or
abandoned for any reason, or shall have been determined adversely to such
Noteholder, then and in every such case each such Noteholder, the Company and
each of the Guarantors shall, except as may be limited or affected by any
determination (including, without limitation, any determination in connection
with any such dismissal) in such proceeding, be restored severally and
respectively to its respective former positions hereunder and thereunder, and
thereafter, subject as aforesaid, the rights and remedies of such Noteholders
shall continue as though no such proceeding had been instituted.
12.17 Cumulative Remedies.
No remedy under this Guaranty, the Note Purchase Agreement or the Notes is
intended to be exclusive of any other remedy, but each and every remedy shall be
cumulative and in addition to any and every other remedy given pursuant to this
Guaranty, the Note Purchase Agreement, the Notes or the other Financing
Documents.
12.18 Limitation on Guarantied Obligations.
Notwithstanding anything in Section 2.1 or elsewhere in this Guaranty or
any other Financing Document to the contrary, the obligations of each Guarantor
under this Guaranty shall at each point in time be limited to an aggregate
amount equal to the greatest amount that would not result in such obligations
being subject to avoidance, or otherwise result in such obligations being
unenforceable, at such time under applicable law (including, without limitation,
to the extent, and only to the extent, applicable to each Guarantor, Section 548
of the Bankruptcy Code of the United States of America and any comparable
provisions of the law of any other jurisdiction, any capital preservation law of
any jurisdiction and any other law of any jurisdiction that at such time limits
the enforceability of the obligations of such Guarantor under this Guaranty).
12.19 Maintenance of Offices.
Each Guarantor will maintain an office at its address set forth in Section
5.3 where notices, presentations and demands in respect of this Guaranty may be
made upon it. Each Guarantor will maintain its office at such address until such
time as such Guarantor shall notify the Noteholders of any change of location of
such office.
12.20 Further Assurances.
Each Guarantor will cooperate with the Noteholders and execute such further
instruments and documents as the Required Holders shall reasonably request to
carry out, to the reasonable satisfaction of the Required Holders, the
transactions contemplated by the Note Purchase Agreements, the Notes, this
Guaranty and the documents and instruments related thereto.
13. INTERPRETATION OF THIS GUARANTY
13.1 Terms Defined.
As used in this Guaranty, capitalized terms have the meaning specified in
the Note Purchase Agreement unless otherwise specified below or set forth in the
section of this Guaranty referred to immediately following such term (such
definitions, unless otherwise expressly provided, to be equally applicable to
both the singular and plural forms of the terms defined):
Affiliate Obligation -- Section 2.9.
Brown's -- has the meaning assigned to such term in the first paragraph
hereof.
Company -- Section 1.1.
Cudahy -- has the meaning assigned to such term in the first paragraph
hereof.
Guaranteeing Subsidiaries -- Section 4.3.
Guarantied Obligations -- Section 2.1.
Guarantor -- has the meaning assigned to such term in the first paragraph
hereof.
Guaranty, this -- has the meaning assigned to such term in the first
paragraph hereof.
Gwaltney -- has the meaning assigned to such term in the first paragraph
hereof.
Morrell -- has the meaning assigned to such term in the first paragraph
hereof.
Note Purchase Agreement -- Section 1.1.
Noteholder -- means, at any time, each Person that is the holder of any
Note at such time.
Notes -- Section 1.1.
Packing -- has the meaning assigned to such term in the first paragraph
hereof.
Purchasers -- Section 1.1.
Series A Notes -- Section 1.1.
Series B Notes -- Section 1.1.
Series C Notes -- Section 1.1.
Series D Notes -- Section 1.1.
Series E Notes -- Section 1.1.
Series F Notes -- Section 1.1.
Series G Notes -- Section 1.1.
Series H Notes -- Section 1.1.
SFFC -- has the meaning assigned to such term in the first paragraph
hereof.
Unconditional Guaranty -- Section 2.1.
13.2 Section Headings and Construction.
(a) 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 Guaranty as a whole and not to any particular
Section or other subdivision. Unless otherwise specified, references to
Sections are to Sections of this Agreement and references to Annexes are to
Annexes to this Agreement.
(b) Construction. Each covenant contained herein shall be construed
(absent an express contrary provision herein) as being independent of each
other covenant contained herein, and compliance with any one covenant shall
not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
14. WARRANTIES AND REPRESENTATIONS
Each Guarantor represents and warrants to each Purchaser, as of the date
hereof, as follows:
14.1 Generally.
(a) Such Guarantor is fully aware of the financial condition of the
Company and is delivering this Guaranty based solely upon its own
independent investigation and in no part upon any representation or
statement of any Noteholder with respect thereto. Such Guarantor is in a
position to obtain, and hereby assumes full responsibility for obtaining,
any additional information concerning the financial condition of the
Company as such Guarantor may deem material to its obligations hereunder,
and such Guarantor is not relying upon, nor expecting, any Noteholder to
furnish it any information concerning the financial condition of the
Company.
