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EXHIBIT 10.3
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CAL-MAINE FOODS, INC.
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LOAN AGREEMENT
Dated as of May 1, 1991
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Adjustable Rate Secured Promissory Note Due May 1, 2000
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TABLE OF CONTENTS
Page
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SECTION 1. LOAN; ISSUE OF NOTES; SECURITY; INTEREST
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1.1. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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1.2. Loan; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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1.3. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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1.4. Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
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SECTION 2. REPRESENTATIONS AND WARRANTIES
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2.1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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2.2. No Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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2.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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2.4. Organization, Authority and Good Standing; Subsidiaries . . . . . . . . . . . . . . . . . . . . 4
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2.5. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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2.6. Leases and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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2.7. Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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2.8. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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2.9. No Burdensome Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.10. Compliance with Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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2.11. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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2.12. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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2.13. Regulation G; Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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2.14. Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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2.15. Governmental Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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2.16. Offering of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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2.17. Hazardous Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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2.18. Separate Property; No Flood Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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2.19. No Affiliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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2.20. No Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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2.21. Title to Property and Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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2.22. Additional Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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SECTION 3. CONDITIONS OF THE LOAN
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3.1. Opinion of Company's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.2. Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.3. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.4. Representations True; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.5. Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.6. Opinion of Purchaser's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.7. Environmental Audit Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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SECTION 4. REPRESENTATION OF PURCHASER
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4.1. Acquisition for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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SECTION 5. FINANCIAL STATEMENTS; COMPLIANCE CERTIFICATES; ADDITIONAL INFORMATION; AND INSPECTION
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5.1. Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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5.2. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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SECTION 6. PRINCIPAL PAYMENT OF NOTE
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6.1. Principal Payments - Mandatory and Optional Prepayment . . . . . . . . . . . . . . . . . . . . . 14
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6.2. Prepayment of Note Upon Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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6.3. Prepayment Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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6.4. Interest After Date Fixed for Principal Payment . . . . . . . . . . . . . . . . . . . . . . . 16
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SECTION 7. AFFIRMATIVE COVENANTS
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7.1. To Pay Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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7.2. Maintenance of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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7.3. To Keep Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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7.4. Payment of Taxes; Corporate Existence;
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Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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7.5. To Insure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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SECTION 8. RESTRICTIVE COVENANTS
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8.1. Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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8.2. Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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8.3. Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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8.4. Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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8.5. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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8.6. Merger, Consolidation, Sale or Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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8.7. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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8.8. Encumbrances On and Transfers of the Collateral . . . . . . . . . . . . . . . . . . . . . . . . 21
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SECTION 9. DEFINITIONS
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SECTION 10. DEFAULTS AND REMEDIES
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10.1. Events of Default; Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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10.2. Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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10.3. Remedies Not Waived . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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10.4. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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10.5. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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SECTION 11. MISCELLANEOUS
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11.1. Loss, Theft, Destruction or Mutilation of Note . . . . . . . . . . . . . . . . . . . . . . . . . 30
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11.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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11.3. Stamp Taxes, Recording Fees, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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11.4. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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11.5. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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11.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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11.7. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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11.8. Law Governing; Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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11.9. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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11.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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11.11. Final Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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EXHIBIT A - FORM OF NOTE
EXHIBIT B1 - DEED OF TRUST (Mississippi)
EXHIBIT B2 - DEED TO SECURE DEBT (Georgia)
EXHIBIT B3 - DEED OF TRUST (Texas)
EXHIBIT C - MORTGAGE (Louisiana)
EXHIBIT D - SECURITY AGREEMENT
EXHIBIT E - GUARANTY
EXHIBIT F - LIENS
EXHIBIT G - OWNERSHIP OF COMPANY AND SUBSIDIARIES
EXHIBIT H - BORROWER'S AFFIDAVIT
EXHIBIT I - OPINION OF COMPANY'S COUNSEL
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CAL-MAINE FOODS, INC.
LOAN AGREEMENT
May 1, 1991
Metropolitan Life Insurance Company
Agricultural Investments
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice-President
CAL-MAINE FOODS, INC., a Delaware corporation (herein called
the "Company") agrees with you as follows:
SECTION 1. LOAN; ISSUE OF NOTES; SECURITY; INTEREST.
1.1. Authorization. The Company has duly authorized the
issuance of adjustable rate secured promissory notes due May 1, 2000 in the
aggregate principal amount of $22,500,000.00 (individually, a "Note" and
collectively, the "Notes"), such Notes to be in the form and have terms and
provisions substantially as set forth in Exhibits A-1 and A-2. The Note in the
face amount of $600,000 is sometimes referred to herein as the "Louisiana Note"
and the Note in the face amount of $21,900,000 is sometimes referred to herein
as the "GMT Note".
1.2. Loan; Closing. The Company hereby agrees to borrow
from you, and you, subject to the terms and conditions herein set forth, hereby
agree to lend to the Company, $22,500,000.00 on May __, 1991 (the "Closing
Date").
The loan will be evidenced by, and subject to all other
conditions precedent having been met, be made against delivery to you at 10
o'clock a.m., Jackson, Mississippi time, on the Closing Date, at the offices of
Wells, Wells, Marble & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other time and place as the parties may agree, of
the Notes payable to you or assigns, dated the Closing Date, duly executed by
the Company and in the aggregate principal amount of such loan. Delivery of
the Notes hereunder shall be made against payment to the Company or the holders
of liens on the Facility (as hereinafter defined) in Federal Reserve or other
funds of the principal amount then available for disbursement pursuant to that
certain Construction Disbursement Agreement and related construction loan
documents, all dated of even date herewith (such Construction Disbursement
Agreement and construction loan documents are hereafter collectively referred
to as the "Construction Loan Documents"). The first $600,000 of such funds
shall be disbursed under the Louisiana Note and the remainder and all future
disbursements under the GMT Note. All future disbursements under
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the Notes shall be governed by the terms of the Construction Loan Documents.
1.3. Security. Payment of the Notes shall be secured by (i)
respective first deeds of trust/deeds to secure debt, security agreements and
financing statements (collectively, the "Deed of Trust") to be entered into by
the Company or certain of its Subsidiaries with respect to, inter alia, the
Company's integrated poultry, egg and livestock operations and office
facilities located in ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Counties, Mississippi, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ Counties, Georgia and ▇▇▇▇▇ County, Texas, as described in said Deed of
Trust, and an act of collateral mortgage, security agreement and financing
statement (the "Mortgage") to be entered into by the Company or certain of its
Subsidiaries with respect to, inter alia, the Company's integrated poultry, egg
and livestock operations and office facilities located in ▇▇▇▇▇▇▇▇▇▇ Parish,
Louisiana, as described in said Mortgage (all such poultry, egg and livestock
operations and office facilities described in the Deed of Trust and Mortgage
are hereinafter collectively referred to as the "Facility"), (ii) a security
agreement between the Company and certain of its Subsidiaries as debtor, and
you, as secured party (the "Security Agreement") granting a security interest
in, inter alia, all equipment, fixtures and other personal property utilized in
connection with, or located at, the Facility as described in said Security
Agreement, which security interest will be perfected by one or more financing
statements, and (iii) a guaranty from certain of the Company's Subsidiaries
(the "Guaranty") with respect to the Company's rights under all leases to which
the Company is or may at any time become a party as lessor pertaining to, inter
alia, the Facility or any interest therein. The Deed of Trust, the Mortgage,
the Security Agreement, and the Assignment shall each be dated and delivered on
the Closing Date and shall be substantially in the form of Exhibits B, C, D and
E hereto, respectively, with such changes, if any, as you and the Company may
approve, and, to Documents, are collectively referred to herein as the
"Collateral Documents".
1.4. Interest Rate.
A. Subject to adjustment as set forth below, the interest
rate on the Notes shall be 9.51% per annum so long as the Notes are not in
default. The interest rate applicable to the Notes shall be subject to
adjustment by you on May 1, 1994 and May 1, 1997 (each respectively an
"Interest Rate Adjustment Date") to an adjusted rate not to exceed 275 basis
points over the yield of 3-year U. S. Treasury Notes in effect on the February
1 prior to such adjustment (or the next Business Day if such February 1 is not
a Business Day), provided, however, the interest rate on the Notes shall in no
event be less than 9.0% per annum. You will give the Company notice of the
interest rate which will be applicable to the Notes on and after each Interest
Rate Adjustment
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Date, not less than 60 days, nor more than 90 days, prior to each Interest Rate
Adjustment Date. For purposes of this Section 1.4A, the yield of U. S.
Treasury Notes shall be as published in the most recent Federal Reserve
Statistical Release H.15 (519) or any successor publication thereto.
B. As provided in Section 6.1C hereof, the Company may
prepay either Note in full within 90 days after an Interest Rate Adjustment
Date by giving notice to you of such prepayment within the time and in the
manner prescribed by said Section 6.1C. Failure to give such notice of
prepayment shall obligate the Company absolutely and unconditionally to pay
interest on the Note from and after such Interest Rate Adjustment Date at the
interest rate as determined in the preceding paragraph.
C. In the event the interest provisions hereof or any
exaction provided for herein or in the Collateral Documents shall result for
any reason and at any time during the term of this loan in an effective rate of
interest which transcends the limit of the usury or any other law applicable to
this loan, all sums in excess of those lawfully collectible as interest for the
period in question shall, without further agreement or notice between or by any
party hereto, be applied on principal immediately upon receipt and effect as
thought the payor had specifically designated such extra sums to be so applied
to principal, and the holder of the Notes shall accept such extra payment or
payments as a premium-free prepayment. If any such amounts are in excess of
the principal then outstanding, such excess shall be paid to the Company. In
no event shall any agreed-to or actual exaction as consideration for the Loan
transcend the limits imposed or provided by the law applicable to this
transaction or the Company in the jurisdictions in which the Facility or any
other security for payment of such Notes is located for the use or detention of
money or for forbearance in seeking its collection.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants that:
2.1. Financial Statements. You have been furnished with
copies of the consolidated balance sheet of the Company and its Subsidiaries as
of the Saturday nearest May 31 in each of the years 1986 to 1990, inclusive,
and the related consolidated statements of operations, changes in stockholders'
equity and changes in financial position of the Company and its Subsidiaries
for the fiscal years ended on said dates, accompanied in each case by the
opinion of its independent certified public accountants.
