EXHIBIT 4.6(i)
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[EXECUTION COUNTERPART]
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of January 15, 1997, made by ▇▇▇▇▇ MEAT
GROUP, INC., a Delaware corporation (the "Borrower") located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, to COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "Rabobank Nederland", New York Branch, with an office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as Agent under the Credit Agreement, defined below
("Agent").
PRELIMINARY STATEMENTS.
The Agent and certain banks have entered into a Fourth Amended,
Restated and Continued Revolving Credit Agreement dated as of April 30, 1996, as
amended by the First Amendment, dated as of July 29, 1996, as amended by the
Second Amendment, dated as of the date hereof (said Agreement, as it may
hereafter be amended or otherwise modified from time to time, being the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with The Smithfield Packing Company,
Incorporated ("Smithfield"), ▇▇▇▇▇▇▇▇ of Smithfield, Ltd. ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Incorporated ("Cudahy"), ▇▇▇▇▇'▇ of Carolina, Inc. ("▇▇▇▇▇'▇"), ▇▇▇▇
▇▇▇▇▇▇▇ & Co. ("▇▇▇▇▇▇▇"), the Borrower and Sunnyland, Inc. ("Sunnyland").
The Credit Agreement, as amended to date, is a complete Amendment,
Restatement and Continuation of the Third Amended, Restated and Continued
Revolving Credit Agreement (the "1995 Agreement") dated as of July 31, 1995, as
amended by First Amendment to the 1995 Agreement dated as of July 31, 1995, and
as amended by Amendment Agreement dated December 20, 1995, among ▇▇▇▇▇▇▇▇,
Packing, Cudahy, Esskay and ▇▇▇▇▇'▇, Rabobank as agent for the Banks and each
financial institution a party thereto, with the 1995 Agreement being a complete
amendment, restatement and continuation of the Second Amended, Restated and
Continued Revolving Credit Agreement (the "1994 Agreement") dated as of March 1,
1994, as amended by Amendments dated as of May 1, 1994, November 28, 1994,
January 31, 1995, February 24, 1995, March 27, 1995, April 30, 1995, May 31,
1995 and July 12, 1995 among Smithfield, Gwaltney, Cudahy, Esskay, Inc.
("Esskay"), ▇▇▇▇▇'▇ and Carolina Food Processors, Inc. and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch
("Rabobank"), with the 1994 Agreement being a complete amendment, restatement
and continuation of (a) of the Amended, Restated and Continued Revolving Credit
Agreement (the "1991 Agreement") dated as of November 27, 1991, as amended as of
August 12, 1992, and as of October 28, 1992, among ▇▇▇▇▇▇▇▇, Packing, Cudahy and
Esskay and Rabobank, with the 1991 Agreement being a complete amendment,
restatement and continuation of the Revolving Credit Agreement dated as of
October 26, 1990, as amended as of October 30, 1991 between ▇▇▇▇▇▇▇▇ and
Rabobank and (b) the Amended and Restated and Continued Oral Finance Facility
(the "1991 Oral Finance Facility") dated as of November 27, 1991 among ▇▇▇▇▇▇▇▇,
Packing, Cudahy and Esskay and Rabobank, with the 1991 Oral Finance Facility
being a
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complete amendment, restatement and continuation of the Oral Finance Facility
dated as of October 26, 1990, as amended, between ▇▇▇▇▇▇▇▇ and Rabobank.
