CAL-MAINE FOODS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
64-0500378
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
STEPHEN A. ZELNICK, ESQ.
MORSE, ZELNICK, ROSE & LANDER, LLP
450 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 838-1177
(212) 838-9190 (FAX)
PETER E. PANARITES, ESQ.
FREEDMAN, LEVY, KROLL & SIMONDS
1050 CONNECTICUT AVENUE, N.W.
SUITE 825
WASHINGTON, D.C. 20036
(202) 457-5105
(202) 457-5151(FAX)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date hereof.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. /X/
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement of the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act of 1933, please check the following box. / /
(1) Estimated solely for purposes of determining the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended (the "Securities Act").
(2) Includes 375,000 shares issuable upon exercise of the Underwriters' over-allotment option.
(3) No registration fee required pursuant to Rule 457 under the Securities Act.
CROSS REFERENCE SHEET
SHOWING LOCATION IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF PART I OF
FORM S-1
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus.......................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus........................................ Inside Front Cover Page; Outside Back
Cover Page; Additional Information
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges......................... Prospectus Summary; The Company; Risk
Factors
4. Use of Proceeds..................................... Use of Proceeds
5. Determination of Offering Price..................... Underwriting
6. Dilution............................................ Dilution
7. Selling Security Holders............................ Principal and Selling Stockholders
8. Plan of Distribution................................ Outside Front Cover Page; Underwriting
9. Description of Securities to be Registered.......... Description of Capital Stock
10. Interests of Named Experts and Counsel.............. Legal Matters; Experts
11. Information With Respect to the Registrant:
(a) Description of Business......................... Business
(b) Description of Property......................... Business -- Properties and Facilities
(c) Legal Proceedings............................... Not Applicable
(d) Market Price of and Dividends on the
Registrant's Common Equity and
Related Stockholder Matters.................. Front Cover Page; Dividend Policy;
Description of Capital Stock; Shares
Eligible for Future Sale;
Management -- 1993 Stock Option Plan
(e) Financial Statements............................ Consolidated Financial Statements;
Capitalization
(f) Selected Financial Data......................... Selected Consolidated Financial
Information and Operating Data
(g) Supplementary Financial Information............. Not Applicable
(h) Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... Management's Discussion and Analysis of
Financial Condition and Results of
Operations
(i) Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure....... Not Applicable
(j) Directors, Executive Officers, Promoters and
Control Persons.............................. Management -- Directors and Executive
Officers
(k) Executive Compensation.......................... Management -- Executive Compensation;
Management -- Employee Stock
Ownership Plan; Management -- 1993
Stock Option Plan; Management --
Savings and Retirement Plan;
Management -- Long Term Incentive
Plans; Management -- Directors
Compensation
(l) Security Ownership of Certain Beneficial Owners
and Management............................... Principal and Selling Stockholders
(m) Certain Relationships and Related
Transactions.................................... Management -- Certain Transactions
12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities.................... Not Applicable*
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 25, 1996
PROSPECTUS
2,500,000 SHARES
Of the 2,500,000 shares of Common Stock, par value $0.01 per share (the "Common Stock") offered hereby, 1,700,000 shares are being sold by Cal-Maine Foods, Inc. ("Cal-Maine" or the "Company") and 800,000 shares are being sold by its founder and principal stockholder (the "Selling Stockholder"). See "Principal and Selling Stockholder" and "Use of Proceeds."
Prior to this offering there has been no public market for the Common Stock. It is anticipated that the initial offering price will be between $6.50 and $7.50 per share. For information relating to the factors considered in determining the initial offering price to the public, see "Underwriting."
Application has been made to list the Common Stock on the NASDAQ Stock Market's National Market (the "NASDAQ National Market") under the proposed symbol "CALM."
The Company's outstanding capital stock includes Common Stock and Class A Common Stock, par value $0.01 per share (the "Class A Common Stock," and together with the Common Stock, the "Capital Stock"). Each share of Class A Common Stock entitles its holder to 10 votes, whereas each share of Common Stock entitles its holder to one vote. Immediately following this offering, the principal stockholder of the Company will own 44% of the outstanding shares of Capital Stock and possess 70% of the total voting power of the outstanding Capital Stock. See "Principal and Selling Stockholders" and "Description of Capital Stock."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNTS(1) COMPANY(2) STOCKHOLDER(2)
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Per Share......................... $ $ $ $
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Total(3).......................... $ $ $ $
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(1) Excludes a non-accountable expense allowance payable to Paulson Investment Company, Inc., the representative (the "Representative") of the several underwriters (the "Underwriters"), equal to 2% of the total price to the public of the shares being offered hereby (see note 2, below). The Company has agreed to issue to the Representative warrants (the "Representative's Warrants") to purchase up to 250,000 shares of Common Stock for $ per share [120% of the initial offering price] and to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. See "Underwriting."
(2) Before deduction of expenses estimated at $701,750, including the Representative's non-accountable expense allowance. Of the total estimated expenses, $585,132 is payable by the Company and $116,618 is payable by the Selling Stockholder.
The date of this Prospectus is , 1996
CAL-MAINE FOODS, INC.
LOCATION OF FACILITIES AND MARKET AREAS
The Company intends to furnish to its stockholders annual reports containing financial statements audited by independent certified public accountants, as well as quarterly financial information. The Company will be subject to the information requirements of the Securities Exchange Act of 1934, as amended, and in connection therewith will file reports, proxy statements and other information with the Securities and Exchange Commission.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, INFORMATION IN THIS PROSPECTUS (i)
ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION AND (ii) IS ADJUSTED TO REFLECT A RECENT RECAPITALIZATION, WHICH RESULTED IN THE CREATION OF THE COMMON STOCK AND THE CLASS A COMMON STOCK, AND A 1,200-FOR-1 STOCK SPLIT OF THE CAPITAL STOCK, EFFECTIVE AS OF OCTOBER 3, 1996. SEE "CAPITALIZATION -- RECAPITALIZATION AND STOCK SPLIT."
THE COMPANY
GENERAL
The Company is primarily engaged in the production, cleaning, grading, packing and sale of fresh shell eggs and the manufacture and sale of egg products. Shell eggs accounted for approximately 92% and egg products approximately 6% of the Company's net sales in fiscal 1996. The Company currently is the largest producer and distributor of fresh shell eggs in the United States, with fiscal 1996 sales of approximately 384.4 million dozen shell eggs, representing approximately 7.5% of all shell eggs sold in the United States. Cal-Maine primarily markets its shell eggs and egg products in 26 states, chiefly in the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.
The Company's operations are fully integrated. It owns facilities to hatch chicks, grow pullets, manufacture feed and produce, process, manufacture and distribute shell eggs and egg products. Company-owned facilities accounted for approximately 60% of total egg production in fiscal 1996, with the balance attributable to contract producers used by the Company. Approximately 95% of the feed for Company-owned farms and contract producers is manufactured by the Company, from purchased ingredients, in feed mills that it owns and operates. Shell eggs are sold directly by the Company primarily to national and regional supermarket chains. Egg products are sold both on a direct basis and through egg product brokers to institutional users, including manufacturers of baked goods, mayonnaise and confections.
GROWTH STRATEGY
During the past eight years the Company has pursued an aggressive growth strategy, including the acquisition of existing shell egg production and processing facilities, as well as the construction of new and more efficient facilities. Since the beginning of fiscal 1989, the Company has consummated six acquisitions, adding an aggregate of 13.7 million layers to its capacity, and built four new "in-line" shell egg production and processing facilities and one pullet growing facility, adding 4 million layers and 950,000 pullets to its capacity. The increases in capacity have been offset by the retirement of older and less efficient facilities and a reduction in eggs produced by contract producers.
As a result of the Company's growth strategy, its total flock, including pullets, layers and breeders, has increased from approximately 6.8 million at May 28, 1988 to an average of approximately 17.4 million for each of the past five fiscal years. Also, there has been a three-fold increase in the number of dozens of shell eggs sold, from approximately 117 million in the fiscal year ended May 28, 1988 to an average of approximately 394 million in each of the past five fiscal years. Net sales amounted to approximately $282.8 million in fiscal 1996, approximately four times net sales of approximately $70.0 million in fiscal 1988. The Company expects to continue to pursue its growth strategy and to use a portion of its net proceeds from this offering to acquire additional shell egg production and processing facilities and feed mills. However, it has no understandings or agreements in that regard at this time.
The Company's new "in-line" facilities result in the gathering, cleaning, grading and packaging of shell eggs by less labor-intensive, more efficient, mechanical means. The increased use of in-line facilities has generated significant cost savings. The cost of eggs produced at these facilities was lower by 1.0c, 1.5c, 2.1c, 2.3c and 3.1c per dozen in fiscal 1992, 1993, 1994, 1995 and 1996, respectively, than the cost to the Company of eggs produced from non-in-line facilities. Also, the Company produces a higher percentage of grade A eggs,
which sell at higher prices, at its in-line facilities. The percentage of the total number of layers housed in the Company's in-line facilities increased from 25% in fiscal 1992 to 55% in fiscal 1996.
The Company's acquisitions and construction of larger facilities, described in the tables below, reflect the continuing concentration of shell egg production in the United States in a decreasing number of shell egg producers. The Company believes that a continuation of that concentration trend may result in the reduced cyclicality of shell egg prices, but no assurance can be given in that regard.
ACQUISITIONS OF EGG PRODUCTION AND PROCESSING FACILITIES
LAYERS PURCHASE
FISCAL YEAR(1) SELLER LOCATION ACQUIRED PRICE
- -------------- ---------------------------------------- --------------- -------------- -----------
1989 Egg City, Inc........................... Arkansas 1,300,000 $ 6,716,000
1990 Sunny Fresh Foods, Inc.................. (2) 7,500,000 21,629,000
1991 Sunnyside Eggs, Inc..................... North Carolina 1,800,000 6,000,000
1994 Wayne Detling Farms..................... Ohio 1,500,000 12,194,000
1995 A&G Farms(3)............................ Kentucky 1,000,000 2,883,000
1997 Sunbest Farms(4)........................ Arkansas 600,000 1,302,000
---------- -----------
Total..................................................... 13,700,000 $50,724,000
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CONSTRUCTION OF EGG PRODUCTION, PULLET GROWING AND PROCESSING FACILITIES(5)
FISCAL YEAR LAYER PULLET APPROXIMATE
COMPLETED LOCATION CAPACITY CAPACITY COST
- ----------- -------------------------------------------------- --------- -------- -----------
1990 Mississippi....................................... 1,000,000 200,000 $10,000,000
1992 Louisiana......................................... 1,000,000 -- 10,000,000
1992 Mississippi....................................... -- 500,000 3,500,000
1994 Mississippi....................................... 1,000,000 -- 9,200,000
1996 Texas............................................. 1,000,000 250,000 14,000,000
--------- ------- -----------
Total............................................. 4,000,000 950,000 $46,700,000
========= ======= ===========
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(2) New Mexico, Kansas, Texas, Alabama, Oklahoma, Arkansas and North Carolina.
(3) In connection with the purchase, the Company leased substantially all facilities and certain equipment of the business under an operating lease with monthly rentals of $79,000. See "Business -- Growth Strategy."
(4) Acquired subsequent to quarter ended August 31, 1996.
(5) Does not include (i) current construction in Chase, Kansas, expected to be completed in fiscal 1999 at an estimated cost of approximately $16,000,000, adding approximately 1,000,000 layer and 250,000 pullet capacity, and a feed mill and grain storage; or (ii) proposed construction in Waelder, Texas, expected to commence in fiscal 1997, and to be completed in fiscal 2000 at an estimated cost of approximately $13,900,000, adding approximately 1,000,000 layer and 250,000 pullet capacity.
The Company was incorporated under Delaware law in 1969. Its principal executive offices are located at 3320 Woodrow Wilson Drive, Jackson, Mississippi 39209, and its telephone number is (601) 948-6813. Except as otherwise indicated by the context, references in this Prospectus to the "Company" or "Cal-Maine" include all subsidiaries of the Company.
THE OFFERING
Common Stock being offered.......... 1,700,000 shares by the Company and
800,000 shares by the Selling
Stockholder(1)
Common Stock to be outstanding after
the offering........................ 12,006,800 shares(1)(2)
Use of Proceeds..................... To provide additional funds for
possible future acquisitions, increase
working capital, and for general
corporate purposes.
Proposed NASDAQ National Market
trading symbol...................... CALM
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(1) Assumes no exercise of the Underwriters' over-allotment option. See "Underwriting."
(2) Excludes shares reserved under the Company's 1993 Stock Option Plan. See "Management -- 1993 Stock Option Plan."
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL YEAR ENDED 13 WEEKS ENDED
----------------------------------------------------------- --------------------
MAY 30, MAY 29, MAY 28, JUNE 3, JUNE 1, SEPT. 2, AUG. 31,
1992 1993 1994 1995 1996 1995 1996
-------- ----------- -------- -------- -------- -------- --------
(UNAUDITED)
STATEMENTS OF OPERATIONS DATA:
Net sales.............................. $234,767 $ 235,908 $254,713 $242,649 $282,844 $56,219 $65,563
Net income (loss)...................... (2,192) 3,103 224 (8,685) 10,925 (1,635) 1,097
Net income (loss) per common
share(1)............................. $ (.18) $ .26 $ .02 $ (.74) $ .94 $ (.14) $ .10
Weighted average shares
outstanding(1)....................... 11,921 11,821 11,760 11,700 11,584 11,647 11,509
OPERATING DATA:
Total flock size (thousands)(2)........ 16,839 17,439 17,697 18,014 17,209 17,819 17,375
Total shell eggs sold (millions of
dozens).............................. 381.2 379.8 403.9 421.8 384.4 94.8 89.4
AUGUST 31, 1996
-----------------------
(UNAUDITED)
AS
ACTUAL ADJUSTED(3)
-------- -----------
BALANCE SHEET DATA:
Working capital........................ $ 28,229 $ 40,286
Total assets........................... 150,351 162,408
Total long-term debt (including current
portion and capitalized lease
obligations)......................... 62,866 62,866
Total stockholders' equity............. 48,976 61,033
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(2) Includes pullets (young female chickens, usually under 20 weeks of age), layers (mature female chickens), and breeders (male or female birds used to produce fertile eggs to be hatched for egg production flocks).
(3) Adjusted to give effect to (i) the sale of 1,700,000 shares of Common Stock offered by the Company (at an assumed initial public offering price of $7.00 per share and after deduction of the underwriting discount and estimated offering expenses payable by the Company) and the addition of the net proceeds thereof to working capital, and (ii) an increase in stockholders' equity resulting from the payment of a note payable to the Company by its principal stockholder. See "Use of Proceeds" and "Capitalization."
RISK FACTORS
In evaluating the Company and its business, prospective investors should carefully consider the following risk factors in addition to the other information contained herein.
VOLATILITY OF WHOLESALE SHELL EGG MARKET PRICES AND FEED COSTS AND EFFECT THEREOF
The Company's operating income or loss is significantly affected by wholesale shell egg market prices, which fluctuate widely. Although the Company can take certain short-term steps to mitigate the adverse effect of low shell egg market prices, fluctuations in egg prices are outside of the Company's control. The pricing of shell eggs is affected by an inelasticity of demand, in connection with which small increases in production or decreases in demand can have a large adverse effect on prices and vice-versa. See "Business -- Shell Eggs" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Feed cost represents the largest element of the Company's farm egg production cost, ranging from 56% to 62% of total cost in the last five fiscal years, or an average of approximately 60%. Although feed ingredients are available from a number of sources, Cal-Maine has little, if any, control over the prices of the ingredients it purchases, which are affected by various demand and supply factors. Increases in feed costs not accompanied by increases in the selling price of eggs can have a material adverse effect on the results of the Company's operations. However, higher feed costs may encourage producers to reduce production, possibly resulting in higher egg prices. Alternatively, low feed costs can encourage industry overproduction, possibly resulting in lower egg prices. Historically, the Company has tended to have higher profit margins when feed costs are higher. However, this may not be the case in the future.
EXPANSION RISKS
The Company proposes to continue a growth strategy calling for the acquisition of other companies engaged in the production and sale of shell eggs and egg products. Federal anti-trust laws require regulatory approval of acquisitions that exceed certain threshold levels of significance. Generally, the Company will be required to obtain federal regulatory approval of any such acquisition which exceeds $15 million in value if (i) the acquired entity is engaged in manufacturing and has more than $10 million of annual revenues or assets or (ii) the acquired entity is not engaged in manufacturing and has more than $10 million of assets. (For purposes of this regulatory approval, drying, freezing and breaking of eggs is considered manufacturing.) The Company also is subject to federal and state laws generally prohibiting anti-competitive conduct. Because the shell egg production and distribution industry is so fragmented, the Company's sales of shell eggs during its last fiscal year represented only approximately 7.5% of domestic egg sales notwithstanding that it is the largest producer and distributor of shell eggs in the United States. Accordingly, the Company believes that regulatory approval of any future acquisitions generally will not be required and, if required, that such approvals will be obtained.
The construction of new, more efficient production and processing facilities is an integral part of the Company's growth strategy. Any such construction can be expected to require compliance with environmental laws and regulations, including the receipt of permits, that could cause schedule delays, although the Company has not experienced any significant delays in the past.
AGRICULTURAL AND FOOD CONSUMPTION RISKS
The Company's egg production activities are subject to risks to which the agriculture industry, in general, is exposed. These include, among others, risks associated with weather conditions and disease factors that could have a material adverse effect on the Company's operations. These risks are not within the Company's control and could have a material adverse effect on its operations. With respect to its products, the Company carries product liability insurance in an amount deemed adequate. Also, the marketability of the Company's shell eggs and egg products is subject to risks such as possible changes in food consumption opinions and practices reflecting perceived health concerns.
DECLINE IN PER CAPITA CONSUMPTION OF SHELL EGGS
The per capita consumption of shell eggs in the United States declined during the 1980s, decreasing from approximately 260 eggs per year in the early 1980s to 239 eggs in 1989. This decline, which may have been attributable to perceived health concerns relating to cholesterol content and lifestyle changes, appears to have leveled off as annual per capita consumption has ranged between 234 and 239 eggs per year since 1990. While the Company believes that increased fast food restaurant consumption, reduced egg cholesterol levels and industry advertising campaigns may result in a continuation of, or possible increases in, current per capita egg consumption levels, no assurance can be given that per capita egg consumption will not decline in the future. Continuing consumer concerns with cholesterol levels may adversely affect the Company's future revenues. See "Business -- Shell Eggs" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
REGULATORY MATTERS
The Company is subject to federal and state regulations relating to grading, quality control, labeling, sanitary control and waste disposal. As a fully-integrated egg producer, the Company's shell egg facilities are subject to United States Department of Agriculture ("USDA") and Food and Drug Administration ("FDA") regulation. The Company's shell egg facilities are subject to periodic USDA inspections, and its egg products plant is subject to continuous on-site USDA inspection. In addition, the Company's facilities are regularly inspected by the Company to assure compliance with its own standards and customer specifications. The Company's operations and facilities are subject to federal and state environmental laws and regulations, and the Company has all required environmental permits.
COMPETITION
The production and sale of fresh shell eggs, which have accounted for approximately 90% or more of the Company's net sales in recent years, is intensely competitive. Although the Company currently is the largest producer of shell eggs in the United States, it is not in a controlling market position in any area where its eggs are sold. See "Business -- Competition."
DEPENDENCE UPON KEY PERSONNEL
The Company's success depends to a large extent upon the performance of its chief executive officer and certain other key members of its management. The loss of any such key management members could have a material adverse effect on the Company. See "Management."
TAX LIABILITY FROM LOSS OF FAMILY FARMING CORPORATION TAX STATUS
The Company has $3,100,000 of deferred tax liability due to a subsidiary's
change from a cash basis to an accrual basis taxpayer on May 29, 1988. This
liability will become payable with respect to the first fiscal year in which the
Company fails to qualify as a "family farming corporation" within the meaning of
Section 447 of the Internal Revenue Code (the "Code"). The Company could lose
such tax status as a result of a change in the tax laws, and will lose such tax
status if its annual revenues from farming are less than $111,549,000 or if the
members of a single family fail to own at least 50% of the voting power of all
voting stock and at least 50% of all other classes of stock. The Company had
farming revenues of $250,152,000 in fiscal 1996. The Company's revenues and the
ownership of its stock by Fred R. Adams, Jr. and other members of his family
presently qualify the corporation as a "family farming corporation." No
assurance can be given that the Company will continue to qualify for such
status. If "family farming corporation" status is lost, payment of the
$3,100,000 deferred tax liability would reduce the Company's cash but would not
impact the Company's statement of operations or reduce stockholders' equity, as
these taxes have been accrued and are reflected on the Company's balance sheet.
See Note 9 of Notes to Consolidated Financial Statements and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Capital Resources and Liquidity."
SEASONALITY
Retail sales of shell eggs are greatest during the fall and winter months and lowest during the summer months. Prices for shell eggs fluctuate in response to seasonal factors and a natural increase in egg production during the spring and early summer. Egg prices tend to increase with the start of the school year and are highest prior to holiday periods. Consequently, the Company generally experiences lower sales and net income in its first and fourth fiscal quarters ending in August and May, respectively. To offset the effects of seasonal factors the Company may break more eggs for egg products during the spring and early summer months, decrease the size of its flocks, take hens out of production to molt or reduce the number of shell eggs purchased from other producers. See "Business -- Seasonality" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
DILUTION
Purchasers of the Common Stock offered hereby will incur an immediate and substantial dilution in the net tangible book value of the Common Stock from the initial public offering price. Additional dilution will occur upon the exercise of outstanding stock options. See "Dilution."
RESTRICTIONS ON DIVIDENDS
The Company's line of credit and long-term loan agreements contain financial covenants and restrictions that limit its ability to pay dividends on its Capital Stock. Under the most restrictive provisions, the Company, without the lender's consent, may not pay any dividend or make any distribution on any class of Capital Stock with respect to any year in which the Company has a net loss. The Company is seeking to negotiate covenants that are less restrictive, but there is no assurance that it will be able to do so.
The Company currently expects to retain a substantial part of any net earnings for use in the financing of the Company's growth and other corporate purposes. However, subject to compliance with its loan covenants, the Company will consider the payment of cash dividends in the future depending upon the results of its operations, its financial condition and capital needs for acquisitions and new facilities construction, as well as other economic factors. See "Dividend Policy."
CONTROL BY CURRENT PRINCIPAL STOCKHOLDER; CERTAIN PROVISIONS OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Upon completion of this offering, Fred R. Adams, Jr., Chairman of the Board and Chief Executive Officer of the Company, and members of his family, will own 44.7% of the outstanding shares of Common Stock, which has one vote per share, and Mr. Adams will own 100% of the outstanding shares of Class A Common Stock, which has 10 votes per share. As a result, upon completion of this offering, Mr. Adams will possess 70.1%, and together with his family will possess 73.5%, of the total voting power represented by the then outstanding shares of Common Stock and Class A Common Stock. The Adams family intends to retain ownership of a sufficient amount of Common Stock and Class A Common Stock to assure its continued ownership of over 50% of the combined voting power of the outstanding shares of Capital Stock in order to preserve the Company's status as a "family farming corporation" for federal income tax purposes. Such ownership may make an unsolicited acquisition of the Company more difficult and discourage certain types of transactions involving change of control of the Company, including transactions in which the holders of Common Stock might otherwise receive a premium for their shares over then current market prices. In addition, certain provisions of the Company's Amended and Restated Certificate of Incorporation require that the Class A Common Stock be issued only to Fred R. Adams, Jr., and members of his immediate family, and that if shares of the Class A Common Stock, by operation of law or otherwise, are deemed not to be owned by Mr. Adams or a member of his immediate family, the voting power of any such shares shall be automatically reduced to one vote per share. The Adams family controlling Capital Stock ownership position may adversely affect the market price of the Common Stock. See "Principal and Selling Stockholders" and "Description of Capital Stock."
LACK OF PRIOR PUBLIC MARKET FOR THE COMMON STOCK; POSSIBLE VOLATILITY OF TRADING PRICE
Prior to this offering, there has been no public market for the Common Stock. Although application has been made for the quotation and trading of the Common Stock on the NASDAQ National Market, there can be no assurance that the application will be approved or that an active public market will develop, or that the initial public offering price will correspond to the price at which the Common Stock will trade in the public market subsequent to this offering. The initial public offering price for the Common Stock will be determined by negotiations among the Company and the Representative of the Underwriters based on the factors described under "Underwriting." The trading price of the Common Stock could be subject to significant fluctuations in response to variations in quarterly operating results, seasonal and other general trends in the industry and other factors.
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of this offering, the Company will have outstanding 12,006,800 shares of Common Stock and 1,200,000 shares of Class A Common Stock (convertible on a share-for-share basis into Common Stock). The 2,500,000 shares of Common Stock offered hereby, and any shares issued in the event the Underwriters' over-allotment option is exercised, will be freely transferable without restriction or further registration under the Securities Act of 1933, as amended (the "Securities Act"). Similarly, any shares of Common Stock issuable upon an exercise of the Representative's Warrants, during a four-year period commencing one year from the effective date of the Registration Statement of which this Prospectus is a part, also will be freely transferable without restriction, subject to the maintenance of the effectiveness under the Securities Act of the Registration Statement as agreed to by the Company. See "Underwriting."
All other outstanding shares of Common Stock, as well as all outstanding shares of Class A Common Stock, are "restricted securities" as that term is defined in Rule 144 under the Securities Act, and may only be sold pursuant to a Registration Statement under the Securities Act or an applicable exemption from registration thereunder, including Rule 144. Except for the sale by the Selling Stockholder of 800,000 shares of Common Stock in this offering, the officers, directors and 5% stockholders of the Company have agreed not to sell, and the Company has agreed not to sell, any shares of Common Stock or other equity securities of the Company for 90 days following the effective date of the Registration Statement of which this Prospectus is a part, without the prior written consent of the Representative of the Underwriters. Upon expiration of such 90-day period, 9,506,800 then outstanding restricted shares of Common Stock will become eligible for resale in the public market by the holders thereof subject to the volume limitations of Rule 144. Following this offering, sales or the expectation of sales of a substantial number of shares of Common Stock in the public market could adversely affect the prevailing market price for the Common Stock. See "Description of Capital Stock" and "Shares Available for Future Sale."
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Common Stock offered by the Company are estimated to be approximately $10,363,000 ($12,726,000 if the Underwriters' over-allotment option is exercised in full), assuming an initial public offering price of $7 per share.
The Company intends to use the net proceeds to provide additional funds for possible future acquisitions of shell egg operations and related facilities, to increase working capital and for general corporate purposes. At this time, Cal-Maine has no understandings or agreements with respect to any such acquisitions. The Company may effect acquisitions, in the discretion of its Board of Directors and management, without shareholder approval, unless such approval is required by law. Pending use of the proceeds for any acquisitions, the net proceeds from this offering may be invested in short-term, interest-bearing, investment-grade obligations, and will be available for general corporate purposes.
Fred R. Adams, Jr., Chairman of the Board and Chief Executive Officer of the Company, will apply $1,694,444 of the proceeds from the sale of his shares of Common Stock to satisfy his note payable in that amount to Cal-Maine. The Company will add such funds to its working capital. See "Certain Transactions."
DIVIDEND POLICY
Although the Company has not paid any cash dividends on its Capital Stock, the Board of Directors will consider the possible declaration of cash dividends in the future in the light of the Company's results of operations, financial condition, capital requirements for possible acquisitions and new construction, and other relevant economic factors. Under the terms of the Company's agreements with its principal lenders, Cal-Maine is subject to various financial covenants limiting its ability to pay dividends. The Company is required to maintain minimum levels of working capital and net worth, to limit capital expenditures, leasing transactions and additional long-term borrowings, and to maintain various current and cash-flow coverage ratios, among other restrictions. The Company was in compliance with all of these restrictions as of August 31, 1996. Under the most restrictive dividend covenants, the Company, without the lender's consent, may not pay any dividend or make any distribution on any class of Capital Stock with respect to any year in which the Company has a net loss. The Company is seeking to negotiate covenants that are less restrictive, but there is no assurance that it will be able to do so. For the foreseeable future, the Company expects to retain earnings for use in its business.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company at August 31, 1996 (see "Recapitalization and Stock Split," below), and as adjusted to reflect (i) the issuance and sale by the Company of 1,700,000 shares of Common Stock offered hereby, at an assumed initial public offering price of $7 per share and after deducting the estimated underwriting discount and offering expenses payable by the Company, and (ii) an increase in stockholders' equity resulting from the payment of a note payable to the Company by its principal stockholder. See "Use of Proceeds."