Said financial statements, including the related schedules and
notes, are complete and correct and fairly present (a) the financial condition
of the Company and its Subsidiaries as at the respective dates of said balance
sheets and (b) the results of the operations and changes in financial position
of the Company and its
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Subsidiaries for the fiscal years ended on said dates, all in conformity with
generally accepted accounting principles applied on a consistent basis (except
as otherwise stated therein or in the notes thereto) throughout the periods
involved.
2.2. No Material Changes. There has been no material or
adverse change in the business, operations, properties, assets, prospects or
condition, financial or other, of the Company and its Subsidiaries subsequent
to June 2, 1990.
2.3. Liens. Exhibit F hereto correctly sets forth all Liens
securing Indebtedness for money borrowed of the Company and its Subsidiaries
existing on the date hereof.
2.4. Organization, Authority and Good Standing;
Subsidiaries. Exhibit G hereto correctly sets forth the name and jurisdiction
of incorporation of the Company and an entire listing of the stockholders of
the Company and their respective interest in the Company as of April 1, 1991.
The shares of stock listed in Exhibit G as owned by ▇▇▇▇ ▇▇▇▇▇, Jr. and his
immediate family as defined in Section 6.2 below are so owned as of the date of
this Agreement and all such shares of stock have been duly issued and are fully
paid and non-assessable. More than fifty percent (50%) of the Company's
outstanding voting stock is owned by ▇▇▇▇ ▇▇▇▇▇, Jr. and his immediate family
and is and shall remain free and clear of all Liens. No person or entity has
any right, contingent or otherwise, to purchase any such shares of stock. The
Company is a duly organized and validly existing corporation in good standing
under the laws of the State of Delaware and has full power and authority to own
its properties and assets and to carry on the business which it now owns and
carries on. The Company has no Subsidiaries other than Cal-Maine Farms, Inc.,
Cal-Maine Egg Products, Inc., Sunnyside Eggs, Inc. and Sunbelt Freight, Inc. as
of the date hereof. Exhibit G also correctly sets forth (a) the name and
jurisdiction of incorporation of each Subsidiary of the Company, and (b) a
statement of the capitalization of each such Subsidiary and the ownership of
its stock. The shares of stock in such Subsidiaries listed in Exhibit G as
owned by the Company are so owned as of the date of this Agreement, free and
clear of all Liens, and all such shares of stock have been duly issued and are
fully paid and non-assessable. No person or entity has any right, contingent
or otherwise, to purchase any such shares of stock. Cal-Maine Farms, Inc.,
Cal-Maine Egg Products, Inc., Sunnyside Eggs, Inc. and Sunbelt Freight, Inc.
are duly organized and validly existing corporations in good standing under the
laws of the States of Delaware, Delaware, North Carolina and Mississippi,
respectively, and have full power and authority to own their properties and
assets and to carry on the businesses which they now own and carry on. The
Company and each of its Subsidiaries are duly qualified and in good standing as
foreign corporations in each jurisdiction wherein the nature of the property
owned or leased by them or the nature of the business transacted by them makes
such
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qualification necessary. There are no Subsidiaries of Cal-Maine Farms, Inc.,
Cal-Maine Egg Products, Inc., Sunnyside Eggs, Inc. or Sunbelt Freight, Inc. as
of the date hereof.
2.5. Title to Properties. The Company and its Subsidiaries
have good and marketable fee title to all the real properties (other than
leaseholds) and good and marketable title to all other material property
reflected on the balance sheet of the Company and its Subsidiaries as of June
2, 1990 referred to in Section 2.1, or purported to have been acquired by the
Company or its Subsidiaries after said date, excepting, however, property sold
or otherwise disposed of subsequent to said date in the ordinary course of
business.
2.6. Leases and Liens. None of the properties or assets
reflected in the consolidated balance sheet of the Company and its Subsidiaries
as of June 2, 1990 referred to in Section 2.1, or acquired by the Company or
its Subsidiaries after said date, is held by the Company or its Subsidiaries
subject to any Lien which would not be permitted by Section 7.4A or which is
not disclosed in Exhibit F hereto. The Company and its Subsidiaries enjoy
peaceful and undisturbed possession under all of the leases under which they
are operating as Lessee, and all such leases are valid, including, without
limitation, in each instance, good title being vested in the lessor thereunder,
and subsisting and in full force and effect.
2.7. Licenses. The Company and its Subsidiaries possess and
shall continue to possess all trademarks, trade names, copyrights, patents,
governmental licenses, franchises, certificates, consents, permits and
approvals necessary to enable them to carry on their business in all material
respects as now conducted and to own and operate the properties material to
their business as now owned and operated, without known conflict with the
rights of others. All such trademarks, trade names, copyrights, patents,
licenses, franchises, certificates, consents, permits and approvals which are
material to the operations of the Company and its Subsidiaries, taken as a
whole, are valid and subsisting.
2.8. Litigation. There are no actions, suits or proceedings
(whether or not purportedly on behalf of the Company or any of its
Subsidiaries) pending to the knowledge of the Company or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind,
which involve any of the transactions herein contemplated or the possibility of
any material and adverse change in the business, operations, properties,
assets, prospects or condition, financial or other, of the Company and its
Subsidiaries; and neither the Company nor any its Subsidiaries is in default or
violation of any law or any rule, regulation, judgment, order, writ,
injunction, decree or award of
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any court, arbitrator or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which default or violation might have a material adverse effect on the
business, operations, properties, prospects or condition, financial or other,
of the Company and its Subsidiaries, taken as a whole, and for which sufficient
reserves have been set aside to pay, in the event of an adverse judgment, all
damages claimed thereunder.
2.9. No Burdensome Provisions. Neither the Company nor any
of its Subsidiaries is a party to any agreement or instrument or subject to any
charter or other corporate or legislative restriction or any judgment, order,
writ, injunction, decree, award, rule or regulation which materially and
adversely affects or in the future may (so far as the Company can now
reasonably foresee) materially and adversely affect the business, operations,
properties, assets, prospects or condition, financial or other, of the Company
and its Subsidiaries, taken as a whole.
2.10. Compliance with Other Instruments. Neither the Company
nor any of its Subsidiaries is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
bond, debenture, note or other evidence of Indebtedness of the Company or its
Subsidiaries or contained in any instrument under or pursuant to which any
thereof has been issued or made and delivered. Neither the execution and
delivery of this Agreement and the Collateral Documents by the Company, the
consummation by the Company of the transactions herein and therein
contemplated, nor compliance by the Company with the terms, conditions and
provisions hereof and thereof and of the Notes will violate any provision of
law or rule or regulation thereunder or any order, injunction or decree of any
court or other governmental body to which the Company or its Subsidiaries is a
party or by which any term thereof is bound or conflict with or result in a
breach of any of the terms, conditions or provisions of the corporate charter
or by-laws of the Company or its Subsidiaries or of any agreement or instrument
to which the Company or its Subsidiaries is a party or by which the Company or
its Subsidiaries is bound, or constitute a default thereunder, or result in the
creation or imposition of any Lien of any nature whatsoever upon any of the
properties or assets of the Company or its Subsidiaries (other than the Liens
created by the Collateral Documents). No consent of the stockholders or other
action of the Company or its Subsidiaries is required for the execution,
delivery and performance of this Agreement, the Collateral Documents or the
Notes by the Company other than as delivered to you prior to Closing, if any.
2.11. Disclosure. Neither this Agreement, the Collateral
Documents nor any of the Exhibits hereto, nor any certificate or other data
furnished to you in writing by or on behalf of the Company or its Subsidiaries
in connection with the transactions
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contemplated by this Agreement contains any untrue statement of a material fact
or omits a material fact necessary to make the statements contained herein or
therein not misleading. To the best knowledge of the Company, there is no fact
which materially and adversely affects or in the future may (so far as the
Company can now reasonably foresee) materially and adversely affect the
business, operations, properties, assets, prospects or condition, financial or
other, of the Company and its Subsidiaries, taken as a whole, which has not
been disclosed to you in writing.
2.12. ERISA. Neither the Company nor any of its Subsidiaries
has incurred any liability (including any contingent liability) to the Pension
Benefit Guaranty Corporation or to any pension plan and all amounts required to
be paid under any plan have been paid.
2.13. Regulation G; Use of Proceeds. Neither the Company nor
any of its Subsidiaries owns or has any present intention of acquiring any
"margin stock" as defined in Regulation G (12 C.F.R., Chapter II, Part 207) of
the Board of Governors of the Federal Reserve System (herein called "margin
stock"). The proceeds from the issuance of the Notes will be used by the
Company to finance the construction of a new pullet growing, egg production and
processing complex (including, without limitation, fixtures and equipment to be
utilized with said complex), refinance existing long-term indebtedness and
provide additional working capital. None of such proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
stock or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry margin stock or for any other purpose
which might constitute this transaction a "purpose credit" within the meaning
of said Regulation G. Neither the Company nor its Subsidiaries nor any agent
acting on their behalf has taken or will take any action which might cause the
transaction contemplated herein to violate said Regulation G, Regulation T (12
C.F.R., Chapter II, Part 220) or Regulation X (12 C.F.R., Chapter II, Part 224)
or any other regulation of the Board of Governors of the Federal Reserve System
or to violate the Securities Exchange Act of 1934, in each case as now in
effect or as the same may hereafter be in effect.
2.14. Tax Liability. The Company and its Subsidiaries have
filed all tax returns which are required to be filed and have paid all taxes
which have become due pursuant to such returns and all other taxes,
assessments, fees and other governmental charges upon the Company and its
Subsidiaries and upon their properties, assets, income and franchises which
have become due and payable by the Company or its Subsidiaries except those
wherein the amount, applicability or validity are being contested by the
Company or its Subsidiaries by appropriate proceedings in good faith and in
respect of which adequate reserves have been established. In the opinion of
the Company, all tax liabilities of the Company and its Subsidiaries were
adequately provided for as of June 2, 1990 and
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are now so provided for on the books of the Company and its Subsidiaries.