(b) As of the date of the execution and delivery of this Guaranty, the
fair salable value of the assets of such Guarantor, taken as a whole,
exceeds its liabilities, taken as a whole; such Guarantor is able to pay
and discharge all of its debts (including, without limitation, its current
liabilities) as they become due and after giving effect to the transactions
contemplated by this Guaranty, such Guarantor will not become unable to pay
and discharge such debts as they become due; there are no presently pending
material court or administrative proceedings or undischarged judgments
against the Guarantor; and no tax Liens have been filed or threatened
against such Guarantor, nor is such Guarantor in default or claimed default
under any agreement for borrowed money.
(c) Such Guarantor is a corporation duly organized and validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Such Guarantor has the corporate power to own its Properties
and carry on its business as it is now being conducted. Such Guarantor has
the valid authority and the corporate power to enter into and perform, and
has taken all necessary action to authorize the entry into, and the
performance and delivery of, this Guaranty and the transactions
contemplated hereby.
(d) This Guaranty has been duly authorized by all necessary action on
the part of such Guarantor, has been duly executed and delivered by duly
authorized officers of such Guarantor, and constitutes a legal, valid and
binding obligation of such Guarantor.
(e) The entry into and performance of this Guaranty and the
transactions contemplated hereby do not and will not conflict with any
applicable law or regulation or official or judicial order, conflict with
the articles or certificate of incorporation, or bylaws, of such Guarantor,
conflict with any agreement or document to which such Guarantor is a party
or that is binding upon it or any of its Properties, or result in the
creation or imposition of any Lien on any of its Properties pursuant to the
provisions of any agreement or document.
14.2 Nature of Business of Company and Subsidiaries.
The Company, the Guarantors, and all of the other Subsidiaries are, and
will be, as to financing and capital raising activities, operated as part of one
consolidated business entity and each Guarantor is directly or indirectly
dependent upon each other Guarantor and each other Subsidiary and the Company
for and in connection with its business activities and its financial resources.
The Company and the Subsidiaries have sought and obtained the sale of the Notes
and the related transactions based on their consolidated financial position and
the Company and the Subsidiaries understand that the Purchasers are relying on
the consolidated financial condition of the Company and the Subsidiaries in
purchasing the Notes.
14.3 Solvency.
The fair value of the business and assets of each of the Company and each
of the Guarantors will be in excess of the amount that will be required to pay
its liabilities (including, without limitation, contingent, subordinated,
unmatured and unliquidated liabilities on existing debts, as such liabilities
may become absolute and matured), in each case after giving effect to the
transactions contemplated by this Guaranty and the other the Financing
Documents. Neither the Company nor any Guarantor, after giving effect to the
transactions contemplated by the Financing Documents, will be engaged in any
business or transaction, or about to engage in any business or transaction, for
which such Person has unreasonably small assets or capital (within the meaning
of applicable law, including, without limitation, Section 548 of the United
States Bankruptcy Code), and neither the Company nor any Guarantor has any
intent to
(a) hinder, delay or defraud any entity to which it is, or will
become, on or after the Closing Date, indebted, or
(b) incur debts that would be beyond its ability to pay as they
mature.
15. MISCELLANEOUS
15.1 Successors and Assigns.
(a) Whenever any Guarantor or any of the parties to the Note Purchase
Agreement is referred to, such reference shall be deemed to include the
successors and assigns of such party, and all the covenants, promises and
agreements contained in this Guaranty by or on behalf of any Guarantor
shall bind the successors and assigns of such Guarantor and shall inure to
the benefit of each of the Noteholders from time to time whether so
expressed or not and whether or not an assignment of the rights hereunder
shall have been delivered in connection with any assignment or other
transfer of Notes.
(b) Each of the Guarantors agrees to take such action as may be
reasonably requested by any Noteholder in connection with the transfer of
the Notes of such Noteholder in accordance with the requirements of the
Note Purchase Agreement in connection with providing an executed copy of
this Guaranty to the new Noteholder or Noteholders of such Notes, provided
that no additional obligations of the Guarantors shall thereby be created
but rather that the existing obligations of the Guarantors shall be more
particularly stated in respect of one or more future Noteholders that are
the subject of this Guaranty.
15.2 Partial Invalidity.
The unenforceability or invalidity of any provision or provisions hereof
shall not render any other provision or provisions contained herein
unenforceable or invalid.
15.3 Communications.
(a) Method; Address. All communications hereunder shall be in
writing, shall be delivered in the manner required by the Note Purchase
Agreement, and shall be addressed, if to the Guarantors, at their
respective addresses as set forth in the Note Purchase Agreement, and if
to any of the Noteholders
(i) if such Noteholder is a Purchaser, at the address set forth
on Schedule A to the Note Purchase Agreement for such Noteholder, and
further including any parties referred to on such Schedule A which are
required to receive notices in addition to such Noteholder, and
(ii) if such Noteholder is not a Purchaser, at the address set
forth in the register for the registration and transfer of Notes
maintained pursuant to Section 5.1 of the Note Purchase Agreement for
such Noteholder,
or to any such party at such other address as such party may designate by
notice duly given in accordance with this Section 5.3.
