Loan and Loan Document Modification Agreement
Relating, Inter Alia, To That Certain Consolidating Loan Agreement
Dated as of August 28, 1998
By and Among
Cape Fear Farm Credit, ACA ("Lender")
and
Xxxxxxx'x Foods, Inc. ("Foods"), Xxxxxxx'x Realty, Inc. ("Realty"),
and Xxxxxxx'x Realty Partnership ("Partnership")
(Foods, Realty and Partnership, collectively, "Borrowers", and each,
individually, a "Borrower"); and Loan Documents Related Thereto
This Loan and Loan Document Modification Agreement (the "Agreement")
executed to be effective as of May 7, 1999 by and among Lender, Borrowers and
Guarantors (as defined hereinbelow) (collectively, the "Parties").
PRELIMINARY STATEMENT
A. Lender previously has made, pursuant to that certain Consolidating Loan
Agreement dated as of August 28, 1998 by and among Lender, Borrowers and others
(the "Loan Agreement"), loans to Borrowers as follows:
(i) A revolving line of credit in the original principal amount of
up to $65,000,000 (the "Operating RLOC"),
(ii) A revolving line of credit in the original principal amount of
up to $80,000,000 (the "Evergreen RLOC"), and
(iii) A revolving line of credit in the original principal amount of
up to $50,000,000 (the "Stock Loan").
B. Smithfield Foods, Inc. and/or certain of its subsidiaries/affiliates
have entered into certain transactions (the "Transactions") with Borrowers
and/or certain of their affiliates, which Transactions are more specifically
described on Exhibit A attached hereto and incorporated herein by reference.
C. Lender has previously provided its consent to the Transactions and
waiver of certain violations of or defaults under the Loan Agreement which would
have occurred as a result of the Transactions, which consent and waiver was
provided by letter dated May 3, 1999 from Lender to C. Xxxxx Xxxx, Vice
President-Finance, Smithfield Foods, Inc. (the "Waiver and Consent Letter"), a
copy of which is attached hereto as Exhibit B; PROVIDED HOWEVER, that such
consent and waiver was conditioned, among other things, upon the provision of an
unconditional guaranty by Smithfield Foods, Inc. of Borrower's obligations under
the Operating RLOC and the Evergreen RLOC, and upon certain amendments and
modifications of the Loan Agreement and loan documents pertaining thereto.
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D. Lender, Borrowers, and Guarantors now desire to modify the Loan
Agreement and the Loan Documents (as defined in the Loan Agreement) to effect
the intent of Parties as set forth in the Waiver and Consent Letter. Except as
otherwise modified herein, all terms used herein shall have the meaning as set
forth in the Loan Agreement.
NOW, THEREFORE, in consideration of the premises set forth in the
foregoing Preliminary Statement, and in consideration of the mutual promises
contained hereinbelow and of other good and valuable consideration, the receipt,
sufficiency and adequacy of which the Parties do hereby acknowledge, the Parties
do hereby agree as follows:
A. AMENDMENT TO LOAN AGREEMENT; CONSENTS REQUIRED THEREUNDER.
1. The Loan Agreement is hereby amended as follows:
(a) Any references to the "Consolidating Loan Agreement" shall
mean the Loan Agreement as amended by this Agreement.
(b) Lender's obligation to make any advances under the Stock Loan
is hereby terminated and any provisions contained in the Loan
Agreement related thereto or to the administration thereof or
the collateral security therefor are hereby deleted. Further,
any impositions upon or obligations of Swine Investment under
the Loan Agreement are hereby terminated, and any reference
thereto is hereby deleted.
(c) Article 1, Definitions is amended as follows:
(i) The following sections are hereby deleted: 1.1, 1.16,
1.23, 1.27, 1.39, 1.40, 1.45, 1.47, 1.48, 1.49, 1.50,
1.51, 1.53, 1.54, and 1.55.