AUGUST 31, 1996
--------------------
(UNAUDITED)
AS
ACTUAL ADJUSTED
-------- --------
(THOUSANDS)
Long-term debt (including current portion).............................. $ 61,535 $ 61,535
Capitalized lease obligations (including current portion)............... 1,331 1,331
Stockholders' equity:
Common Stock, par value $0.01 per share; 30,000,000 shares
authorized; 15,835,200 shares outstanding and 17,535,200 shares
outstanding, as adjusted(1)....................................... 158 175
Class A Common Stock, par value $0.01 per share; 1,200,000 shares
authorized; 1,200,000 shares outstanding.......................... 12 12
Paid-in capital.................................................... 8,229 18,575
Retained earnings.................................................. 48,155 48,155
Less: Common Stock in treasury (5,528,400 shares)....................... (5,884) (5,884)
Note receivable -- stockholder..................................... (1,694) --
-------- --------
Stockholders' equity.................................................... 48,976 61,033
-------- --------
Total capitalization.................................................... $111,842 $123,899
======== ========
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RECAPITALIZATION AND STOCK SPLIT
On September 24, 1996, the shareholders approved an amendment to the certificate of incorporation to authorize capital stock consisting of 30,000,000 shares of Common Stock and 1,200,000 shares of Class A Common Stock, each class having a par value of $0.01 per share, and to reclassify and change each previously outstanding share of Class A Common Stock, $1.00 par value per share, and each previously outstanding share of Class B Common Stock, $1.00 par value per share, into 1,200 shares each of Common Stock and Class A Common Stock, respectively, each class with a par value of $0.01 per share. The Company's Amended and Restated Certificate of Incorporation, which reflects such authorized capital stock, was effective as of October 3, 1996. Unless otherwise indicated, all references to historical earnings per share, and number and class of shares outstanding, are as adjusted for the aforesaid recapitalization, reclassification and stock split of the Company's capital stock.
DILUTION
The book value of the Company as of August 31, 1996 was $48,976,000 or $4.26 per share of Capital Stock. "Book value per share" represents the amount of total assets of the Company less total liabilities, divided by the number of shares of Capital Stock outstanding. After giving effect to (i) the sale by the Company of the 1,700,000 shares of Common Stock offered hereby, assuming an initial public offering price of $7 per share, (ii) the deduction of the underwriting discounts and estimated offering expenses payable by the Company and (iii) an increase in stockholders' equity resulting from the payment of a note payable to the Company by its principal stockholder, the pro forma net book value of the Company as of August 31, 1996, would be $61,033,000, or $4.62 per share. This represents an immediate increase in book value of $.36 per share to existing stockholders and an immediate dilution of $2.38 per share to investors purchasing Common Stock in this offering. The following table illustrates this per share dilution:
Assumed initial public offering price per share....................... $7.00
Book value per share as of August 31, 1996....................... $4.26
Increase per share attributable to new investors................. .36
-----
Pro forma book value per share after offering......................... 4.62
-----
Dilution per share to new investors................................... $2.38
=====
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The following table sets forth as of August 31, 1996 the number of shares of Capital Stock issued by the Company, the total consideration paid and the weighted average price per share paid by existing stockholders and by new investors, assuming an initial offering price of $7 per share, before deducting underwriting discounts and estimated offering expenses:
WEIGHTED
AVERAGE
SHARES PURCHASED(1) TOTAL CONSIDERATION(1) PRICE
--------------------- ---------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ----------- ------- --------
Existing stockholders....................... 11,506,800 87.1% $ 8,399,000 41.4% $ .73
New investors............................... 1,700,000 12.9 11,900,000 58.6 $ 7.00
---------- ----- ----------- -----
Total............................. 13,206,800 100.0% $20,299,000 100.0%
========== ===== =========== =====
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The foregoing table assumes (i) no exercise of the Underwriters' over-allotment option, (ii) no exercise of options outstanding under the 1993 Stock Option Plan, and (iii) no exercise of the Representative's Warrants. A maximum of 375,000 shares of Common Stock are issuable upon exercise of the Underwriters' over-allotment option. As of August 31, 1996, there were outstanding stock options to purchase an aggregate of 504,000 shares of Common Stock at an exercise price of $3.42 per share, and the Company had an additional 296,000 shares of Common Stock available for future option grants. The exercise of these stock options would result in further dilution to new investors. See "Management -- 1993 Stock Option Plan" and Note 8 of Notes to Consolidated Financial Statements of the Company. A maximum of 250,000 shares of Common Stock are issuable upon exercise of the Representative's Warrants. The assumed exercise price per share of the Representative's Warrants is $8.40, or 120% of the per share price of the Common Stock offered hereby.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The income statement data presented below for each of the fiscal years, which end on the Saturday closest to May 31, in the five-year period ended June 1, 1996, and the balance sheet data at June 3, 1995 and June 1, 1996, have been derived from the Company's financial statements, which have been audited by Ernst & Young LLP, independent auditors. In the opinion of management of the Company, the unaudited information for the 13 week periods ended September 2, 1995 and August 31, 1996 has been prepared on a basis consistent with the audited information and includes all adjustments, which consist only of normal recurring accruals necessary for a fair presentation of the results for those periods. The results of operations for the 13 weeks ended August 31, 1996 are not necessarily indicative of the results of the complete fiscal year. The selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and with the consolidated financial statements of the Company and notes thereto included elsewhere in this Prospectus.
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL YEARS ENDED 13 WEEKS ENDED
-------------------------------------------------------- --------------------
MAY 30, MAY 29, MAY 28, JUNE 3, JUNE 1, SEPT. 2, AUG. 31,
1992 1993 1994 1995 1996 1995 1996
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
STATEMENT OF OPERATIONS DATA:
Net sales................................. $234,767 $235,908 $254,713 $242,649 $282,844 $56,219 $65,563
Cost of sales............................. 211,428 204,115 225,227 223,965 230,850 51,385 55,712
-------- -------- -------- -------- -------- -------- --------
Gross profit.............................. 23,339 31,793 29,486 18,684 51,944 4,834 9,851
Selling, general and administrative....... 24,694 24,776 26,094 27,934 29,653 6,569 7,140
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)............... (1,355) 7,017 3,392 (9,250) 22,341 (1,735) 2,711
Other income (expense):
Interest expense, net................. (3,658) (3,034) (4,318) (5,052) (5,487) (1,457) (1,116)
Equity in income of affiliate......... 299 506 283 24 721 29 64
Other................................. 1,322 674 1,238 993 (190) 562 135
-------- -------- -------- -------- -------- -------- --------
(2,037) (1,854) (2,797) (4,035) (4,956) (866) (917)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes......... (3,392) 5,163 595 (13,285) 17,385 (2,601) 1,794
Income tax expense (benefit).............. (1,200) 2,060 371 (4,600) 6,460 (966) 697
-------- -------- -------- -------- -------- -------- --------
Net income (loss)......................... $ (2,192) $ 3,103 $ 224 $ (8,685) $ 10,925 (1,635) 1,097
======== ======== ======== ======== ======== ======= =======
Net income (loss) per common share(1)..... $ (.18) $ .26 $ .02 $ (.74) $ .94 $ (.14) $ .10
======== ======== ======== ======== ======== ======= =======
Weighted average shares outstanding(1).... 11,921 11,821 11,760 11,700 11,584 11,647 11,509
|
JUNE 3, JUNE 1, AUGUST 31,
1995 1996 1996
-------- -------- ------------
(UNAUDITED)
BALANCE SHEET DATA:
Working capital................................................................. $ 10,092 $ 26,742 $ 28,229
Total assets.................................................................... 147,402 149,991 150,351
Total debt (including current portion).......................................... 64,211 63,426 62,866
Total stockholders' equity...................................................... 37,472 47,900 48,976
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company's operating income or loss is significantly affected by wholesale shell egg market prices, which can fluctuate widely and are outside of the Company's control. Retail sales of shell eggs are greatest during the fall and winter months and lowest during the summer months. Prices for shell eggs fluctuate in response to seasonal factors and a natural increase in egg production during the spring and early summer. The Company currently uses independent contract producers for approximately 40% of its total egg production. Because shell eggs are perishable, inventories rarely exceed four days of production. Thus, shell egg inventories cannot be accumulated in response to low egg market prices. However, egg product inventories can be stored for extended periods and may be increased during periods of low prices and decreased during periods of high prices. The Company continuously endeavors to increase its profitability by effecting improvements in feed efficiency, molting programs and other operating activities in order to enhance its operating efficiency. See "Business -- Shell Eggs" for a further discussion.
The Company's cost of production is materially affected by feed costs, which average about 60% of Cal-Maine's total farm egg production cost. The cost of feed ingredients is affected by a number of supply and demand factors such as crop production and weather, and other factors, such as the level of grain exports, over which the Company has little or no control.
The per capita consumption of shell eggs in the United States declined during the 1980s, decreasing from approximately 260 eggs per year in the early 1980's to 239 eggs per year in 1989. This decline, which may have been attributable to perceived health concerns relating to cholesterol content and changes in lifestyle, appears to have leveled off and annual per capita consumption has ranged between approximately 234 and 239 eggs per year since 1990. While the Company believes that increased fast food restaurant consumption, reduced egg cholesterol levels and industry advertising campaigns may result in a continuation of, or a possible increase in, current per capita egg consumption levels, no assurance can be given that per capita egg consumption will not decline in the future. Consumer concerns relating to the effect of cholesterol levels in health may adversely impact the Company's operations in the future. For additional information, see "Business -- Shell Eggs."
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage relationship to net sales of certain items in the Company's statements of operations:
PERCENTAGE OF NET SALES
-----------------------------------------------------
FISCAL YEAR ENDED 13 WEEKS ENDED
----------------------------- --------------------
(UNAUDITED)
MAY 28, JUNE 3, JUNE 1, SEPT. 2, AUG. 31,
1994 1995 1996 1995 1996
------- ------- ------- -------- --------
Net sales..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales................................. 88.4 92.3 81.6 91.4 85.0
------ ------ ------ ------- -------
Gross profit.................................. 11.6 7.7 18.4 8.6 15.0
Selling, general and administrative
expenses.................................... 10.3 11.5 10.5 11.7 10.9
------ ------ ------ ------- -------
Operating income (loss)....................... 1.3 (3.8) 7.9 (3.1) 4.1
Other income (expense)........................ (1.1) (1.7) (1.8) (1.5) (1.4)
------ ------ ------ ------- -------
Income (loss) before income taxes............. .2 (5.5) 6.1 (4.6) 2.7
Income tax provision (benefit)................ .1 (1.9) 2.2 (1.7) 1.0
------ ------ ------ ------- -------
Net income (loss)............................. .1% (3.6)% 3.9% (2.9)% 1.7%
====== ====== ====== ======= =======
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First Quarter Ended August 31, 1996 Compared to First Quarter Ended September 2, 1995
Net Sales. For the quarter ending August 31, 1996, net sales were $65.6 million, an increase of $9.3 million, or 16.6%, over last year's first quarter sales of $56.2 million. For this year's first quarter, 89.4 million dozen eggs were sold compared to 94.8 million dozen for last year's first quarter, a decrease of 5.4 million dozen, or 6.0%. The decrease in dozens sold is primarily attributable to the fact that the Company purchased fewer eggs from outside sources during the quarter ended August 31, 1996 than during last year's first quarter. The dollar increase in net sales is the result of a $2 million increase in egg product sales and a 15% increase in average shell egg market prices. The net average selling price per dozen for this year's first quarter was $.682, compared to $.556 cents for the first quarter last year, an increase of 22.7%. The "net average selling price" is the average selling price for all grades of shell eggs, including non-graded egg sales, breaking stock and undergrades.
Cost of Sales. Total cost of sales for the quarter ended August 31, 1996 was $55.7 million, an increase of $4.3 million, or 8.4%, over a cost of sales of $51.4 million in the last year's first quarter. The increase for this year's first quarter is attributable to an increase in the cost of feed ingredients. At the same time, there was a reduction in the cost of sales due to a reduction of approximately 30% in the Company's purchases of eggs from outside sources. The cost of feed per dozen produced during the quarter ended August 31, 1996 was $.32 per dozen as compared to $.22 per dozen for the first quarter last year, or an increase of approximately 45%. Feed costs account for almost 60% of the Company's farm cost of egg production. Poor crop conditions in the mid-west resulted in the higher cost of feed ingredients. With increases in egg prices exceeding increases in production costs, the gross profit increased from 8.6% of net sales in the quarter ended September 2, 1995 to 15.0% of net sales in the quarter ended August 31, 1996.
Selling, General and Administrative Expenses. Selling, general and administrative expenses for the quarter ended August 31, 1996 was $7.1 million, an increase of $500,000, or 8.7%, over the $6.6 million for the comparable period last year. As a percent of net sales, selling, general and administrative expenses have decreased slightly from 11.7% for last year's quarter to 10.9% for this year's first quarter.
Operating Income. As a result of the above, operating income was $2.7 million for the quarter ending August 31, 1996 as compared to an operating loss of $1.7 million for the first quarter last year. As a percent of net sales, the quarter ended August 31, 1996 had a 4.1% operating profit, compared to a 3.1% operating loss for the first quarter last year.
Other Income (Expense). Net other expenses in each of the first quarters of this and the last fiscal year were $900,000. A reduction of $300,000 in interest expense for the quarter ended August 31, 1996, was offset by other income in last year's quarter, principally from insurance claim proceeds.
Income Taxes. As a result of above, the Company's pre-tax income was $1.8 million for the quarter ended August 31, 1996 compared to a pre-tax loss of $2.6 million for last year's quarter ended September 2, 1995. For the quarter ended August 31, 1996, an income tax expense of $700,000 was recorded, and for the quarter ended September 2, 1995 an income tax benefit of $1.0 million was recognized. The effective income tax rate was 39.9% for the quarter ended August 31, 1996, as compared to 37.1% for the quarter ended September 2, 1995. The increase in the effective income tax rate is primarily attributable to an increase in the effective state income tax rate.
Net Income. Net income for the quarter ended August 31, 1996 was $1.1 million, or $.10 per share, compared to a loss of $1.6 million, or $.14 per share, for the quarter ended September 2, 1995.
Fiscal Year Ended June 1, 1996 Compared to Fiscal Year Ended June 3, 1995
Net Sales. Net sales in the fiscal year ended June 1, 1996 were $282.8 million, an increase of $40.2 million, or 16.6%, over net sales of $242.6 million in the fiscal year ended June 3, 1995. The increase was due to higher shell egg prices. Cal-Maine's net average selling price during fiscal 1996 was $.684 per dozen shell eggs, compared to $.528 per dozen shell eggs in fiscal 1995. During fiscal 1996, the Company experienced a decrease in the number of eggs sold because of a slight reduction in flock size and fewer purchases from outside producers. The Company produced 308.8 million dozens of eggs in fiscal 1996, compared with
322.7 million in fiscal 1995. The Company purchased approximately 80.2 million dozens of eggs in fiscal 1996, compared to 105.0 million in fiscal 1995.
Cost of Sales. The total cost of sales in fiscal 1996 was $230.9 million, an increase of $6.9 million, or 3.1%, above fiscal 1995's cost of sales of $224.0 million. The increase was primarily due to an increase in feed ingredient cost from $.211 per dozen eggs in fiscal 1995 to $.266 per dozen eggs in fiscal 1996. The gross profit margin increased to 18.4% in fiscal 1996 from 7.7% in fiscal 1995, as a result of the increase in shell egg prices, which more than offset the decrease in the number of eggs produced and the increase in feed cost.
Selling, General and Administrative Expenses. Selling, general and administrative expenses in fiscal 1996 were $29.7 million, an increase of $1.8 million, or 6.2%, from $27.9 million in fiscal 1995. Selling, general and administrative expenses as a percent of net sales were 10.5% in fiscal 1996, a decrease from 11.5% in fiscal 1995.
Operating Income. As a result of the above, the Company's operating income was $22.3 million in fiscal 1996, compared to an operating loss of $9.3 million in fiscal 1995.
Other Income (Expense). Other expense increased from $4.0 million in fiscal 1995 to $5.0 million in fiscal 1996. An increase of approximately $1.0 million in the Company's equity in the income of BCM Egg Company ("BCM"), a partnership in which Cal-Maine is a 50% owner, was more than offset by an increase in interest expense of $400,000 and a $1.2 million reduction in other income.
Income Taxes. As a result of the above, the Company's pre-tax income was $17.4 million in fiscal 1996, compared to a $13.3 million of loss before income taxes in fiscal 1995. Income tax expense was $6.5 million in fiscal 1996 compared to an income tax benefit of $4.6 million in fiscal 1995. The effective income tax rate was 37.2% for the year ended June 1, 1996, compared to 34.6% for the year ended June 3, 1995. This increase was principally a result of the increased effective tax rate for state income taxes.
Net Income. As a result of the above, the Company had net income of $10.9 million, or $.94 per share, in fiscal 1996, compared to a net loss of $8.7 million, or $.74 per share, in fiscal 1995.
Fiscal Year Ended June 3, 1995 Compared to Fiscal Year Ended May 28, 1994
Net Sales. Net sales in the fiscal year ended June 3, 1995 were $242.6 million, a decrease of $12.1 million, or 4.7%, from net sales of $254.7 million in the fiscal year ended May 28, 1994. The decrease was due to lower shell egg market prices. During fiscal 1995, the Company increased its own production of eggs as well as its purchases of eggs from other producers. The Company produced approximately 322.7 million dozens of eggs in fiscal 1995, compared to 317.9 million in fiscal 1994. The Company purchased approximately 105.0 million dozens of eggs in fiscal 1995, compared to 91.3 million in fiscal 1994.
Cost of Sales. The total cost of sales in fiscal 1995 was $224.0 million, a decrease of $1.2 million, or 0.6%, below fiscal 1994's cost of sales of $225.2 million. The decrease was primarily due to decreased feed costs, which averaged $.211 per dozen eggs in fiscal 1995 compared to $.239 per dozen eggs in fiscal 1994. The cost of sales as a percent of net sales increased from 88.4% in fiscal 1994 to 92.3% in fiscal 1995. The decrease in egg prices in fiscal 1995 more than offset the increased egg production and lower feed costs in that year.
Selling, General and Administrative Expenses. Selling, general and administrative expenses in fiscal 1995 were $27.9 million, an increase of $1.8 million, or 7.1%, over $26.1 million in fiscal 1994. Selling, general and administrative expenses as a percent of net sales amounted to 11.5% in fiscal 1995, as compared to 10.3% in fiscal 1994.
Operating Income (Loss). As a result of the above, the Company had an operating loss of $9.3 million in fiscal 1995, compared to operating income of $3.4 million in fiscal 1994.
Other Income (Expense). Other expenses exceeded other income in fiscal 1995 by $4.0 million, an increase of $1.2 million, or 44.3%, above the $2.8 million excess of expenses over other income in fiscal 1994. The increase is attributable primarily to an increase of $700,000 in interest expense, offset in part by a
decrease of $300,000 in the Company's equity in the income of BCM and a decrease of $200,000 in other income.
Income Tax Expense (Benefit). The pre-tax loss in fiscal 1995 was $13.3 million compared to the prior year's pre-tax income of $600,000. The income tax benefit was $4.6 million in fiscal 1995, compared to the prior fiscal year's income tax expense of $400,000.
Net Income (Loss). The Company had a net loss of $8.7 million, or $.74 per share, in fiscal 1995, compared to net income of $200,000, or $.02 per share, in fiscal 1994.
CAPITAL RESOURCES AND LIQUIDITY
The Company's working capital at August 31, 1996 was $28.2 million compared to $26.7 million of working capital at June 1, 1996. The Company's need for working capital generally is highest in the first and last fiscal quarters ending in August and May, respectively, when egg prices normally are at seasonal lows. Seasonal borrowing needs frequently are higher during those periods than during other fiscal periods.
The Company had an unused $35 million line of credit with three banks at August 31, 1996. Borrowings under the line of credit bear interest at 1.5% above the federal funds rate or LIBOR, at the Company's option. At August 31, 1996, the Company's long-term debt, including current maturities and capitalized lease obligations, amounted to approximately $62.9 million.
Substantially all trade receivables and inventories collateralize the
Company's line of credit, and property, plant and equipment collateralize the
Company's long-term debt. The Company is required by certain provisions of these
loan agreements to (i) maintain minimum levels of working capital and net worth;
(ii) limit dividends, capital expenditures, lease obligations and additional
long-term borrowings; and (iii) maintain various current and cash-flow coverage
ratios, among other restrictions. The Company was in compliance with these
provisions at August 31, 1996.
In the quarter ended August 31, 1996, $3.1 million in net cash was provided by operating activities, primarily from net income and depreciation. Of the $3.1 million, $1.8 million was used for construction and purchases of equipment, and $600,000 was used to repay long-term debt. The net result of these activities was a net increase in cash and cash equivalents of $729,000. One million dollars of long-term borrowed funds have been used in the construction of the egg production facility in Chase, Kansas.
In fiscal 1996, $25.3 million of net cash was provided by operating activities, of which $8.8 million of cash was used primarily for property, plant and equipment purchases and $15.5 million of net cash was used to repay borrowings under the Company's line of credit.
The Company is financing approximately $13.5 million of the $16.0 million total estimated cost to complete the construction of new shell egg production, processing and feed mill facilities in Chase, Kansas through industrial revenue bonds maturing in 2011 and secured by the property, plant and equipment there. At August 31, 1996, the Company had expended approximately $2.2 million on this recently-commenced construction, completion of which is expected in fiscal 1999. In late fiscal 1997, the Company plans to commence construction of new shell egg production and processing facilities in Waelder, Texas. It expects to complete construction of those facilities in fiscal 2000 at a total estimated cost of approximately $13.9 million, of which the Company plans to finance approximately $10.4 million through a borrowing from an insurance company. That borrowing is expected to mature 15 years from issuance and be secured by the property, plant and equipment at Waelder.
The Company has $3,100,000 of deferred tax liability due to a subsidiary's
change from a cash basis to an accrual basis taxpayer on May 29, 1988. This
liability will become payable with respect to the first fiscal year in which the
Company fails to qualify as a "family farming corporation" within the meaning of
Section 447 of the Internal Revenue Code (the "Code"). The Company could lose
such tax status as a result of a change in the tax laws, and will lose such tax
status if its annual revenues from farming are less than $111,549,000 or if the
members of a single family fail to own at least 50% of the voting power of all
voting stock and at least 50% of all other classes of stock. The Company had
farming revenues of $250,152,000 for fiscal 1996. The
Company's farming revenues and the ownership of its stock by Fred R. Adams, Jr. and other members of his family presently qualify the corporation as a "family farming corporation." If "family farming corporation" status is lost, payment of the $3,100,000 deferred tax liability would reduce the Company's cash but would not impact the Company's statement of operations or reduce stockholders' equity, as these taxes have been accrued and are reflected on the Company's balance sheet. See Note 9 of Notes to Consolidated Financial Statements.
BUSINESS
The Company is primarily engaged in the production, grading, packing and sale of fresh shell eggs, which accounted for approximately 92% of net sales in the Company's fiscal year ended June 1, 1996, and the manufacture and sale of egg products, which accounted for approximately 6% of net sales in fiscal 1996. Cal-Maine's operations are fully integrated and it owns facilities to hatch chicks, grow pullets, manufacture feed and produce, process, manufacture and distribute eggs and egg products. The Company's products are principally marketed in 26 states, chiefly in the southwestern, southeastern, mid-west and mid-Atlantic regions of the United States.
GROWTH STRATEGY
During the past eight years the Company has pursued an aggressive growth strategy, including the acquisition of existing shell egg production and processing facilities, as well as the construction of new and more efficient facilities. Since the beginning of fiscal 1989, the Company has consummated six acquisitions, adding an aggregate of 13.7 million layers to its capacity, and built four major new "in-line" shell egg production and processing facilities and one pullet growing facility, adding 4 million layers and 950,000 pullets to its capacity. Each of the new shell egg production facilities generally provides for the processing of approximately 300 cases of shell eggs per hour. These increases in capacity have been accompanied by the retirement of older and less efficient facilities and a reduction in eggs produced by contract producers. The new "in-line" facilities result in the gathering, cleaning, grading and packaging of shell eggs by less labor-intensive, more efficient, mechanical means.
As a result of the Company's growth strategy, the Company's total flock, including pullets, layers and breeders, has increased from approximately 6.8 million at May 28, 1988 to an average of approximately 17.4 million for each of the past five fiscal years. Also, there has been a three-fold increase in the number of dozens of shell eggs sold, from approximately 117 million in the fiscal year ended May 28, 1988 to an average of approximately 394 million in each of the past five fiscal years. Net sales amounted to approximately $282.8 million in fiscal 1996, approximately four times net sales of approximately $70.0 million in fiscal 1988.
The Company's acquisitions and construction of larger facilities, described in the tables below, reflect the continuing concentration of shell egg production in the United States in a decreasing number of shell egg producers. The Company believes that a continuation of that concentration trend may result in the reduced cyclicality of shell egg prices, but no assurance can be given in that regard.
ACQUISITIONS OF EGG PRODUCTION AND PROCESSING FACILITIES
LAYERS PURCHASE
FISCAL YEAR(1) SELLER LOCATION ACQUIRED PRICE
- -------------- ---------------------------------------- --------------- -------------- -----------
1989 Egg City, Inc........................... Arkansas 1,300,000 $ 6,716,000
1990 Sunny Fresh Foods, Inc.................. (2) 7,500,000 21,629,000
1991 Sunnyside Eggs, Inc..................... North Carolina 1,800,000 6,000,000
1994 Wayne Detling Farms..................... Ohio 1,500,000 12,194,000
1995 A&G Farms(3)............................ Kentucky 1,000,000 2,883,000
1997 Sunbest Farms(4)........................ Arkansas 600,000 1,302,000
---------- -----------
Total..................................................... 13,700,000 $50,724,000
========== ===========
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(2) New Mexico, Kansas, Texas, Alabama, Oklahoma, Arkansas and North Carolina.
(3) In connection with the purchase, the Company leased substantially all facilities and certain equipment of the business under an operating lease with monthly rentals of $79,000. See "Business -- Growth Strategy."
(4) Acquired subsequent to quarter ended August 31, 1996.
CONSTRUCTION OF EGG PRODUCTION, PULLET GROWING AND PROCESSING FACILITIES(1)
FISCAL YEAR LAYER PULLET APPROXIMATE
COMPLETED LOCATION CAPACITY CAPACITY COST
- ----------- -------------------------------------------------- --------- -------- -----------
1990 Mississippi....................................... 1,000,000 200,000 $10,000,000
1992 Louisiana......................................... 1,000,000 -- 10,000,000
1992 Mississippi....................................... -- 500,000 3,500,000
1994 Mississippi....................................... 1,000,000 -- 9,200,000
1996 Texas............................................. 1,000,000 250,000 14,000,000
--------- ------- -----------
Total............................................. 4,000,000 950,000 $46,700,000
========= ======= ===========
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As part of its strategy of increasing market share through the acquisition of production and processing facilities, the Company will consider the acquisition of egg producers owning one million or more layers. The Company believes that there are approximately 50 companies engaged in shell egg production in the United States that own one million or more layers, of which two own from 10 to 15 million layers, approximately five own from 5 to 10 million layers and approximately 40 own from 1 to 5 million layers. In addition, the Company intends to consider the possible acquisition of facilities engaged in the manufacture and sale of egg products. The Company expects to continue to pursue its growth strategy and to use a portion of its net proceeds from this offering, promissory notes and common stock to acquire additional shell egg production and related facilities. However, it has no understandings or agreements in that regard at this time.
The construction of new egg production and processing facilities has been, and will continue to be, an important component of the Company's growth strategy. Since the end of fiscal 1989, the Company has constructed four major egg production and processing facilities in Mississippi, Louisiana and Texas and a pullet growing facility in Mississippi, at a total cost of approximately $46.7 million, of which approximately $28.2 million was financed by bank and insurance company borrowings and $6.85 million through the issuance of industrial revenue bonds. These new facilities, each of which generally provides for the processing of approximately 300 cases of shell eggs per hour, have added a total capacity of approximately 4.0 million layers and 1.0 million pullets to the Company's total flock.
The Company currently is constructing new egg production, processing and feed mill facilities in Chase, Kansas, which are expected to be completed in fiscal 1999 at an estimated cost of approximately $16 million, of which approximately $13.5 million is being financed through the issuance of industrial revenue bonds. The new facilities are expected to have a 1.0 million layer and 250,000 pullet capacity. In addition, the Company plans in late fiscal 1997 to commence the construction of a new in-line egg laying facility in Waelder, Texas, which is expected to be completed in fiscal 2000 at an estimated total cost of approximately $13.9 million, of which approximately $10.4 million is expected to be borrowed from an insurance company. The facility is expected to have a 1,000,000 layer and 250,000 pullet capacity. Although the Company has not made any decisions or entered into any understandings or agreements relating to the construction of additional shell egg production and processing or egg product manufacturing facilities, it plans to continue to periodically consider the construction of such facilities when consistent with market conditions and other economic factors.
The increased use of in-line facilities has generated significant cost savings. The cost of eggs at these facilities was lower by 1.0c, 1.5c, 2.1c, 2.3c and 3.1c per dozen in fiscal 1992, 1993, 1994, 1995 and 1996, respectively, than costs to the Company of eggs from non-in-line facilities. Also, due to less breakage, the Company produces a higher percentage of grade A eggs, which sell at higher prices, at these facilities. The percentage of the Company's total layers housed in in-line facilities increased from 25% in fiscal 1992 to 55% in fiscal 1996.
The following table sets forth certain selected consolidated operating data for each of the Company's past eight fiscal years.