2.15. Governmental Action. No action of, or filing with, any
governmental or public body or authority is required to authorize, or is
otherwise required in connection with, the execution, delivery and performance
by the Company of this Agreement, the Collateral Documents or the Notes (other
than recordation of the Deed of Trust in the Office of the Recorder of ▇▇▇▇▇
and ▇▇▇▇▇▇▇ Counties, Mississippi, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Counties, Georgia, and
▇▇▇▇▇ County, Texas, recordation of the Mortgage in the Office of the Recorder
of ▇▇▇▇▇▇▇▇▇▇ Parish, Louisiana, and the filing of financing statements with
respect to the Collateral (as defined in the Security Agreement) in the Office
of the Secretary of State of the States of Mississippi, Texas and Louisiana and
in the Office of the Recorder of ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Counties, Mississippi,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Counties, Georgia, ▇▇▇▇▇ County, Texas and ▇▇▇▇▇▇▇▇▇▇
Parish, Louisiana, all of which will have been duly recorded or filed on or
prior to the Closing Date).
2.16. Offering of Notes. Neither the Company nor any agent
acting on its behalf has, either directly or indirectly, sold or offered for
sale or disposed of, or attempted or offered to dispose of, the Notes or any
part thereof, or any similar obligation of the Company, to, or has solicited
any offers to buy any thereof from, or has otherwise approached or negotiated
in respect thereof with, any Person or Persons other than you and no more than
six other institutional investors; and the Company agrees that neither they nor
any agent acting on their behalf will sell or offer for sale or dispose of, or
attempt or offer to dispose of, any thereof to, or solicit any offers to buy
any thereof from, or otherwise approach or negotiate in respect thereof with,
any Person or Persons so as thereby to bring the issuance or delivery of the
Notes within the provisions of Section 5 of the Securities Act of 1933, as
amended.
2.17. Hazardous Waste. Neither the Facility nor any portion
thereof nor any other property owned or controlled at any time by the Company
or its Subsidiaries has been or will be used by the Company or its
Subsidiaries, or any tenant of the Facility or any portion thereof or such
other property, for the production, release, storage, handling or disposal of
hazardous or toxic wastes or materials other than those pesticides, herbicides
and other agricultural chemicals customarily used in agricultural operations of
the type currently conducted by the Company or its Subsidiaries at the Facility
or such other property, all of which have been and will be used in accordance
with all applicable laws and regulations.
2.18. Separate Property; No Flood Zone. All real property
parcels comprising each site of the Facility are taxed and billed separately
from real property not subject to the Deed of Trust and
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Mortgage, and none of the buildings situated on the sites comprising the
Facility are located within a flood zone.
2.19. No Affiliation. No director, officer or stockholder of
the Company or any Subsidiary is an officer or director of yours or is a
relative of an officer or director of yours within the following categories: a
son, daughter or descendant of either; a stepson, stepdaughter, stepfather,
stepmother; father, mother or ancestor of either, or a spouse. It is expressly
understood that for the purpose of determining any of the foregoing
relationships, a legally adopted child of a person is considered a child of
such person by blood.
2.20. No Foreign Person. To the best of the Company's
knowledge, neither the Company or any Subsidiary nor any stockholder of the
Company or any Subsidiary is, and no legal or beneficial interest in a
stockholder of the Company or any Subsidiary is or will be held, directly or
indirectly, by, a "foreign person" under the International Foreign Investment
Survey Act of 1976, the Agricultural Foreign Investment Disclosure Act of 1978,
the Foreign Investments in Real Property Tax Act of 1980, the amendments of
such Acts or regulations promulgated pursuant to such Acts.
2.21. Title to Property and Collateral. As of the Closing
Date, the Company and its Subsidiaries, as the case may be, has good and
marketable title in fee simple to such of the Property (as defined in the Deed
of Trust and Mortgage) as constitutes real property and good and merchantable
title to the Collateral (as defined in the Security Agreement) subject in each
case to no Liens other than the Liens of the Collateral Documents and Permitted
Encumbrances.
2.22. Additional Representations and Warranties. As of the
date hereof, the representations and warranties contained in the Borrower's
Affidavit attached hereto as Exhibit H and incorporated herein by reference are
true and correct.
SECTION 3. CONDITIONS OF THE LOAN.
Your obligation to make the loan, as provided in Section 1.2,
on the Closing Date shall be subject to the conditions precedent that you have
received on or before the closing date in form and substance satisfactory to
your counsel, such assurances and evidence as you may require of the
performance by the Company of all its agreements theretofore to be performed
hereunder, to the accuracy of its representations and warranties herein
contained and to the satisfaction, prior thereto or concurrently therewith, of
the following further conditions:
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3.1. Opinion of Company's Counsel. You shall have
received on the Closing Date from ▇▇▇▇▇, Moore, Simmons, ▇▇▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇, counsel for the Company, a favorable opinion in form and substance
similar to Exhibit I attached hereto and incorporated herein by reference, and
as to such other matters incident to the transactions contemplated by this
Agreement as you may reasonably request.
3.2. Legality. You shall have satisfied yourself that the
Notes being purchased by you on the Closing Date shall qualify on the Closing
Date as a legal investment for mutual life insurance companies under the New
York Insurance Law (without resort to any provision of such law, such as
Section 1405(a)(8) thereof, permitting limited investments by you without
restriction as to the character of the particular investment) and such purchase
shall not subject you to any penalty or other onerous condition under or
pursuant to any applicable law or governmental regulation; and you shall have
received such certificates or other evidence as you may reasonably request to
establish compliance with this condition.
3.3. Proceedings. All proceedings to be taken in connection
with the transactions contemplated by this Agreement and the Collateral
Documents, and all documents incidental thereto, shall be satisfactory in form
and substance to you; and you shall have received copies of all documents which
you may reasonably request in connection with said transactions and copies of
the records of all corporate proceedings in connection therewith in form and
substance satisfactory to you.
3.4. Representations True; No Default. The representations
and warranties of the Company in this Agreement and in the Collateral Documents
shall be true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date; on
the Closing Date no event which is, or with notice or lapse of time or both
would be, an Event of Default shall have occurred and be continuing; and you
shall have received an affidavit, dated the Closing Date, of the Company to
each such effect.
3.5. Collateral Documents. You shall have received on the
Closing Date fully executed original counterparts of each of the Collateral
Documents.
3.6. Opinion of Purchaser's Counsel. You shall have
received on the Closing Date from Wells, Wells, Marble & ▇▇▇▇▇, counsel for
you, a favorable opinion as to such matters incident to the transactions
contemplated by this Agreement as you may reasonably request.
3.7. Environmental Audit Results. The results of the
environmental audit of the Facility, and any remedial action
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required to be taken by the Company as a result of such audit, are complete and
satisfactory to you.
SECTION 4. REPRESENTATION OF PURCHASER.
4.1. Acquisition for Investment. This Agreement is made
with you in reliance upon your representation to the Company (which, by your
acceptance hereof, you confirm) that you are acquiring the Notes for your own
account for the purpose of investment and not with a view to, or for sale in
connection with, the distribution thereto; provided, however, that the
disposition of your property shall at all times be within your control. In the
event that you do sell or otherwise dispose of the Notes, you agree to notify
the Company at least sixty (60) days in advance of any such sale or
disposition.
SECTION 5. FINANCIAL STATEMENTS; COMPLIANCE CERTIFICATES; ADDITIONAL
INFORMATION; AND INSPECTION.
5.1. Financial Statements and Reports. From and after the
date hereof and so long as you (or a nominee designated by you) shall hold the
Notes, the Company will deliver to you in duplicate:
(a) as soon as practicable after the end of each
quarter in each fiscal year of the Company, and in any event
within 30 days after the end of each quarter in each fiscal
year of the Company, the interim consolidated statements of
earnings, stockholders' equity and cash flows of the Company
and its Subsidiaries for such period and for that part of the
fiscal year ended with such period and the consolidated
balance sheet of the Company and its Subsidiaries as at the
end of such period, all in reasonable detail, prepared in
conformity with generally accepted accounting principles
applied on a basis contingent with that of previous years
(except as otherwise stated therein or in the notes thereto)
and certified by the Chief Financial Officer of the Company
(and in his absence, the President) as presenting fairly the
financial condition and results of operations of the Company
and its Subsidiaries as at the end of and for the fiscal
periods to which they relate, subject to the Company's
year-end adjustments;
(b) as soon as practicable after the end of each
fiscal year, and in any event within 90 days after the end of
each fiscal year, the consolidated balance sheet and related
consolidated statements of earnings, stockholders' equity and
cash flows of the Company and its Subsidiaries as of the end
of and for such year, setting forth in each case in
comparative form the corresponding figures of the previous
fiscal year, all in reasonable detail, prepared in conformity
with generally accepted accounting principles applied on a
basis consistent with that of previous years (except as
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otherwise stated therein or in the notes thereto) and
accompanied by a report or opinion of independent certified
public accountants selected by the Company stating that such
financial statements present fairly the consolidated financial
condition and results of operations and changes in financial
position of the Company and its Subsidiaries in accordance
with generally accepted accounting principles consistently
applied (except for changes with which such accountants
concur) and that the examination of such accountants in
connection with such financial statements has been made in
accordance with generally accepted auditing standards;
(c) concurrently with the financial statements
delivered pursuant to Section 5.1(b), the written statement of
said accountants, which accountants shall be reasonably
acceptable to you, that in the ordinary course of making their
normal examination necessary for their report or opinion on
said financial statements they have obtained no knowledge of
any Event of Default or event which, with notice or lapse of
time or both, would become an Event of Default or, if such
accountants shall have obtained knowledge of any such Event of
Default or event, they shall disclose in such statement the
Event or Events of Default and/or such event or events and the
nature and status thereof, but such accountants shall not be
liable, directly or indirectly, to anyone for any failure to
obtain knowledge of any such Event of Default or event;
(d) concurrently with the financial statements
delivered pursuant to Section 5.1(b), a certificate of the
Company (1) setting forth, as of the end of the preceding
fiscal year, the extent to which the Company and its
Subsidiaries have complied with the requirements of Sections
8.1 through 8.8, inclusive, including in each case a brief
description, together with all necessary computations, of the
manner in which such compliance was determined and the
respective amounts as of the end of or for such fiscal year of
Consolidated Liabilities, Consolidated Net Worth, Consolidated
Current Assets, Consolidated Current Liabilities, operating
lease obligations pursuant to Section 8.4, and the amount
available for dividends pursuant to Section 8.5, (2) stating
that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made
under its supervision to determine whether the Company has
fulfilled all of its obligations under this Agreement, the
Collateral Documents and the Notes, (3) stating that, to the
best of its knowledge, the Company is not and has not been in
default in the fulfillment of any of the terms, covenants,
provisions or conditions hereof and thereof and no Event of
Default or event which, with notice or lapse of time or both,
would become an Event of Default exists or existed or, if any
such default or Event of Default or event exists or existed,
specifying such default, Event of Default or event and the
nature and status thereof, and (4) giving, in the
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event of the formation or acquisition of a Subsidiary during
the preceding fiscal year, the name of such Subsidiary, its
jurisdiction of incorporation and a brief description of its
business;
(e) as soon as practicable, copies of all
financial statements, proxy statements and reports as the
Company or its Subsidiaries shall send or make available
generally to their stockholders and, if requested by you, to
any governmental agency or agencies and regular periodic
reports, if any, which the Company or its Subsidiaries may
file with any governmental agency or agencies;
(f) immediately upon any officer of the Company
becoming aware of the existence of a condition, event or act
which constitutes an Event of Default or an event of default
under any other evidence of Indebtedness of the Company or of
any Subsidiary, or an event which, with notice or lapse of
time or both, would constitute such an Event of Default or
event of default, a written notice specifying the nature and
period of existence thereof and what action the Company or
such Subsidiary, as the case may be, is taking or proposes to
take with respect thereto;
(g) immediately upon any officer of the Company
becoming aware of the occurrence of any (1) "reportable
event," as defined in Section 4043(b) of ERISA, or (2)
non-exempted "prohibited transaction," as defined in Sections
406 and 408 of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended in connection with any "employee
pension benefit plan," as defined in Section 3 of ERISA, or
any trust created thereunder, a written notice specifying the
nature thereof, what action the Company or such Subsidiary is
taking or proposes to take with respect thereto and, when
known, any action taken by the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect thereto;
(h) promptly upon any officer of the Company
becoming aware of the occurrence of (1) any surrender of
assets of the Company or its Subsidiaries in satisfaction of
any Indebtedness, (2) the dissolution of any material
operating partnership or real estate ownership partnership of
the Company or its Subsidiaries, (3) the termination or
expiration of any lease of real property to which the Company
or its Subsidiaries is lessee, or (4) the commencement of any
litigation, including any arbitration or mediation, and of any
proceedings before any governmental agency which could
materially and adversely affect the business, properties,
prospects or financial condition of the Company and its
Subsidiaries taken as a whole (including any such action
commenced by counterclaim), written notice specifying the
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nature thereof and what action the Company or such Subsidiary,
as the case may be, is taking with respect thereto; and
(i) such other information as to the business and
properties of the Company and its Subsidiaries, including
consolidating financial statements of the Company and its
Subsidiaries, and financial statements and other reports filed
with any governmental department, bureau, commission or
agency, as you may from time to time reasonably request.