It is a condition precedent to the making of Advances by the Banks
under the Credit Agreement that the Borrower shall have granted the security
interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Banks to make Advances under the Credit Agreement, the Borrower
hereby agrees as follows:
SECTION 1. Grant of Security. The Borrower hereby pledges and assigns
to the Agent on behalf of the Banks, and hereby grants to the Agent on behalf of
the Banks a security interest in, all of the Borrower's right, title and
interest in and to the following, whether now owned or hereafter acquired (the
"Collateral"):
(a) All inventory in all of its forms, wherever located, now
or hereafter existing (including, but not limited to, (i) all meat,
meat products and raw materials and work in process therefor,
finished goods thereof, and materials used or consumed in the
manufacture or production thereof including packaging and processing
supplies, (ii) goods in which the Borrower has an interest in mass or
a joint or other interest or right of any kind (including, without
limitation, goods in which the Borrower has an interest or right as
consignee), and (iii) goods which are returned to or repossessed by
the Borrower), and all accessions thereto and products thereof and
documents therefor (any and all such inventory, accessions, products
and documents being the "Inventory");
(b) All farm products in all of their respective forms,
wherever located, now or hereafter existing, including but not
limited to (i) meat and products thereof and (ii) all agricultural
supplies used or consumed in the Borrower's operations, including
without limitation all feed, meal, ingredients, seeds, drugs,
medications, vaccines, supplements and other chemicals used in
feeding, maintaining, growing, preserving or producing any farm
products, and (iii) all accessions to and products of and documents
for any of the foregoing (any and all such farm products, accessions,
products and documents being the "Farm Products");
(c) All accounts, contract rights, chattel paper,
instruments, general intangibles and other obligations of any kind
(including, without limitation, payment-in-kind certificates, rights
to any government subsidy, set aside, diversion, deficiency or
disaster payment, and payments in kind), now or hereafter existing,
whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services, and all rights now or
hereafter existing in and to all security agreements, leases, and
other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, instruments, general intangibles or
obligations (any and all such accounts, contract rights, chattel
paper, instruments, general intangibles
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and obligations being the "Receivables", and any and all such leases,
security agreements and other contracts being the "Related
Contracts"); and
(d) Subject to Section 9(a) hereof, all proceeds of any and
all of the foregoing Collateral (including, without limitation,
proceeds which constitute property of the types described in clauses
(a), (b) and (c) of this Section 1) and, to the extent not otherwise
included, all payments under insurance (whether or not the Agent on
behalf of the Banks is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
SECTION 2. Security for Obligations. This Agreement secures the
payment of all obligations of any or all of the Borrowers now or hereafter
existing under the Credit Agreement and each of the Notes thereunder, whether
for principal, interest, fees, expenses or otherwise, and all or any obligations
of any Borrower under any Loan Document and all obligations of the Borrower now
or hereafter existing under this Agreement (all such obligations being the
"Obligations").
SECTION 3. Borrower Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Borrower shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Agent on behalf of the
Banks of any of the rights hereunder shall not release the Borrower from any of
its duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Agent nor any Bank shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Agent or any Bank be obligated to
perform any of the obligations or duties of the Borrower thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.
SECTION 4. Representations and Warranties. The Borrower represents
and warrants as follows:
(a) All of the Inventory and Farm Products are located at
the places specified in the Schedule hereto. The chief place of
business and chief executive office of the Borrower and the office
where the Borrower keeps its records concerning the Receivables, and
all originals of all chattel paper which evidence Receivables, are
located at the address first specified above for the Borrower. None
of the Receivables is evidenced by a promissory note or other
instrument.
(b) The Borrower owns the Collateral free and clear of any
lien, security interest, charge or encumbrance except for the
security interest created by this Agreement. No effective financing
statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except
such
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as may have been filed in favor of the Agent on behalf of the Banks
relating to this Agreement. The Borrower does not conduct business
under any other name.
(c) The Borrower has exclusive possession and control of the
Inventory and Farm Products.
(d) This Agreement creates a valid and perfected first
priority security interest in the Collateral, securing the payment of
the Obligations, and all filings and other actions necessary or
desirable to perfect and protect such security interest have been
duly taken.
(e) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body is required either (i) for the grant by the Borrower of the
security interest granted hereby or for the execution, delivery or
performance of this Agreement by the Borrower or (ii) for the
perfection of or the exercise by the Agent on behalf of the Banks of
its rights and remedies hereunder, except for such financing
statements as may be filed in favor of the Agent on behalf of the
Banks relating to this Agreement.
SECTION 5. Further Assurances. (a) The Borrower agrees that from time
to time, at the expense of the Borrower, the Borrower will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that the Agent or a Bank may request, in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable the Agent on behalf of the Banks to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, the Borrower will: (i) ▇▇▇▇ conspicuously each
document included in the Inventory and each chattel paper included in the
Receivables and, at the request of the Agent on behalf of the Banks, each
Related Contract and each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Agent, indicating that such
document, chattel paper, Related Contract or Collateral is subject to the
security interest granted hereby; (ii) if any Receivable shall be evidenced by a
promissory note or other instrument, deliver and pledge to the Agent on behalf
of the Banks hereunder such note or instrument duly indorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and substance
satisfactory to the Agent on behalf of the Banks; and (iii) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Agent may
request, in order to perfect and preserve the security interest granted or
purported to be granted hereby.
(b) The Borrower hereby authorizes the Agent on behalf of the Banks
to file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Collateral without the signature of
the Borrower where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
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(c) The Borrower will furnish to the Agent or the Banks from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Agent or a Bank
may reasonably request, all in reasonable detail.