FISCAL YEAR ENDED
-------- ------------ ----------------------------------------------------------------
JUNE 3, JUNE 2, JUNE 1, MAY 30, MAY 29, MAY 28, JUNE 3, JUNE 1,
1989 1990 1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- ------- ------- -------
SHELL EGG OPERATING PROFIT (LOSS):
Profit (Loss) (cents per
dozen):
Feed Cost................ 26.0cents 24.2cents 23.3cents 22.7cents 21.9cents 23.9cents 21.1cents 26.6cents
Hen Amortization and
Mortality.............. 5.4 5.9 7.0 7.2 7.1 6.5 7.4 7.2
Facilities and Other Farm
Costs.................. 7.6 7.9 8.5 8.5 8.7 8.5 8.9 8.9
----- ----- ----- ----- ----- ----- ----- -----
Farm Egg Production
Cost................... 39.0 38.0 38.8 38.4 37.7 38.9 37.4 42.7
Purchases, Processing,
Distribution, SG&A
Cost................... 15.2 20.4 20.8 18.5 17.8 18.2 18.1 22.6
----- ----- ----- ----- ----- ----- ----- -----
Total Cost............... 54.2 58.4 59.6 56.9 55.5 57.1 55.5 65.3
Average Selling Price(1)...... 57.8 70.0 66.2 56.3 57.4 57.7 52.8 68.4
----- ----- ----- ----- ----- ----- ----- -----
Profit (Loss) (cents per
dozen)................. 3.6cents 11.6cents 6.6cents (0.6)cents 1.9cents (0.6)cents (2.7)cents 3.1cents
==== ==== ==== ===== ===== ===== ==== ====
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The following egg flow chart depicts the Company's production and marketing of shell eggs and egg products:
[Flow Chart]
SHELL EGGS
Production
Shell eggs are produced on farms owned by the Company or by contract producers. The following table sets forth for each of the Company's last five fiscal years, the percentages of egg production attributable to the Company's own facilities and to contract producers.
FISCAL YEAR ENDED
---------------------------------------------------
MAY 20, MAY 28, MAY 30, JUNE 3, JUNE 1,
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
Percentage of Egg Production
- ---------------------------------------------------
Company Facilities............................ 46.5% 50.0% 56.4% 59.3% 60.5%
Contract Producers............................ 53.5% 50.0% 43.6% 40.7% 39.5%
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Under Cal-Maine's arrangements with its contract producers, the Company owns the entire flock, furnishes all feed and supplies, owns the shell eggs produced, and assumes all market risks. The contract producers own their facilities and are paid a fee based on production with incentives for performance.
The Company may change the mix of its own versus contract egg production to mitigate the adverse effect of low egg market prices upon its operations. Also, the Company continuously seeks to make improvements in feed efficiency, egg production, molting programs and other operating practices.
The commercial production of shell eggs requires a source of baby chicks to be used for laying flock replacement. The Company produces approximately 98% of its chicks in its own hatcheries and obtains the balance from commercial sources. Feed for the laying flocks is produced by Company-owned and operated mills located in Alabama, Arkansas, Louisiana, Missouri, Mississippi, New Mexico, North Carolina, Ohio, Oklahoma, South Carolina and Texas. All ingredients necessary for feed production are readily available in the open market and are purchased centrally from Jackson, Mississippi. Approximately 95% of the feed for Company-owned farms and contract producers is manufactured at feed mills owned and operated by the Company. Poultry feed is formulated using a computer model to determine the least-cost ration to meet the nutritional needs of the flocks. Although most feed ingredients are purchased on an as needed basis, the futures market is sometimes used to hedge costs when deemed to be advantageous.
After the eggs are produced, they are cleaned, graded and packed. Substantially all of the Company-owned farms have modern "in-line" facilities that mechanically gather, clean, grade and package the eggs produced, thereby reducing the amount of labor needed and increasing efficiency. Eggs produced on farms owned by contractors are brought to the Company's processing plants where they are cleaned, graded and packed. Some eggs are sold unprocessed to other processors.
In fiscal 1994, 1995 and 1996, the Company purchased approximately $8.0 million, $7.5 million and $9.9 million of shell eggs, respectively, from BCM Egg Company, a partnership of which the Company is a 50% owner.
The shell egg production and processing industry has been characterized by a growing concentration of production in a decreasing number of shell egg producers. In 1995, 53 producers with one million or more layers owned 68.2% of the 246.7 million total U.S. layers, compared with the 56 producers with one million or more layers owning 63.6% of the 231.9 million total U.S. layers in 1990, and 61 producers with one million or more layers owning 56.2% of the 248.0 million total U.S. layers in 1985. The Company believes that a continuation of that concentration trend may result in the reduced cyclicality of shell egg prices, but no assurance can be given in that regard.
Marketing
Of the 384 million dozen shell eggs sold by the Company in the fiscal year ended June 1, 1996, approximately 93% were cleaned, graded and packed in the Company's processing facilities and sold by the
Company, 5% were used by the Company in its manufacture of egg products, and 2% were sold direct from the Company's farms to other shell egg users.
Sales of shell eggs primarily are made to national and regional supermarket chains that buy direct from the Company. During fiscal 1996, Cal-Maine's largest customer accounted for less than 10% of net sales, and the top 10 customers accounted for slightly more than 50% of net sales in the aggregate. The majority of eggs sold are merchandised on a daily or short-term basis. Most sales to established accounts are on open account with terms ranging from seven to 30 days. Although the Company has established a long-term relationship with many of its customers, such customers are free to acquire shell eggs from other sources.
The Company sells its shell eggs at prices generally related to independently quoted wholesale market prices. The prices of its shell eggs reflect fluctuations in the quoted market, and the results of the Company's shell egg operations are materially affected by changes in market quotations. All major egg customers purchase eggs at significant discounts from quoted egg prices which serve as a reference point in selling price determinations. Egg prices reflect a number of economic conditions, such as the supply of eggs and the level of demand, which, in turn, are influenced by a number of factors that the Company cannot control. No representation can be made as to the future level of prices, which are subject to wide fluctuations.
Shell eggs are perishable. Consequently, the Company maintains very low shell egg inventories, usually consisting of approximately four days of production. Retail sales of shell eggs are greatest during the fall and winter months and lowest during the summer months. Prices for shell eggs fluctuate in response to seasonal demand factors and a natural increase in egg production during the spring and early summer. Consequently, the Company generally experiences lower sales and net income in its first and fourth fiscal quarters ending in August and May, respectively.
The decline in per capita consumption of shell eggs that occurred during the 1980's, which may be attributable to perceived health concerns relating to cholesterol content and lifestyle changes, appears to have abated, as annual per capita consumption has remained relatively level in the 1990's to date. The annual per capita consumption of shell eggs since 1990 has ranged from 234 to 239, averaging 236. While the Company believes that increased fast food restaurant consumption, reduced egg cholesterol levels and industry advertising campaigns may result in a continuance of, or possible increase in, current per capita egg consumption levels, no assurance can be given that per capita consumption will not decline in the future.
EGG PRODUCTS
Egg products produced by the Company include liquid egg whites, liquid egg yolks, liquid whole eggs, salt yolk, sugar yolk, similar products sold in frozen form, and various forms of dried whole eggs, egg whites and yolks. The Company's production facility is located in Jackson, Mississippi. Sales are made primarily to national accounts which consist principally of manufacturers of baked goods, mayonnaise and confections. The Company manufactures and distributes egg products in liquid, frozen and dried forms and also processes egg products according to customer specifications for use in special baking and manufacturing applications. Egg products are sold on a direct basis to major institutional users or with the assistance of egg product brokers. Egg products accounted for approximately 6% of the Company's net sales in each of fiscal year 1996 and fiscal 1995, and 7.2% in fiscal 1994.
Of the 23 million dozen of shell eggs used in the Company's egg product operations in the fiscal 1996, approximately 83% were produced by the Company's own and contract farms, and the balance was purchased by the Company from outside sources.
Egg product sales are somewhat seasonal, with peak demands occurring prior to holiday seasons. The Company's plant is operated at its highest capacity during periods when egg prices are at their lowest. These periods normally do not coincide with the high demand periods for egg products. As a result, the Company's egg product inventories can be significant, requiring high working capital. The Company tends to build egg product inventories during periods of shell egg surpluses and reduce inventories when demand for shell eggs is stronger. Egg product inventories vary between two and four months of sales.
SPECIALTY EGGS
The Company has developed the capability to produce specialty eggs such as Egg-land's Best(TM) and Farmhouse eggs.
Egg-land's Best(TM) eggs are patented eggs that are believed by its developers, based on scientific studies, to cause no increase in serum cholesterol when eaten as part of a low fat diet. Cal-Maine produces and processes Egg-land's Best(TM) eggs, under license from Egg-land's Best, Inc. ("EB"), at its existing facilities, under EB guidelines that require the use of a proprietary vegetarian feed supplement, adherence to quality control standards and use of approved packaging materials. The Company believes it is EB's largest franchisee. The product is marketed to the Company's established base of customers at prices that reflect a premium over ordinary shell eggs. Although Egg-land's Best(TM) eggs accounted for less than 1% of the Company's net sales in fiscal 1996, Cal-Maine believes that the product offers an important opportunity for enhanced future operating results from additional sales in a market that tends to avoid ordinary shell eggs.
"Farmhouse" brand eggs are currently produced and processed at Company facilities located in Kansas, New Mexico, North Carolina and Texas. The hens that produce these eggs are not caged, and are provided with a diet of natural grains and drinking water that is free of hormones or other chemical additives. Although Farmhouse eggs account for only a small part of net sales at this time, they meet the demands of consumers who are sensitive to environmental and animal welfare issues. The Company is committed to continuing production of Farmhouse eggs, and believes that the United States market will grow in the future.
LIVESTOCK
The Company's livestock operations currently consist of the operation of a 1,440 head dairy facility, from which milk sales are made to a major milk processor. Milk and cattle sales were approximately 2% of the Company's net sales in fiscal 1996.
COMPETITION
The production, processing and distribution of shell eggs is an intensely competitive business which, traditionally, has attracted large numbers of producers. Competition is generally based on price, service and quality of production. Although the Company is the largest combined producer, processor and distributor of shell eggs in the United States, it does not occupy a controlling market position in any area where its eggs are sold. The Company competes with approximately 50 other manufacturers of egg products. Competition is not limited by geographic boundaries and is predicated primarily on quality, price, product availability and terms of sale.
PROPERTIES AND FACILITIES
The Company owns or leases farms, processing plants, hatcheries, feed mills, warehouses, offices and other property located in Alabama, Arkansas, Kansas, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, South Carolina and Texas, as follows: two breeding facilities, two hatcheries, 14 feed mills, 10 production facilities, 13 pullet growing facilities, 19 processing and packing facilities, two wholesale distribution facilities, one egg products plant and a dairy farm. Most of the Company's property is owned and encumbered. See Notes 5, 6 and 7 of the Notes to Consolidated Financial Statements of the Company.
The Company operates 175 over-the-road tractors and 271 trailers, of which 91 and 186 are owned, respectively, and the balance are leased.
At June 1, 1996, the Company owned approximately 12,070 acres of land and owned facilities to:
OPERATION CAPACITY
--------------------------------- ----------
Hatch............................ 13,000,000 - pullet chicks per year
Grow (1)......................... 5,240,000 - pullets per year
House (2)........................ 9,200,000 - hens
Produce.......................... 547 - tons of feed per hour
Process (3)...................... 4,780 - cases of eggs per hour
Break (3)........................ 500 - cases of eggs per hour
Dry (4).......................... 5,500 - lbs. per hour liquid whites
5,570 - lbs. per hour liquid whole eggs
5,570 - lbs. per hour liquid yolk
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(2) The Company controls the production from approximately 15.2 million layers, including 6.0 million of capacity cared for by contract operators.
(3) One case equals 30 dozen eggs.
(4) One case of large eggs yields approximately 40 lbs. of liquid egg and approximately 10 lbs. of dried egg.
Over the past five fiscal years, Cal-Maine's capital expenditures have been approximately $88 million, including the acquisition of the operations of other businesses. The Company's facilities currently are maintained in good operable condition and are insured to an extent the Company deems adequate.
GOVERNMENT REGULATION
The Company is subject to federal and state regulations relating to grading, quality control, labeling, sanitary control and waste disposal. As a fully-integrated egg producer, the Company's shell egg facilities are subject to USDA and FDA regulation. The Company's shell egg facilities are subject to periodic USDA inspections, and its egg products plant is subject to continuous on-site USDA inspection. Cal-Maine maintains its own inspection program to assure compliance with the Company's own standards and customer specifications.
Cal-Maine is subject to federal and state environmental laws and regulations and has all necessary permits. The construction of new facilities requires compliance with environmental laws and regulations, including the receipt of permits, that could cause schedule delays, although the Company has not experienced any significant delays in the past.
EMPLOYEES
As of June 1, 1996, the Company had a total of approximately 1,650 employees of whom 1,495 worked in egg production, processing and marketing, 67 were engaged in feed mill operations, 50 in dairy activities, and 38 were administrative employees, including officers, at the Company's executive offices. About one-fourth of the Company's personnel is part-time. None of the Company's employees is covered by a collective bargaining agreement. The Company considers its relations with employees to be good.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the executive officers and directors of the Company:
NAME AGE POSITION
- ----------------------------------- --- --------------------------------------------------
Fred R. Adams, Jr.(1)(3)........... 64 Chairman of the Board of Directors and Chief
Executive Officer
Richard K. Looper(1)............... 69 President, Chief Operating Officer and Director
Bobby J. Raines(1)(2).............. 64 Vice President, Chief Financial Officer,
Treasurer, Secretary and Director
Adolphus B. Baker.................. 39 Vice President and Director of Marketing and
Director
Jack B. Self....................... 66 Vice President/Operations and Production and
Director
Joe M. Wyatt....................... 57 Vice President/Feed Mill Division and Director
Charles F. Collins................. 52 Vice President, Controller and Director
W.D. (Jack) Cox(2)(3).............. 71 Director
R. Faser Triplett, M.D.(2)(3)...... 63 Director
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(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Fred R. Adams, Jr. has served as the Chief Executive Officer and director of the Company since its formation in 1969 and as the Chairman of its Board of Directors since 1982. He is a director and past chairman of National Egg Company, United Egg Producers, Mississippi Poultry Association, U.S. Egg Marketers, Inc., and Egg Clearinghouse, Inc. Mr. Adams is the father-in-law of Mr. Baker.
Richard K. Looper has served as the President and Chief Operating Officer of the Company since 1983. Previously, he had served as Executive Vice President of the Company since 1982 and was originally employed by the Company in 1974. Mr. Looper is a past chairman of the American Egg Board and U.S. Egg Marketers, Inc. He has served as a director of the Company since 1982.
Bobby J. Raines has served as Vice President, Chief Financial Officer, Treasurer and Secretary of the Company since 1972. Previously, he had handled various operational responsibilities and has been employed by the Company since its formation in 1969. He has served as a director of the Company since 1982.
Adolphus B. Baker has been Vice President and Director of Marketing of the Company since 1988. Previously, he had served as Assistant to the President since 1987 and has been employed by the Company since 1986. Mr. Baker is a member of the American Egg Board, chairman of Mississippi Poultry Association, and is a past chairman of Egg Clearinghouse, Inc. He has been a director of the Company since 1991. Mr. Baker is Mr. Adams' son-in-law.
Jack B. Self has been Vice President/Operations and Production since the Company's formation in 1969. He has served as a director of the Company since 1983.
Joe M. Wyatt has been Vice President/Feed Mill Division since 1977 and has been employed by the Company since its formation in 1969. He has served as a director of the Company since 1983.
Charles F. Collins has served as Vice President and Controller of the Company since 1978. He has served as a director of the Company since 1983. He has been employed by the Company since 1969.
W.D. (Jack) Cox has served as a director of the Company since September 1996. Mr. Cox has been a consultant to various food companies and a major farm implement company since October 1990. Prior thereto,
he served as Vice President for vegetable oil procurement at Kraft, Inc. ("Kraft"), and was a consultant to offshore and Canadian locations of Kraft's facilities. In the early 1980s, Mr. Cox was Vice President for commodities and ingredients of Nabisco Brands, Inc. From 1970 to 1972 Mr. Cox was employed by the Company as Vice President for egg products.
R. Faser Triplett, M.D., has served as a director of the Company since September 1996. Dr. Triplett is a practicing physician and a Clinical Assistant Professor at the University of Mississippi School of Medicine. He is the majority owner of Avanti Travel, Inc. and a director of Mobile Telecommunications Technologies Corp.
The Company's Compensation Committee reviews and recommends to the Board of Directors the compensation and benefits of all officers of the Company, reviews general policy matters relating to compensation and benefits of employees of the Company and administers the issuance of stock options to the Company's officers, employees and directors. The Audit Committee meets with management and the Company's independent auditors to determine the adequacy of internal controls and other financial reporting matters.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth all compensation awarded to, earned by or paid for services rendered to the Company in all capacities during the fiscal year ended June 1, 1996 by (i) the Company's chief executive officer and (ii) the Company's four other most highly compensated executive officers who were serving as executive officers at the end of that year.
SUMMARY COMPENSATION TABLE
LONG-TERM
FISCAL 1996 COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------- ------------
SHARES OF
COMMON STOCK
UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITIONS SALARY BONUS(1) OPTIONS PAYOUTS COMPENSATION(2)
- --------------------------------------- -------- -------- ------------ ------- ---------------
Fred R. Adams, Jr. -- Chairman of the
Board and Chief Executive Officer.... $336,910 $250,000 None None $83,797
Richard K. Looper -- President and
Chief Operating Officer.............. 129,903 150,000 120,000 $50,000(3) 1,246
Bobby J. Raines -- Vice President,
Chief Financial Officer, Treasurer
and Secretary........................ 115,577 91,000 96,000 (4) 977
Jack B. Self -- Vice
President/Operations and
Production........................... 82,500 37,250 48,000 (4) 1,102
Joe M. Wyatt -- Vice President/Feed
Mill Divisions....................... 78,896 27,250 48,000 (4) 730
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(2) The amounts shown represent premiums paid under separate life insurance policies purchased by the Company for each person named in the table. The policy on Mr. Adams' life is owned by an Adams family intervivos trust, and the beneficiaries are Mr. Adams' four daughters and their descendants. Messrs. Looper, Raines, Self and Wyatt are the owners of their respective policies, and members of their families are the beneficiaries. The Company is not a beneficiary under any of such policies and will not receive any portion of the proceeds paid thereunder upon the death of any of the insureds.
(3) Pursuant to Mr. Looper's incentive compensation agreement with the Company. See "Long Term Incentive Plans," below.
(4) Amount earned but payable in the future pursuant to long term incentive plans not included. See "Long Term Incentive Plans," below.
EMPLOYEE STOCK OWNERSHIP PLAN
The Company maintains a payroll-based Employee Stock Ownership Plan (the "ESOP"). Pursuant to the ESOP, originally established in 1976, substantially all persons employed at January 1, 1994, as well as substantially all new full-time employees over age 21 with one or more years of service, participate. The ESOP is administered by an Administrative Committee including Messrs. Raines, Looper and Collins, directors of the Company. Its assets, which are managed by a trustee designated by the Board, consist primarily of Common Stock of the Company. Contributions by the Company may be made in cash or shares of Common Stock, as determined by the Board of Directors. Employee contributions are not permitted. Company contributions generally may not exceed 15% of the aggregate annual compensation of participating employees. Contributions are allocated to the accounts of participating employees in the proportion which each employee's compensation for the year bears to the total compensation (up to $150,000 per employee) of all participating employees. Company contributions vest 20% annually beginning with the participating employee's third year of service.
Shares of Common Stock held in an employee's account are voted by the ESOP
trustee in accordance with the employee's instructions. An employee or his or
her beneficiary is entitled to distribution of the balance of his or her account
upon termination of employment. The Company's contributions to the ESOP amounted
to approximately $911,000 in fiscal 1994, $808,000 in fiscal 1995 and $992,000
in fiscal 1996. At June 1, 1996, 4,054,800 shares of Common Stock were held by
and allocated to employee accounts maintained under the ESOP. For the fiscal
year ended June 1, 1996, the Company's contributions to the ESOP on behalf of
each of the executive officers named in the Summary Compensation Table were:
Fred R. Adams, Jr. -- $8,523, Richard K. Looper -- $8,263, Bobby J.
Raines -- $9,135, Jack B. Self -- $5,292 and Joe M. Wyatt -- $4,757.
1993 STOCK OPTION PLAN
Pursuant to the Company's 1993 Stock Option Plan, which was adopted on May 25, 1993 and amended on September 23, 1996, with stockholder approval, (the "1993 Plan") a total of 800,000 shares of Common Stock are reserved for issuance upon the exercise of options that may be granted to directors, officers and key employees of the Company. Options are awarded by the Board of Directors of the Company.
The 1993 Plan is designed to obtain for the Company and its shareholders the benefits resulting from equity ownership in Cal-Maine by directors, officers and key employees. The Company believes that the 1993 Plan will aid in attracting and retaining competent persons through the opportunity to acquire a proprietary interest in Cal-Maine. Options granted under the 1993 Plan may be either incentive stock options ("ISOs") that satisfy the requirements of Section 422 of the Code or nonstatutory options ("NSOs") which are not intended to satisfy such requirements.
The exercise price per share under any option granted under the 1993 Plan may not be less than 100% of the fair market value of the Common Stock on the date of grant, or in the case of ISOs, less than 110% of such fair market value if the option is granted to a person who holds 10% or more of the voting power of the Capital Stock. Fair market value will be as determined by the Board of Directors in good faith. The aggregate fair market value of the Common Stock subject to an ISO, as determined upon a grant, which is exercisable by an optionee for the first time during any calendar year cannot exceed $100,000. The number and kind of shares subject to an option, and the option exercises price, may be adjusted in certain circumstances to prevent dilution. The method of payment of an option exercise price will be as determined by the Board of Directors and set forth in the individual stock option agreement.
No options may be granted under the 1993 Plan more than ten years after the date of its adoption, and no option may exercised more than 10 years after the date of its grant, or in the case of an ISO, more than five years after the date of grant if granted to a person holding more than 10% of the voting power of the Common Stock. The term or times at which an option may be exercised and any conditions or restrictions relating thereto will be as determined by the Board of Directors and set forth in the individual stock option agreement. If for any reason other than death, an optionee ceases to be an employee or director of the Company, any unexercised portion of the option as of the date of termination of employment or director service may be
exercised for 90 days thereafter. Upon the death of an optionee while employed by the Company or serving on its Board, his or her legal representative or a legatee may, within six months after the death, exercise any unexercised portion of the option as of the time of the optionee's death. Options are not transferable or assignable otherwise than by will or the laws of descent and distribution, and during his or her lifetime may only be exercised by the optionee.
The presently outstanding options granted under the 1993 Plan are exercisable on a cumulative basis over a period of six years from the date of grant at the rate of 20% per year beginning twelve months after the date of grant. The shares issued upon any exercise of an option will be deemed to be "restricted securities" until the Company registers such shares under the 1933 Act.
Pursuant to the 1993 Plan, options have been granted and are outstanding for the purchase of 504,000 shares of Common Stock at an exercise price of $3.42 per share and for the purchase of 24,000 shares of Common Stock at an exercise price of $4.33 per share. None of the options granted by the Company to date have been exercised. Options to purchase Common Stock at a price of $3.42 per share were granted on August 2, 1993 to the following executive officers of the Company: Richard K. Looper -- 120,000 shares; Bobby J. Raines -- 96,000 shares; Adolphus B. Baker, Jack B. Self, Joe M. Wyatt, and Charles F. Collins -- 48,000 shares each; and options to purchase 12,000 shares of Common Stock at a price of $4.33 per share were granted on October 15, 1996 to each of W. D. (Jack) Cox and R. Faser Triplett, directors of the Company. All options expire ten years after grant.
SAVINGS AND RETIREMENT PLAN
Since 1985, the Company has maintained a defined contribution savings and retirement plan (the "Retirement Plan"), which is designed to qualify under Sections 401(a) and 401(k) of the Code. An employee is eligible to participate in the Retirement Plan on or after having attained age 21 and after one year of service. The Retirement Plan is administered by the Company and permits covered employees to contribute up to 10% of their annual compensation, up to a maximum of $9,500 per year, as adjusted for inflation, through salary reduction on a pre-tax basis in accordance with the Code. Highly compensated employees may be subject to further limitations on the amount of their maximum contribution. The Company may make discretionary contributions matching each employee's pre-tax contributions. The Retirement Plan is intended to comply with the Employee Retirement Income Security Act of 1974, as amended.
Participating employees are at all times 100% vested in their account balances under the Retirement Plan. Benefits are paid at the time of a participant's death, retirement, disability, termination of employment, and, under limited circumstances, may be withdrawn prior to the employee's termination of service. Contributions are not taxable to employees until such funds are distributed to them.
LONG TERM INCENTIVE PLANS
The Company has entered into certain incentive compensation continuation agreements (the "Agreements") with Richard K. Looper, Bobby J. Raines, Jack B. Self and Joe M. Wyatt. Pursuant to the Agreements, each such executive officer may earn up to ten years of compensation payments if he remains with the Company until age 65. If the officer's employment ends before his 65th birthday, he would be entitled to fewer years of incentive compensation payments, depending on the length of time served as an officer. The incentive compensation payments are made monthly, beginning immediately after the officer's 65th birthday, at the annual rate of $50,000 per year for Messrs. Looper and Raines, and $20,000 per year for Messrs. Self and Wyatt. Further, the Agreement with Mr. Self was amended, effective September 2, 1994, so that for each subsequent year, after age 65, Mr. Self serves as an officer of the Company, he is entitled to receive one additional year of incentive compensation payable at the annual rate of $20,000 per year. The Agreements provide that once payments begin or have been earned, any remaining payments will continue to be made to the officer's estate after his death.
Messrs. Looper and Raines have each earned 10 years of incentive compensation payments under the Agreements, and Mr. Self has earned 12 years of such payments. Mr. Looper began receiving his payments on December 1, 1991, while Mr. Raines' payments will not begin until after his 65th birthday. Mr. Self's
payments will not begin until he retires. Mr. Wyatt has earned six years of incentive compensation payments, and will become entitled to four additional years if he continues to serve as an employee of the Company until August 4, 2004.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE
NAME PERIOD WHEN PAYOUT BEGINS ANNUAL PAYMENTS
- --------------------------- ------------------------- ----------------
Bobby J. Raines............ November 1, 2005 $ 50,000
Jack B. Self............... (1) $ 20,000
Joe M. Wyatt............... September 1, 2008 $ 20,000
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Pursuant to the Agreement with Mr. Raines, for each of 10 consecutive approximately 14-month periods (or any portion thereof) ending November 1, 1997 that Mr. Raines is employed by the Company, he is entitled to receive, starting at age 65, one year of incentive compensation payable at the annual rate of $50,000 per year. Mr. Raines served a portion of the ninth such period during the fiscal year ended June 1, 1996, and, accordingly, is entitled to an additional year of incentive compensation payable beginning November 1, 2005, at the annual rate of $50,000 per year.
Under the Agreement, as amended, with Mr. Self, for each 12-month period ending August 31 that Mr. Self serves as an employee of the Company, he is entitled to receive one additional year of incentive compensation payable at the annual rate of $20,000 per year. For his service as an employee of the Company for the 12-month period ended August 31, 1995, Mr. Self is entitled to an additional year of incentive compensation payable beginning the eleventh year after his retirement.
Mr. Wyatt's Agreement provides that for each of 10 consecutive approximately 19-month periods (or any portion thereof) ending August 4, 2004 that Mr. Wyatt is employed by the Company, he is entitled to receive, starting at age 65, one year of incentive compensation payable at the annual rate of $20,000 per year. Mr. Wyatt served a portion of the fifth such period during the fiscal year ended June 1, 1996, and, accordingly, is entitled to an additional year of incentive compensation payable beginning September 1, 2008, at the annual rate of $20,000 per year.
DIRECTOR COMPENSATION
The Company's non-employee directors are each entitled to receive $10,000 annually as compensation for their services as a director and may be granted options to purchase Common Stock under the 1993 Plan. They also may be compensated for any services performed in addition to their normal duties as a director of the Company. Employee-directors receive no additional compensation for their services as directors of the Company.
CERTAIN TRANSACTIONS
Fred R. Adams, Jr., Chairman of the Board and Chief Executive Officer of the Company, is indebted to the Company in the amount of $1,694,444 under a non-interest bearing demand note receivable. Mr. Adams will use an equal amount of the proceeds from his sale of Common Stock in this offering to pay his note in full.
Between September 1993 and September 1996, the Company and the ESOP have repurchased, for cash, shares of Cal-Maine capital stock owned by Fred R. Adams, Jr., and members of his family and his spouse's family, in the following aggregate amounts: Fred R. Adams, Jr. -- 456,000 shares for $1,656,890; Jean Adams (Mr. Adams' spouse) -- 175,200 shares for $598,850; Mr. Adams children and their spouses -- 82,800 shares for $299,688; and, Mrs. Adams' children and their spouses -- 24,000 shares for $83,030. All of such repurchases were made at prices approximating book value, as determined by an unaffiliated, independent business appraiser.