(ii) The following definition is added in the appropriate
alphabetical order:
o "Chase Manhattan Facilities" means those certain
loan facilities extended to Smithfield under a
credit agreement dated July 15, 1997, as amended,
among Smithfield and Chase Manhattan Bank, N.A.,
as administrative agent for certain lenders.
(iii) The following definitions are amended:
o Section 1.13 is amended to read as follows:
"Evergreen RLOC Maturity Date" means November 1,
1999.
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o Section 1.20 is amended to read as follows:
"Guarantor" means, individually, Xxxxxxx'x
Turkeys, Inc., Xxxxxxx'x Capital, Inc., Xxxxxxx'x
Foods of Mexico, Inc., Xxxxxxx'x Foods of Brazil,
LLC, and Smithfield.
o Section 1.24 is amended to delete the phrase "the
Pledge Agreement, Forbearance Agreements,"
therefrom.
o Section 1.25 is amended to read as follows:
"Loans" means the Operating RLOC and the Evergreen
RLOC as described in Section 2.1.
o Section 1.30 is amended to read as follows:
"Notes" means the Operating RLOC Note and the
Evergreen RLOC Note.
o Section 1.36 is amended to read as follows:
"Operating RLOC Maturity Date" means November 1,
1999.
o Section 1.46 is amended to read as follows:
"Smithfield" means Smithfield Foods, Inc., a
Virginia corporation.
(c) Section 4.1(c) is amended to read as follows:
(c) Financial Statements. Borrowers shall furnish (i)
monthly internally-prepared financial statements of each of
the entities comprising the Xxxxxxx'x Group within thirty (30)
days after the close of each month and certified by the chief
financial officer or general partners (as the case may be) of
the respective entity to be true, correct and complete; and
(ii) such other information respecting the financial condition
and operations of each entity comprising the Xxxxxxx'x Group
as Lender from time to time reasonably may request. All
financial statements shall be prepared in accordance with
GAAP, shall be in form and content satisfactory to Lender, and
shall include, without limitation, an income or cash flow
statement, balance sheet, and list of contingent liabilities
and claims.
(d) Section 4.1(h) is amended to insert the phrase "of such entity
and its subsidiaries, taken as a whole," following the phrase
"material adverse change" occurring in the third line thereof.
(e) Section 4.2(f) is amended to read as follows:
(f) Extension of Loans; Guaranties. No Borrower shall
make any loans, advances, extensions of credit to, or permit
to be outstanding loans or advances by or on behalf of
Borrowers, or any one or more of them, or become a guarantor,
endorser, or surety for, any person, firm, corporation or
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any other entity, including officers, employees, shareholders,
directors, or other executives of any Borrower, except for (i)
loans from Foods to Xxxxxxx'x Processing, Inc., the proceeds
of which may not be reloaned to any entity except Carolina
Turkeys, such loans being evidenced by certain promissory
notes which shall be in form and substance satisfactory to
Lender, in its sole discretion; (ii) loans from Foods to or
for the benefit of Carolina Turkeys on reasonable commercial
terms approved by Lender in advance or as required by the
terms of the Carolina Turkeys partnership agreement dated
March 1, 1985; (iii) loans from Foods to any member of the
Xxxxxxx'x Group on reasonable commercial terms approved by
Lender in advance; (iv) loans or advances from Foods to
Xxxxxxx'x Capital, Inc. in an amount not to exceed an
aggregate of $85,000,000.00; (v) short-term loans or
guaranties to the employees (excluding stockholders) or
contract growers of Foods in an amount not to exceed an
aggregate of $1,000,000.00; and (vii) that certain guaranty of
Foods to NationsBank of twenty percent (20%) of that certain
$6,000,000.00 line of credit facility established by
NationsBank for Ag Pro Vision, Inc., provided that such
guaranty shall not exceed $1,200,000.00.