5.2. Inspection. From and after the date hereof and so long
as you (or a nominee designated by you) shall hold the Notes, you shall have
the right to (i) visit and inspect, at your expense, any of the properties, all
at such reasonable times and as often as you may reasonably request, of the
Company and its Subsidiaries, to examine their books of account and those of
their Subsidiaries, and to discuss the affairs, finances and accounts of the
Company or any Subsidiary with each of their officers and managers and
independent public accountants, and (ii) contact such third parties doing
business with the Company and its Subsidiaries, and to engage in such other
auditing procedures as you deem reasonable to ensure the validity of your
security interests or the accuracy of the Company's representations, warranties
and certifications. In connection with such inspections, you and your
engineers, contractors and other representatives shall have the right to
perform such environmental audits and other environmental examinations of the
Facility as you deem necessary or advisable from time to time. Such
environmental audits and examinations shall be at your cost and expense if such
audits and examinations reveal no material violation of any representation or
warranty or covenant contained herein, in any Collateral Document or the Notes,
otherwise such costs and expenses shall be borne solely by the Company.
SECTION 6. PRINCIPAL PAYMENT OF NOTE.
6.1. Principal Payments - Mandatory and Optional Prepayment.
A. (i) The Company covenants and agrees that it will monthly
pay $4,000.00 principal on the unpaid Louisiana Note on the first day of each
month, commencing January 1, 1992 to and including April 1, 2000. All
remaining principal thereafter shall be paid May 1, 2000. All mandatory
principal payments pursuant to this Section 6.1A shall be made together with
interest accrued on the unpaid balance of the Louisiana Note as required in the
Louisiana Note, but without prepayment premium.
(ii) The Company covenants and agrees that it will monthly
pay $96,000.00 principal on the unpaid GMT Note on the first day of each month,
commencing January 1, 1992 to and including December 1, 1993, and pay
$126,000.00 principal on the unpaid GMT Note on the first day of each month,
commencing January 1, 1994 to and
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including April 1, 2000. All remaining principal thereafter shall be paid May
1, 2000. All mandatory principal payments pursuant to this Section 6.1A shall
be made together with interest accrued on the unpaid balance of the GMT Note as
required in the GMT Note, but without prepayment premium.
B. (i) The Company may, at its option, prepay the Louisiana
Note in part (in integral multiples of $100) on the due date of any interest
payment following the first anniversary of the Closing Date without prepayment
premium, together with accrued interest as required in the Note to the date of
such partial prepayment; provided, however, such partial prepayment or
prepayments may not in the aggregate, when combined with any required payments
as set forth in Section 6.1A above, exceed twenty percent (20%) of the original
principal debt under the Louisiana Note in any one calendar year. Principal
shall be applied to the outstanding principal balance in the inverse order of
maturity.
(ii) The Company may, at its option, prepay the GMT Note in whole or
in part (in integral multiples of $10,000) on the due date of a payment at a
price equal to the Prepayment Price, as hereafter defined, with accrued
interest as required in the GMT Note to the date of such prepayment, provided
the Company shall give notice of any such prepayment to the holder of the GMT
Note not less than 30 nor more than 60 days prior to the date fixed in such
notice for prepayment (the "Prepayment Date"). Principal shall be applied to
the outstanding principal balance in the inverse order of maturity.
C. (i) The Company may, at its option, prepay the Louisiana
Note in whole (but not in part) on (a) any date other than a date occurring
within 90 days after an Interest Rate Adjustment Date at a price equal to the
Prepayment Price, as hereafter defined, and (b) any date occurring within 90
days after an Interest Rate Adjustment Date. Any prepayment in full under
subparagraph (b) shall be at the principal amount of the outstanding Louisiana
Note to be prepaid, together with accrued interest at the rate of the lower of
the then-current rate and the proposed adjusted interest rate provided for in
Section 1.4 from and including such Interest Rate Adjustment Date to the date
of prepayment, but without premium.
(ii) The Company may, at its option, prepay the GMT Note in whole (but
not in part) on any date occurring within 90 days after an Interest Rate
Adjustment Date by giving notice of such prepayment to the holder of the GMT
Note not less than 10 days nor more than 20 days prior to such date. Such
notice of prepayment shall specify therein the date of prepayment. Such
prepayment shall be at the principal amount of the outstanding GMT Note to be
prepaid, together with accrued interest at the rate of the lower of the
then-current rate and the proposed adjusted interest rate
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provided for in Section 1.4 from and including such Interest Rate Adjustment
Date to the date of prepayment, but without premium.
6.2. Prepayment of GMT Note Upon Change of Control. In the
event that a Change of Control Date (as hereinafter defined) shall occur, the
Company will, within 10 days after such Change of Control Date, give you
written notice thereof and shall describe in reasonable detail the facts and
circumstances giving rise thereto. Upon the occurrence of a Change of Control
Date, the Company will prepay, if you shall so request, all of the GMT Note
which you then hold at the Prepayment Price (as hereinafter defined) plus
interest accrued to the date of prepayment. Said request (the "Prepayment
Notice") shall be made by you in writing not later than the later of (a) 60
days after the Change of Control Date and (b) 50 days after you receive notice
of the Change of Control Date, and said request shall specify the date (also
referred to as the "Prepayment Date") upon which the Company shall prepay the
GMT Note held by you, which date shall be not less than 30 days nor more than
60 days from the date of the Prepayment Notice.
The term "Change of Control Date" shall mean the first day on
which any Person, or group of related Persons, (i) shall acquire beneficial
ownership of fifty percent (50%) or more of the Voting Stock of the Company;
(ii) shall acquire all or substantially all of the assets of the Company; or
(iii) shall acquire beneficial ownership of 50% or more of the outstanding
voting stock or other interest of an entity with or into which the Company has
merged or consolidated, whether pursuant to a statutory merger or consolidation
or otherwise. A transfer of such shares of stock or other interest under the
terms of a will or by intestate succession shall not be deemed a transfer under
the terms of this paragraph. For purposes of this Section 6.2 only, the term
"Person" shall not include ▇▇▇▇ ▇▇▇▇▇, Jr. or any members of his immediate
family within the following categories: a son, daughter or spouse or descendant
of either; a stepson, stepdaughter, stepfather or stepmother; father, mother,
or ancestor of either; or a spouse. It is expressly for the purpose of
determining any of the foregoing relationships, a legally adopted child of a
person is considered a child of such person by blood.
6.3. Prepayment Price. On any Prepayment Date, the Company
shall prepay the GMT Note held by you at the Prepayment Price plus interest
accrued thereon to the Prepayment Date. Payment of the Prepayment Price shall
be made as provided in Section 11.5.
The Prepayment Price shall be determined by you in good faith,
as of 5:00 p.m., New York time, on the fifth Business Day prior to the
Prepayment Date. Such Prepayment Price, as calculated by you, will be binding
upon the Company, absent manifest error. Promptly upon such determination you
shall notify the Company in writing of the amount of such Prepayment Price,
setting forth in reasonable detail the computation thereof.
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The term "Prepayment Price" shall mean the outstanding
principal balance of the Note, or the amount of the partial prepayment, as the
case may be, together with accrued interest to the date of prepayment, plus a
prepayment premium equal to five percent (5%) of such outstanding principal
balance or partial prepayment, if such prepayment shall be during the first
year following the Closing Date; four percent (4%) of such outstanding
principal balance or partial prepayment if such prepayment shall be during the
second year following the Closing Date; three percent (3%) of such outstanding
principal balance or partial prepayment if such prepayment shall be during the
third year following the Closing Date; two percent (2%) of such outstanding
principal balance or partial prepayment if such prepayment shall be during the
fourth year following the Closing Date; and one percent (1%) of such
outstanding principal balance or partial prepayment if such prepayment shall be
during the fifth year following the Closing Date. No prepayment premium shall
be required for any prepayment occurring on or after the fifth year following
the Closing Date.