In 1994, Mr. Adams, to satisfy certain personal obligations, as a guarantor, executed and delivered to a bank a Promissory Note (the "Note") in the principal amount of $720,064.41 and pledged 194,400 shares (subsequently reduced to 127,200 shares as discussed below) of Common Stock of the Company owned by him (the "Collateralized Shares") to secure his obligation under the Note. The Company, in a Redemption Agreement with Mr. Adams executed March 7, 1994 (the "Agreement"), agreed to repurchase the Collateralized Shares from the bank, at a purchase price equal to the book value thereof, in the event of a default under the Note, based on the determination of the Board of Directors that it would be in the best interest of the Company for the Collateralized Shares to be acquired, if necessary, by the Company rather than by an unrelated party. There has been no default under the Note. Pursuant to the Agreement, the bank had the right to require the Company to repurchase a portion of the Collateralized Shares if shares of Common Stock of the Company (other than the Collateralized Shares) were sold by Mr. Adams other than to members of his family in an amount in excess of $500,000 in any year. Mr. Adams advised the bank in September 1996 of his intention to sell 800,000 shares of Common Stock owned by him in the public offering to which this Prospectus relates. The bank and Mr. Adams then entered into an agreement providing that (i) the bank will not have the right to require the Company to repurchase any of the Collateralized Shares as a result of the public offering and (ii) Mr. Adams will pay approximately $65,000 to the bank, which amount equals the amount the bank would have received in a repurchase by the Company pursuant to the Agreement, upon the sale by him of shares of Common Stock in the public offering. At October 4, 1996, the principal amount of the Note had been reduced to $454,326 and the amount of Collateralized Shares securing Mr. Adams' obligation thereunder had been reduced to 127,200 shares.
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company's outstanding Common Stock as of October 3, 1996, and
as adjusted to reflect the sale of the shares of Common Stock offered hereby, by
(i) each person known to the Company to beneficially own more than 5% of Common
Stock, (ii) each director of the Company, (iii) each executive officer named in
the Summary Compensation Table, and (iv) all directors and executive officers of
the Company as a group.
SHARES OWNED PRIOR TO THE
OFFERING(1) SHARES OWNED AFTER THE OFFERING(1)(2)
----------------------------------- ----------------------------------------
COMMON STOCK COMMON STOCK
-------------------- -------------------------
PERCENT OF SHARES OFFERED NUMBER PERCENT OF
NUMBER OF PERCENT TOTAL VOTING BY SELLING OF PERCENT TOTAL VOTING
NAME OF STOCKHOLDER(3) SHARES OF CLASS POWER(4) STOCKHOLDER SHARES OF CLASS POWER(2)(4)
- -------------------------------- --------- -------- ------------ -------------- -------------- -------- ------------
Fred R. Adams, Jr.(5)........... 6,456,936(5)(6) 62.6% 82.7% 800,000 5,656,936(6) 47.1% 73.5%
Cal-Maine Foods, Inc. Employee
Stock Ownership Plan.......... 4,054,800 39.3 18.2 4,054,800 33.8 16.9
Richard K. Looper............... 328,696 (7) 3.2 1.2 328,696(7) 2.7 1.1
Bobby J. Raines................. 296,830 (8) 2.9 1.1 296,830(8) 2.5 1.0
Adolphus B. Baker............... 242,426 (9) 2.3 1.0 242,426(9) 2.0 *
Jack B. Self.................... 168,576 (10) 1.6 * 168,576(10) 1.4 *
Joe M. Wyatt.................... 168,234 (11) 1.6 * 168,234(11) 1.4 *
Charles F. Collins.............. 93,213 (12) * * 93,213(12) * *
W.D. (Jack) Cox................. -- * * -- * *
R. Faser Triplett............... -- * * -- * *
All directors and executive
officers as a group (nine
persons)(13).................. 7,754,731 73.5% 87.5% 6,955,731 56.8% 78.0%
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(1) The information as to beneficial ownership is based on information known to the Company or statements furnished to the Company by the beneficial owners. As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of a security). For purposes of this table, a person is deemed as of any date to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date, such as under the 1993 Plan. See note (5), below, in this connection.
(2) Gives effect to the assumed issuance of shares by the Company of Common Stock in this offering, but not to the exercise of the Underwriters' over-allotment option. If the Underwriter's over-allotment option is exercised, 375,000 additional shares of Common Stock will be sold by the Company.
(3) The address of each person, except Jack Cox and R. Faser Triplett, is Cal-Maine Foods, Inc., 3320 Woodrow Wilson Drive, Jackson, Mississippi 39207. The address of Mr. Cox is 1161 Oak River Road, Memphis, Tennessee 38120, and of Dr. Triplett is 3691 Old Canton Road, Jackson, Mississippi 39216.
(4) Percent of total voting power is based on the total votes to which the Common Stock and Class A Common Stock are entitled. Mr. Adams beneficially owns 100% of the Class A Common Stock.
(5) Mr. Adams is the Selling Shareholder in the offering being made by this Prospectus. The number of shares shown in the table include 817,200 shares of Common Stock owned by his spouse and other members of his family as to which Mr. Adams disclaims any beneficial ownership and 127,200 shares pledged to a bank to secure the promissory note obligation described under "Certain Transactions" and 660,000 shares to secure other bank borrowings. The Class A Common Stock, which is 100% owned by Mr. Adams, is convertible on a shares-for-share basis into shares of Common Stock, but such Class A shares are not included in the table, except as indicated in note (4) above.
(6) Includes 284,136 shares accumulated under the ESOP.
(7) Includes 255,496 shares accumulated under the ESOP, and 72,000 shares subject to stock options exercisable within 60 days.
(8) Includes 238,030 shares accumulated under the ESOP, and 57,600 shares subject to stock options exercisable within 60 days.
(9) Includes 28,800 shares subject to stock options exercisable within 60 days, and 62,400 shares owned by Mr. Baker's spouse separately and as custodian for their children as to which Mr. Baker disclaims any beneficial ownership. Such 62,400 shares are also included in the 817,200 shares referred to in note (5), above. Also includes 22,426 shares accumulated under the ESOP.
(10) Includes 134,976 shares accumulated under the ESOP, and 28,800 shares subject to stock options exercisable within 60 days.
(11) Includes 138,234 shares accumulated under the ESOP, and 28,800 shares subject to stock options exercisable within 60 days.
(12) Includes 64,413 shares accumulated under the ESOP, and 28,800 shares subject to stock options exercisable within 60 days.
(13) Includes shares as to which Messrs. Adams and Baker disclaims any beneficial ownership. See notes (5) and (9), above.
The shares of Common Stock accumulated in the ESOP, as indicated in notes
(6) through (12) above, also are included in the 4,054,800 shares as shown in
the table as owned by the ESOP.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 30,000,000 shares of Common Stock, par value $0.01 per share, and 1,200,000 shares of Class A Common Stock, par value $0.01 per share, of which 10,306,800 and 1,200,000 shares, respectively, were issued and outstanding at October 3, 1996. Upon completion of this offering, there will be outstanding 12,006,800 shares of Common Stock (12,381,800 shares if the Underwriters' over-allotment option is exercised) and 1,200,000 shares of Class A Common Stock.
Dividends. Holders of shares of Capital Stock are entitled to receive such dividends as may be declared by the Company's Board of Directors out of funds legally available for such purpose. No dividend may be declared or paid in cash or property on any share of any class of Capital Stock, however, unless simultaneously the equivalent dividend is declared or paid on each share of the other class of Capital Stock. However, any cash dividend payable upon a share of Class A Common Stock shall be in an amount equal to 95% of any cash dividend payable on a share of Common Stock. In the case of any stock dividend, holders of Common Stock are entitled to receive the same percentage dividend (payable only in shares of Common Stock) as the holders of Class A Common Stock receive (payable only in shares of Class A Common Stock). See "Dividend Policy" as to certain dividend restrictions under the Company's line of credit and loan agreements.
Voting Rights. Holders of shares of Capital Stock vote as a single class on all matters submitted to a vote of the stockholders, with each share of Common Stock entitled to one vote and each share of Class A Common Stock entitled to ten votes. Holders of Capital Stock have the right of cumulative voting in the election of directors. Under Delaware law, the affirmative vote of the holders of a majority of the outstanding shares of any class of Capital Stock is required to approve, among other things, a change in the designations, preferences and limitations of the shares of such class of Capital Stock. See "Other Provisions," below.
Liquidation Rights. Upon liquidation, dissolution, or winding-up of the Company, the holders of Common Stock are entitled to share ratably with the holders of Class A Common Stock in all assets available for distribution after payment in full of creditors.
Ownership of Class A Stock. The Class A Common Stock may only be issued to Fred R. Adams, Jr., and members of his immediate family, including his spouse, his natural children, his sons-in-law and his grandchildren. In the event any share of Class A Common Stock, by operation of law or otherwise is, or shall be deemed to be owned by any person other than Mr. Adams or a member of his immediate family, the voting power of such stock will be reduced from ten votes per share to one vote per share. Also, shares of Class A Common Stock shall be automatically converted into Common Stock on a share per share basis in the event
the beneficial or record ownership of any such share of Class A Common Stock is transferred, by any means, to any person other than Mr. Adams or a member of his immediate family.
Other Provisions. Each share of Class A Common Stock is convertible, at the option of its holder, into one share of Common Stock at any time. The holders of Common Stock and Class A Common Stock are not entitled to preemptive or subscription rights. The shares of Capital Stock presently outstanding are, and the shares of Common Stock offered hereby will be, upon issuance, validly issued, fully paid and nonassessable. In any merger, consolidation or business combination, the consideration to be received per share by holders of Common Stock must be identical to that received by holders of Class A Common Stock, except that if any such transaction in which shares of Capital Stock are distributed, such shares may differ as to voting rights to the extent that voting rights now differ among the classes of Capital Stock. No class of Capital Stock may be combined or subdivided unless the other classes of Capital Stock are combined or subdivided in the same proportion.
TRANSFER AGENT
SunTrust Bank, Atlanta, of Atlanta, Georgia, will be the Transfer Agent and Registrar for the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been a market for the Common Stock. All of the outstanding shares of Class A Common Stock are owned by Fred R. Adams, Jr., who does not plan to sell any of such shares.
Upon completion of this offering, there will be outstanding 12,006,800 shares of Common Stock (12,381,800 shares assuming exercise of the Underwriters' over-allotment option). Of these shares, the 2,500,000 sold in this offering will be freely tradeable without restriction (except as to affiliates of the Company) or further registration under the Securities Act.
The remaining 9,506,800 shares of Common Stock outstanding upon completion of this offering are "restricted securities" within the meaning of Rule 144 under the Securities Act, were issued and sold by the Company in private transactions more than three years ago and may be publicly sold only if registered under the Securities Act or sold in accordance with an applicable exemption from registration, such as Rule 144. (The provisions of Rule 144 are summarized below.) Of such outstanding shares, a total of 5,381,200 shares will be beneficially owned by Fred R. Adams, members of his family and other directors and executive officers deemed to be affiliates of the Company (excluding a total of 1,137,711 shares accumulated under the ESOP for their benefit); 4,054,800 shares will be owned by the ESOP; and the balance of 70,800 shares will be owned by other persons not deemed to be affiliates of the Company.
Mr. Adams, the ESOP and the Company's directors and executive officers, who upon completion of this offering will beneficially own an aggregate of 9,436,000 outstanding shares, have entered into lock-up agreements with the Underwriters providing that they will not sell any shares of Common Stock owned by them, without the prior written consent of the Representative, for a period of 90 days after the date of this Prospectus. Therefore, upon completion of this offering, 70,800 shares of Common Stock will become eligible for resale in the public market without restriction pursuant to Rule 144(k) as discussed below, and beginning 90 days after the date of this Prospectus, 9,436,000 shares will become eligible for resale in the public market, subject to the volume limitations of Rule 144 described below. Future sales of substantial amounts of Common Stock in the public market could adversely affect prevailing market prices.
In general, under Rule 144, a person (or persons whose shares are aggregated) who has beneficially owned restricted securities within the meaning of Rule 144 ("Restricted Shares") for at least two years, including the holding period of any securities which are converted into the Restricted Shares and including the holding period of any prior owner except an affiliate, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of one percent of the then outstanding shares of Common Stock or the average weekly trading volume of the Common Stock on the NASDAQ National Market during the four calendar weeks preceding such sale. Sales under Rule 144 are also subject to certain manner of sale
provisions, notice requirements and the availability of current public information about the Company. Any person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of the Company at any time during the 90 days preceding a sale, and who has beneficially owned shares for at least three years (including any period of ownership of preceding non-affiliated holders), would be entitled to sell such shares under Rule 144(k) without regard to the volume limitations, manner of sale provisions, public information requirements or notice requirements.
The Company intends to file a registration statement under the Securities Act covering the 800,000 shares of Common Stock issuable under the Company's 1993 Plan. See "Management -- Stock Option Plan." Such registration statement will automatically become effective upon filing and, accordingly, shares registered under such registration statement will be available for sale in the open market, subject to vesting restrictions.
UNDERWRITING
The Underwriters named below, acting through Paulson Investment Company, Inc., the Representative, have agreed, severally and not jointly, subject to the terms and conditions contained in the Underwriting Agreement, to purchase the Common Stock offered by this Prospectus from the Company and the Selling Shareholder in the amounts set forth below:
UNDERWRITER NUMBER OF SHARES
- ----------------------------------------------------------------------------- ----------------
Paulson Investment Company, Inc. ............................................
-------------
Total........................................................................ 2,500,000
=============
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The Underwriting Agreement provides that the Underwriters are obligated to purchase all of the shares of the Common Stock offered by this Prospectus if any shares are purchased. The Company and the Selling Stockholder have been advised that the Underwriters propose to offer the Common Stock to the public initially at the offering price shown on the cover page of this Prospectus and to selected dealers, including Underwriters, at that price less a concession to be determined by the Representative. After the initial public offering of the Common Stock, the public offering price and other offering terms may be changed.
The Company has granted the Underwriters an option, exercisable by the Representative during the 30-day period after the date of this Prospectus, to purchase up to 375,000 additional shares on the same terms as the Common Stock being purchased by the Underwriters from the Company. The Representative may exercise this option only to cover over-allotments in the sale of the Common Stock.
The Underwriters will purchase the Common Stock (including the shares subject to the Underwriters' over-allotment option) offered hereby at a discount equal to % of the public offering price, or $ per share.
The Representative will also receive at the Closing a non-accountable expense allowance equal to 2% of the aggregate initial public offering price of the Common Stock sold in the offering.
The Company has agreed to issue to the Representative warrants (the "Representative's Warrants") to purchase up to 250,000 shares of Common Stock. The Representative's Warrants are exercisable for a period of four years beginning one year from the date of this Prospectus at a price of $ per share and are nontransferable except (i) to any of the Underwriters or to individuals who are either an officer or a partner of an Underwriter or (ii) by will or the laws of descent and distribution. The holders of the Representative's Warrants will have, in that capacity, no voting, dividend or other shareholder rights. Any profits realized by the
Representative on the sale of the Common Stock issuable on exercise of the Representatives' Warrants may be deemed to be additional underwriting compensation.
The shares of Common Stock underlying the Representative's Warrants are being registered on the Registration Statement of which this Prospectus is a part. The Company has agreed to maintain an effective registration statement with respect to such shares to permit their resale at all times during the period in which the Representative's Warrants are exercisable. The sale of the shares issuable upon exercise of the Representative's Warrants could dilute the interests of the other holders of Common Stock and the existence of the Representative's Warrants may make the raising of additional capital by the Company more difficult. At any time at which exercise of the Representative's Warrants might be expected, it is likely that the Company could raise additional capital on terms more favorable than the terms of the Representative's Warrants.
All officers, directors and 5% stockholders of the Company have agreed not to sell any Common Stock of the Company owned by such person, pursuant to Rule 144 under the Securities Act or otherwise, and the Company has agreed not to sell any Common Stock (other than shares issuable upon the exercise of options under the 1993 plan), without the prior written consent of the Representative, for a period of 90 days after the date of this Prospectus.
In addition, the Company and the Selling Stockholder have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute in certain events to any liabilities incurred by the Underwriters in connection with the sale of the Common Stock.
DETERMINATION OF OFFERING PRICE
Prior to this offering, there has been no public market for the Common Stock. Consequently, the public offering price of the shares has been determined by negotiation between the Company and the Underwriters. Factors considered in determining the public offering price of the Common Stock included the Company's net worth and earnings, the amount of dilution per share of Common Stock to the public investors, prospects for the industry in which the Company operates, the present state of the Company's activities and the general condition of the securities markets at the time of the offering.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed upon for the Company by Wells, Moore, Simmons & Neeld, PLLC, Jackson, Mississippi. Freedman, Levy, Kroll & Simonds, Washington, D.C, have acted as special counsel to the Company with respect to legal matters under the federal securities laws. Certain legal matters in connection with this offering will be passed upon for the Underwriters by Morse, Zelnick, Rose & Lander, LLP, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of June 3, 1995 and June 1, 1996, and for each of the three years in the period ended June 1, 1996, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein and are included in reliance upon such report, given on the authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the "Commission"), Washington, D.C., a Registration Statement on Form S-1 under the Securities Act with respect to the shares of Common Stock being offered by this Prospectus. This Prospectus does not contain all of the information set forth in the Registration Statement, certain portions of which are omitted in accordance with the rules and regulations of the Commission. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and each such statement is qualified in all respects by such reference and the exhibits and schedules thereto.
The Company is subject to the information and reporting requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files reports and other information with the Commission. The Registration Statement, the exhibits and schedules forming a part thereof and the reports and other information filed by the Company with the Commission in accordance with the Exchange Act can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for inspection and copying at the following regional offices of the Commission: 75 Park Place, 14th Floor, New York, New York 10007; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
INDEX TO FINANCIAL STATEMENTS
PAGE
----
CONSOLIDATED FINANCIAL STATEMENTS OF CAL-MAINE FOODS, INC.:
Report of Independent Auditors...................................................... F-2
Consolidated balance sheets as of June 3, 1995, June 1, 1996 and August 31, 1996
(unaudited)...................................................................... F-3
Consolidated statements of operations for the fiscal years ended May 28, 1994, June
3, 1995 and June 1, 1996 and the 13 weeks ended September 2, 1995 (unaudited) and
August 31, 1996 (unaudited)...................................................... F-4
Consolidated statements of changes in stockholders' equity for the fiscal years
ended May 28, 1994, June 3, 1995 and June 1, 1996 (unaudited) and the 13 weeks
ended August 31, 1996 (unaudited)................................................ F-5
Consolidated statements of cash flows for the fiscal years ended May 28, 1994, June
3, 1995 and June 1, 1996 and the 13 weeks ended September 2, 1995 (unaudited) and
August 31, 1996 (unaudited)...................................................... F-6
Notes to consolidated financial statements.......................................... F-7
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REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS
CAL-MAINE FOODS, INC.
We have audited the accompanying consolidated balance sheets of Cal-Maine Foods, Inc. and subsidiaries as of June 3, 1995 and June 1, 1996, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended June 1, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cal-Maine Foods, Inc. and subsidiaries at June 3, 1995 and June 1, 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 1, 1996, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Jackson, Mississippi
July 22, 1996, except for Note 12, as to
which the date is October 3, 1996
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 3, JUNE 1, AUGUST 31,
1995 1996 1996
-------- -------- -----------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents.................................................... $ 3,050 $ 3,959 $ 4,688
Receivables:
Trade receivables, less allowance for doubtful accounts of $34 at June 3,
1995 and $31 and $109 (unaudited) at June 1 and August 31, 1996 (Note
7)..................................................................... 10,173 13,387 13,550
Other.................................................................... 590 160 171
-------- -------- ---------
10,763 13,547 13,721
Recoverable federal and state income taxes................................... 1,462 460 460
Inventories (Notes 4 and 7).................................................. 38,370 40,969 40,684
Prepaid expenses and other current assets.................................... 1,112 1,513 1,892
-------- -------- ---------
Total current assets............................................................. 54,757 60,448 61,445
Other assets:
Notes receivable and investments............................................. 4,338 5,318 5,373
Other........................................................................ 937 529 503
-------- -------- ---------
5,275 5,847 5,876
Property, plant and equipment, less accumulated depreciation (Notes 5 and 7)..... 85,713 82,426 81,841
Leased property under capital leases, less accumulated amortization (Note 6)..... 1,657 1,270 1,189
-------- -------- ---------
Total assets..................................................................... $147,402 $149,991 $ 150,351
======== ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks....................................................... $ 15,500 $ -- $ --
Trade accounts payable....................................................... 11,643 13,780 13,792
Accrued wages and benefits................................................... 3,398 4,077 3,004
Accrued expenses and other liabilities....................................... 1,325 2,237 2,689
Current maturities of:
Long-term debt........................................................... 3,888 3,807 4,075
Capitalized lease obligations............................................ 281 450 301
-------- -------- ---------
4,169 4,257 4,376
-------- -------- ---------
Current liabilities, exclusive of deferred income taxes.......................... 36,035 24,351 23,861
Deferred income taxes............................................................ 8,630 9,355 9,355
-------- -------- ---------
Total current liabilities........................................................ 44,665 33,706 33,216
Long-term debt, less current maturities (Note 7)................................. 58,645 58,214 57,460
Capitalized lease obligations, less current maturities (Note 6).................. 1,397 955 1,030
Deferred expenses (Note 8)....................................................... 1,503 1,561 2,014
Deferred income taxes (Note 9)................................................... 3,720 7,655 7,655
-------- -------- ---------
Total liabilities................................................................ 109,930 102,091 101,375
Commitments and contingencies (Note 10)
Stockholders' equity (Note 12):
Common stock, $1 par value at June 3, 1995 and June 1, 1996 and $0.01 par
value (unaudited) at August 31, 1996 (Note 8):
Authorized shares -- 15,000 at June 3, 1995 and June 1, 1996 and
30,000,000 (unaudited) at August 31, 1996..............................
Issued and outstanding shares -- 14,196 at June 3, 1995 and June 1, 1996
and 15,835,200 (unaudited) at August 31, 1996.......................... 14 14 158
Class A Common stock, $1 par value at June 3, 1995 and June 1, 1996 and $0.01
par value (unaudited) at August 31, 1996 (Note 8):
Authorized shares -- None at June 3, 1995 and June 1, 1996 and 1,200,000
(unaudited) at August 31, 1996.........................................
Issued and outstanding shares -- None at June 3, 1995 and June 1, 1996
and 1,200,000 (unaudited) at August 31, 1996........................... -- -- 12
Paid-in capital.............................................................. 8,386 8,385 8,229
Retained earnings............................................................ 36,133 47,058 48,155
Common stock in treasury (4,483 shares at June 3, 1995, 4,602 shares at June
1, 1996 and 5,528,400 (unaudited) shares at August 31, 1996)............... (5,367) (5,863) (5,884)
Note receivable -- stockholder............................................... (1,694) (1,694) (1,694)
-------- -------- ---------
Total stockholders' equity....................................................... 37,472 47,900 48,976
-------- -------- ---------
Total liabilities and stockholders' equity....................................... $147,402 $149,991 $ 150,351
======== ======== =========
|
See accompanying notes.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
FISCAL YEAR ENDED 13 WEEKS ENDED
-------------------------------- --------------------
MAY 28, JUNE 3, JUNE 1, SEPT. 2, AUG. 31,
1994 1995 1996 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
Net sales................................... $254,713 $242,649 $282,844 $ 56,219 $ 65,563
Cost of sales............................... 225,227 223,965 230,850 51,385 55,712
-------- -------- -------- -------- --------
Gross profit................................ 29,486 18,684 51,994 4,834 9,851
Selling, general and administrative......... 26,094 27,934 29,653 6,569 7,140
-------- -------- -------- -------- --------
Operating income (loss)..................... 3,392 (9,250) 22,341 (1,735) 2,711
Other income (expense):
Interest expense (Note 7).............. (4,318) (5,052) (5,487) (1,457) (1,116)
Equity in income of affiliate (Note
3)................................... 283 24 721 29 64
Other.................................. 1,238 993 (190) 562 135
-------- -------- -------- -------- --------
(2,797) (4,035) (4,956) (866) (917)
-------- -------- -------- -------- --------
Income (loss) before income taxes........... 595 (13,285) 17,385 (2,601) 1,794
Income tax expense (benefit) (Note 9)....... 371 (4,600) 6,460 (966) 697
-------- -------- -------- -------- --------
Net income (loss)........................... $ 224 $ (8,685) $ 10,925 $ (1,635) $ 1,097
======== ======== ======== ======= =======
Net income (loss) per common share.......... $ .02 $ (.74) $ .94 $ (.14) $ .10
======== ======== ======== ======= =======
|
See accompanying notes.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
CLASS
A COMMON NOTE
COMMON COMMON PAID-IN RETAINED STOCK IN RECEIVABLE --
STOCK STOCK CAPITAL EARNINGS TREASURY STOCKHOLDER TOTAL
------ ------ ------- -------- -------- ----------- -------
Balance at May 29, 1993........... $ 14 $-- $8,387 $44,594 $ (4,914) $(1,694) $46,387
Purchases of common stock for
treasury...................... -- -- -- -- (122) -- (122)
Net income for 1994............. -- -- -- 224 -- -- 224
----- --- ------ ------- -------- ------- -------
Balance at May 28, 1994........... 14 -- 8,387 44,818 (5,036) (1,694) 46,489
Redemption of fractional shares
of common stock............... -- -- (1) -- -- -- (1)
Purchases of common stock for
treasury...................... -- -- -- -- (331) -- (331)
Net loss for 1995............... -- -- -- (8,685) -- -- (8,685)
----- --- ------ ------- -------- ------- -------
Balance at June 3, 1995........... 14 -- 8,386 36,133 (5,367) (1,694) 37,472
Redemption of fractional shares
of common stock............... -- -- (1) -- -- -- (1)
Purchases of common stock for
treasury...................... -- -- -- -- (496) -- (496)
Net income for 1996............. -- -- -- 10,925 -- -- 10,925
----- --- ------ ------- -------- ------- -------
Balance at June 1, 1996........... 14 -- 8,385 47,058 (5,863) (1,694) 47,900
Exchange of common stock for
Class A common stock
(unaudited)................... (1) 1 -- -- -- -- --
Stock split..................... 145 11 (156) -- -- -- --
Purchase of common stock for
treasury (unaudited).......... -- -- -- -- (21) -- (21)
Net income for the 13 weeks
ended August 31, 1996
(unaudited)................... -- -- -- 1,097 -- -- 1,097
----- --- ------ ------- -------- ------- -------
Balance at August 31, 1996
(unaudited)..................... $158 $12 $8,229 $48,155 $ (5,884) $(1,694) $48,976
===== === ====== ======= ======== ======= =======
|
See accompanying notes.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FISCAL YEAR ENDED 13 WEEKS ENDED
-------------------------------- --------------------
MAY 28, JUNE 3, JUNE 1, SEPT. 2, AUG. 31,
1994 1995 1996 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).................................... $ 224 $ (8,685) $ 10,925 $ (1,635) $ 1,097
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization.................... 9,148 9,894 10,444 2,577 2,559
Provision for doubtful accounts.................. 21 4 41 -- 78
Provision for deferred income taxes.............. 2,210 (3,210) 4,660 -- --
Equity in income of affiliate.................... (283) (24) (721) (29) (64)
(Gain) loss on sales of property, plant and
equipment...................................... 145 (873) 956 (181) (47)
Increase in deferred compensation................ 60 60 60 15 15
Change in operating assets and liabilities, net of
effects from purchases of shell egg production and
processing businesses in 1994 and 1995:
(Increase) decrease in receivables and other
assets......................................... (3,694) 2,388 (2,220) (1,562) (605)
(Increase) decrease in inventories............... (976) 2,205 (2,599) (1,316) 285
Increase (decrease) in accounts payable, accrued
expenses and deferred expenses................. 823 (2,033) 3,728 (1,117) (171)
-------- -------- -------- -------- --------
Net cash provided by (used in) operating
activities......................................... 7,678 (274) 25,274 (3,248) 3,147
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment........... (15,563) (15,944) (8,768) (2,427) (2,112)
Purchases of shell egg production and processing
businesses......................................... (12,194) (2,883) -- -- --
Payments received on notes receivable and from
investments........................................ 606 136 513 8 9
Increase in note receivable and investments.......... (10) (40) (13) -- --
Net proceeds from sales of property, plant and
equipment.......................................... 959 1,292 687 246 266
-------- -------- -------- -------- --------
Net cash used in investing activities................ (26,202) (17,439) (7,581) (2,173) (1,837)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under line of credit....... -- 15,500 (15,500) 8,000 --
Long-term borrowings................................. 17,745 6,000 5,050 -- 1,000
Principal payments on long-term debt and capital
leases............................................. (4,586) (5,432) (5,835) (1,301) (1,560)
Purchases of common stock for treasury............... (121) (332) (497) (60) (21)
Redemption of fractional shares of common stock...... -- (1) (2) -- --
-------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities......................................... 13,038 15,735 (16,784) 6,639 (581)
-------- -------- -------- -------- --------
Increase (decrease) in cash and cash equivalents..... (5,486) (1,978) 909 1,218 729
Cash and cash equivalents at beginning of period..... 10,514 5,028 3,050 3,050 3,959
-------- -------- -------- -------- --------
Cash and cash equivalents at end of period........... $ 5,028 $ 3,050 $ 3,959 $ 4,268 $ 4,688
======== ======== ======== ======== ========
Non-cash investing and financing activities:
Notes received from sales of properties.......... $ -- $ 330 $ 664 $ -- $ --
======== ======== ======== ======== ========
Capital lease obligations for equipment.......... $ 914 $ 676 $ -- $ -- $ --
======== ======== ======== ======== ========
|
See accompanying notes.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 1, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Cal-Maine Foods, Inc. and its subsidiaries ("the Company") all of which are wholly-owned. All significant intercompany transactions and accounts have been eliminated in consolidation.