SECTION 6. As to Inventory and Farm Products. The Borrower shall:
(a) Keep the Inventory and Farm Products (other than
Inventory and Farm Products sold in the ordinary course of business)
at the places therefor specified in Section 4(a) or, upon 30 days'
prior written notice to the Agent and the Banks, at such other places
in jurisdictions where all action required by Section 5 shall have
been taken with respect to the Inventory and Farm Products.
(b) Pay promptly when due all property and other taxes,
assessments and government charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against,
the Inventory and Farm Products, except to the extent the validity
thereof is being contested in good faith.
SECTION 7. Insurance. (a) The Borrower shall, at its own expense,
maintain insurance with respect to the Inventory and Farm Products in such
amounts, against such risks, in such form and with such insurers, as shall be
satisfactory to the Agent from time to time. Each policy for (i) liability
insurance shall provide for all losses to be paid to the Agent on behalf of the
Banks and the Borrower as their respective interests may appear and (ii)
property damage insurance shall provide for all losses (except for losses of
less than $3,000,000 per occurrence) to be paid directly to the Agent on behalf
of the Banks. Each such policy shall in addition (i) name the Borrower and the
Agent on behalf of the Banks as insured parties thereunder (without any
representation or warranty by or obligation upon the Agent or the Banks) as
their interests may appear, (ii) contain the agreement by the insurer that any
loss as set forth above shall be payable to the Agent on behalf of the Banks
notwithstanding any action, inaction or breach of representation or warranty by
the Borrower, (iii) provide that there shall be no recourse against the Agent or
the Banks for payment of premiums or other amounts with respect thereto and (iv)
provide that at least ten days' prior written notice of cancellation or of lapse
shall be given to the Agent by the insurer. The Borrower shall, if so requested
by the Agent, deliver to the Agent original or duplicate policies of such
insurance and, as often as the Agent may reasonably request, a report of a
reputable insurance broker with respect to such insurance. Further, the Borrower
shall, at the request of the Agent, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements of Section
5 and cause the respective insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by the
Borrower pursuant to this Section 7 may be paid directly to the person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Inventory or Farm Products when subsection (c) of this Section 7 is
not applicable, the Borrower shall make or cause to be made the necessary
replacements of such Inventory or Farm Products, and any proceeds of insurance
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maintained by the Borrower pursuant to this Section 7 shall be paid to the
Borrower as reimbursement for the costs of such replacements.
(c) Upon (i) the occurrence and during the continuance of any Event
of Default, or (ii) the actual or constructive total loss (in excess of
$3,000,000 per occurrence) of any Inventory or Farm Products, all insurance
payments in respect of such Inventory or Farm Products shall be paid to and
applied by the Agent on behalf of the Banks as specified in Section 13(b).
SECTION 8. As to Receivables. (a) The Borrower shall keep its chief
place of business and chief executive office and the office where it keeps its
records concerning the Receivables, and all originals of all chattel paper which
evidence Receivables, at the location therefor specified in Section 4(a) or,
upon 30 days' prior written notice to the Agent and the Banks, at such other
locations in a jurisdiction where all action required by Section 5 shall have
been taken with respect to the Receivables. The Borrower will hold and preserve
such records and chattel paper and will permit representatives of the Agent and
the Banks at any time during normal business hours to inspect and make abstracts
from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), the Borrower
shall continue to collect, at its own expense, all amounts due or to become due
the Borrower under the Receivables. In connection with such collections, the
Borrower may take (and, at the Agent's reasonable direction, shall take) such
action as the Borrower or the Agent may deem necessary or advisable to enforce
collection of the Receivables; provided, however, that the Agent on behalf of
the Banks shall have the right at any time, upon the occurrence and during the
continuance of an Event of Default or an event which, with the giving of notice
or the lapse of time, or both, would become an Event of Default and upon written
notice to the Borrower of its intention to do so, to notify the account debtors
or obligors under any Receivables of the assignment of such Receivables to the
Agent on behalf of the Banks and to direct such account debtors or obligors to
make payment of all amounts due or to become due to the Borrower thereunder
directly to the Agent on behalf of the Banks and, upon such notification and at
the expense of the Borrower, to enforce collection of any such Receivables, and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as the Borrower might have done. After receipt by
the Borrower of the notice from the Agent referred to in the proviso to the
preceding sentence, (i) all amounts and proceeds (including instruments)
received by the Borrower in respect of the Receivables shall be received in
trust for the benefit of the Banks hereunder, shall be segregated from other
funds of the Borrower and shall be forthwith paid over to the Agent on behalf of
the Banks in the same form as so received (with any necessary indorsement) to be
held as cash collateral and either (A) released to the Borrower so long as no
Event of Default shall have occurred and be continuing or (B) if any Event of
Default shall have occurred and be continuing, applied as provided by Section
13(b), and (ii) the Borrower shall not adjust, settle or compromise the amount
or payment of any Receivable, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 9. Transfers and Other Liens. The Borrower shall not:
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(a) Sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except Inventory in the
ordinary course of business.