6.4. Interest After Date Fixed for Principal Payment. In the
event the Company shall fail to pay either Note or any payment owing in respect
of either Note according to the terms thereof and hereof (inclusive of any
other permitted payments of which the Company has notified you) within fifteen
(15) days of the date fixed for such principal payment, such payment shall bear
interest at the Overdue Interest Rate from and after the sixteenth (16th) day
following such date until paid and, so far as may be lawful, any overdue
installment of interest shall bear interest at said rate from and after said
sixteenth (16th) day until paid. Until the earlier of such sixteenth (16th)
day or the date payment is received by you, interest shall continue to accrue
at the current interest rate on the outstanding principal balance.
SECTION 7. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that so long as the Note
shall be outstanding:
7.1. To Pay Notes. The Company will punctually pay or cause
to be paid the principal and interest (and prepayment premium, if any) to
become due in respect of the Notes according to the terms thereof and hereof
(inclusive of any other permitted payments of which the Company has notified
you).
7.2. Maintenance of Office. The Company will maintain an
office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or such other
place in the United States of America as the Company may designate in writing
to the holder of the Notes).
7.3. To Keep Books. The Company will, and will cause each
of its Subsidiaries to, keep proper books of record and account in accordance
with generally accepted accounting principles.
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7.4. Payment of Taxes; Corporate Existence; Maintenance of
Properties. The Company will, and will cause each of its Subsidiaries to,
(a) pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon
them, their income or profits or their property before the
same shall become in default, as well as all lawful claims and
liabilities of any kind (including claims and liabilities for
labor, materials and supplies) which, if unpaid, might by law
become a Lien upon its property; provided, however, that
neither the Company nor any Subsidiary shall be required to
pay any such tax, assessment, charge, levy or claim if the
amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings and if the
Company or such Subsidiary shall have set aside on its books
reserves in respect thereof (segregated to the extent required
by generally accepted accounting principles) deemed adequate
in the opinion of the Board of Directors;
(b) subject to Section 8.6A, do all things necessary
to preserve and keep in full force and effect their corporate
existence, rights (charter and statutory) and franchises;
provided, however, that neither the Company nor any Subsidiary
shall be required to preserve any right or franchise if the
Board of Directors shall reasonably determine that the
preservation thereof is no longer desirable in its conduct of
business; and
(c) maintain and keep all of their properties used
or useful in the conduct of their business in good condition,
repair and working order and supplied with all necessary
equipment and make all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as may
be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section 7.4(c)
shall prevent the Company or any Subsidiary from discontinuing
the operation and maintenance of any of their properties, if
such discontinuance is, in the judgment of the Company or such
Subsidiary, immaterial to the Company as a whole and desirable
in the conduct of the business of the Company or such
Subsidiary.
7.5. To Insure. The Company will, and will cause each of
its Subsidiaries to (in addition to the insurance required to be maintained
pursuant to Paragraph 1.05 of the Deed of Trust, Paragraph 1.05 of the
Mortgage, and Section 2(e) of the Security Agreement):
(a) keep all of their insurable properties owned by
them insured against all risks usually insured against by
persons
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operating like properties in the same geographical areas where
the properties are located, all in amounts sufficient to
prevent the Company or such Subsidiary, as the case may be,
from becoming a coinsurer within the terms of the policies in
question, but in any event in amounts not less than 80% of the
then full replacement value thereof;
(b) maintain public liability insurance against
claims for personal injury, death or property damage suffered
by others upon or in or about any premises occupied by it or
occurring as a result of its maintenance or operation of any
airplanes, automobiles, trucks or other vehicles or other
facilities (including, but not limited to, any machinery used
therein or thereon) or as the result of the use of products
sold by it or services rendered by it;
(c) maintain such other types of insurance with
respect to its business as is usually carried by persons of
comparable size engaged in the same or similar business and
similarly situated; and
(d) maintain all such worker's compensation or
similar insurance as may be required under the laws of any
State or jurisdiction in which it may be engaged in business.
All insurance for which provision has been made in Section
7.5(b) and Section 7.5(c) shall be maintained in at least such amounts as such
insurance is usually carried by persons of comparable size engaged in the same
or a similar business and similarly situated; and all insurance herein provided
for shall be effected under a valid and enforceable policy or policies issued
by insurers of recognized responsibility, except that the Company or such
Subsidiary may effect worker's compensation or other similar insurance in
respect of operations in any State or other jurisdiction either through an
insurance fund operated by such State or other jurisdiction or by causing to be
maintained a system or systems of self-insurance which are in accord with
applicable laws.
SECTION 8. RESTRICTIVE COVENANTS.
The Company covenants and agrees that so long as either of the
Notes shall be outstanding:
8.1. Total Liabilities. The Company and its Subsidiaries,
on a fully consolidated basis, will not at any time permit the ratio of
Consolidated Liabilities (excluding Consolidated Deferred Taxes) to
Consolidated Net Worth to exceed 2.55:1.0.
8.2. Current Ratio. The Company and its Subsidiaries, on a
fully consolidated basis, will not at any time permit the ratio of Consolidated
Current Assets to Consolidated Current Liabilities
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(excluding Consolidated Current Deferred Taxes) to be less than 1.25:1.0.
8.3. Net Worth. Subject to the following sentence, the
Company and its Subsidiaries, on a fully consolidated basis, will not at any
time permit their Consolidated Net Worth to be less than $25,000,000.00.
Commencing June 2, 1991 and continuing in each succeeding fiscal year
thereafter, this minimum Consolidated Net Worth shall be increased (but shall
not decrease) by an amount equal to twenty-five percent (25%) of the previous
fiscal year's Consolidated Net Income.
8.4. Lease Obligations. The Company and its Subsidiaries, on
a fully consolidated basis, will not at any time create, assume or incur, or in
any manner become liable for any lease or leases (exclusive of Capital Leases)
in which the rentals due in any fiscal year exceed the aggregate amount of
$2,500,000.00.
8.5. Restricted Payments. The Company and its Subsidiaries
will not, directly or indirectly, make any Restricted Payments or incur any
liability to make any Restricted Payments unless, immediately after giving
effect to such action, there shall not exist any Event of Default or event
which, with notice or lapse of time or both, would become an Event of Default.
All dividends, distributions, purchases, redemptions,
retirements, acquisitions and payments made pursuant to this Section 8.5 in
property other than cash shall be included for purposes of calculations
pursuant to this Section 8.5 at the fair market value thereof (as determined in
good faith by the Board of Directors) at the time of declaration of such
dividend or at the time of making such distribution, purchase, redemption,
retirement, acquisition or payment.
8.6. Merger, Consolidation, Sale or Lease.
A. The Company will not consolidate with or merge into any
Person, or permit any Person to merge into it, or sell, transfer or otherwise
dispose of all or substantially all of their properties and assets, unless:
(1) the successor formed by or resulting from such
consolidation or merger (if other than the Company) or the
transferee to which such sale, transfer or other disposition
shall be made shall be a solvent corporation duly organized
and existing under the laws of the United States of America or
any State thereof;
(2) the due and punctual performance and observance
of all the obligations, terms, covenants, agreements and
conditions of this Agreement, the Collateral Documents and the
Notes to be performed or observed by the Company shall, by
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written instrument furnished to the holder of the Notes, be
expressly assumed by such successor (if other than the
Company) or transferee; and
(3) at the time of such transaction and assumption,
and immediately after giving effect thereto, no Event of
Default or event which, with notice or lapse of time or both,
would constitute an Event of Default shall have occurred and
be continuing.
B. Except as permitted in Section 8.6A above, the Company
will not, and will not permit any Subsidiary to, sell, assign, transfer or
otherwise dispose of (other than in the ordinary course of business) any of its
properties and assets to any Person provided, however, the Company may, and may
permit its Subsidiaries to, sell, assign, transfer or otherwise dispose of no
more than ten percent (10%) of its Consolidated Assets in any one fiscal year
if at the time of such transaction or transactions, and immediately after
giving effect thereto, no Event of Default or event which, with notice or lapse
of time or both, would constitute an Event of Default shall have occurred and
be continuing, and provided further that no security for the loan shall be part
of such assets sold, assigned, transferred or disposed. In addition, and
notwithstanding anything to the contrary in any security agreement or other
instrument securing real property, the Company and its Subsidiaries
collectively may sell or otherwise dispose of, free from such liens, furniture,
furnishings, equipment, tools, appliances, machinery, fixtures, or
appurtenances subject to such liens, which may become worn out, undesirable,
obsolete, disused or unnecessary for use in the operation of the Facility not
exceeding in value at the time of disposition thereof One Hundred Thousand
Dollars ($100,000.00) for any single transaction, or a total of Two Hundred
Thousand Dollars ($200,000) in any one fiscal year, upon replacing the same by,
or substituting for the same, other furniture, furnishings, equipment, tools,
appliances, machinery, fixtures, or appurtenances not necessarily of the same
character, but of at least equal value to Grantor and costing not less than the
amount realized from the property sold or otherwise disposed of, which shall
forthwith become, without further action, subject to such liens and security
interests.
8.7. Transactions with Affiliates. The Company will not,
and will not permit any Subsidiary to, engage in any transaction with an
Affiliate on terms more favorable to the Affiliate than would have been
obtainable in arm's length dealing in the ordinary course of business with a
Person not an Affiliate. The Company agrees that, to the extent there are any
inter-company loans involving the Company or any Subsidiary on a date on which
an Event of Default exists, no payment of any amounts owing in connection
therewith may be made until the earlier of your waiver of such Event of Default
or the repayment in full of all amounts owing to you in connection with the
Loan. To the extent any amounts are
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received in any manner whatsoever in connection with such inter-company loans
by an obligee thereof during the period described in the immediately preceding
sentence, such amounts shall be held in trust for and paid over to you until
you are in receipt of all amounts owing to you in connection with the Loan. For
purposes of this Section 8.7 only, the term "Affiliates" shall exclude any
wholly-owned Subsidiary of the Company.