Business
The Company is engaged in the production, processing and distribution of shell eggs and egg products and livestock operations. The Company's operations are significantly affected by market price fluctuation of its principal products sold, shell eggs, and the costs of its principal ingredients, corn and other grains. In fiscal year 1996, corn prices were historically high, which adversely affected cost of goods sold. Management anticipates that corn prices may remain abnormally high in fiscal year 1997, at least through the harvesting of the 1996 crops, which will have an adverse effect on the fiscal 1997 cost of goods sold.
Primarily all of the Company's sales are to wholesale egg and egg products buyers in the southwestern, southeastern, midwestern and mid-Atlantic regions of the United States. Credit is extended based upon an evaluation of each customer's financial condition and credit history and generally collateral is not required. Credit losses have consistently been within management's expectations.
Use of Estimates
The preparation of the consolidated financial statements in conformity with general accepted accounting principles requires management to make estimates and assumptions that affect the amount reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Inventories
Inventories of eggs, feed, supplies and livestock are valued principally at the lower of cost (first-in, first-out method) or market.
The cost associated with flocks are accumulated during a growing period of approximately 18 weeks and amortized over the productive lives of the flocks.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is provided by the straight-line method over the estimated useful lives.
Income Taxes
Income taxes have been provided using the liability method in accordance with FASB Statement No. 109, "Accounting for Income Taxes". Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Stock Based Compensation
The Company grants stock options for a fixed number of shares to employees with an exercise price equal to or above the fair value of the shares at the date of the grant. The Company accounts for stock option grants in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees," and, accordingly, recognizes no compensation expense for the stock option grants.
Net Income Per Common Share
Net income per common share is based upon the weighted average number of common shares outstanding of 11,760,000, 11,700,000, 11,584,000, 11,647,000 (unaudited) and 11,509,000 (unaudited) during fiscal 1994, 1995, 1996, and for the 13 weeks ended August 31, 1995 and 1996, respectively (see Note 12).
Impact of Recently Issued Accounting Standards
In March 1995, the FASB issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed" which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Statement 121 also addresses the accounting for long-lived assets that are expected to be disposed. The Company adopted Statement 121 in fiscal 1997, the effect of which was not material (unaudited) to the Company's financial position or operations.
Fiscal Year
The Company's fiscal year-end is on the Saturday nearest May 31 which was May 28, 1994, June 3, 1995 and June 1, 1996 for the most recent three years.
Reclassifications
Certain reclassifications have been made to the fiscal 1994 and fiscal 1995 consolidated financial statements to conform to the fiscal 1996 presentation.
2. ACQUISITION
In June 1994, the Company purchased, for $2,883, certain inventories, land and equipment of a shell egg production and processing business and accounted for the transaction as a purchase. In connection with the purchase, the Company leased substantially all facilities and certain equipment of the business under an operating lease with monthly rentals of $79 through May 1998. The Company may renew the lease for three years with monthly rentals of $79 through May 2001. The Company has the option to purchase the facilities and equipment for approximately $3,820 after fiscal 1999 or $1,750 after fiscal 2002.
In July 1993, the Company acquired certain operating assets of a shell egg production and processing business for $12,194. The transaction was accounted for as a purchase.
The operating results of these assets acquired are included in the consolidated statements of operations of the Company for the periods subsequent to the acquisition dates. Prior operations of these assets acquired are immaterial to the Company's net sales, net income (loss) and net income (loss) per common share for the fiscal years ended May 28, 1994 and June 3, 1995.
3. INVESTMENT IN AFFILIATE
The Company is a fifty percent owner of BCM Egg Company ("BCM"), a partnership. Equity in earnings of $283, $24, $721, $29 (unaudited) and $64 (unaudited) from BCM have been included in the consolidated statements of operations in fiscal 1994, 1995, 1996 and the 13 weeks ended August 31, 1995 and
3. INVESTMENT IN AFFILIATE -- (CONTINUED) 1996, respectively. The Company purchased approximately $8,046, $7,492, $9,929, $1,980 (unaudited) and $2,745 (unaudited) of eggs from BCM during each of those periods, which represented a significant percentage of BCM's sales.
4. INVENTORIES
Inventories consisted of the following:
JUNE 3, JUNE 1, AUGUST 31,
1995 1996 1996
------- ------- -----------
(UNAUDITED)
Flocks................................................. $22,154 $23,501 $24,748
Eggs and egg products.................................. 3,953 3,127 4,150
Feed and supplies...................................... 7,932 10,424 7,888
Livestock.............................................. 4,331 3,917 3,898
------- ------- -------
$38,370 $40,969 $40,684
======= ======= =======
|
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
JUNE 3, JUNE 1, AUGUST 31,
1995 1996 1996
-------- -------- -----------
(UNAUDITED)
Land and improvements................................ $ 17,789 $ 18,854 $ 19,496
Buildings and improvements........................... 47,511 48,830 49,048
Machinery and equipment.............................. 66,993 68,836 70,318
Construction-in-progress............................. 7,850 3,617 2,896
-------- -------- ---------
140,143 140,137 141,758
Less accumulated depreciation and amortization....... 54,430 57,711 59,917
-------- -------- ---------
$ 85,713 $ 82,426 $ 81,841
======== ======== =========
|
6. LEASES
Leased property under capital leases consisted of the following:
JUNE 3, JUNE 1, AUGUST 31,
1995 1996 1996
------- ------- -----------
(UNAUDITED)
Machinery and equipment.................................. $ 2,100 $ 2,100 $ 2,100
Less accumulated amortization............................ 443 830 911
------- ------- -------
$ 1,657 $ 1,270 $ 1,189
======= ======= =======
|
6. LEASES -- (CONTINUED) Future minimum payments under capital leases and noncancelable operating leases that have initial or remaining noncancelable terms in excess of one year at June 1, 1996 are as follows:
CAPITAL OPERATING
LEASES LEASES
------ ---------
1997............................................................... $ 534 $ 2,786
1998............................................................... 303 2,574
1999............................................................... 303 1,428
2000............................................................... 322 1,008
2001............................................................... 152 584
Thereafter......................................................... -- 362
------ -------
Total minimum lease payments.................................. 1,614 $ 8,742
=======
Less amount representing interest (rates from 7.25% to 9.0%)....... 209
------
Present value of minimum lease payments............................ 1,405
Less amounts due within one year................................... 450
------
Amounts due after one year......................................... $ 955
======
|
Substantially all of the leases provide that the Company pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased assets. The Company has guaranteed under certain operating leases the residual value of transportation equipment at the expiration of the leases. Rent expense was $2,443, $3,726, $3,901, $933 (unaudited) and $1,000 (unaudited) in fiscal 1994, 1995, 1996 and for the 13 weeks ended August 31, 1995 and 1996, respectively. Included in rent expense are vehicle rents totaling $1,407, $1,726, $1,718, $427 (unaudited) and $451 (unaudited) in fiscal 1994, 1995, 1996 and for the 13 weeks ended August 31, 1995 and 1996, respectively.
7. CREDIT FACILITIES AND LONG-TERM DEBT
Long-term debt consisted of the following:
JUNE 3, JUNE 1, AUGUST 31,
1995 1996 1996
------- ------- -----------
(UNAUDITED)
Note payable at 6.62%; due in monthly installments of $130,
plus interest, maturing in 2000.............................. $17,450 $15,890 $15,245
Note payable at 7.64%; due in monthly installments of $114,
including interest, maturing in 2003......................... 11,562 11,053 10,919
Note payable at federal funds rate plus 1.65%; due in quarterly
installments of $298, plus interest, maturing in 2000........ 11,273 10,079 9,780
Note payable, 9.625%; due in monthly installments of $60, plus
interest, maturing in 2001................................... 8,205 7,485 7,320
Note payable at 7.75%; due in monthly installment of $55, plus
interest, maturing in 2003................................... 4,265 8,655 8,490
Note payable, federal funds rate plus 1.5%; due in quarterly
installments of $36, plus interest, maturing in 2000......... 786 643 607
Note payable at 8.69%; due in monthly installments of $8,
including interest, maturing in 2001......................... 451 392 377
Note payable at 6.61%; due in monthly installments of $7,
including interest, maturing in 2000......................... 400 335 319
Note payable at 4%; due in monthly installments of $4,
including interest, maturing in 1999......................... 191 149 138
Industrial revenue bonds....................................... 7,950 7,340 8,340
------- ------- -------
62,533 62,021 61,535
Less current maturities........................................ 3,888 3,807 4,075
------- ------- -------
$58,645 $58,214 $57,460
======= ======= =======
|
The industrial revenue bonds with principal balances of $5,040, $2,300 and $1,000 at August 31, 1996 are due November 1, 2005, May 1, 2006 and April 1, 2011, respectively, with interest due monthly at variable rates (6.15% at June 3, 1995 and 5.60% at June 1, 1996). The bonds have been issued by local county authorities and, under their terms, are redeemable at the option of the Company on a monthly basis subject to certain mandatory redemption requirements. The bonds are collateralized by letters of credit of approximately $7,500.
The aggregate annual maturities of long-term debt at June 1, 1996 are as follows:
1997....................................................... $ 3,807
1998....................................................... 4,979
1999....................................................... 5,393
2000....................................................... 15,129
2001....................................................... 14,590
Thereafter................................................. 18,123
-------
$62,021
=======
|
The Company has a $35,000 line of credit with three banks, of which all was unused at June 1, 1996. The line of credit is limited in availability based upon the levels of accounts receivable and inventories. Borrowings under the line of credit bear interest at 1.5% above the federal funds rate or LIBOR, at the Company's option. Facilities fees of .25% per annum are payable quarterly on the unused portion of the line.
Substantially all trade receivables and inventories collateralize the line of credit and property, plant and equipment collateralize the long-term debt. The Company is required, by certain provisions of the loan
7. CREDIT FACILITIES AND LONG-TERM DEBT -- (CONTINUED) agreements, to maintain minimum levels of working capital and net worth; to limit dividends, capital expenditures and additional long-term borrowings; and to maintain various current and debt-to-equity ratios. Additionally, the chief executive officer of the Company, or his family, must maintain ownership of not less than 50% of the outstanding voting power represented by the capital stock of the Company. The Company was in compliance with these provisions as of June 1, 1996.
Interest of $3,780, $5,594, $5,910, $1,557 (unaudited) and $1,161 (unaudited) was paid during fiscal 1994, 1995, 1996 and for the 13 weeks ended August 31, 1995 and 1996, respectively. Interest of $208, $438, $305, $100 (unaudited) and $45 (unaudited) was capitalized for construction of certain facilities during fiscal 1994, 1995, 1996 and for the 13 weeks ended August 31, 1995 and 1996, respectively.
8. EMPLOYEE BENEFIT PLANS
The Company has a self-insured medical plan covering substantially all full-time employees. The plan contains certain stop-loss provisions for losses greater than specified amounts, which are covered by insurance carriers. The Company's contributions under the plan were approximately $1,700, $2,100, $3,130, $587 (unaudited) and $776 (unaudited) in fiscal 1994, 1995, 1996 and the 13 weeks ended August 31, 1995 and 1996, respectively.
The Company has a 401(k) plan which covers substantially all employees. Participants in the Plan may contribute up to the maximum allowed by Internal Revenue Service regulations.
The Company has an employee stock ownership plan (ESOP) that covers substantially all employees. The Company's contributions are determined by the Board of Directors and may be made in cash or common stock. The contributions vest 20% annually beginning with the participant's third year of service. The Company's contributions to the plan were approximately $911, $808, $992, $268 (unaudited) and $295 (unaudited) in fiscal 1994, 1995, 1996 and the 13 weeks ended August 31, 1995 and 1996, respectively.
The Company has deferred compensation agreements with certain officers for
payments to be made over specified periods beginning when the officers reach age
65. Amounts expensed for these agreements totaled $60 in fiscal 1994, 1995,
1996, respectively, and $15 (unaudited) for the 13 weeks ended August 31, 1995
and 1996, respectively.
The Company has reserved 800,000 shares under its 1993 Stock Option Plan. In August 1993, options to purchase 504,000 shares of common stock were granted to certain officers of the Company at $3.42 per share which was the estimated fair value of the common stock at the date of grant. The options vest annually over five years after one year from the grant date. Total options exercisable at June 1, 1996 and August 31, 1996 were 201,600 shares and 302,400 shares (unaudited), respectively.
9. INCOME TAXES
Income tax expense (benefit) consisted of the following:
FISCAL YEAR ENDED
-----------------------------
MAY 28, JUNE 3, JUNE 1,
1994 1995 1996
------- ------- -------
Current:
Federal...................................... $(1,839) $(1,390) $ 1,700
State........................................ -- -- 100
------- ------- -------
(1,839) (1,390) 1,800
Deferred:
Federal...................................... 2,170 (2,810) 4,020
State........................................ 40 (400) 640
------- ------- -------
2,210 (3,210) 4,660
------- ------- -------
$ 371 $(4,600) $ 6,460
======= ======= ======
|
Significant components of the Company's deferred tax liabilities were as follows:
JUNE 3, JUNE 1,
1995 1996
------- -------
Current deferred tax liabilities:
Inventories.................................................. $ 8,460 $ 9,330
Prepaid expenses............................................. 245 235
Accrued expenses............................................. -- (200)
Other........................................................ (75) (10)
------- -------
Total current deferred tax liabilities............................ 8,630 9,355
Long-term deferred tax liabilities:
Property, plant and equipment................................ 5,370 5,830
Investments.................................................. 235 385
Deferred compensation........................................ (295) (300)
State net operating loss carryforwards....................... (560) (255)
Alternative minimum tax credit carryforwards................. -- (1,105)
Federal net operating loss carryforward...................... (4,130) --
Cash basis temporary differences............................. 3,100 3,100
------- -------
Total long-term deferred tax liabilities.......................... 3,720 7,655
------- -------
Total deferred tax liabilities.................................... $12,350 $17,010
======= =======
|
Effective May 29, 1988, the Company could no longer use cash basis accounting for its farming subsidiary because of tax law changes. The taxes on the cash basis temporary differences as of that date will not be payable under current tax laws provided there are no changes in ownership control and future annual revenues of the farming subsidiary exceed 1988 revenues. Management does not anticipate the payment of such taxes related to these cash basis timing differences during 1997.
9. INCOME TAXES -- (CONTINUED) The differences between income tax expense at the Company's effective income tax rate and income tax expense (benefit) at the statutory federal income tax rate were as follows:
FISCAL YEAR ENDED 13 WEEKS ENDED
----------------------------- --------------------------
MAY 28, JUNE 3, JUNE 1, SEPTEMBER 2, AUGUST 31,
1994 1995 1996 1995 1996
------- ------- ------- ------------ ----------
(UNAUDITED)
Statutory federal income tax (benefit).............. $ 202 $(4,517) $5,911 $ (884) $ 610
State income taxes, net (benefit)................... 26 (268) 488 (73) 50
Other, net.......................................... 143 185 61 (9) 37
----- ------- ------ ------ ------
$ 371 $(4,600) $6,460 $ (966) $ 697
===== ======= ====== ====== ======
|
Federal and state income taxes of $2,370, $294, $1,985 and $257 (unaudited) were paid in fiscal 1994, 1995 and 1996, and the 13 weeks ended August 31, 1996, respectively. Federal and state income taxes of $51, $3,267, $1,500 and $27 (unaudited) were refunded in fiscal 1994, 1995 and 1996, and the 13 weeks ended August 31, 1996, respectively.
10. COMMITMENTS AND CONTINGENCIES
The Company has begun construction on operating facilities with an estimated total cost of $16,000 of which $2,200 (unaudited) was expended as of August 31, 1996. The cost to complete the facilities will be primarily funded by future advances from industrial revenue bonds totaling $13,500 of which $1,000 (unaudited) was advanced as of August 31, 1996. Principal payments of $90 plus interest are due monthly beginning November 1, 1998 through April 2011. Interest is payable monthly at a fixed rate based upon the average-life US Treasury rate plus 2% at the date funds are received.
The Company is the defendant in certain legal actions. It is the opinion of management, based on advise of legal counsel, that the outcome of these actions will not have a material adverse effect on the Company's financial position.
11. FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheet for cash and cash equivalents, notes receivable and investments, long-term debt and capitalized leases approximate their carrying value. The fair values for notes receivables, long-term debt and capitalized leases are estimated using discounted cash flow analysis, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements.
12. SUBSEQUENT EVENTS
The Company intends to file a registration statement with the Securities and Exchange Commission covering 1,700,000 shares of common stock to be sold by the Company in an underwritten public offering. Effective July 29, 1996, the Board of Directors adopted and the shareholders approved an amendment to the Company's certificate of incorporation that authorized 14,000 shares of Class A common stock and 1,000 shares of Class B common stock, both with $1.00 par value. Effective September 24, 1996, the Board of Directors adopted and the shareholders approved an amendment to the Company's certificate of incorporation to reclassify both classes of common stock and increase the authorized shares to 30,000,000 shares of common stock and 1,200,000 shares of Class A common, each class with a par value of $.01 per share. Effective October 3, 1996, the Company completed a 1200-for-1 stock split of its common stock and Class A common stock. The unaudited August 31, 1996 stockholders' equity balances have been restated and the net income (loss) per common share have been restated for each period presented to reflect these transactions.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF, OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
TABLE OF CONTENTS
PAGE
----
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 9
Dividend Policy....................... 10
Capitalization........................ 11
Dilution.............................. 12
Selected Historical Consolidated
Financial Information............... 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 14
Business.............................. 19
Management............................ 27
Certain Transactions.................. 31
Principal and Selling Stockholders.... 33
Description of Capital Stock.......... 34
Shares Eligible for Future Sale....... 35
Underwriting.......................... 36
Legal Matters......................... 37
Experts............................... 37
Additional Information................ 37
Index to Financial Statements......... F-1
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[CAL-MAINE FOODS LOGO]
CAL-MAINE FOODS, INC.
2,500,000 SHARES
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (TO BE COMPLETED BY AMENDMENT)
The following table sets forth the various expenses in connection with the sale and distribution of the securities being registered, other than the underwriting discounts and commissions. All amounts shown are estimates (rounded to the next dollar) except the Securities and Exchange Commission registration fee and the NASD filing fee.
SEC Registration Fee.............................................. $ 7,216
NASD Filing Fee................................................... 2,882
NASDAQ Listing Fee................................................ 47,517
Blue Sky Fees and Expenses........................................ 10,000
Representative's Expense Allowance*............................... 350,000
Transfer Agent and Registrar Fees................................. 2,000
Accounting Fees and Expenses...................................... 35,000
Legal Fees and Expenses........................................... 175,000
Printing and Engraving............................................ 60,000
Miscellaneous..................................................... 12,135
--------
Total................................................... $701,750
========
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Of the above expenses, approximately $585,132 will be paid by the Company and $116,618 by the Selling Stockholder.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant may indemnify its directors, officers and certain other persons to the full extent permitted by Section 145 of the Delaware General Corporation Law, as amended from time-to-time.
Section 10 of the Registrant's Amended and Restated Certificate of Incorporation provides as follows:
No director of the corporation shall have any personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, that this section shall not eliminate or limit the liability of a director (i) for any breach of a director's duty or loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. The limitation of liability shall not eliminate or limit the liability of any director for any act or omission occurring prior to the date upon which this provision becomes effective.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT NO. TITLE
- ----------- ---------------------------------------------------------------------------------
1 Form of Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
|
II-1
EXHIBIT NO. TITLE
- ----------- ---------------------------------------------------------------------------------
3.2 By-Laws of the Registrant, as amended.
4.1 Specimen certificate for shares of Common Stock, par value $0.01 per share, of
the Registrant.
4.2 Form of Warrant Agreement (including form of Common Stock Purchase Warrant).
5 Opinion of Wells, Moore, Simmons & Neeld.
10.1 Amended and Restated Term Loan Agreement, dated as of May 29, 1990, between Cal-
Maine Foods, Inc. and Cooperative Centrale Raiffeisen -- Boerenleenbank B.A.,
"Rabobank Nederland," New York Branch, and Amended and Restated Revolving Credit
Agreement among Cal-Maine Foods, Inc., and Barclays Bank PLC (New York) and
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., dated as of 29 May 1990,
and amendments thereto (without exhibits).
10.2 Note Purchase Agreement, dated as of November 10, 1993, between John Hancock
Mutual Life Insurance Company and Cal-Maine Foods, Inc., and amendments thereto
(without exhibits).
10.3 Loan Agreement, dated as of May 1, 1991, between Metropolitan Life Insurance
Corporation and Cal-Maine Foods, Inc., and amendments thereto (without exhibits).
10.4 Employee Stock Ownership Plan, as Amended and Restated.
10.5 1993 Stock Option Plan, as Amended.
10.6 Wage Continuation Plan, dated as of July 1, 1986, among R.K. Looper, B.J. Raines
and the Registrant.
10.7 Wage Continuation Plan, dated as of July 1, 1986, between Jack Self and the
Registrant, as amended on September 2, 1994.
10.8 Wage Continuation Plan, dated as of April 15, 1988, between Joe Wyatt and the
Registrant.
10.9 Redemption Agreement, dated March 7, 1994, between the Registrant and Fred R.
Adams, Jr.
11 Statement re computation of earnings per share.
21 Subsidiaries of the Registrant.
24.1 Consent of Wells, Moore, Simmons & Neeld (included in Exhibit 5).
24.2 Consent of Freedman, Levy, Kroll & Simonds.
24.3 Consent of Ernst & Young LLP.
24.4 Powers of Attorney (included in page II-4).
27 Financial Data Schedule.
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(b) Schedules
Schedule II -- Valuation and Qualifying Accounts.
(The schedules omitted are not required.)
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes, with respect to shares of its Common Stock issuable upon exercise of the Representative's Warrants:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;
II-2
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering of such shares of Common Stock, by the Representative or its designees.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under "Item
14 -- Indemnification of Directors and Officers" above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned Registrant hereby undertakes to provide to the Underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(i) or (4) or 497(h) under the Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Jackson, Mississippi on this 21st day of October, 1996.
CAL-MAINE FOODS, INC.
/s/ FRED R. ADAMS, JR.
--------------------------------------
FRED R. ADAMS, JR.
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
|
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Cal-Maine Foods, Inc. (the "Company"), hereby severally constitute and appoint Fred R. Adams, Jr., Richard K. Looper and Bobby J. Raines, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Registration Statement on Form S-1 filed herewith and any and all pre-effective and post-effective amendments to said Registration Statement, and generally to do all such things in our names and on our behalf in our capacities as officers and directors to enable the Company to comply with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Registration Statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
/s/ FRED R. ADAMS, JR. Chairman of the Board and October 21, 1996
- ------------------------------------------ Chief Executive Officer
FRED R. ADAMS, JR. (Principal Executive Officer)
/s/ BOBBY J. RAINES Vice President, Chief Financial October 21, 1996
- ------------------------------------------ Officer, Treasurer, Secretary
BOBBY J. RAINES and Director
(Principal Financial Officer)
/s/ CHARLES F. COLLINS Vice President, Controller October 21, 1996
- ------------------------------------------ and Director
CHARLES F. COLLINS (Principal Accounting Officer)
/s/ RICHARD K. LOOPER Director October 21, 1996
- ------------------------------------------
RICHARD K. LOOPER
/s/ ADOLPHUS B. BAKER Director October 21, 1996
- ------------------------------------------
ADOLPHUS B. BAKER
/s/ JACK B. SELF Director October 21, 1996
- ------------------------------------------
JACK B. SELF
/s/ JOE M. WYATT Director October 21, 1996
- ------------------------------------------
JOE M. WYATT
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II-4
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------- -----------------
/s/ W.D. COX Director October 22, 1996
- ------------------------------------------
W.D. COX
/s/ R. FASER TRIPLETT Director October 21, 1996
- ------------------------------------------
R. FASER TRIPLETT
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II-5
CAL-MAINE FOODS, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MAY 28, 1994, JUNE 3, 1995, AND JUNE 1, 1996
(IN THOUSANDS)
BALANCE AT CHARGED TO WRITE-OFF BALANCE AT
BEGINNING OF COST AND OF END OF
DESCRIPTION PERIOD EXPENSE ACCOUNTS PERIOD
- --------------------------------------------------- ------------ ---------- --------- ------------
Year ended June 1, 1996:
Allowance for doubtful accounts............... $ 34 $ 41 $44 $ 31
==== ==== === ====
Year ended June 3, 1995:
Allowance for doubtful accounts............... $ 49 $ 4 $19 $ 34
==== ==== === ====
Year ended May 28, 1994:
Allowance for doubtful accounts............... $ 55 $ 21 $27 $ 49
==== ==== === ====
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EXHIBIT-1
2,875,000 Shares
of Common Stock of
CAL-MAINE FOODS, INC.
UNDERWRITING AGREEMENT
Paulson Investment Company, Inc.
As Representative of the
Several Underwriters
c/o Paulson Investment Company, Inc.
811 SW Front Avenue
Portland, Oregon 97204
Gentlemen:
Cal-Maine Foods, Inc., a Delaware corporation (the "Company"), proposes to sell to the several underwriters (the "Underwriters") named in Schedule I hereto for whom you are acting as the Representative (the "Representative") an aggregate of 1,700,000 shares of Common Stock, $0.01 par value per share, of the Company (the "Common Stock") and Fred R. Adams, Jr. (the "Selling Stockholder") proposes to sell to the Underwriter an aggregate of 800,000 shares of Common Stock . The respective amounts of shares to be so purchased from the Company by the several Underwriters (the "Firm Shares") are set forth opposite their names in Schedule I hereto. The Company also proposes to grant to the Representative an option to purchase up to 375,000 additional shares of its Common Stock (the "Option Shares") as set forth below.
As the Representative, you have advised the Company that (a) you are authorized to enter into this Agreement for yourself as Representative and on behalf of the several Underwriters, (b) the several Underwriters are willing, acting severally and not jointly, to purchase the numbers of Firm Shares set forth opposite their respective names in Schedule I.
The Firm Shares and the Option Shares (to the extent that the aforementioned option is exercised) are herein collectively called the "Shares"
In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING STOCKHOLDER.
(a) The Company represents and warrants to each of the Underwriters as follows:
(i) A registration statement on Form S-1 (File No. 333-________) with respect to the Shares has been prepared by the Company in conformity with the requirements of the Securities Act of 1933, as amended (the "Act"), and the Rules and Regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder and has been filed with the Commission. Copies of such registration statement, including any amendments thereto, the preliminary prospectuses (meeting the requirements of the Rules and Regulations) contained therein and the exhibits, financial statements and schedules, as finally amended and revised, have heretofore been delivered by the Company to you. Such registration statement, herein referred to as the "Registration Statement," which shall be deemed to include all information omitted therefrom in reliance upon Rule 430A and contained in the Prospectus referred to below, has become effective under the Act and no post-effective amendment to the Registration Statement has been filed as of the date of this Agreement. "Prospectus" means (a) the form of prospectus first filed with the Commission pursuant to Rule 424(b), or (b) the last preliminary prospectus included in the Registration Statement filed prior to the time it becomes effective or filed pursuant to Rule 424(a) under the Act that is delivered by the Company to the Underwriters for delivery to purchasers of the Shares, together with the term sheet or abbreviated term sheet filed with the Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus included in the Registration Statement prior to the time it becomes effective is herein referred to as a "Preliminary Prospectus."
(ii) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement. Except as described in the Prospectus, the Company does not own any interest in any corporation or other business entity that has any material assets, liabilities or operations. The Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification.
(iii) The outstanding shares of Common Stock of the Company, including all Firm Shares to be sold by the Selling Stockholder, have been duly authorized and validly issued and are fully paid and non-assessable and have been issued and sold by the Company in compliance in all material respects with applicable Federal and state securities laws; the Firm Shares to be sold by the Company, the shares issuable upon exercise of the Representative's Warrants (as defined in Paragraph (f) of Section 2 hereof) and the Option Shares that may be sold by the Company have been duly authorized and when issued and paid for as contemplated herein will be validly issued, fully paid and non-assessable; and no preemptive rights of stockholders exist with respect to any of the Shares or the issue and sale thereof. Neither the filing of the Registration Statement, nor the offering or sale of the Shares as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any other shares of Common Stock under the Act.
(iv) The information set forth under the caption "Capitalization" in the Prospectus is true, correct and complete as to the matters customarily covered under such a caption. All of the Shares conform to the description thereof contained in the Registration Statement. The form of certificates for the Shares conforms to the corporate law of the State of Delaware. Except as disclosed in the Prospectus, there are no outstanding rights, options or warrants for the purchase of any securities of the Company, and the Company is not a party to any agreement pursuant to which any person has the right to purchase any securities of the Company. Effectively immediately following the Closing Date (hereinafter defined) there will be no person holding any anti-dilution rights with respect to the securities of the Company other than the holders of stock options under the Company's 1993 Stock Option Plan and the holder(s) of the Representative's Warrants.
(v) Except as disclosed in the Registration Statement, the Company has not (i) issued any capital stock or any options, warrants, convertible securities or other rights to purchase its capital stock, (ii) increased its long-term or short-term debt, or (iii) declared or paid any dividends on its capital stock.