(f) Section 4.2(g) is amended to read as follows:
(g) Distributions, Dividends, etc. No Borrower shall
declare or pay any dividends or distributions, or purchase,
redeem, retire or otherwise acquire for value any Borrower's
capital stock now or hereafter outstanding; or make any
distribution of assets to any Borrower's stockholders as such,
whether in the form of cash, assets, or in obligations of such
Borrower; or allocate or otherwise set apart any sum for the
payment of any dividend or distribution on, or for the
purchase, redemption, or retirement of any shares of any
Borrower's capital stock; or make any other distribution by
reduction of capital, or otherwise, in respect of any shares
of its capital stock; or permit any member of the Xxxxxxx'x
Group to purchase or otherwise acquire for value any stock of
any Borrower or other member of the Xxxxxxx'x Group.
(g) Section 4.2(h) is amended to read as follows:
(h) Additional Borrowings. No Borrower shall incur
direct, conditional, or contingent liability or indebtedness
for borrowed money other than with Lender, unless such
indebtedness has been approved by Lender in writing in advance
and is subject to a written subordination agreement
subordinating such indebtedness to the Loans, in a form
satisfactory to Lender in its sole discretion except for (i)
Borrowers' debts to Rabobank, as approved by Lender; (ii)
purchase money indebtedness (including capitalized leases) for
equipment or real estate, provided that the aggregate
outstanding principal balance of all such loans and
capitalized leases at no time exceeds $750,000.00 in excess of
such loans and capitalized leases outstanding as of the
Closing Date and each such loan has an initial maturity of not
greater than
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three (3) years; (iii) debt not to exceed in the aggregate
$2,000,000.00 incurred pursuant to an overdraft facility to be
extended to Foods by a depository institution with assets in
excess of $100,000,000.00; and debt to Smithfield and/or its
subsidiaries, which debt is unsecured and is subordinated, on
terms satisfactory to Lender, to all obligations of Borrowers
to Lender.
(h) Section 4.2(i), subsection (ii) is amended to delete the
phrase "and NationsBank" therefrom.
(i) Section 4.3 is hereby deleted.
(j) Section 6.1 is amended to delete the phrase "or NationsBank"
occurring in the third line and the fifth line thereof.
(k) Section 6.6 is amended to delete the phrase "and NationsBank"
occurring in the third line and the sixth line thereof.
(l) Section 6.7 is amended to insert the phrase "taken as a whole"
following the word "Borrower".
(m) Section 6.8 is amended to read as follows:
Cross-Default. (i) Any default by any Borrower or any
Guarantor occurs under any agreement with Lender or Rabobank
or another financial institution, whether now existing or
hereafter arising, or (ii) any default by Smithfield under the
Chase Manhattan Facilities; which default is not corrected
within the cure period, if any, provided in any such agreement
or under the Chase Manhattan Facilities.
2. The consent of Lender is hereby given with respect to the
Transactions and, to the extent that any or all of the Transactions
violate or result in the violation of any term or condition of the
Loan Agreement, as amended hereby, which violation would constitute
a default or event of default thereunder, Lender hereby waives any
and all rights with regard thereto.
3. Xxxxxxx'x Processing, Inc. and Xxxxxxx'x Foods of the Midwest are
hereby released as Guarantors.
4. Xxxxxxx'x Turkeys, Inc. hereby agrees to provide its unconditional
guaranty of payment and performance of the Loans, on terms
satisfactory to Lender, simultaneously with the execution of this
Agreement.
B. AMENDMENT OF NOTES.
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1. The Operating RLOC Note is hereby amended to delete the phrase "the
Operating RLOC Maturity Date" and insert the phrase "November 1,
1999", in the place thereof.
2. The Evergreen RLOC Note is hereby amended to delete the phrase "the
Evergreen RLOC Maturity Date" and insert the phrase "November 1,
1999", in the place thereof.
C. AMENDMENT OF LOAN DOCUMENTS. Each and every Loan Document is
hereby amended to the extent necessary that such Loan Document shall be
interpreted in a manner consistent with the terms and conditions of this
Agreement.