(b) Create or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to any of the
Collateral to secure Debt of any person or entity, except for the
security interests created by this Agreement.
SECTION 10. Agent Appointed Attorney-in-Fact. The Borrower hereby
irrevocably appoints the Agent on behalf of the Banks the Borrower's
attorney-in-fact, with full authority in the place and stead of the Borrower and
in the name of the Borrower, the Agent on behalf of the Banks or otherwise, from
time to time in the Agent's discretion, to take any action and to execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the Borrower under Section
8), including, without limitation:
(i) to obtain and adjust insurance required to be paid to
the Agent on behalf of the Banks pursuant to Section 7,
(ii) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral,
(iii) instruments, documents and chattel paper, in
connection with clause (i) or (ii) above, and
(iv) proceedings which the Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Agent on behalf of the Banks with respect
to any of the Collateral.
SECTION 11. Agent May Perform. If the Borrower fails to perform any
agreement contained herein, the Agent on behalf of the Banks may itself perform,
or cause performance of, such agreement, and the expenses of the Agent incurred
in connection therewith shall be payable by the Borrower under Section 14(b).
SECTION 12. The Agent's Duties. The powers conferred on the Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Agent shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral.
SECTION 13. Remedies. If any Event of Default shall have occurred and
be continuing:
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(a) The Agent on behalf of the Banks may exercise in respect
of the Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies
of a secured party on default under the Uniform Commercial Code (the
"Code") (whether or not the Code applies to the affected Collateral)
and also may (i) require the Borrower to, and the Borrower hereby
agrees that it will at its expense and upon request of the Agent
forthwith, assemble all or part of the Collateral as directed by the
Agent and make it available to the Agent at a place to be designated
by the Agent which is reasonably convenient to both parties and (ii)
without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any
of the Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Agent may deem
commercially reasonable. The Borrower agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to
the Borrower of the time and place of any public sale or the time
after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(b) All cash proceeds received by the Agent in respect of
any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of the Banks, be held
by the Agent on behalf of the Banks as collateral for, and/or then or
at any time thereafter applied (after payment of any amounts payable
to the Agent pursuant to Section 14) in whole or in part by the Agent
on behalf of the Banks against, all or any part of the Obligations in
such order as set forth in Section 1.11 of the Credit Agreement. Any
surplus of such cash or cash proceeds held by the Agent on behalf of
the Banks and remaining after payment in full of all the Obligations
shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive such surplus.
SECTION 14. Indemnity and Expenses. (a) The Borrower agrees to
indemnify the Agent from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities resulting
from the Agent's gross negligence or willful misconduct.
(b) The Borrower will upon demand pay to the Agent the amount of any
and all reasonable expenses, including the reasonable fees and disbursements of
its counsel and of any experts and agents, which the Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent hereunder or (iv) the failure by the Borrower to
perform or observe any of the provisions hereof.
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SECTION 15. Continuing Security Interest; Transfer of Notes. This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the later of payment in full of
the Obligations or the Termination Date, (ii) be binding upon the Borrower, its
successors and assigns and (iii) inure to the benefit of and be binding on the
Agent and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), a Bank may assign or otherwise
transfer the Notes held by it and delivered under the Credit Agreement to any
other person or entity, and such other person or entity shall thereupon become
vested with all the benefits in respect thereof granted to a Bank herein or
otherwise. Upon the later of the payment in full of the Obligations or the
Termination Date, the security interest granted hereby shall terminate and all
rights to the Collateral shall revert to the Borrower. Upon any such
termination, the Agent on behalf of the Banks will, at the Borrower's expense,
execute and deliver to the Borrower such documents as the Borrower shall
reasonably request to evidence such termination.
SECTION 16. Governing Law; Terms. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, except to
the extent that the validity or perfection of the security interest hereunder,
or remedies hereunder, in respect of any particular Collateral are governed by
the laws of a jurisdiction other than the State of New York. Unless otherwise
defined herein or in the Credit Agreement, terms used in Article 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined.
[Signature on Next Page.]
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IN WITNESS WHEREOF, the Borrower has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
▇▇▇▇▇ MEAT GROUP, INC.
▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
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SCHEDULE TO SECURITY AGREEMENT
▇▇▇▇▇ County, Florida
Hillsborough County, Florida
Orange County, Florida
▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ County, Georgia