(vi) The Commission has not issued an order preventing or suspending the use of any Prospectus relating to the proposed offering of the Shares nor instituted proceedings for that purpose. The Registration Statement contains, and the Prospectus and any amendments or supplements thereto will contain, all statements which are required to be stated therein by, and will conform to, the requirements of the Act and the Rules and Regulations. The Registration Statement and any amendments thereto do not contain, and will not contain, any untrue statement of a material fact and do not omit, and will not omit, to state any material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement or the Prospectus, or any such amendment or supplement, in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any Underwriter through the Representative, specifically for use in the preparation thereof.
(vii) The financial statements of the Company, together with related notes and schedules as set forth in the Registration Statement, present fairly the financial position and the results of operations and cash flows of the Company as of the indicated dates and for the indicated periods. Such financial statements and related schedules have been prepared in accordance with generally accepted accounting principles, consistently applied through the periods involved, except as disclosed therein, and all adjustments necessary for a fair presentation of results for such periods have been made. The summary financial and statistical data of the Company included in the Registration Statement present fairly the information shown therein and such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of the Company.
(viii) Ernst & Young LLP, who have certified certain of the financial statements filed with the Commission as part of the Registration Statement, are independent public accountants as required by the Act and the Rules and Regulations.
(ix) There is no action, suit, claim or proceeding pending or, to the knowledge of the Company, threatened against the Company before any court or administrative agency or otherwise which if determined adversely to the Company might result in any material adverse change in the earnings, business, management, properties assets, rights, operations, condition (financial or otherwise) or prospects of the Company or to prevent the consummation of the transactions contemplated hereby.
(x) The Company has good and marketable title to all of the properties and assets reflected in the financial statements (or as described in the Registration Statement), subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those reflected in such financial statements (or as described in the Registration Statement) or which are not material in amount. The Company occupies its leased properties under valid and binding leases conforming in all material respects to the description thereof set forth in the Registration Statement.
(xi) The Company has filed all Federal, state, local and foreign income tax returns which have been required to be filed and has paid all taxes indicated by said returns and all assessments received by it to the extent that such taxes have become due and are not being contested in good faith. All tax liabilities have been adequately provided for in the financial statements of the Company.
(xii) Since the respective dates as of which information is given in the Registration Statement, as it may be amended or supplemented, there has not been any material adverse change
or any development involving a prospective material adverse change in or affecting the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company, whether or not occurring in the ordinary course of business, and there has not been any material transaction entered into or any material transaction that is probable of being entered into by the Company, other than transactions in the ordinary course of business and changes and transactions described in the Registration Statement, as it may be amended or supplemented. The Company has no material contingent obligations which are not disclosed in the Company's financial statements included in the Registration Statement or elsewhere in the Prospectus which are included in the Registration Statement.
(xiii) The Company is not, nor, with the giving of notice or lapse of time or both, will not be, in violation of or in default under its Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation") or by-laws or under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound and which default is material in respect of the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party, or of the Certificate of Incorporation or by-laws of the Company or any order, rule or regulation applicable to the Company of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction.
(xiv) Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation of the transactions herein contemplated (except such additional steps as may be required by the Commission, the National Association of Securities Dealers, Inc. (the "NASD") or such additional steps as may be necessary to qualify the Shares for public offering by the Underwriters under state securities or Blue Sky laws) has been obtained or made and is in full force and effect.
(xv) The Company holds or has licensed all material patents, patent rights, trademarks, trade names, copyrights, trade secrets and licenses of any of the foregoing (collectively, the "Intellectual Property Rights"), that are necessary for the conduct of its business as conducted and as proposed to be conducted in accordance with the description contained in the Prospectus; there is no claim pending or, to the knowledge of the Company, threatened against it alleging any infringement of Intellectual Property Rights, nor does the Company know of any basis for any such claim. The Company knows of no material infringement by others of Intellectual Property Rights owned by or licensed to the Company.
(xvi) The Company holds all material licenses, certificates, permits, orders or other similar authorizations granted or issued by any governmental agency (collectively the "Government Permits") required to conduct its business. No proceeding to revoke, limit or otherwise materially change any Government Permit has been commenced or, to the Company's knowledge, is threatened against the Company
(xvii) The Company, to its knowledge, is in compliance with all laws, rules, regulations, orders of any court or administrative agency, operating licenses or other requirements imposed by any governmental body applicable to it, except as in the aggregate do not have and will not in the future have a material adverse effect upon the operations, business, properties or assets of the Company, including, to its knowledge and without limitation, all applicable laws, rules, regulations, licenses or other governmental standards relating to the production and sales of fresh shell eggs and dairy products, the manufacture and sale of egg products, the breeding, keeping, housing and disposal of chickens and cattle and any other business conducted or proposed to be conducted by the Company; and the conduct of the business of the Company, as described in the Prospectus, will not cause the Company to be in violation of any such requirements.
(xviii) Neither the Company nor, to the Company's knowledge, any of its affiliates, has taken or intends to take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Shares.
(xix) The Company is not an "investment company" within the meaning of such term under the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations of the Commission thereunder.
(xx) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management's general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(xxi) The Company carries, or is covered by, insurance in such amounts and covering such risks as is adequate for the conduct of its business and the value of its properties and as is customary for companies engaged in similar industries.
(xxii) The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company would have any liability; the Company has not incurred and does not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.
(xxiii) The Representative's Warrants have been duly authorized for issuance to the Representative and will, when issued, possess rights, privileges and characteristics as represented in the most recent form of Representative's Warrants filed as an exhibit to the Registration Statement; the securities to be issued upon exercise of the Representative's Warrants, when issued and delivered against payment therefor in accordance with the terms of the Representative's Warrants, will be duly and validly issued, fully paid, non-assessable and free of preemptive rights, and all corporate action required to be taken for the authorization and issuance of the Representative's Warrants, and the securities to be issued upon their exercise, have been validly and sufficiently taken.
(xxiv) The Company has caused each officer and director and each person who owns, beneficially or of record, 5% or more of the Common Stock outstanding immediately prior to this offering to furnish to the Representative, on or prior to the date of this Agreement, a letter or letters, in form and substance satisfactory to the Underwriters ("Lockup Agreements"), pursuant to which each such person shall agree: (A) not to offer to sell, sell, contract to sell, sell short or otherwise dispose of, any shares of Common Stock or other capital stock of the Company, or any other securities convertible, exchangeable or exercisable for shares or derivatives of Common Stock owned by such person, or request the registration for the offer or sale of any of the foregoing (or as to which such person has the right to direct the disposition of) for a period of ninety (90) days after the effective date of the Registration Statement, directly or indirectly, except with the prior written consent of the Representative; and (B) if such consent is provided, to give prior written notice to the Representative of any offers to sell, sales, contracts to sell, short sales or other dispositions by any such person of Common Stock pursuant to Rule 144 under the Act or any similar provisions enacted subsequent to the date of this Agreement, for a period of ninety (90) days after the effective date of the Registration Statement.
(xxv) The Company has not at any time during the last five years (A) made any unlawful contribution to any candidate for foreign office, or failed to disclose fully any contribution in violation of law, or (B) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties, other than payments required or permitted by the laws of the United States or any jurisdiction thereof.
(xxvi) Except as disclosed in the Prospectus, neither the Company nor any of its officers, directors or affiliates have caused any person, other than the Underwriters, to be entitled to reimbursement or compensation of any kind, including, without limitation, any compensation that would be includable as underwriter compensation under the NASD's Corporate Financing Rule with respect to the offering of the Shares, as a result of the consummation of such offering based on any activity of such person as a finder, agent, broker, investment adviser or other financial service provider.
(xxvii) The Common Stock has been approved for inclusion, subject to official notice of issuance in the NASDAQ National Market
(b) The Selling Stockholder represents and warrants to each of the Underwriters as follows:
(i) The Selling Stockholder now has and at the Closing Date will have good and marketable title to the Firm Shares to be sold by the Selling Stockholder, free and clear of any liens, encumbrances, equities and claims, and full right, power and authority to effect the sale and delivery of such Firm Shares; and upon the delivery of, against payment for, such Firm Shares pursuant to this Agreement, the Underwriters will acquire good and marketable title thereto, free and clear of any liens, encumbrances, equities and claims.
(ii) The Selling Stockholder has full right, power and authority to execute and deliver this Agreement and the Custody Agreement (as defined in Section 1(b)(v)) and to perform its obligations under such agreements. The execution and delivery of this Agreement and the consummation by the Selling Stockholder of the transactions herein contemplated and the fulfillment by the Selling Stockholder of the terms hereof will not require any consent, approval, authorization, or other order of any court, regulatory body, administrative agency or other governmental body (except as may be required under the Act, state securities laws or Blue Sky laws) and will not result in a breach of any of the terms and provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Selling Stockholder is a party, or of any order, rule or regulation applicable to the Selling Stockholder of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction.
(iii) The Selling Stockholder has not taken, directly or indirectly, any action designed to, or which has constituted, or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of the Common Stock of the Company and, other than as permitted by the Act, the Selling Stockholder will not distribute any prospectus or other offering material in connection with the offering of the Shares.
(iv) Without having undertaken to determine independently the accuracy or completeness of either the representations and warranties of the Company contained herein or the information contained in the Registration Statement, the Selling Stockholder has no reason to believe that the representations and warranties of the Company contained in this Section 1 are not true, correct and complete, is familiar with the Registration Statement and has no knowledge of any material fact, condition or information not disclosed in the Registration Statement which has adversely affected, or may adversely affect, the business of the Company and the sale of the Shares by the Selling Stockholder pursuant hereto is not prompted by any information concerning the Company or any of its subsidiaries which is not set forth in the Registration Statement. The information pertaining to the Selling Stockholder in the Prospectus is true, correct and complete.
(v) Certificates in negotiable form for the Shares to be sold hereunder by the Selling Stockholder have been placed in custody with the ____________ as custodian (the "Custodian") pursuant to a custody agreement executed by the Selling Stockholder for delivery of all Shares to be sold hereunder by the Selling Stockholder (the "Custody Agreement"). The Selling Stockholder specifically agrees that the Shares represented by the certificates held in custody for the Selling Stockholder under the Custody Agreement are subject to the interests of the Representative, that the arrangements made by the Selling Stockholder for such custody are irrevocable, and that the obligations of the Selling Stockholder hereunder shall not be terminable by any act or deed of the Selling Stockholder (or by any other person, firm or corporation including the Company, the Custodian or the Representative) or by operation of law (including the death of the Selling Stockholder) or by the occurrence of any other event or events, except as set forth in the Custody Agreement. If any such event should occur prior to the delivery to the Representative of the Shares to be sold by the Selling Stockholder hereunder, certificates for such Shares shall be delivered by the Custodian in accordance with the terms and conditions of this Agreement as if such event had not occurred, regardless of whether or not the Custodian shall have received notice of such death, incapacity or other event. The Custodian is authorized to receive and acknowledge receipt of the proceeds of sale of such Shares held by it against delivery of such Shares.
(vi) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation by the Selling Stockholder of the transactions contemplated herein, except such as may have been obtained under the Act and such as may be required under the Blue Sky Laws of any jurisdiction in connection with
the purchase and distribution of the Firm Shares by the Underwriters and such other approvals as have been obtained.
(vii) Neither the sale of the Shares being sold by the Selling Stockholder nor the consummation of any other of the transactions contemplated herein by the Selling Stockholder or the fulfillment of the terms hereof by the Selling Stockholder will conflict with, result in a breach of, or constitute a default under, the terms of any indenture or other agreement or instrument to which the Selling Stockholder is a party or bound, or any order or regulation applicable to the Selling Stockholder of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Selling Stockholder.
(viii) In respect of any statements in or omissions from the Registration Statement or the Prospectus or any amendment or supplement thereto made in reliance upon and in conformity with information furnished in writing to the Company by the Selling Stockholder specifically for use in connection with the preparation thereof, the Selling Stockholder hereby makes the same representations and warranties to each Underwriter as the Company makes to such Underwriter under paragraph (a)(vi) of this Section.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties and covenants herein contained, and subject to the conditions herein set forth, the Company agrees to sell 1,700,000 Firm Shares and the Selling Stockholder agrees to sell 800,000 Firm Shares to the Underwriters and each Underwriter agrees, severally and not jointly, to purchase, at a price of $_________ per share, the number of Firm Shares set forth opposite the name of each underwriter in Schedule I hereof, subject to adjustment in accordance with Section 9 hereof.
(b) The Company and the Selling Stockholder agree to have the Firm Shares available for inspection, checking and packaging by the Representative in New York, New York, not later than 1:00 PM on the business day prior to the Closing Date.
(c) Payment for the Firm Shares to be sold hereunder is to be made in New York Clearing House funds and, at the option of the Representative by certified or bank cashier's checks drawn to the order of the Company and the Selling Stockholder in accordance with their respective interests or bank wire to an account specified by the Company and/or the Selling Stockholder against either uncertificated or certificated delivery of the Firm Shares (which delivery, if certificated, shall take place in such location in as may be specified by the Representative) to the Representative for the several accounts of the Underwriters. Such payment is to be made at the offices of , , at 7:00 a.m., Portland, Oregon time, time, on the third business day after the date of this Agreement or at such other time and date not later than five business days thereafter as the Representative, the Company and the Selling Stockholder shall agree, such time and date being
herein referred to as the "Closing Date." (As used herein, "business day" means a day on which the New York Stock Exchange is open for trading and on which banks in New York are open for business and not permitted by law or executive order to be closed.) Except to the extent uncertificated Firm Shares are delivered at closing, the certificates for the Firm Shares will be delivered in such denominations and in such registrations as the Representative shall request in writing not later than the second full business day prior to the Closing Date, and will be made available for inspection by the Representative at least one business day prior to the Closing Date.
(d) If on the Closing Date the Selling Stockholder fails to sell the Firm Shares which the Selling Stockholder has agreed to sell on such date, the Company agrees that it will sell or arrange for the sale of that number of shares of Common Stock to the Representative which represents the Firm Shares which the Selling Stockholder has failed to so sell.
(e) On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Representative to purchase the Option Shares at the price per share as set forth in paragraph (a) of this Section 2. The option granted hereby may be exercised in whole or in part by giving written notice: (i) at any time before the Closing Date and (ii) only once thereafter within thirty (30) days after the date of this Agreement, by the Representative to the Company setting forth the number of Option Shares as to which the Representative is exercising the option, the names and denominations in which the Option Shares are to be registered and the time and date at which certificates representing the Option Shares are to be delivered. The time and date at which certificates for Option Shares are to be delivered shall be determined by the Representative but shall not be earlier than three nor later than ten business days after the exercise of such option nor in any event prior to the Closing Date (such time and date being herein referred to as the "Option Closing Date"). If the date of exercise of the option is three or more days before the Closing Date, the notice of exercise shall set the Closing Date as the Option Closing Date. The option with respect to the Option Shares granted hereunder may be exercised only to cover over-allotments in the sale of the Firm Shares by the Underwriters. The Representative may cancel such option at any time prior to its expiration by giving written notice of such cancellation to the Company. To the extent, if any, that the option is exercised, payment for the Option Shares shall be made on the Option Closing Date in New York Clearing House funds and, at the option of the Representative, by certified or bank cashier's check drawn to the order of the Company or by bank wire to an account specified by the Company against delivery of certificates therefor at such location in New York, New York as may be specified by the Representative.
(f) In addition to the sums payable to the Representative as provided elsewhere herein, the Representative shall be entitled to receive at the closing, for itself alone and not as representative of the Underwriters, as additional compensation for its services,
purchase warrants (the "Representative's Warrants") for the purchase of up to 250,000 shares of Common Stock of the Company at a price of $______ per share, upon the terms and subject to adjustment as described in the form of Representative's Warrant filed as an exhibit to the Registration Statement.
(g) The Selling Stockholder will pay all applicable state transfer taxes, if any, involved in the transfer to the several Underwriters of the Firm Shares to be purchased by them from the Selling Stockholder and the respective Underwriters will pay any additional stock transfer taxes involved in further transfers.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public offering of the Firm Shares as soon as the Representative deems it advisable to do so. The Firm Shares are to be initially offered to the public at the initial public offering price set forth in the Prospectus. The Representative may from time to time thereafter change the public offering price and other selling terms. To the extent, if at all, that any Option Shares are purchased pursuant to Section 2 hereof, the Representative will offer them to the public on the foregoing terms.
It is further understood that the Representative will act as representative of the Underwriters in the offering and sale of the Shares in accordance with an Agreement Among Underwriters entered into by the Representative and the several other Underwriters.
4. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDER.
(a) The Company covenants and agrees with the several Underwriters that:
(i) The Company shall: (A) use its best efforts to cause the Registration Statement to become effective or, if the procedure in Rule 430A of the Rules and Regulations is followed, to prepare and timely file with the Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form approved by the Representative containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rule 430A of the Rules and Regulations, and (B) not file any amendment to the Registration Statement or supplement to the Prospectus of which the Representative shall not previously have been advised and furnished with a copy or to which the Representative shall have reasonably objected in writing or which is not in compliance with the Rules and Regulations.
(ii) The Company shall advise the Representative promptly:
(A) when the Registration Statement or any post-effective amendment thereto
shall have become effective, (B) of receipt of any comments from the
Commission, (C) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, and (D) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus or of the institution of any proceedings for that purpose. The Company will use its best efforts to prevent the issuance of any such stop order preventing or suspending the use of the Prospectus and to obtain as soon as possible the lifting thereof, if any is issued.
(iii) The Company shall cooperate with the Representative in endeavoring to qualify the Shares for sale under the securities laws of such jurisdictions as the Representative may reasonably have designated in writing and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose, provided the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent. The Company will, from time to time, prepare and file such statements, reports, and other documents as are or may be required to continue such qualifications in effect for so long a period as the Representatives may reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the Representative, from time to time, as many copies of any Preliminary Prospectus as the Representative may reasonably request. The Company will deliver to, or upon the order of, the Representative during the period when delivery of a Prospectus is required under the Act, as many copies of the Prospectus in final form, or as thereafter amended or supplemented, as the Representative may reasonably request. The Company will deliver to the Representative at or before the Closing Date, three signed copies of the Registration Statement and all amendments thereto including all exhibits filed therewith, and will deliver to the Representative such number of copies of the Registration Statement (including such number of copies of the exhibits filed therewith that may reasonably be requested), and of all amendments thereto, as the Representative may reasonably request.
(v) The Company will comply with the Act and the Rules and Regulations, and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Shares as contemplated in this Agreement and the Prospectus. If during the period in which a prospectus is required by law to be delivered by an Underwriter or dealer, any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriters, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in light of the circumstances existing at the time the Prospectus is delivered to a purchaser, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with any law, the Company promptly will prepare and file with the Commission an appropriate amendment to the Registration Statement or supplement to the Prospectus so that the Prospectus as so amended or supplemented will not,
in light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply with the law.
(vi) The Company will make generally available to its security holders, as soon as it is practicable to do so, but in any event not later than 15 months after the effective date of the Registration Statement, an earnings statement (which need not be audited) in reasonable detail, covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement, which earnings statement shall satisfy the requirements of the Act and Rule 158 of the Rules and Regulations and will advise you in writing when such statement has been so made available.
(vii) The Company shall: (A) deliver to its stockholders annual reports containing financial statements audited by its independent accountants and, for a reasonable period, not less than five years, quarterly reports concerning unaudited financial information for each of the first three quarters of each fiscal year, and (B) for a period of five years from the Closing Date, deliver to the Representative copies of annual reports and copies of all other documents, reports and information furnished by the Company to its stockholders or filed with any securities exchange or the NASD pursuant to the requirements of such exchange or with the Commission pursuant to the Act or the Exchange Act. The Company will deliver to the Representative similar reports with respect to significant subsidiaries, as that term is defined in the Rules and Regulations, which are not consolidated in the Company's financial statements.
(viii) Except with the prior written consent of the Representative, no offering, sale, short sale or other disposition of any shares of Common Stock of the Company or other securities convertible into or exchangeable or exercisable for shares of Common Stock or derivative of Common Stock will be made for a period of ninety (90) days after the effective date of this Registration Statement directly or indirectly, by the Company other than the sales of Common Stock covered by this Agreement and sales upon exercise of options outstanding, on the effective date, under the 1993 Stock Option Plan.
(ix) The Company shall use its best efforts to list subject to notice of issuance the Shares on the NASDAQ Stock Market and thereafter to maintain such listing.
(x) The Company shall apply the net proceeds of its sale of the Shares as set forth in the Prospectus and shall file such reports with the Commission with respect to the sale of the Shares and the application of the proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(xi) The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Shares in such a manner as would require the Company or any of its subsidiaries to register as an investment company under the 1940 Act.
(xii) The Company shall maintain the currency of the prospectus forming a part of an effective registration statement, which may be the Registration Statement filed with respect to the Common Stock issuable upon exercise of the Representative's Warrants at all times during which any Warrant remains outstanding.
(xiii) The Company shall, if it commences to engage in any business with the government of Cuba or with any person or affiliate located in Cuba after the date the Registration Statement becomes or has become effective with the Commission or with the Florida Department of Banking and Finance (the "Department"), whichever date is later, or if the information reported or incorporated by reference in the Prospectus, if any, concerning the Company's business with Cuba or with any person or affiliate located in Cuba changes in any material way, provide the Department with notice of such business or change, as appropriate, in a form acceptable to the Department.
(xiv) The Company shall maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company, a registrar for the Common Stock.
(xv) The Company shall not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.
(b) The Selling Stockholder covenants and agrees with the several Underwriters that:
(i) In order to document the Underwriters' compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with respect to the transactions herein contemplated, the Selling Stockholder agrees to deliver to you prior to or at the Closing Date a properly completed and executed United States Treasury Department Form W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof).
(ii) The Selling Stockholder shall not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.
5. COSTS AND EXPENSES.
(a) The Representative shall be entitled to receive from the Company, for itself alone and not as Representative of the Underwriters, a nonaccountable expense allowance equal to 2% of the aggregate public offering price of Shares sold to the Underwriters in connection with the offering. The Representative shall be entitled to withhold this allowance on the Closing Date with respect to all Shares delivered on the Closing Date (less $35,000
heretofore advanced against such amount that has heretofore been paid by the
Company). In addition, the Representative shall be entitled to receive from
the Company reimbursement for its accountable expenses to the extent that such
expenses exceed the $35,000 heretofore advanced by the Company. If the public
offering of the Shares is consummated, all amounts paid pursuant to the
immediately preceding sentence shall be credited against the Representative's
non-accountable expenses as provided in the first sentence of this paragraph
(a) of Section 5; provided, however, that the sums so paid shall be limited to
an amount that would not increase the amount of non-accountable reimbursement
otherwise payable under the aforesaid first sentence of this paragraph. If,
for any reason, said public offering is not consummated, the Company shall
reimburse the Representative for any further accountable expenses incurred in
connection with the proposed offering; provided, however, in such event the
total amount of expenses reimbursed by the Company pursuant to this paragraph
shall not exceed $75,000. For purposes of this paragraph, the Representative
shall be deemed to have incurred expenses when they are billed regardless of
whether such expenses have been paid.
(b) In addition to the payment described in paragraph (a) of this Section 5, the Company shall pay all costs, expenses and fees incident to the performance of the obligations of the Company and Selling Stockholder under this Agreement, including, without limiting the generality of the foregoing, the following: accounting fees of the Company; the fees and disbursements of counsel for the Company; the cost of printing and delivering to, or as requested by, the Underwriters copies of the Registration Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the Underwriters' Selling Memorandum, the Underwriters' Invitation Letter, the NASDAQ Listing Application, the Blue Sky Survey and any supplements or amendments thereto; the filing fees of the Commission; the filing fees and expenses (including legal fees and disbursements) incident to securing any required review by the NASD of the terms of the sale of the Shares; the Listing Fee of the NASDAQ Stock Market; and the expenses, including the fees and disbursements of counsel for the Underwriters, incurred in connection with the qualification of the Shares under State securities or Blue Sky laws; provided, however, that the Selling Stockholder shall be responsible for the registration fee of the Securities and Exchange Commission and for the Blue Sky filing fees attributable to the shares being sold by him as well as for his pro rata share of the of the underwriting discount and expense allowance. To the extent, if at all, that the Selling Stockholder engages special legal counsel to represent him in connection with this offering, the fees and expenses of such counsel shall be borne by such Selling Stockholder. Any transfer taxes imposed on the sale of the Firm Shares to the several Underwriters shall be paid by the Selling Stockholder. If this Agreement shall not be consummated because the conditions in Section 6 hereof are not satisfied, or because this Agreement is terminated by the Representative pursuant to Section 11 hereof, or by reason of any failure, refusal or inability on the part of the Company or the Selling Stockholder to perform any undertaking or satisfy any condition of this Agreement or to comply with any of the terms hereof on their part to be performed, unless such failure to satisfy said condition or to comply with said terms be due to the default or omission of any Underwriter, then, subject to the expense limitations set forth in
Paragraph (a) of this Section 5, the Company shall reimburse the several Underwriters for reasonable out-of-pocket expenses, including fees and disbursements of counsel, reasonably incurred in connection with investigating, marketing and proposing to market the Shares or in contemplation of performing their obligations hereunder; but the Company and the Selling Stockholder shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits from the sale by them of the Shares.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm Shares on the Closing Date and the Option Shares, if any, on the Option Closing Date, as the case may be, are subject to the accuracy, as of the Closing Date or the Option Closing Date, as the case may be, of the representations and warranties of the Company and the Selling Stockholder contained herein, and to the performance by the Company and Selling Stockholder of their covenants and obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments thereto shall have become effective and any and all fillings required by Rule 424 and Rule 430A of the Rules and Regulations shall have been made, and any request of the Commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed to the Representative and complied with to their reasonable satisfaction. No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been taken or, to the knowledge of the Company, shall be contemplated by the Commission and no injunction, restraining order, or order of any nature by a Federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance of the Shares.
(b) The Representative shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinion of Freedman, Levy, Kroll & Simonds, counsel for the Company and the Selling Stockholder, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters (and stating that it may be relied upon by counsel to the Underwriters) to the effect that:
(i) The Company has been duly organized and is validly existing as a corporation under the laws of the State Delaware, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement. All outstanding shares of capital stock of every subsidiary of the Company have been duly authorized and validly issued and are fully paid and non-assessable.
(ii) The Company has authorized and outstanding capital stock as set forth under the caption "Capitalization" in the Prospectus; the authorized shares of the Common Stock
have been duly authorized; the outstanding shares of the Company's Common Stock have been duly authorized and validly issued and are fully paid and non-assessable and were issued and sold by the Company in compliance in all material respects with applicable securities laws; all of the securities of the Company conform to the description thereof contained in the Prospectus; the certificates for the Common Stock and Warrants of the Company, assuming they are in the form filed with the Commission, are in due and proper form; the shares of Common Stock to be sold by the Company and the Selling Stockholder pursuant to this Agreement, including shares of Common Stock issuable upon exercise of the Warrants, have been duly authorized and are, or in the case of the Shares to be sold by the Company, will be validly issued, fully paid and non-assessable when issued and paid for as contemplated by this Agreement and the Registration Statement; and no preemptive rights of stockholders exist with respect to any of the Common Stock of the Company or the issue or sale thereof pursuant to any applicable statute or the provisions of the Company's Certificate of Incorporation or, to such counsel's knowledge, pursuant to any contractual obligation.
(iii) The Representative's Warrants have been authorized for issuance to the Representative and will, when issued, possess rights, privileges, and characteristics as represented in the most recent form of Representative's Warrant filed as an exhibit to the Registration Statement; the securities to be issued upon exercise of the Representative's Warrants, when issued and delivered against payment therefor in accordance with the terms of the Representative's Warrants, will be duly and validly issued, fully paid, non-assessable and free of preemptive rights, and all corporate action required to be taken for the authorization and issuance of the Representative's Warrants, and the securities to be issued upon their exercise, has been validly and sufficiently taken.
(iv) Except as described in the Prospectus, to the knowledge of such counsel, there are no outstanding securities of the Company convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of capital stock of the Company and there are no outstanding or authorized options, warrants or rights of any character obligating the Company to issue any shares of its capital stock or any securities convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of such stock; and except as described in the Prospectus, to the knowledge of such counsel, no holder of any securities of the Company or any other person has the right, contractual or otherwise, which has not been satisfied or effectively waived, to cause the Company to sell or otherwise issue to them, or to permit them to underwrite the sale of, any Common Stock or the right to have any shares of the Common Stock or other securities of the Company included in the Registration Statement or the right, as a result of the filing of the Registration Statement, to require registration under the Act of any shares of Common Stock or other securities of the Company.
(v) The Registration Statement has become effective under the Act and, to the best knowledge of such counsel, no stop order proceedings with respect thereto have been instituted or are pending or threatened under the Act.
(vi) The Registration Statement, the Prospectus and each amendment or supplement thereto comply as to form in all material respects with the requirements of the Act and the Rules and Regulations (except that such counsel need not express an opinion as to the financial statements, schedules and statistical information therein).
(vii) The statements under the captions "Shares Eligible for Future Sale" and "Description of Capital Stock" in the Prospectus and in Items 14 and 15 of the Registration Statement, insofar as such statements constitute a summary of documents referred to therein or matters of law, accurately summarize in all material respects the information called for with respect to such documents and matters.
(viii) Such counsel does not know of any contracts or documents required to be filed as exhibits to the Registration Statement or described in the Registration Statement or the Prospectus which are not so filed or described as required, and such contracts and documents as are summarized in the Registration Statement or the Prospectus are fairly summarized in all material respects.