8.8. Encumbrances On and Transfers of the Collateral.
Except for Permitted Encumbrances, the Company and its Subsidiaries will not
create, incur, assume or suffer to exist any Lien on any of the Collateral or
any interest therein. Except as permitted by Sections 8.6A and 8.6B hereof, the
Company and its Subsidiaries will not sell, convey, lease, assign or otherwise
transfer all or any of the Collateral or any interest therein, whether
voluntarily or by operation of law.
SECTION 9. DEFINITIONS.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
"Affiliate" means any Person which, directly or indirectly,
controls or is controlled by or is under common control with the Company or any
Subsidiary or which beneficially owns or holds or has the power to direct the
voting power of 5% or more of any class of voting stock of the Company or any
Subsidiary or which has 5% or more of its voting stock (or in the case of a
Person which is not a corporation, 5% or more of its equity interest)
beneficially owned or held, directly or indirectly, by the Company or any
Subsidiary. For purposes of this definition, "control" means the power to
direct the management and policies of a Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Board of Directors" means the board of directors of the
Company or of a Subsidiary so specified or indicated by the context or, if duly
authorized to exercise the power of the Board of Directors, any duly authorized
committee thereof.
"Business Day" shall mean any day on which banks are required
to be open to carry on their normal business in the State of New York.
"Capital Lease" means and includes at any time any lease of
property, real or personal, which in accordance with GAAP would at such time be
required to be capitalized on a balance sheet of the lessee.
"Capital Lease Obligation" means at any time the capitalized
amount of the rental commitment under a Capital Lease which in
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accordance with GAAP would at such time be required to be shown on a balance
sheet.
"Collateral" means all property and assets, and proceeds
thereof, subjected, or intended to be subjected, at any time to the Liens of
any of the Collateral Documents.
"Company" shall mean Cal-Maine Foods, Inc., a Delaware
corporation, and, subject to Section 8.6A hereof, its respective successors and
assigns.
"Consolidated Assets" means, as of the date of determination
thereof, the aggregate of all assets which in accordance with GAAP would be so
classified and appear as assets on the consolidated balance sheet of the
Company and its Subsidiaries.
"Consolidated Current Assets" means, as of the date of
determination thereof, the aggregate of all assets which in accordance with
GAAP would be so classified and appear as current assets on the consolidated
balance sheet of the Company and its Subsidiaries.
"Consolidated Current Deferred Taxes" means, as of the date of
determination thereof, the aggregate of all taxes which in accordance with GAAP
would be so classified and appear as Current Deferred Taxes on the consolidated
balance sheet of the Company and its Subsidiaries.
"Consolidated Current Liabilities" means, as of the date of
determination thereof, the aggregate of all liabilities which in accordance
with GAAP would be so classified and appear as current liabilities on the
consolidated balance sheet of the Company and its Subsidiaries.
"Consolidated Deferred Taxes" means, as of the date of
determination thereof, the aggregate of all taxes which in accordance with GAAP
would be so classified and appear as Deferred Taxes on the consolidated balance
sheet of the Company and its Subsidiaries.
"Consolidated Liabilities" means, as of the date of
determination thereof, the aggregate of all liabilities which in accordance
with GAAP would be so classified and appear as liabilities on the consolidated
balance sheet of the Company and its Subsidiaries.
"Consolidated Net Income" means the Net Income of the Company
and its Subsidiaries, after eliminating inter-company items, all as
consolidated and determined in accordance with GAAP.
"Consolidated Net Worth" means, as of the date of
determination thereof, the aggregate amount of the consolidated
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assets less the consolidated liabilities of the Company and its Subsidiaries,
in each case after eliminating inter-company items and as determined in
accordance with GAAP.
"Consolidated Working Capital" means, as of the date of
determination thereof, the excess of Consolidated Current Assets over
Consolidated Current Liabilities.
"Deferred Taxes" means, with respect to any Person for any
period, the deferred taxes of such Person for such period determined in
accordance with GAAP as in effect from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Events of Default" has the meaning specified in Section 10.1.
"GAAP" means, as to a particular Person and at a particular
time of determination, such accounting principles as, in the opinion of the
independent public accountants regularly employed by such Person, conform at
such time of determination to generally accepted accounting principles.
"Indebtedness" means and includes (i) all indebtedness or
obligations for money borrowed or for the purchase price of property (exclusive
of orders or commitments made in the ordinary course of business for future
delivery of goods or services prior to the time the obligation to pay becomes
firm) and any notes payable and drafts accepted representing extensions of
credit, whether or not representing indebtedness or obligations for money
borrowed or for the purchase price of property, (ii) indebtedness or
obligations secured by or constituting any Lien existing on property owned by
the Person whose Indebtedness is being determined, whether or not the
indebtedness or obligations secured thereby shall have been assumed, (iii)
Capital Lease Obligations, (iv) guarantees and endorsements of (other than
endorsements for purposes of collection in the ordinary course of business),
and obligations to purchase goods or services for the purpose of supplying
funds for the purchase or payment of, or measured by, indebtedness, liabilities
or obligations of others (whether or not representing money borrowed) and other
contingent obligations in respect of, or to purchase or otherwise acquire or
service, indebtedness, liabilities or obligations of others (whether or not
representing money borrowed) and (v) all indebtedness, liabilities or
obligations (whether or not representing money borrowed) in effect guaranteed
by an agreement, contingent or otherwise, to make a loan, advance or capital
contribution to or other investment in the debtor for the purpose of assuring
or maintaining a minimum equity, asset base, working capital or other balance
sheet condition for any date, or to provide funds for the payment of any
liability, dividend or stock liquidation payment, or otherwise to supply funds
to or in any manner invest in the debtor for such
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purpose. A renewal or extension of any Indebtedness without increase in the
principal amount thereof shall not be deemed to be the incurrence of the
Indebtedness so renewed or extended. In case any corporation shall become a
Subsidiary, such corporation shall be deemed to have incurred at the time it
becomes a Subsidiary all Indebtedness of such corporation outstanding
immediately thereafter.
"Lien" means any mortgage, lien, pledge, security interest,
encumbrance or charge of any kind, whether or not consensual, any conditional
sale or other title retention agreement or any Capital Lease.
"Net Income" means, with respect to any Person for any period,
the net income (or the net deficit, if expenses and charges exceed revenues and
other proper income credits) of such Person for such period determined in
accordance with GAAP as in effect from time to time.
"Overdue Interest Rate" means the lesser of (a) five percent
(5%) per annum over the Interest Rate in effect immediately prior to the time
the Overdue Interest Rate is applicable, and (b) the maximum interest rate
provided by law.
"Permitted Encumbrances" means those Liens described on
Schedule C to the Deed of Trust and Exhibit C of the Mortgage.
"Person" includes an individual, a corporation, a partnership,
a joint venture, a trust, an unincorporated organization or a government or any
agency or political subdivision thereof.
"Restricted Investment" means any investment (other than by
guaranteeing or otherwise becoming liable, contingently or otherwise, in
respect of the Indebtedness of another Person) by the Company or any Subsidiary
in any other Person, whether by acquisition of stock or Indebtedness, or by
loan, advance, transfer of property out of the ordinary course of business,
capital contribution, extension of credit on terms other than those normal in
the business of the Company or any Subsidiary, or otherwise (the foregoing
items being herein collectively called "Investments", and individually, an
"Investment"); provided, however, that the term "Restricted Investment" shall
not include:
(i) marketable obligations issued or guaranteed by the
United States of America or by any agency of the United States of America, and
maturing not later than twelve months from the date of acquisition thereof,
(ii) commercial paper, issued by a corporation duly
organized and existing under the laws of the United States of America or any
State thereof and having a net worth of not less than $100,000,000, which has
one of the two highest credit ratings by a responsible independent credit
agency of recognized standing,
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(iii) investments in negotiable certificates of deposit or
bankers' acceptances issued by, or drawn on, a United States bank or trust
company that is a member of the Federal Reserve Bank and maturing not later
than twelve months from the date of acquisition thereof, and
(iv) Investments in any Subsidiary or in any corporation
which by reason thereof will immediately after such Investment become a
Subsidiary.
"Restricted Payments" means dividends paid on capital stock
(in either cash or property), Restricted Investments, and purchases or
redemptions of capital stock.
"Subsidiary" means any corporation at least a majority of
whose outstanding stock having ordinary voting power for the election of a
majority of the members of the board of directors (or other governing body) of
such corporation (other than stock having such power only by reason of the
happening of a contingency) shall at the time be owned directly or indirectly
by the Company and/or one or more Subsidiaries of the Company.
"Voting Stock", as applied to the stock of any corporation,
shall mean stock of any class or classes (however designated) having ordinary
voting power for the election of a majority of the directors of such
corporation other than stock having such power only by reason of the happening
of a contingency.
All accounting terms used herein and not expressly defined in
this Agreement shall have the meanings respectively given to them in accordance
with GAAP as it exists at the date of applicability thereof.
SECTION 10. DEFAULTS AND REMEDIES.