D. MISCELLANEOUS.
1. Each Borrower and each Guarantor hereby confirms the representations
and warranties as set forth in Article 3 of the Loan Agreement,
except as amended hereby, as and when originally made, and further
represents and warrants that the summary of the Transactions set
forth in Exhibit A is true and correct.
2. Each Borrower and each Guarantor hereby agrees to execute and
deliver to Lender, promptly upon request from Lender, such other and
further documents and assurances as reasonably may be necessary or
appropriate to consummate the transactions contemplated herein or to
perfect or continue the perfection of any liens contemplated hereby.
Such documents and assurances shall include, as conditions precedent
to this Agreement, among other things, the following:
(a) An unlimited, unconditional guaranty of Smithfield Foods,
Inc., on a form satisfactory to Lender and its counsel, of all
obligations of Borrowers under the Loan Agreement and the Loan
Documents;
(b) Evidence, to the satisfaction of Lender and counsel, of the
due authorization of each Borrower and Guarantor to enter into
and perform its respective obligations hereunder; and
(c) An opinion of counsel for each Borrower and Guarantor, in form
and content satisfactory to Lender and its counsel, opining,
among other things, as to the due organization and good
standing of each Borrower and Guarantor, the authorization of
each Borrower and Guarantor to enter into the transactions
contemplated hereunder, and the continuing enforceability of
the Loan Documents, as modified hereby, in accordance with
their respective terms.
3. This Agreement may be executed in two (2) or more counterparts, each
of which shall be deemed an original, but all of which shall
constitute one in the same instrument, and in making proof of this
Agreement, it shall not be necessary to produce or account for more
than one such counterpart.
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4. This Agreement is not a novation and, except as otherwise modified
hereby, the terms and provisions of the Loan Agreement, the Loans,
and any and all Loan Documents shall remain in full force and effect
and shall continue to be secured by the Collateral therefor with the
same force, effect and priority.
5. This Agreement, along with the Loan Agreement and the Loan
Documents, represents the full agreement of the Parties and
supersedes any other existing agreements, written or oral.
In witness whereof, the Parties have executed this Agreement to be
effective as of the date first written above.
BORROWERS:
ATTEST: XXXXXXX'X FOODS, INC.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
------------------------------ ----------------------------------
Assistant Secretary Its: President
[Corporate Seal]
ATTEST: XXXXXXX'X REALTY, INC.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
------------------------------ ----------------------------------
Assistant Secretary Its: President
[Corporate Seal]
XXXXXXX'X REALTY PARTNERSHIP (SEAL)
ATTEST: By: Xxxxxxx'x Foods, Inc., General Partner
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
------------------------------ ----------------------------------
Assistant Secretary Its: President
[Corporate Seal]
ATTEST: By: Xxxxxxx'x Realty, Inc., General Partner
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/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
------------------------------ ----------------------------------
Assistant Secretary Its: President
[Corporate Seal]
GUARANTORS:
ATTEST: XXXXXXX'X TURKEYS, INC.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
------------------------------ ----------------------------------
Assistant Secretary Its: President
[Corporate Seal]
ATTEST: XXXXXXX'X CAPITAL, INC.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
------------------------------ ----------------------------------
Assistant Secretary Its: President
[CORPORATE SEAL]
ATTEST: XXXXXXX'X FOODS OF MEXICO, INC.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
------------------------------ ----------------------------------
Assistant Secretary Its: President
[Corporate Seal]
XXXXXXX'X FOODS OF BRAZIL, LLC
[SEAL] By: /s/Xxxxx X. Xxxx
------------------------------ --------------------------------------
Its: Manager
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ATTEST: SMITHFIELD FOODS, INC.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxx
------------------------------ ----------------------------------
Assistant Secretary Its: Vice President
[Corporate Seal]
LENDER:
CAPE FEAR FARM CREDIT, ACA
By: /s/ X. Xxxxx Xxxxxxx
----------------------------------
Its: Vice President
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