(b) When Given. Any communication so addressed and deposited in the
United States mail, postage prepaid, by registered or certified mail (in
each case, with return receipt requested) shall be deemed to be received on
the third (3rd) succeeding Business Day after the day of such deposit (not
including the date of such deposit). Any communication so addressed and
delivered otherwise shall be deemed to be received when actually received
at the address of the addressee.
15.4 Governing Law.
THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, INTERNAL VIRGINIA LAW, EXCLUDING CHOICE-OF-LAW PROVISIONS OF
SUCH COMMONWEALTH THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH COMMONWEALTH.
15.5 Effective Date.
This Guaranty shall be effective as of the date hereof.
15.6 Benefits of Guaranty Restricted.
Nothing express or implied in this Guaranty is intended or shall be
construed to give to any Person other than the Guarantors, the Noteholders and
the Security Trustee any legal or equitable right, remedy or claim under or in
respect hereof or any covenant, condition or provision herein contained; and all
such covenants, conditions and provisions are and shall be held to be for the
sole and exclusive benefit of the Guarantors, the Noteholders and the Security
Trustee.
15.7 Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein or made in writing by
the Guarantors in connection herewith shall survive the execution and delivery
hereof.
15.8 Expenses.
(a) The Guarantors shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees) incurred by the Noteholders
and the Security Trustee in connection with the consideration, negotiation,
preparation or execution of any amendments, waivers, consents, standstill
agreements and other similar agreements with respect hereto (whether or not
any such amendments, waivers, consents, standstill agreements or other
similar agreements are executed).
(b) At any time when any one or more of the Company or the Guarantors
and the Noteholders are conducting restructuring or workout negotiations in
respect hereof, or a Default or Event of Default exists, the Guarantors
shall pay when billed the reasonable costs and expenses (including
reasonable attorneys' fees and the reasonable fees of professional
advisors) incurred by the Noteholders in connection with the assessment,
analysis or enforcement of any rights or remedies that are or may be
available to the Noteholders.
(c) If any of the Guarantors shall fail to pay when due any principal
of, or Make-Whole Amount or interest on, any Note, each of the Guarantors
shall pay to each Noteholder, to the extent permitted by law, such amounts
as shall be sufficient to cover the costs and expenses, including but not
limited to reasonable attorneys' fees, incurred by such Noteholder in
collecting any sums due on the Notes.
15.9 Amendment.
This Guaranty may be amended only in a writing executed by each Guarantor
and the Required Holders.
15.10 Survival.
So long as the Guarantied Obligations and all payment obligations of the
Guarantors hereunder shall not have been fully and finally performed and
indefeasibly paid, the obligations of the Guarantors hereunder shall survive the
transfer and payment of any Note and the payment in full of all the Notes.
15.11 Entire Agreement.
This Guaranty constitutes the final written expression of all of the terms
hereof and is a complete and exclusive statement of those terms.
15.12 Duplicate Originals, Execution in Counterpart.
Two or more duplicate originals hereof 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 Guaranty 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 that, collectively, show
execution by each party hereto shall constitute one duplicate original.
[Remainder of page intentionally blank. Next page is signature page.]
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed
on its behalf by a duly authorized officer of such Guarantor.
GWALTNEY OF SMITHFIELD, LTD.
By /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Secretary and Treasurer
JOHN MORRELL & CO.
By /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Secretary
THE SMITHFIELD PACKING COMPANY,
INCORPORATED
By /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Secretary and Treasurer
SFFC, INC.
By /s/ David W. Dupert
Name: David W. Dupert
Title: President
<PAGE>
PATRICK CUDAHY INCORPORATED
By /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Secretary
BROWN'S OF CAROLINA, INC.
By /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Secretary and Treasurer
SMITHFIELD FOODS, INC.
EXHIBIT 11
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) and the number of shares and common equivalent shares used to
present net income (loss) per common share were computed as follows:
<TABLE>
<CAPTION>
13 Weeks 13 Weeks
Ended Ended
Income (loss) (in thousands) July 28, 1996 July 30, 1995
- ---------------------------- ------------- -------------
<S> <C>
Net income (loss) $ 746 $ (4,394)
Dividends accumulated for Series B
and C preferred stock (338) (169)
---------- ----------
Net income (loss) available to
common stockholders $ 408 $ (4,563)
========== ==========
Shares (in thousands)
- ---------------------
Weighted average common shares:
Outstanding 18,016 16,398
Net effect of dilutive stock options 588 488
---------- ----------
Common shares for computation 18,604 16,886
========== ==========
Net income (loss) per common share $ .02 $ (.27)
========== ==========
</TABLE>
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