(ix) Such counsel knows of no legal or governmental proceedings pending or threatened against the Company except as set forth in the Prospectus.
(x) The execution and delivery of this Agreement and the consummation of the transactions herein contemplated do not and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, the Certificate of Incorporation or bylaws of the Company, or any agreement or instrument known to such counsel to which the Company is a party or by which the Company may be bound.
(xi) This Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company enforceable in accordance with its terms except as rights to indemnity or contribution hereunder may be limited by federal or state securities laws or public policy and except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity.
(xii) No approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body is necessary in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated herein (other than as may be required by the NASD or as required by state securities and Blue Sky laws as to which such counsel need not express an opinion) except such as have been obtained or made, specifying the same.
(xiii) The Company is not, and will not become, as a result of the transactions contemplated by this Agreement and application of the net proceeds therefrom as described in the Prospectus, required to register as an investment company under the 1940 Act.
(xiv) Such counsel has reviewed the applicable provisions of the Hart-Scott-Rodino Act (the "HSR Act") and the Prospectus accurately describes the applicability thereof to future acquisitions by the Company.
(xv) This Agreement has been duly authorized, executed and delivered on behalf of the Selling Stockholder.
(xvi) To the best knowledge of such counsel, the Selling Stockholder has full legal right, power and authority, and any approvals required by law to sell, assign, transfer and deliver Shares to be sold by such Selling Stockholder have been obtained.
(xvii) The Custody Agreement executed and delivered by the Selling Stockholder is valid and binding and enforceable against such Stockholder in accordance with its terms.
(xviii) The Underwriters (assuming that they are bona fide purchasers within the meaning of the Uniform Commercial Code) have acquired good and marketable title to the Firm Shares being sold by the Selling Stockholder on the Closing Date free and clear of all liens, encumbrances, equities and claims.
In rendering such opinion, such counsel may rely as
to matters governed by the laws of states other than Delaware or Federal laws
on local counsel in such jurisdictions, provided that in each case such counsel
shall state that they believe that they and the Underwriters are justified in
relying on such other counsel. In addition to the matters set forth above, the
opinion of Freedman, Levy, Kroll and Simonds shall also include a statement to
the effect that nothing has come to the attention of such counsel which leads
them to believe that (i) the Registration Statement, at the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the Closing
Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein). With respect to
such statements, Freedman, Levy, Kroll and Simonds may state that their belief
is based upon the procedures set forth therein (which
procedures shall be reasonably acceptable to the Representative and counsel for the Underwriters) but is otherwise without independent check and verification.
(c) The Representative shall have received from Wells, Moore, Simmons & Neeld its opinion that: (i) the Company has been duly organized and is validly existing as a corporation under the laws of the State Delaware, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement; the Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification or in which the failure to qualify would have a materially adverse effect upon the business of the Company, all outstanding shares of capital stock of every subsidiary of the Company have been duly authorized and validly issued and are fully paid and non-assessable; and (ii) the Company has authorized and outstanding capital stock as set forth under the caption "Capitalization" in the Prospectus; the authorized shares of the Common Stock have been duly authorized; the outstanding shares of the Company's Common Stock have been duly authorized and validly issued and are fully paid and non-assessable and were issued and sold by the Company in compliance in all material respects with applicable securities laws; all of the securities of the Company conform to the description thereof contained in the Prospectus; the certificates for the Common Stock and Warrants of the Company, assuming they are in the form filed with the Commission, are in due and proper form; the shares of Common Stock to be sold by the Company and the Selling Stockholder pursuant to this Agreement, including shares of Common Stock issuable upon exercise of the Warrants, have been duly authorized and are, or in the case of the Shares to be sold by the Company, will be validly issued, fully paid and non-assessable when issued and paid for as contemplated by this Agreement and the Registration Statement; and no preemptive rights of stockholders exist with respect to any of the Common Stock of the Company or the issue or sale thereof pursuant to any applicable statute or the provisions of the Company's Certificate of Incorporation or, to such counsel's knowledge, pursuant to any contractual obligation. Such opinion shall expressly state that it can be relied upon by Freedman, Levy, Kroll and Simonds, by Morse, Zelnick, Rose & Lander, LLP and by the Underwriters.
(d) The Representative shall have received from Morse, Zelnick, Rose & Lander, LLP, counsel for the Underwriters, an opinion dated the Closing Date or the Option Closing Date, as the case may be, substantially to the effect specified in subparagraphs (i), (v) and (vi) of paragraph (b) of this Section 6. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel that has caused them to believe that: (i) the Registration Statement, at the time it became effective under the Act (but after giving effect to any modifications incorporated therein pursuant to Rule 430A under the Act) and as of the Closing Date or the Option Closing Date, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) the Prospectus, or any supplement thereto, on the date it was filed pursuant to the Rules and Regulations and as of the Closing Date or the Option Closing Date,
as the case may be, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of circumstances under which they were made, not misleading (except that such counsel need not express any view as to financial statements, schedules and statistical information therein). With respect to such statement, such counsel may state that their belief is based upon the procedures set forth therein, but is without independent check and verification.
(e) The Representative shall have received at or prior to the Closing Date from Morse, Zelnick, Rose & Lander, LLP a memorandum or summary, in form and substance satisfactory to the Representative, with respect to the qualification for offering and sale by Underwriters of the Shares under the state securities or Blue Sky laws of such jurisdictions as the Representative may reasonably have designated to the Company.
(f) The Representative, on behalf of the several Underwriters, shall have received, on the Closing Date and on the Option Closing Date, as the case may be, a letter dated the Closing Date or the Option Closing Date, as the case may be, in form and substance satisfactory to the Representative, of Ernst & Young LLP confirming that they are independent public accountants within the meaning of the Act and the applicable published Rules and Regulations thereunder and stating that in their opinion the financial statements and schedules examined by them and included in the Registration Statement comply in form and in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations, and containing such other statements and information as are ordinarily included in accountants' "comfort letters" to Underwriters with respect to the financial statements and certain financial and statistical information contained in the Registration Statement and Prospectus.
(g) The Representative shall have received on the Closing Date or the Option Closing Date, as the case may be, a certificate or certificates of the Chief Executive Officer of the Company to the effect that, as of the Closing Date or the Option Closing Date, as the case may be, such officer represents as follows:
(i) The Registration Statement has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for such purpose have been taken or are, to the best of his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company contained in Section 1 hereof are true and correct as of the Closing Date or the Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules 424 or 430A under the Act have been made;
(iv) He has carefully examined the Registration Statement and the Prospectus and, in his opinion, as of the effective date of the Registration Statement, the statements contained in the Registration Statement were true and correct, and such Registration Statement and Prospectus did not omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, and since the effective date of the Registration Statement no event has occurred which should have been set forth in a supplement to or an amendment of the Prospectus which has not been set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given in the Registration Statement and Prospectus, there has not been any material adverse change or any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, of the Company or the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company whether or not arising in the ordinary course of business.
(h) The Company and the Selling Stockholder shall have furnished to the Representative such further documents confirming the representations and warranties, covenants and conditions contained herein and related matters as the Representative may reasonably have requested.
(i) The Firm Shares and the Option Shares have been approved for designation upon notice of issuance on the NASDAQ Stock Market.
(j) The Lockup Agreements described in Section 1(a)(xxiv) shall have been executed and delivered and shall be in full force and effect.
(k) The Common Stock shall have been approved for inclusion, subject to official notice of issuance, in the NASDAQ National Market.
The opinions and certificates mentioned in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in all material respects satisfactory to the Representative and to Morse, Zelnick, Rose & Lander, LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this
Section 6 shall not have been fulfilled, the obligations of the Underwriters
hereunder may be terminated by the Representative by notifying the Company and
the Selling Stockholder of such termination in writing or by telegram at or
prior to the Closing Date or the Option Closing Date, as the case may be. In
such event, the Company, the Selling Stockholder and the Underwriters shall not
be under any obligation to each other (except to the extent provided in Section
5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the Shares required to be delivered as and when specified in this Agreement are subject to the conditions that at the Closing Date or the Option Closing Date, as the case may be, no stop order suspending the effectiveness of the Registration Statement shall have been issued and in effect or proceedings therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company and the Selling Stockholder jointly and
severally agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made; and will reimburse each Underwriter and each such
controlling person in accordance with Section 8(c) for any legal or other
expenses reasonably incurred by such Underwriter or such controlling person in
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to
the offering of the Shares, whether or not such Underwriter or controlling
person is a party to any action or proceeding; provided, however, that the
Company and the Selling Stockholder will not be liable in any such case to the
extent that: (i) any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement, or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by or
through the Representative specifically for use in the preparation thereof, or
(ii) with respect to the Preliminary Prospectus, any such loss, claim damage or
liability of such Underwriter relates to the failure of such Underwriter to
deliver a copy of the Prospectus at, or prior to, the confirmation of the sale
of the Shares to the person alleging such loss, claim, damage or liability,
where the alleged untrue statement or omission of a material fact contained in
such Preliminary Prospectus was corrected in the Prospectus. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have. In no event, however, shall the liability of the Selling Stockholder for
indemnification under this Section 8(a) exceed the proceeds received by such
Selling Stockholder from the Underwriters in the offering.
(b) Each Underwriter severally and not jointly will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement, the Selling Stockholder,
and each person, if any, who controls the Company or the Selling Stockholder
within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, Selling
Stockholder or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, Selling Stockholder or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided, however, that each
Underwriter will be liable in each case to the extent, and only to the extent,
that (i) such untrue statement or alleged untrue statement or omission or
alleged omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by or
through the Representative specifically for use in the preparation thereof or,
(ii) with respect to the Preliminary Prospectus, any such loss, claim, damage
or liability relates to the failure of such Underwriter to deliver a copy of
the Prospectus at, or prior to, the confirmation of the sale of the Shares to
the person alleging such loss, claim, damage or liability, where the alleged
untrue statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus. This indemnity agreement will be
in addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 8, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing. No indemnification provided for in Section 8(a) or (b) shall be available to any party who shall fail to give notice as provided in this Section 8(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 8(a) or (b). In case any such proceeding shall be brought against any indemnified party and such indemnified party shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of presentation) the fees and
expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm for all such indemnified parties. Such firm shall
be designated in writing by the Representative in the case of parties
indemnified pursuant to Section 8(a) and by the Company in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. In addition, the indemnifying party will not, without the prior
written consent of the indemnified party, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action or
proceeding in which indemnification may be sought hereunder unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(d) If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Selling Stockholder on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Selling Stockholder on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Stockholder, respectively, bears to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Stockholder on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholder and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
Section 8(d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 8(d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above in this Section 8(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d): (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of fraudulent misrepresentation, and (iii) the
Selling Stockholder shall not be required to contribute any amount in excess of
the proceeds received by such Selling Stockholder from the Underwriters in the
offering. The Underwriters' obligations in this Section 8(d) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
(e) In any proceeding relating to the Registration Statement, any Preliminary Prospectus, the Prospectus or any supplement or amendment thereto, each party against whom contribution may be sought under this Section 8 hereby consents to the jurisdiction of any court having jurisdiction over any other contributing party, agrees that process issuing from such court may be served upon him or it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join him or it as an additional defendant in any such proceeding in which such other contributing party is a party.
(f) Any losses, claims, damages or liabilities for which
an indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, or expenses are incurred. The indemnity and
contribution agreements contained in this Section 8 and the representations and
warranties of the Company set forth in this Agreement shall remain operative
and in full force and effect, regardless of: (i) any investigation made by or
on behalf
of any Underwriter or any person controlling any Underwriter, the Company, its directors or officers, the Selling Stockholder or any persons controlling the Company or Selling Stockholder within the meaning of the Act, (ii) acceptance of any Shares and payment therefor hereunder, or (iii) any termination of this Agreement. A successor to any Underwriter, or to the Company, its directors or officers, or any person controlling the Company, shall be bound by and entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be, any Underwriter shall fail to purchase and pay for the portion of the Shares which such Underwriter has agreed to purchase and pay for on such date (otherwise than by reason of any default on the part of the Company or the Selling Stockholder), the Representative shall use its reasonable efforts to procure within 36 hours thereafter one or more of the other Underwriters, or any others, to purchase from the Company and the Selling Stockholder upon the terms set forth herein such amounts as may be agreed upon and upon the terms set forth herein, the Firm Shares or Option Shares, as the case may be, which the defaulting Underwriter or Underwriters failed to purchase. If during such 36 hours the Representative shall not have procured such other Underwriters, or any others, to purchase the Firm Shares or Option Shares, as the case may be, agreed to be purchased by the defaulting Underwriter or Underwriters, then (a) if the aggregate number of Shares with respect to which such default shall occur does not exceed 10% of the Firm Shares or Options Shares, as the case may be, covered hereby, the other Underwriters shall be obligated, severally, in proportion to the respective numbers of Firm Shares or Option Shares, as the case may be, which they are obligated to purchase hereunder, to purchase the Firm Shares or Option Shares, as the case may be, which such defaulting Underwriter or Underwriters failed to purchase, or (b) if the aggregate number of Firm Shares or Option Shares, as the case may be, with respect to which such default shall occur equals or exceeds 10% of the Firm Shares or Option Shares, as the case may be, covered hereby, the Company or the Representative shall have the right, by written notice given as to the Firm Shares if the default relates to the Firm Shares, or as to the Option Shares if the default relates to the Option Shares, within the next 36-hour period to the parties to this Agreement, to terminate this Agreement without liability on the part of the non-defaulting Underwriters or of the Company or of the Selling Stockholder, except for expenses to be paid by the Company under Section 5 hereof and except to the extent provided in Section 8 hereof. In the event of a default by any Underwriter or Underwriters, as set forth in this Section 9, the Closing Date or Option Closing Date, as the case may be, may be postponed for such period, not exceeding seven days, as the Representative may determine in order that the required changes in the Registration Statement or in the Prospectus or in any other documents or arrangements may be effected. The term "Underwriter" includes any person substituted for a defaulting Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as otherwise provided herein, will be mailed, delivered, telecopied or telegraphed and confirmed as follows:
if to the Representative or the Underwriters:
Paulson Investment Company, Inc.
811 SW Front Avenue
Portland, Oregon 97204
Attention: Chester L.F. Paulson
with a copy to:
Morse, Zelnick, Rose & Lander, LLP 450 Park Avenue New York, New York 10022 Attention: Stephen A. Zelnick, Esq.
if to the Company
or the Selling Stockholder to:
Cal-Maine Foods, Inc.,
3320 Woodrow Wilson Drive
Jackson, Mississippi 39207
Attention: Fred R. Adams, Jr.
with a copy to: Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W.
Suite 825
Washington, D.C. 20036
Attention: Peter E. Panarites, Esq.
11. TERMINATION.
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This Agreement may be terminated by the Representative by notice to the Company as follows:
(a) at any time prior to the earlier of (i) the time the Shares are released by the Representative for sale by notice to the Underwriters, or (ii) 11:30 a.m. on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following has occurred: (i) since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change or any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, of the Company or the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company, whether or not arising in the ordinary course of business, (ii) any outbreak or escalation of hostilities or declaration of war or national emergency or other national or international calamity or crisis or change in economic or political conditions if the effect of such outbreak, escalation, declaration, emergency, calamity, crisis or change on the financial markets of the United States would, in the Representative's judgment, make it impracticable to market the Shares or to enforce contracts for the sale of the Shares, (iii) the Dow Jones Industrial Average shall have fallen by 15 percent or more from its closing price on the day immediately preceding the date that the Registration Statement is declared effective by the Commission, (iv) suspension of trading in securities generally on the New York Stock Exchange or the American Stock Exchange or limitation on prices (other than limitations on hours or numbers of days of trading) for securities on either such Exchange, (v) the enactment, publication, decree or other promulgation of any statute, regulation, rule or order of any court or other governmental authority which in the Representative's opinion materially and adversely or may materially and adversely affect the business or operations of the Company, (vi) declaration of a banking moratorium by United States or New York State authorities; (vii) the suspension of trading of the Common Stock by the Commission or the NASD on the Nasdaq National Market, or (viii) the taking of any action by any governmental body or agency in respect of its monetary or fiscal affairs which in the Representative's opinion has a material adverse effect on the securities markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the Underwriters, the Company, the Selling Stockholder and their respective successors, executors, administrators, heirs and assigns, and the officers, directors and controlling persons referred to herein, and no other person will have any right or obligation hereunder. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Stockholder and the Underwriters acknowledge and agree that the only information furnished or to be furnished by any Underwriter to the Company for inclusion in any Prospectus or the Registration Statement consists of the information set forth in the last paragraph on the front cover page (insofar as such information relates to the Underwriters), the legends required by Item 502(d) of Regulation S-K under the Act and the information under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements contained in this Agreement and the representations, warranties and covenants in this Agreement shall remain in full force and effect regardless of: (a) any termination of this Agreement (b) any investigation made by or on behalf of any Underwriter or controlling person thereof or by or on behalf of the Company or its directors or officers and (c) delivery of and payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement shall be governed by, and construed in accordance with, the laws of the State of Oregon. All disputes relating to this Agreement shall be adjudicated before a court located in Multnomah County, Oregon to the exclusion of all other courts that might have jurisdiction.
If the foregoing letter is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement among the Company, the Selling Stockholder and the several Underwriters in accordance with its terms.
[balance of this page intentionally left blank]
Any person executing and delivering this Agreement as Attorney-in-Fact for the Selling Stockholder represents by so doing that he has been duly appointed as Attorney-in-Fact by the Selling Stockholder pursuant to a validly existing and binding Power of Attorney which authorizes such Attorney-in-Fact to take such action.
Very truly yours,
CAL-MAINE FOODS, INC.
by:
---------------------------------
Fred R. Adams, Jr.
Chairman and Chief Executive Officer
------------------------------------
Fred R. Adams, Jr.
Selling Stockholder
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
PAULSON INVESTMENT COMPANY, INC.
As Representative of the several
Underwriters listed on Schedule I
by:
---------------------------
Authorized Officer
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SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Shares
Underwriter to be Purchased(1)
----------- ----------------
Paulson Investment Company, Inc.
--------------------------------
Total 2,500,000
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(1) Subject to pro rata increase in the event that the Option Shares are purchased as provided in Section 2(e)
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CAL-MAINE FOODS, INC.
Cal-Maine Foods, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:
FIRST: That the Board of Directors of Cal-Maine
Foods, Inc., acting by unanimous written consent of its members effective the
23rd day of September, 1996, which consent has been duly filed with the minutes
of the Board, duly adopted a Resolution setting forth a proposed Amended and
Restated Certificate of Incorporation of the corporation, declaring said
amendment and restatement to be advisable and calling for consideration by the
shareholders of said amendment. The Resolution recommended that the
Certificate of Incorporation of Cal-Maine Foods, Inc. be restated pursuant to
Section 245 of the General Corporation Law of the State of Delaware and that
Section 4 of such Certificate be amended to provide for 31,200,000 shares of
Capital stock consisting of 30,000,000 shares of Common Stock with a par value
of $.01 per share and 1,200,000 shares of Class A Common Stock with a par value
of $.01 per share. Further, such resolution recommended that each share of
Class A Common Stock $1.00 par value per share and each share of Class B Common
Stock $1.00 par value per share outstanding on the effective date of the
Amended and Restated Certificate of Incorporation be reclassified and changed
into 1,200 fully paid and nonassessable
shares of Common Stock par value $.01 per share and Class A Common Stock par value $.01 per share respectively.
SECOND: Thereafter, pursuant to the Resolution of the Board of Directors, the question of the restatement and amendment of the Certificate of Incorporation of the corporation as aforesaid, was presented to the shareholders of the corporation and a majority of the shareholders of each class of common stock, which constitutes a majority of the voting stock of the corporation, acting by written consent pursuant to Section 228 of the General Corporation Law of the State of Delaware effective September 24, 1996, did vote in favor of the amendment and restatement, such amendment and restatement being as follows:
THIRD: This document constitutes the Amended and Restated Certificate of Incorporation of Cal-Maine Foods, Inc., which was originally incorporated on September 10, 1969. This Amended and Restated Certificate of Incorporation has been duly adopted by the Board of Directors and by the shareholders of this Corporation in conformity with the requirements and provisions of Section 245 of the General Corporation Law of the State of Delaware.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CAL-MAINE FOODS, INC.
1. The name of the Corporation is CAL-MAINE FOODS, INC.
2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
To raise, produce, or otherwise acquire, invest in, own, hold, use, mortgage, pledge, sell, assign, transfer, or otherwise dispose of, trade, deal in and deal with any and all kinds of animals and agricultural products, and manufacture, produce, purchase, or otherwise acquire, invest in, own, mortgage, pledge, sell, assign, transfer, or otherwise dispose of, deal in, and deal with any and all articles or things manufactured, produced, resulting, or derived in whole or in part from animals or agricultural products of any kind, whether to be used as food or in commerce, manufacture, the sciences, the arts or otherwise.
To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description.
To acquire, and pay for in cash, stock or bonds of this Corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the
obligations or liabilities of any person, firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this Corporation.
To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by an corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privilege of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable of the preservation, protection, improvement and enhancement in value thereof.
To borrow or raise moneys for any of the purposes of the Corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the Corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the Corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the Corporation's property and assets, or any interest therein, wherever situated.
In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this Amended and Restated Certificate of Incorporation together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation.
The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in no wise limited or restricted by reference to, or inference from, the terms of any other clause in this Certificate of Incorporation, but the business and purposes specified in each of the foregoing clauses of this article shall be regarded as independent business and purposes.
4. The amount of capital stock which the Corporation is authorized to issue shall be 31,200,000 Shares of Capital Stock and shall consist of (a) 30,000,000 shares of Common Stock with a par value of One Cent ($.01) per share and (b) 1,200,000 shares of Class A Common Stock with a par value of One Cent ($.01) per share.
No holder of Capital Stock of the Corporation shall have any pre-emptive right to subscribe to any stock of the Corporation or to any security convertible into stock of the Corporation.
The designations, preferences, privileges, and voting powers of the aforesaid classes of stock of the Corporation and the restrictions, limitations, and qualifications thereof are as follows:
COMMON STOCK
Each share of Class A Common Stock of the Corporation of the par value of One Dollar ($1.00) issued and outstanding or held in the treasury of the Corporation immediately before the close of business on the date this Amended and Restated Certificate of Incorporation becomes effective (the "Effective Time") is hereby reclassified and changed into One Thousand Two Hundred (1,200) fully paid and nonassessable shares of Common Stock of the
Corporation of the par value of One Cent ($.01) each, (the "Common Stock") and each holder of record of a certificate for one or more shares of the Class A Common Stock of the par value of one dollar ($1.00) of the Corporation as of the Effective Time shall be entitled to receive as soon as practicable, and without surrender of such certificate, a certificate or certificates representing One Thousand One Hundred Ninety-Nine (1,199) additional shares of Common Stock for each one share of such Class A Common Stock represented by the certificate of such holder.
At all elections of directors of the Corporation, each holder of the Common Stock shall be entitled to as many votes as shall equal the number of votes which (except for such provisions as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected, and he may cast all of such votes for a single director or may distribute them among the number to be voted for, or for any two of them as he may see fit.
Except for the right of cumulative voting in relation to the election of directors as set forth above, the holders of the Common Stock shall be entitled to one vote per share of Common Stock.
The Common Stock and the Class A Common Stock of the Corporation of the par value of one cent ($.01) referred to under "Class A Common Stock" below (the "Class A Common Stock") shall together vote as a class provided that the holders of Common Stock shall have one vote per share and the holders of Class A Common Stock shall have ten votes per share.
Anything herein to the contrary notwithstanding, the holders of Common Stock shall have exclusive voting power on all matters at any time when no shares of Class A Common Stock are issued and outstanding and the holders of the Class A Common Stock will have the exclusive voting power on all matters at any time when no shares of the Common Stock are issued and outstanding.
Dividends and distributions may be declared, paid and made upon the Common Stock as from time to time determined by the Board of Directors of the Corporation and may be paid upon the Common Stock out of any source at the time lawfully available for the payment of dividends or distributions.
The Common Stock shall not be combined or subdivided unless at the same time there is a proportionate combination or subdivision of the Class A Common Stock. If the Class A Common Stock is combined or subdivided, a proportionate combination or subdivision of the Common Stock shall be made at the same time.
CLASS A COMMON STOCK
Each share of Class B Common Stock of the Corporation of the par value of One Dollar ($1.00) issued and outstanding or held in the treasury of the Corporation immediately before the Effective Time is hereby reclassified and changed into One Thousand Two Hundred (1,200) fully paid and nonassessable shares of Class A Common Stock of the Corporation of the par value of One Cent ($.01) (the "Class A Common Stock" herein) each, and each holder of record of a certificate for one or more shares of Class B Common Stock of the Corporation of the par value of one dollar ($1.00) as of the
Effective Time shall be entitled to receive as soon as practicable, and upon surrender of such certificate, a certificate or certificates representing One Thousand Two Hundred (1,200) shares of Class A Common Stock for each one share of such Class B Common Stock represented by the certificate of such holder.
At all elections of directors of the Corporation, each holder of the Class A Common Stock shall be entitled to as many votes as shall equal the number of votes which, except for such provisions as to cumulative voting, he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected and he may cast all of such votes for a single director or may distribute them among the number to be voted for, or for any two or more of them as he sees fit.
Except for the right of cumulative voting in relation to the election of directors as set forth above, each share of Class A Common Stock shall have ten votes per share on all matters that may be submitted to a vote or consent of the shareholders.
The Common Stock and the Class A Common Stock shall together vote as a class provided that the holders of Common Stock shall have one vote per share and the holders of Class A Common Stock shall have ten votes per share.
Anything herein to the contrary notwithstanding, the holders of Common Stock shall have exclusive voting power on all matters at any time when no shares of Class A Common Stock are issued and outstanding, and the holders of the Class A Common Stock will have
the exclusive voting power on all matters at any time when no shares of the Common Stock are issued and outstanding.
No dividend may be declared and paid in Class A Common Stock unless the dividend is payable only to the holders of Class A Common Stock and a dividend payable to Common Stock is declared and paid concurrently in respect of outstanding shares of Common Stock in the same number of shares of Common Stock per outstanding share.
The holders of record of Class A Common Stock may at any time convert any whole number or all of such holder's shares of Class A Common Stock into fully paid and non-assessable shares of Common Stock of the Corporation at the rate (subject to adjustment as hereinafter provided) of one share of Common Stock for each share of Class A Common Stock converted. Such conversion shall be effected by the holder of Class A Common Stock surrendering such Class A Common Stock certificate or certificates to be converted, duly endorsed, at the office of the Corporation or at any transfer agent for the Corporation or for the Class A Common Stock together with a written election to the Corporation at such office that the holder thereof elects to convert all or the specified number of shares of Class A Common Stock into Common Stock and specifying the name or names in which the holder desires the certificate or certificates for such shares of Common Stock to be issued. Upon conversion, the Corporation shall issue and deliver to such holder or holders, nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled. Such conversion shall be deemed to have been made at the
close of business on the day of presentation for conversion and the person or persons entitled to receive the shares of Common Stock as a result of such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.
Before any shares of Common Stock shall be delivered upon conversion, the holders of shares of Class A Common Stock whose shares are being converted into Common Stock shall deliver the certificate or certificates representing such shares to the Corporation or its duly authorized agent (or if such certificates have been lost, stolen, or destroyed, the holder thereof shall execute an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in relation to such conversion) specifying the place where the Common Stock issued in conversion thereof shall be sent. The endorsement of the certificate or certificates of Class A Common Stock to be converted into Common Stock shall be in form satisfactory to the Corporation or its agent, as the case may be.
The number of shares of Common Stock into which the shares of Class A Common Stock may be converted shall be subject to adjustment from time to time in the event of any capital reorganization, reclassification of stock of the Corporation or consolidation or merger of the Corporation with or into another corporation. Each share of the Class A Common Stock shall thereafter be convertible into such kind and amount of securities or other assets or both as are issuable or distributable in respect
to the number of shares of Common Stock into which each share of Class A Common Stock is convertible immediately prior to such reorganization, reclassification, consolidation or merger. In any such case, appropriate adjustments shall be made by the Board of Directors of the Corporation in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of Class A Common Stock such that the provisions set forth herein (including provisions for adjustment of the conversion rate) shall thereafter be applicable, as nearly as reasonably may be possible in relation to any securities or other assets thereafter deliverable upon conversion of the Class A Common Stock.
The Corporation shall at all times reserve and keep available out of the authorized and unissued shares of Common Stock, solely for the purpose of affecting the conversion of the outstanding Class A Common Stock, such number of the shares of Common Stock as shall from time to time be sufficient to effect conversion of all outstanding Class A Common Stock and if, at any time, the number of authorized and unissued shares of Common Stock shall not be sufficient to effect conversion of the then outstanding Class A Common Stock, the Corporation shall take such action as may be necessary to increase the number of authorized and unissued shares of Common Stock to such number as shall be sufficient for such purposes.
All certificates representing Class A Common Stock surrendered for conversion shall be appropriately canceled on the books of the
Corporation and the shares converted, represented by such certificates, shall be restored to the status of authorized but unissued shares of Class A Common Stock of the Corporation.