10.1. Events of Default; Acceleration. If one or more of the
following events (herein called "Events of Default") shall occur for any reason
whatsoever (and whether such occurrence shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
A. default in the payment of any interest upon either
Note when such interest becomes due and payable, and such default shall have
continued for a period of fifteen (15) days; or
B. default in the payment of principal of (or prepayment
premium, if any, on) either Note when and as the same shall become due and
payable, whether at maturity or at a date fixed for principal payment or
prepayment (including, without limitation, a principal payment or prepayment as
provided in Section 6), or by
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acceleration or otherwise, and such default shall have continued for a period
of fifteen (15) days; or
C. default in the performance or observance of any other
covenant, agreement or condition contained herein, in either of the Notes, the
Deed of Trust, the Mortgage, the Construction Loan Documents or the Security
Agreement or any Event of Default under the Deed of Trust, Mortgage, or
Construction Disbursement Agreement or Default under the Security Agreement
shall occur, and such default shall have continued for a period of thirty (30)
days; or
D. the Company or any Subsidiary shall not pay when due,
whether by acceleration or otherwise, any evidence of indebtedness of the
Company or such Subsidiary (other than the Notes), or any condition or default
shall exist under any such evidence of indebtedness or under any agreement
under which the same may have been issued permitting such evidence of
indebtedness to become or be declared due prior to the stated maturity thereof,
and such default shall have continued for a period of ten (10) days; or
E. the Company or any Subsidiary shall file a petition
seeking relief for itself under Title 11 of the United States Code, as now
constituted or hereafter amended, or an answer consenting to, admitting the
material allegations of or otherwise not controverting, or shall fail to timely
controvert, a petition filed against the Company or such Subsidiary seeking
relief under Title 11 of the United States Code, as now constituted or
hereafter amended; or the Company or any Subsidiary shall file such a petition
or answer with respect to relief under the provisions of any other now existing
or future bankruptcy, insolvency or other similar law of the United States of
America or any State thereof or of any other country or jurisdiction providing
for the reorganization, winding-up or liquidation of corporations or an
arrangement, composition, extension or adjustment with creditors; or
F. a court of competent jurisdiction shall enter an
order for relief which is not stayed within 60 days from the date of entry
thereof against the Company or any Subsidiary under Title 11 of the United
States Code, as now constituted or hereafter amended; or there shall be entered
an order, judgment or decree by operation of law or by a court having
jurisdiction in the premises which is not stayed within 60 days from the date
of entry thereof adjudging the Company or any Subsidiary as bankrupt or
insolvent, or ordering relief against the Company or any Subsidiary, or
approving as properly filed a petition seeking relief against the Company or
any Subsidiary, under the provisions of any other now existing or future
bankruptcy, insolvency or other similar law of the United States of America or
any State thereof or of any other country or jurisdiction providing for the
reorganization, winding-up or liquidation of corporations or an arrangement,
composition, extension or adjustment with creditors, or appointing a receiver,
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liquidator, assignee, sequestrator, trustee, custodian or similar official of
the Company or any Subsidiary or of any substantial part of its property, or
ordering the reorganization, winding-up or liquidation of its affairs; or any
involuntary petition against the Company or any Subsidiary seeking any of the
relief specified in this clause shall not be dismissed within 60 days of its
filing; or
G. the Company or any Subsidiary shall make a general
assignment for the benefit of its creditors; or the Company or any Subsidiary
shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, sequestrator, trustee, custodian or similar official of
the Company or such Subsidiary or of all or any substantial part of its
property; or the Company or any Subsidiary shall have admitted to its
insolvency or inability to pay, or shall have failed to pay, its debts
generally as such debts become due; or the Company or any Subsidiary or its
directors or majority members shall take any action to dissolve or liquidate
the Company or such Subsidiary (other than as contemplated by Section 8.6A); or
H. the rendering against the Company or any Subsidiary
of a final non-appealable judgment, decree or order for the payment of money in
excess of $100,000 and the continuance of such judgment, decree or order
unsatisfied and in effect for any period of 60 consecutive days without a stay
of execution; or
I. the Company or any Subsidiary shall (1) engage in any
non-exempted "prohibited transaction," as defined in Sections 406 and 408 of
ERISA and Section 4975 of the Internal Revenue Code of 1986, as amended, (2)
incur any "accumulated funding deficiency," as defined in Section 302 of ERISA,
in an amount in excess of $10,000, whether or not waived, or (3) terminate or
permit the termination of an "employee pension benefit plan," as defined in
Section 3 of ERISA, in a manner which could result in the imposition of a Lien
on any property of the Company or such Subsidiary pursuant to Section 4068 of
ERISA securing an amount in excess of $10,000; or
J. any representation or warranty made by the Company in
Section 2 hereof or in any Collateral Document or in any certificate or
instrument furnished in connection therewith shall prove to have been false or
misleading in any respect as of the date made; or
K. the dissolution of the Company, whether by operation
of law or otherwise (other than as contemplated by Section 8.6A);
then an amount equal to the Prepayment Price (based on the outstanding
principal balance), computed as provided in Section 6.3 (except that, for
purposes of such computation, the Prepayment Date shall be deemed to be the
date upon which the Event of Default shall have occurred), shall at the option
of the Noteholder
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immediately become due and payable without notice or demand, together with
accrued interest thereon at the Overdue Interest Rate, provided, however, that
upon the occurrence of an Event of Default described in clauses (E), (F) or (G)
of this Section 10.1, the entire outstanding principal amount of both Notes,
together with accrued interest thereon after default at the Overdue Interest
Rate, shall at the option of the Noteholder immediately become due and payable
without notice or demand.
The Company hereby expressly acknowledges and agrees (i) that
the prepayment premium provided for herein is reasonable, (ii) that legal
counsel of the Company's own choosing has advised the Company with respect to
such prepayment premium, (iii) that any prepayment made at a time when it is
otherwise restricted under the Notes will result in material loss and damage to
the holder of the Note, requiring such holder to secure reinvestments at
additional costs which might not produce the same economic benefit to such
holder as the economic benefits under the Notes, (iv) that the foregoing
prepayment premium is a reasonable estimate of such loss and damage, and (v)
the Company shall be estopped hereafter from claiming differently as to any of
the foregoing. The foregoing prepayment premium is not intended to be a
penalty, but instead shall serve as liquidated damages to provide you with the
benefit of your bargain.
10.2. Suits for Enforcement. In case an Event of Default
shall occur and be continuing, the holder of the Notes may proceed to protect
and enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant contained in
the Notes or in this Agreement or in any Collateral Document or in aid of the
exercise of any power granted in the Notes or in this Agreement or in any
Collateral Document or may proceed to enforce the payment of the Notes or to
enforce any other legal or equitable right of the holder of the Notes. The
Company agrees that its obligations under Section 6 are of the essence of this
Agreement, and upon application to any court of equity having jurisdiction in
the premises, the original holder of the Notes shall be entitled to a decree
against the Company requiring specific performance of such obligations.
10.3. Remedies Not Waived. No course of dealing between the
holder of the Notes and the Company or any delay or failure on the part of the
holder in exercising any rights under any Note or under any Collateral Document
or hereunder shall operate as a waiver of any rights of such holder.
10.4. Remedies Cumulative. No remedy herein or in either
Note or in any Collateral Document conferred upon the holder of the Notes is
intended to be exclusive of any other remedy and each and every remedy shall be
in addition to every other remedy given hereunder or under the Notes or under
any Collateral Document or
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now or hereafter existing at law or in equity or by statute or otherwise.
10.5. Costs and Expenses. The Company shall pay to the
holder of the Notes, to the extent permitted under applicable law, all
reasonable out-of-pocket expenses incurred by such holder as shall be
sufficient to cover the cost and expense of enforcing such holder's rights
under the Notes and any Collateral Document or the collecting and foreclosing
upon, or otherwise dealing with, the Collateral, or participating in any
litigation or bankruptcy proceeding for the protection or enforcement of the
holder's collateral or claim against the Company or any guarantors of the Notes
or otherwise incurred in connection with the occurrence of an Event of Default,
said expenses to include reasonable compensation to the attorneys and counsel
of such holder for any services rendered in that connection, upon the Notes
held by such holder.
SECTION 11. MISCELLANEOUS.
11.1. Loss, Theft, Destruction or Mutilation of Note. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of a Note, and, in the case of any such loss, theft or
destruction, upon receipt of a bond of indemnity reasonably satisfactory to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Note, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Note, a new Note of like tenor and unpaid principal
amount and dated the date of, or, if later, the date to which interest has been
paid on, the lost, stolen, destroyed or mutilated Note. In the case of a
holder of the Note which is an institutional investor such as you, its own
unsecured agreement of indemnity shall be deemed satisfactory to the Company.
11.2. Expenses. Whether or not the loan herein contemplated
shall be consummated, the Company shall pay you the total amount of $112,500.00
as a non-refundable processing fee, all of which has been previously paid to
you, and the Company shall pay all costs of executing and closing this
Agreement and the Collateral Documents, including, without limitation,
attorneys fees, survey costs, appraisal fees, title insurance and related
expenses, engineering reports, and environmental audit reviews and related
expenses. In addition to the non-refundable processing fee described in the
foregoing sentence, the Company shall pay you the total amount of $112,500.00
as a standby fee, all of which has been previously paid to you, which you shall
refund in the event that the loan is consummated on the Closing Date as
provided for herein. The Company's obligations under this Section 11.2 shall
survive the payment or prepayment of the Notes.
11.3. Stamp Taxes, Recording Fees, etc. The Company will
pay, and save you and any subsequent holder of the Notes harmless against, any
and all liability (including any interest or penalty
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35
for non-payment or delay in payment) with respect to stamp and other taxes
(other than any such stamp or other taxes incurred upon a transfer of a Note by
you), if any, and all recording and filing fees which may be payable or
determined to be payable in connection with the transactions contemplated by
this Agreement and the Collateral Documents, including, without limitation, the
issue and delivery of the Notes, the execution, delivery, filing and recording
of the Collateral Documents and financing statements related thereto, or any
modification, amendment or alteration thereof. The obligations of the Company
under this Section 11.3 shall survive the payment or prepayment of the Notes.
11.4. Successors and Assigns. All covenants, agreements,
representations and warranties made herein, in the Collateral Documents and in
the Notes or in certificates delivered in connection herewith by or on behalf
of the Company shall survive the issue and delivery of the Notes to you, the
making of the loan by you as provided in Section 1.2, and shall bind the
successors and assigns of the Company, whether so expressed or not, and all
such covenants, agreements, representations and warranties shall inure to the
benefit of your successors and assigns, including any subsequent holder of any
of the Notes.
11.5. Payment. Notwithstanding any provision to the contrary
in either Note contained, the Company will promptly and punctually pay to you
by wire transfer of immediately available funds pursuant to wiring instructions
from you, or if you so request, by check mailed (not later than three days
prior to the date any payment is due) to Metropolitan Life Insurance Company,
Agricultural Investments, ▇▇▇ ▇▇-▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ or by
such other method or to such other address as may be designated in writing by
you, all amounts payable in respect of the principal of, prepayment premium, if
any, and interest on, the Notes, without any presentment thereof and without
any notation of such payment being made thereon.
11.6. Notices. All communications provided for hereunder,
under the Collateral Documents or under the Notes (other than payments in
respect thereof which shall be made in accordance with Section 11.5) shall be
in writing, and if to you, mailed (by registered or certified mail) or
delivered to you addressed as this Agreement is addressed with a copy to:
Metropolitan Life Insurance Company, Agricultural Investments, ▇.▇. ▇▇▇ ▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Manager, or
if to the Company, mailed (by registered or certified mail) to Cal-Maine Foods,
Inc., P.O. Box 2960, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇. ▇. ▇▇▇▇▇▇, Vice-President and Chief Financial Officer, or
addressed to either party at any other address in the United States of America
that such party may hereafter designate by written notice to the other party.
Communications mailed as aforesaid shall be deemed sufficiently
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36
made three (3) days after the time such communication is deposited in the
mails.
11.7. Severability. If any provision of this Agreement or
either Note or the application thereof to any person or circumstance shall be
invalid or unenforceable to any extent, the remainder of this Agreement and
such Note and the application of such provision to other persons or
circumstances shall not be affected thereby and shall be enforced to the
maximum extent permitted by law.
11.8. Law Governing; Modification. This Agreement shall be
construed in accordance with and governed by laws of the State of Mississippi.
No provision of this Agreement may be waived, changed or modified, or the
discharge thereof acknowledged, orally, but only by an agreement in writing
signed by the party against whom the enforcement of any waiver, change,
modification or discharge is sought.
11.9. Headings. The headings of the sections and subsections
of this Agreement are inserted for convenience only and do not constitute part
of this Agreement.
11.10. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
11.11. Final Credit Agreement. THIS WRITTEN AGREEMENT, THE
NOTES AND THE COLLATERAL DOCUMENTS ARE THE FINAL EXPRESSION OF THE CREDIT
AGREEMENT BETWEEN THE COMPANY AND YOU AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT BETWEEN THE COMPANY AND YOU.
THE COMPANY AND YOU HEREBY AFFIRM THAT THERE IS NO UNWRITTEN ORAL CREDIT
AGREEMENT BETWEEN THE COMPANY AND YOU WITH RESPECT TO THE SUBJECT MATTER OF
THIS WRITTEN CREDIT AGREEMENT, THE NOTES, THE COLLATERAL DOCUMENTS, AND ANY
RELATED LOAN DOCUMENTS.
If the foregoing is satisfactory to you, please sign the form
of acceptance on the enclosed counterpart of this letter agreement and forward
the same to the Company, whereupon this letter agreement will become a binding
agreement between you and the Company as of the date first above written.
Yours very truly,
CAL-MAINE FOODS, INC., a
Delaware corporation
By:
--------------------------------
▇▇▇▇ ▇▇▇▇▇, Jr.
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Its Chief Executive Officer
By:
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Secretary
The foregoing agreement is
hereby accepted as of the
date first above written.
METROPOLITAN LIFE INSURANCE COMPANY
By
--------------------------------
Its
-----------------------------
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FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Agreement"), made and
entered into this 11 the day of November, 1991, by and between CAL-MAINE FOODS,
INC., a Delaware corporation (hereinafter "Borrower"), and METROPOLITAN LIFE
INSURANCE COMPANY, a New York corporation ("Lender");
W I T N E S S E T H:
WHEREAS, Borrower has executed and delivered to Lender a certain
Adjustable Rate Secured Promissory Note dated May 1, 1991 in the amount of
$21,900,000 and a certain Adjustable Rate Secured Promissory Note dated May 1,
1991 in the amount of $600,000 (collectively, the "Notes");
WHEREAS, the Notes are secured by (i) respective first deeds of
trust/deeds to secure debt, security agreements and financing statements
(collectively, the "Deed of Trust") entered into by the Company or certain of
its Subsidiaries with respect to, inter alia, the Company's integrated poultry,
egg and livestock operations and office facilities located in ▇▇▇▇▇ and ▇▇▇▇▇▇▇
Counties, Mississippi, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Counties, Georgia and ▇▇▇▇▇ County,
Texas, as described in said Deed of Trust, and an act of collateral mortgage,
security agreement and financing statement (the "Mortgage") entered into by the
Company or certain of its Subsidiaries with respect to, inter alia, the
Company's integrated poultry, egg and livestock operations and office
facilities located in ▇▇▇▇▇▇▇▇▇▇ Parish, Louisiana, as described in said
Mortgage (all such poultry, egg and livestock operations and office facilities
described in the Deed of Trust and Mortgage are hereinafter collectively
referred to as the "Facility"); (ii) a security agreement between the Company
and certain of its Subsidiaries as debtor, and you, as secured party (the
"Security Agreement") granting a security interest in, inter alia, all
equipment, fixtures and other personal property utilized in connection with, or
located at, the Facility as described in said Security Agreement, which
security interest will be perfected by one or more financing statements; (iii)
a guaranty from certain of the Company's Subsidiaries (the "Guaranty"); and
(iv) a Loan Agreement dated as of May 1, 1991 (the "Loan Agreement") and
certain other related loan documents (The Notes, Deed of Trust, Mortgage,
Security Agreement, Guaranty, Loan Agreement and all other related loan
documents are collectively referred to as the "Loan Documents"); and
WHEREAS, Borrower has requested, and Lender has agreed, to modify
Section 8.4 of the Loan Agreement to exclude rentals paid on certain of
Borrower's trucking operations;
NOW, THEREFORE, in consideration of the mutual covenants herein
expressed and other good and valuable consideration, the
39
receipt and sufficiency of which is hereby acknowledged, Borrower and Lender
hereby agree as follows:
1. Section 8.4 of the Loan Agreement is hereby deleted in its
entirety and in its stead is inserted the following:
"8.4. Lease Obligations. The Company and its Subsidiaries, on a fully
consolidated basis, will not at any time create, assume or incur, or in any
manner become liable for any lease or leases (exclusive of Capital Leases and
leases for semi-tractors and licensed trailers) in which the rentals due in any
fiscal year exceed the aggregate amount of $2,500,000.00."
2. Except as expressly modified herein, the Loan Documents shall
remain the same and are hereby ratified and confirmed.
IN WITNESS WHEREOF, this First Amendment to Loan Agreement has been
executed as of the day and year first above written.
BORROWER:
CAL-MAINE FOODS, INC., a Delaware
corporation
By:
-------------------------------------
▇▇▇▇ ▇▇▇▇▇, Jr.
Its Chief Executive Officer
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Secretary
LENDER:
METROPOLITAN LIFE INSURANCE COMPANY, a
New York corporation
By:
-------------------------------------
Printed:
--------------------------------
Title:
----------------------------------
The undersigned hereby ratify and confirm their obligations as guarantors under
a certain Loan Guaranty Agreement dated May 1, 1991 and acknowledge and agree
that said obligations are in no
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40
manner affected by the foregoing First Amendment to Loan Agreement.
CAL-MAINE FARMS, INC., a Delaware
corporation
By:
--------------------------------------
Its:
----------------------------------
CAL-MAINE EGG PRODUCTS, INC., a Delaware
corporation
By:
--------------------------------------
Its:
----------------------------------
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Metropolitan Life Insurance Company
Agricultural Investments, Illinois Regional ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel ▇▇▇ ▇▇▇-▇▇▇▇ Fax ▇▇▇ ▇▇▇-▇▇▇▇
[METLIFE LOGO]
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Regional Manager
A. ▇▇▇ ▇▇▇▇▇▇▇▇
Assistant Manager
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Assistant Manager
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial officer
CAL-MAINE FOODS, INC.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: X16 74 95, X16 81 04 & X16 95 84
Cal-Maine Foods, Inc. and Subsidiaries
Gentlemen:
With respect to the Loan Agreements dated May 1, 1991, March 19, 1992 and
February 2, 1994 ("collectively, the Loan Agreements") between Metropolitan
Life Insurance Company ("Metropolitan") and Cal-Maine Foods, Inc. ("Cal-Maine")
and its subsidiary Cal-Maine Partnership, Ltd. ("Cal-Maine Partnership"), as
the case may be, you have requested a waiver of Metropolitan's right to request
payment in full of certain notes upon the occurrence of a Change of Control
Date as more particularly set forth in Section 6.2 of each of said Loan
Agreements.
At your request, and based upon the representations of Mr. ▇▇▇▇ ▇▇▇▇▇, Jr. in
that certain letter dated October 9, 1996 concerning his intent to maintain
majority control of Cal-Maine and its subsidiaries, Metropolitan hereby waives
the provisions of the aforesaid Section 6.2, effective upon the date of
Cal-Maine's and Cal-Maine Partnership's acceptance of and agreement to this
letter as set forth below, subject to the consummation of Cal-Maine's pending
public stock offering, for the remaining terms of these loans, provided that at
the time of such public stock offering there shall exist no Event of Default or
event or condition, which upon the expiration of time or the giving of notice
or both, would constitute an Event of Default upon said Loan Agreements.
It shall further be understood and agreed reference to stock ownership of ▇▇▇▇
▇▇▇▇▇, Jr. and his immediate family as set forth in Section 8.5B of the Loan
Agreement dated February 2, 1994, and all other references in the Loan
Agreement to stock ownership of more than fifty percent (50%) of the Company's
"outstanding Voting Stock", shall refer to Voting Stock representing more than
fifty percent (50%) of the total "voting power" of all classes of outstanding
Voting Stock. Consistent therewith, the "Pledge of Stock" provision at page 3
of the "Summary Outline of Major Business Terms" attached to Metropolitan's
loan commitment letter dated September 3, 1996, shall refer to a majority of
the total voting power represented by all classes of Cal-Maine's voting stock
outstanding.
42
Except as specifically set forth herein, all other terms and conditions of said
Loan Agreements, as may have been modified from time to time by time parties
hereto, shall remain in full force and effect and are hereby ratified and
affirmed by you in all respects.
Metropolitan's agreement hereto is subject to our receipt of an executed
duplicate original of this letter indicating your acceptance of these terms on
or before October 25, 1996. In the event that such public stock offering shall
not occur on or before February 1, 1997, Metropolitan's agreement hereto shall
be null and void and of no force and effect whatsoever.
Very Truly Yours,
Accepted and agreed to this 21st day of October, 1996.
Cal-Maine Foods, Inc.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇ ------------------------------
Its:
-----------------------------
A. ▇▇▇ ▇▇▇▇▇▇▇▇
Assistant Manager
Agribusiness Specialist
Illinois Regional Office Cal-Maine Partnership, Ltd.
October 15, 1996 By:
------------------------------
Its:
-----------------------------
aci