The Class A Common Stock may be issued only to Fred R. Adams, Jr. and members of his immediate family. As used herein "immediate family" is defined as Fred R. Adams, Jr., his spouse, his natural children, his sons-in-law or his grandchildren. In the event any share of Class A Common Stock, by operation of law or otherwise is, or shall be deemed to be owned by any person other than a member of the immediate family of Fred R. Adams, Jr., as herein defined, the voting power of such stock shall be reduced from ten votes per share to one vote per share.
Shares of Class A Common Stock shall be automatically converted into Common Stock on a share per share basis in the event the beneficial or record ownership of any such share of Class A Common Stock shall be transferred, without limitation, by way of gift, settlement, will, operation of law or intestacy, to any person or entity that is not a member of the immediate family of Fred R. Adams, Jr.
The holder of shares of Class A Common Stock of the Corporation may pledge or otherwise utilize Class A Common Stock as security for an obligation of a holder of such stock. Such pledge or utilization shall not be considered as a transfer of ownership for the purposes of determining eligibility of ownership of the Class A Common Stock until the beneficial ownership of any such pledged or hypothecated stock is transferred of record to a pledgee
who is not a member of the immediate family of Fred R. Adams, Jr. Conversion into Common Stock shall be deemed to have occurred (whether or not certificates representing such shares are surrendered) as of the close of business on the date of transfer and the person or persons entitled to receive shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.
No dividend or distribution may be declared and paid upon the shares of Class A Common Stock unless concurrently therewith a dividend and distribution is also declared and paid upon the shares of Common Stock. Any cash dividend or distribution payable upon the shares of Class A Common Stock shall be in an amount equal to ninety-five per cent of any cash dividend or distribution declared and paid upon the Common Stock on a per share basis.
The Corporation shall pay any and all taxes or other fees payable in respect of the issuance and delivery of shares of Common Stock issuable as a result of the conversion of Class A Common Stock unless the issuance of Common Stock results from the transfer of Class A Common Stock to a person not entitled to the ownership thereof.
All shares of Common Stock which may be issued upon conversion of the shares of Class A Common Stock will, upon issuance by the Corporation, be deemed validly issued, fully paid and non-assessable and free from all taxes, liens, and charges with respect to the issuance thereof.
So long as any shares of Class A Common Stock are outstanding, the Corporation shall not, without first obtaining the approval by vote or written consent in the manner provided by law of the holders of not less than 66 2/3 % per cent of the total number of shares of Class A Common Stock outstanding, voting separately as a class, (1) alter or change the rights or privileges of Class A Common Stock, (2) amend any provision of this paragraph 4 affecting the Class A Common Stock or (3) effect any re-classification or recapitalization of the Corporation's outstanding capital stock.
Shares of Class A Common Stock may be issued to any party eligible to own such stock for such consideration, in an amount not less than the par value thereof, as the Board of Directors of the Corporation shall determine to be adequate, including without limitation, shares of the Corporation's Common Stock on a share for share basis.
5. The Corporation is to have perpetual existence.
6. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the real and personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purposes and to abolish any such reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the Corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the by-laws of the Corporation; and, unless the resolution or by-laws, expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute, to sell, lease or exchange all or substantially all of the property and assets of the Corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the Corporation.
7. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.
8. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the Corporation. Elections of directors need not be by written ballot unless the by-laws of the Corporation shall so provide.
9. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
10. No director of the Corporation shall have any
personal liability to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director; provided, however, that this
section shall not eliminate or limit the liability of a director (i) for any
breach of a director's duty or loyalty to the Corporation or its stockholders,
(ii) for acts or
omissions not in good faith or which involve intentional misconduct or a know violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. The limitation of liability shall not eliminate or limit the liability of any director for any act or omission occurring prior to the date upon which this provision becomes effective.
As required by Section 228 of the General Corporation Law of the State of Delaware prompt notice of such Consent by stockholders in lieu of meeting was given in writing to all shareholders of record of the corporation.
FOURTH: Said Amended and Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Cal-Maine Foods, Inc. has caused this Certificated to be signed by B. J. Raines, its Vice President, on this the 24th day of September, 1996.
ATTEST:
EXHIBIT 3.2
RESTATED TO INCLUDE ALL AMENDMENTS
THROUGH SEPTEMBER 23, 1996
CAL-MAINE FOODS, INC.
BYLAWS
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both, within and without the State of Delaware, as the board of directors may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Jackson, State of Mississippi, at such place as may be fixed from time to time by the board of directors, or at such other place, either within or without the State of Delaware, as shall be designated from time to time by the board of directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of meeting or in a duly
executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1970, shall be held on the fourth Monday of September, if not a legal holiday, and, if a legal holiday, then on the next secular day following, at 10:00 A.M., or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting, stating the place, date and hour of the meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the chief executive officer or president and shall be called by the chief executive officer or president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in voting interest of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting, stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority in voting interest of the Capital stock issued and outstanding and entitled to vote thereat, present in person or represented in proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or
by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders of a majority in voting interest of the Capital stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation a different vote is required, in which case such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation, each stockholder holding Common Stock shall, at every meeting of the stockholders, be entitled to vote in person or by proxy for each share of the Common Stock held by such
stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Unless otherwise provided in the certificate of incorporation, each shareholder holding Class A Common Stock shall at every meeting of the stockholders be entitled to ten votes in person or by proxy for each share of the Class A Common Stock held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. At all elections of directors of the corporation, each stockholder having voting power shall be entitled to exercise such right of cumulative voting as provided in the certificate of incorporation.
Section 11. Unless otherwise provided in the certificate of incorporation, any action required to be taken at an annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding Capital stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board shall not be less than three nor more than twelve. The first board shall consist of three directors. Thereafter, within the limits above specified, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting. The directors shall be elected at the annual meeting of the stockholders except as provided in Section 2 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors do not need to be stockholders.
Section 2. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director; and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at
least ten percent of the total number of votes represented by the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.
Section 3. The business of the corporation shall be managed by its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors shall be held immediately following and at the same place as the annual meeting of the shareholders and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held at the time and place aforesaid, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver by all of the directors.
Section 6. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board.
Section 7. Special meetings of the board may be called by the chief executive officer, chairman of the board, or president on three days notice to each director, either personally, by mail, telegram or by facsimile transmission; special meetings shall be called by the chairman, chief executive officer, president, or secretary in like manner and on like written request of two directors.
Section 8. At all meetings of the board, a majority of the directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meetings of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of the proceedings of the board or committee.
Section 10. The chairman of the board of directors shall preside at all meetings of the board of directors. In the absence of the chairman, the chief executive officer shall preside and in his absence the president shall preside.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting any agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the bylaws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of incorporation, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a committee thereof or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing
committees may be allowed compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States Mail. Notice to directors may also be given by telegram or by facsimile transmission.
Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these bylaws, a waiver of notice thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a chief executive officer, a president, a vice-president, a secretary and a treasurer. The
board of directors may also choose additional vice-presidents and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these bylaws otherwise provide.
Section 2. The board of directors at its first meeting after each annual meeting of stockholders shall choose a chief executive officer, a president, one or more vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such officers and agents as its shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors.
CHIEF EXECUTIVE OFFICER
Section 6. The chief executive officer shall have general managerial responsibilities for the affairs of the corporation, subject to orders and directions of the Board of Directors, and
shall preside at all meeting of the stockholders. He may execute bonds, mortgages and other contracts requiring a seal under the seal of the corporation, except where required or permitted by law to otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directs to some other officer or agent of the corporation.
THE PRESIDENT
Section 7. Subject to the direction of the Board of Directors and of the chief executive officer the president shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He may execute bonds, mortgages and other contracts requiring a seal under the seal of the corporation, except where required or permitted by law to otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directs to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the chief executive officer or the president or in the event of their inability or refusal to act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated, or in the absence of any designation, then in the order of their election)
shall perform the duties of the chief executive officer or of the president and when so acting, shall have all the powers of and be subject to all the restrictions upon the chief executive officer of the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors and shall perform such other duties as may be prescribed by the board of directors or chief executive officer, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it, and when so affixed it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other office to affix the seal of the corporation and to attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation.
Section 13. If required by the board of directors, he shall give the corporation a bond at the expense of the corporation (which shall be renewed every six years) in such sum and with surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers and money and other property of whatever kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the treasurer of in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of Capital stock in the corporation shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors or the president or a vice-president and the treasurer or an assistant treasurer or the secretary or an assistant secretary of the corporation certifying the number and class of shares owned by him in the corporation.
Section 2. Where a certificate is countersigned (1) by a transfer agent other than the corporation or its employee, or (2)
by a registrar other than the corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders of any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than 60 days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on the books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors may from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation or for such other
purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish the reserve in the manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting of the shareholders a full and clear statement of the business and condition of the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation shall be signed by manual or facsimile signature by such officer or officers or such other person or persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the corporation, the year of its incorporation and the words "Corporate Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise shown thereon.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation, at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such special meeting.
EXHIBIT 4.1
NUMBER SHARES
CMF- [CAL-MAINE LOGO]
COMMON STOCK COMMONSTOCK
SEE REVERSE FOR CERTAIN DEFINITIONS
CAL-MAINE FOODS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF
DELAWARE
CUSIP
THIS CERTIFIES that
is the owner of
|
FULLY PAID AND NONASSESABLE SHARES OF COMMON STOCK $.Ol PAR VALUE PER SHARE, OF
CAL-MAINEFOODS,INC.
transferable on the books of the Company in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This
certifica is not vaild until counter signed and registered by the Transfer
Agent and Registar.
WITNESS the facsimile seal of the Company and the facsimile
signtures of its duly authorzed officers.
Dated:
Chief Executive Officer
(SEAL)
Secretary
COUNTERSIGNED AND REGISTERED:
SunTrust Bank, Atlanta
(Atlanta, Georgia)
|
CAL-MAINE FOODS, INC.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OF THE COMPANY, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS, SUCH REQUEST MAY BE MADE TO THE COMPANY OR THE TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with rights of survivorship and not
as tenants in common
UNIF GIFT MIN ACT -.....Custodian.....
(cust) (minor)
under Uniform Gifts to Minors
Act........
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received,__________ hereby sell, assign and transfer unto
Please insert social security or other identifying number of assignee
of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
to transfer the said stock on the books of the within named Company with full power of substitution in the premises.
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGMENT OR ANY CHANGE WHATEVER.
Note: Signature(s) should be guaranteed by an
eligible institution pursuant to S.E.C. Rule 17Ad-15
EXHIBIT 4.2
WARRANT AGREEMENT
BETWEEN
CAL-MAINE FOODS, INC.
AND
PAULSON INVESTMENT COMPANY, INC.
WARRANTS FOR PURCHASE OF 250,000 SHARES OF COMMON STOCK,
PAR VALUE $0.01 PER SHARE, OF CAL-MAINE FOODS, INC.
WARRANTS VOID AFTER ____________ _____, 2001
WARRANT AGREEMENT, dated as of _____________, 1996, between CAL-MAINE
FOODS, INC. (the "Company") and PAULSON INVESTMENT COMPANY, INC. (the
"Representative").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representative warrants ("Warrants") to purchase up to an aggregate of 250,000 shares of Common Stock, $0.01 par value, of the Company; and
WHEREAS, the Representative has agreed pursuant to the underwriting agreement (the "Underwriting Agreement") dated as of the date hereof between the Company and the several Underwriters listed therein to act as the Representative in connection with the Company's proposed public offering of up to 2,875,000 shares of Common Stock (including 800,000 shares being sold by a Selling Stockholder) at a public offering price of $_____ per share of Common Stock (the "Public Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be issued on the Closing Date (as such term is defined in the Underwriting Agreement) by the Company to the Representative in consideration for, and as part of the Representative's compensation in connection with, the Representative acting as the Representative pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency which is hereby acknowledged, the parties hereto agreed as follows:
THE REPRESENTATIVE (OR ITS DESIGNEES) IS HEREBY GRANTED THE RIGHT TO PURCHASE, AT ANY TIME FROM ____________, 1997, UNTIL 5:00 P.M., PACIFIC TIME, ON ____________, 2001, UP TO AN AGGREGATE OF 250,000 SHARES OF COMMON STOCK AT AN INITIAL EXERCISE PRICE (SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 3 HEREOF) OF $_______ PER SHARE OF COMMON STOCK SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT.
The Warrants issued pursuant hereto are subject to the following terms and conditions:
1. DEFINITIONS OF CERTAIN TERMS. Except as may be otherwise clearly required by the context, the following terms have the following meanings:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Closing Date" means the date on which the Offering is closed.
(c) "Commission" means the Securities and Exchange Commission.
(d) "Common Stock" means the common stock, $0.01 par value, of the Company.
(e) "Company" means Cal-Maine Foods, Inc., a Delaware corporation.
(f) "Company's Expenses" means any and all expenses payable by the Company or the Warrantholder in connection with the offering described in the Registration Statement, as defined below, except the Warrantholder's Expenses.
(g) "Effective Date" means the date on which the Registration Statement is declared effective by the Commission.
(h) "Exercise Price" means the price at which the Warrantholder may purchase one Share (or other Securities obtainable in lieu of one Share) upon exercise of a Warrant as determined from time to time pursuant to the provisions hereof. The initial Exercise Price is $_________ per Share.
(i) "Offering" means the public offering of Shares made pursuant to the Registration Statement.
(j) "Participating Underwriter" means any underwriter participating in the sale of the Shares pursuant to the Registration Statement, as defined below.
(k) "Registration Statement" means the Company's registration statement (File No.333-______), as amended on the Closing Date.
(l) "Rules and Regulations" means the rules and regulations of the Commission adopted under the Act.
(m) "Securities" means the securities obtained or obtainable upon exercise of the Warrant(s) or securities obtained or obtainable upon exercise, exchange, or conversion of such securities.
(n) "Share" means, as appropriate, either (i) a share of Common Stock which is one of the shares of Common Stock offered to the public through the prospectus included in the Registration Statement or (ii) an identical share of Common Stock for which a Warrant is initially exercisable.
(o) "Warrant Certificate" means the certificate evidencing the Warrant(s), a form of which is annexed hereto as Exhibit A.
(p) "Warrantholder" means the record holder of the Warrant(s) or Securities. The initial Warrantholder is Paulson Investment Company, Inc.
(q) "Warrantholder's Expenses" means the sum of: (i) the aggregate amount of cash payments made to an underwriter, underwriting syndicate, or agent in connection with a public offering described in Section 6 hereof multiplied by a fraction the numerator of which is the aggregate sales price of the Securities sold by such underwriter, underwriting syndicate, or agent in such offering and the denominator of which is the aggregate sales price of all of the Securities sold by such underwriter, underwriting syndicate, or agent in such offering and (ii) all out-of-pocket expenses of the Warrantholder, except for the fees and disbursements of one firm retained as legal counsel for the Warrantholder that will be paid by the Company.
(r) "Warrant(s)" means the warrant(s) evidenced by the Warrant Certificate, any similar certificate issued in connection with the Offering, or any certificate obtained upon transfer or partial exercise of the Warrant(s) evidenced by any such certificate.
2. EXERCISE OF WARRANT(S).
(a) All or any part of the Warrant may be exercised during a four-year period commencing on the first anniversary of the Effective Date and ending at 5 p.m. Pacific Time on the fifth anniversary of the Effective Date by surrendering the Warrant Certificate, together with appropriate instructions, duly executed by the Warrantholder or by its duly authorized attorney, at the office of the Company, 3320 Woodrow Wilson Drive, Jackson, Mississippi 39209, or at such other office or agency as the Company may designate. Upon receipt of notice of exercise, the Company shall immediately instruct its transfer agent to prepare certificates for the Securities to be received by the Warrantholder upon completion of the Warrant exercise. When such certificates are prepared, the Company shall notify the Warrantholder and deliver such certificates to the Warrantholder (or as otherwise designated by the Warrantholder's written instructions) immediately upon payment in full by the Warrantholder, in lawful money of the United States, of the Exercise Price payable with respect to the Securities being purchased. If the Warrantholder shall represent and warrant that all applicable registration and prospectus delivery requirements for their sale have been complied with upon sale of the Securities received upon exercise of the Warrant(s), such certificates shall not bear a legend with respect to the Act.
If fewer than all the Securities purchasable under the Warrant(s) are purchased, the Company will, upon such partial exercise, execute and deliver to the Warrantholder a new Warrant Certificate (dated the date hereof), in form and tenor similar to the Warrant Certificate, evidencing that portion of the Warrant not exercised. The Securities to be obtained on exercise of the Warrant(s) will be deemed to have been issued, and any person exercising the Warrants will be deemed to have become a holder of record of those Securities as of the date of the payment of the Exercise Price.
(b) In addition to the method of payment set forth in paragraph
(a) of this Section 2 and in lieu of any cash payment required thereunder, the
Warrantholder shall have the right at any time and from time to time to
exercise the Warrant(s) in full or in part by surrendering the
Warrant Certificate in the manner specified herein in exchange for the number of shares of Common Stock equal to the quotient derived from DIVIDING the NUMERATOR (which shall be an amount equal to the DIFFERENCE BETWEEN: (I) the number of shares of Common Stock or other Securities as to which the Warrant is being exercised MULTIPLIED by the per share Market Price, AND (II) the number of shares of Common Stock or other Securities as to which the Warrant is being exercised MULTIPLIED by the Exercise Price) BY the DENOMINATOR which shall be the per share Market Price of the Common Stock. Solely for the purposes of this paragraph, Market Price shall be calculated either: (i) on the date on which the form of election attached hereto is deemed to have been sent to the Company pursuant to Section 10 hereof (Notice Date") or (ii) as the average of the Market Prices for each of the five trading days preceding the Notice Date, whichever of (i) or (ii) is greater.
As used herein, the term "Market Price" at any date shall be deemed to be, when referring to the Common Stock, the last reported sale price, or, in case no such reported sale takes place on such day, the average of the last reported sale prices for the last three (3) trading days, in either case as officially reported by the principal securities exchange on which the Common Stock is listed or admitted to trading or by the NASDAQ Stock Market ("NSM"), or, if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted by the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the average closing bid price as furnished by the National Association of Securities Dealers, Inc. ("NASD") through NASDAQ or similar organization if NASDAQ is no longer reporting such information, or if the Common Stock is not quoted on NASDAQ, as determined in good faith (using customary valuation methods) by resolution of the members of the Board of Directors of the Company, based on the best information available to it.
3. ADJUSTMENTS IN CERTAIN EVENTS. The number, class, and price of Securities for which the Warrant Certificate may be exercised are subject to adjustment from time to time upon the happening of certain events as follows:
(a) If the outstanding shares of the Company's Common Stock are
divided into a greater number of shares or a dividend in stock is paid on the
Common Stock, the number of shares of Common Stock for which the Warrant(s) is
(are) then exercisable will be proportionately increased and the Exercise Price
will be proportionately reduced; and, conversely, if the outstanding shares of
Common Stock are combined into a smaller number of shares of Common Stock, the
number of shares of Common Stock for which the Warrant(s) is (are) then
exercisable will be proportionately reduced and the Exercise Price will be
proportionately increased. The increases and reductions provided for in this
paragraph (a) of Section 3 will be made with the intent and, as nearly as
practicable, the effect that neither the percentage of the total equity of the
Company obtainable on exercise of the Warrant(s) nor the price payable for such
percentage upon such exercise will be affected by any event described in this
paragraph (a) of Section 3.
(b) In case of any change in the Common Stock through merger, consolidation, reclassification, reorganization, partial or complete liquidation, purchase of substantially all the assets of the Company, or other change in the capital structure of the Company, then, as a condition of such change, lawful and adequate provision will be made so that the holder of the Warrant Certificate will have the right thereafter to receive upon the exercise of the Warrant(s) the kind and amount of shares of stock or other securities or property which it would have been entitled if, immediately prior to such event, it had held the number of shares of Common Stock obtainable upon the exercise of the Warrant(s). In any such case, appropriate adjustment will be made in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Warrantholder, to the end that the provisions set forth herein will thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of the Warrant(s). The Company will not permit any change in its capital structure to occur unless the issuer of the shares of stock or other securities to be received by the holder of the Warrant Certificate, if not the Company, agrees to be bound by and comply with the provisions of the Warrant Certificate.
(c) When any adjustment is required to be made in the number of
shares of Common Stock or other securities, or property purchasable upon
exercise of the Warrant(s), the Company will promptly determine the new number
of such shares or other securities or property purchasable upon exercise of the
Warrant(s) and (i) prepare and retain on file a statement describing in
reasonable detail the method used in arriving at the new number of such shares
or other securities or property purchasable upon exercise of the Warrant(s) and
(ii) cause a copy of such statement to be mailed to the Warrantholder within
thirty (30) days after the date of the event giving rise to the adjustment.
(d) No fractional shares of Common Stock or other securities will be issued in connection with the exercise of the Warrant(s), but the Company will pay, in lieu of fractional shares, a cash payment therefor on the basis of the Market Price as that term is defined in paragraph (b) of Section 2.
(e) If preferred securities of the Company or securities of any subsidiary of the Company are distributed pro rata to holders of any or all of the Company's securities, such number of securities will be distributed to the Warrantholder or its assignee upon exercise of its rights hereunder as such Warrantholder or assignee would have been entitled to if the Warrant Certificate had been exercised prior to such distribution. The provisions with respect to adjustment of the Common Stock provided in this Section 3 will also apply to the preferred securities and securities of any subsidiary to which the Warrantholder or his assignee is entitled under this paragraph (e) of Section 3.
(f) Notwithstanding anything herein to the contrary, there will be no adjustment made hereunder on account of the sale of the Common Stock or other Securities purchasable upon exercise of the Warrant(s).
4. RESERVATION OF SHARES. The Company agrees that the number of shares of Common Stock or other Securities sufficient to provide for the exercise of the Warrant(s) upon the basis set forth above will at all times during the term of the Warrant(s) be reserved for exercise.
5. VALIDITY OF SECURITIES. All Securities delivered pursuant the exercise of the Warrant(s) will be duly and validly issued in accordance with their terms, and the Company will pay all documentary and transfer taxes, if any, in respect of the original issuance thereof upon exercise of the Warrant(s).
6. REGISTRATION OF SECURITIES ISSUABLE ON EXERCISE OF WARRANT(S).
(a) The Company shall register the Securities with the Commission pursuant to the Act so as to allow the unrestricted sale of the Securities to the public from time to time during a five year period commencing on the first anniversary of the Effective Date and ending at 5:00 p.m. Pacific Time on the fifth anniversary of the Effective Date (the "Registration Period"). The Company shall also file such applications and other documents necessary to permit the sale of the Securities to the public during the Registration Period in those states in which the Shares were qualified for sale in the Offering or such other states as to which the Company and the Warrantholder agree. In order to comply with the provisions of this Section 6(a), the Company shall not be required to file more than one registration statement. No registration right of any kind, "piggyback" or otherwise, is required to be in effect longer than five years from the Closing Date.
(b) The Company shall pay all of the Company's Expenses and each Warrantholder will pay its pro rata share of the Warrantholder's Expenses relating to the registration, offer, and sale of the Securities.
(c) Except as specifically provided herein, the manner and conduct of the registration, including the contents of the registration statement, will be entirely in the control and at the discretion of the Company. The Company shall file such post-effective amendments and supplements as may be necessary to maintain the currency of the registration statement during the period of its use. In addition, if the Warrantholder participating in the registration is advised by counsel that the registration statement, in its opinion, is deficient in any material respect, the Company shall use its best efforts to cause the registration statement to be amended to eliminate the concerns raised.
(d) The Company shall furnish to the Warrantholder the number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as the Warrantholder may reasonably request in order to facilitate the disposition of Securities owned by it.
(e) The Company shall, at the request of Warrantholder: (i) furnish an opinion of the counsel representing the Company for the purposes of the registration pursuant to this
Section 6, addressed to the Warrantholder and any Participating Underwriter,
(ii) furnish an appropriate letter from the independent public accountants of
the Company, addressed to the Warrantholder and any Participating Underwriter,
and (iii) make representations and warranties to the Warrantholder and any
Participating Underwriter. A request pursuant to this subsection (e) may be
made on three occasions. The documents required to be delivered pursuant to
this subsection (e) will be dated within 30 days of the request and will be, in
form and substance equivalent to similar documents furnished to the
underwriters in connection with the Offering, with such changes as may be
appropriate in light of changed circumstances.
7. INDEMNIFICATION IN CONNECTION WITH REGISTRATION.
(a) In connection with its registration obligations, the Company shall indemnify and hold harmless the selling Warrantholder, any person who controls the selling Warrantholder within the meaning of the Act, and any Participating Underwriter against any losses, claims, damages, or liabilities, joint or several, to which the Warrantholder, controlling person, or Participating Underwriter may be subject under the Act or otherwise; and it shall reimburse each Warrantholder, each controlling person, and each Participating Underwriter for any legal or other expenses reasonably incurred by the Warrantholder, controlling person, or Participating Underwriter in connection with investigating or defending any such loss, claim, damage, liability, or action, insofar as such losses, claims, damages, or liabilities, joint or several (or actions in respect thereof), arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained, on the effective date thereof, in any such registration statement or any preliminary prospectus or final prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company will not be liable in any case to the extent that any loss, claim, damage, or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in any registration statement, preliminary prospectus, final prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished by the Warrantholder or any person controlling the Warrantholder or any Participating Underwriter for use in the preparation thereof. The indemnity agreement contained in this subparagraph (a) will not apply to amounts paid to any claimant in settlement of any suit or claim unless such payment is first approved by the Company, such approval not to be unreasonably withheld or delayed.
(b) The selling Warrantholder, as a condition of the Company's registration obligation, shall indemnify and hold harmless the Company, each of its directors, each of its officers who have signed any registration statement or other filing or any amendment or supplement thereto, and any person who controls the Company within the meaning of the Act, against any losses, claims, damages, or liabilities to which the Company or any such director, officer, or controlling person may become subject under the Act or otherwise, and shall reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, or controlling person in connection with investigating or defending any such
loss, claim, damage, liability, or action, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in said registration statement, any preliminary or final prospectus, or other filing, or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in said registration statement, preliminary or final prospectus, or other filing, or amendment or supplement, in reliance upon and in conformity with written information furnished by the Warrantholder or any person controlling the Warrantholder or any Participating Underwriter for use in the preparation thereof; provided, however, that the indemnity agreement contained in this subparagraph (b) shall not apply to amounts paid to any claimant in settlement of any suit or claim unless such payment is first approved by the Warrantholder, such approval not to be unreasonably withheld or delayed.
(c) Promptly after receipt by an indemnified party under subparagraphs (a) or (b) above of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, notify the indemnifying party of the commencement thereof, but the omission to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party otherwise than under subparagraphs (a) and (b).
(d) If any such action is brought against any indemnified party and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified parry; and after notice from the indemnifying party to such indemnified party of its election to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation.
8. RESTRICTIONS ON TRANSFER. The Warrant Certificate and the Warrant(s) may not be sold, transferred, assigned or hypothecated except to underwriters of the Offering or to individuals who are either a partner or an officer of such an underwriter or by will or by operation of law. The Warrant(s) may only be exercised by one of the aforesaid persons or by a successor entity or legal representative. The Warrant(s) may be divided or combined, upon request to the Company by the Warrantholder, into a certificate or certificates evidencing the same aggregate number of Warrants.
9. NO RIGHTS AS A STOCKHOLDER. Except as otherwise provided herein, the Warrantholder will not, by virtue of ownership of the Warrant(s), be entitled to any rights of a stockholder of the Company but will, upon written request to the Company, be entitled to receive such quarterly or annual reports as the Company distributes to its stockholders.
10. NOTICE. Any notices required or permitted to be given hereunder will be in writing and may be served personally or by mail; and if served will be addressed as follows:
If to the Company:
3320 Woodrow Wilson Drive
Jackson, Mississippi 39209
Attn: Fred R. Adams, Jr., Chairman of the Board
If to the Warrantholder:
at the address furnished
by the Warrantholder to the Company for the purpose of notice.
Any notice so given by mail will be deemed effectively given 48 hours after mailing when deposited in the United States mail, registered or certified mail, return receipt requested, postage prepaid and addressed as specified above. Any party may by written notice to the other specify a different address for notice purposes.
11. APPLICABLE LAW. This Warrant Agreement and the Warrant(s) issuable pursuant to the provisions hereof will be governed by and construed in accordance with the laws of the State of Oregon, without reference to conflict of laws principles thereunder. All disputes relating to this Warrant Agreement and/or the Warrant(s) issuable hereunder shall be tried before the courts of Oregon located in Multnomah County, Oregon to the exclusion of all other courts that might have jurisdiction.
Dated as of , 1996
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CAL-MAINE FOODS, INC.
By:
---------------------------------
---------------------------------
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EXHIBIT A
[FORM OF WARRANTS CERTIFICATE]
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON RECEIPT BY THE ISSUER OF AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., PACIFIC TIME, ________, 2001
NO. W- WARRANTS TO PURCHASE
250,000 SHARES OF COMMON STOCK
WARRANT CERTIFICATE
This WARRANT CERTIFICATE certifies that _________, or registered
assigns, is the registered holder of a Warrant to purchase initially, at any
time from _______, 1997 until 5:00 p.m., Pacific time, on _______, 2001
("Expiration Date"), up to _________________ fully-paid and non-assessable
shares of common stock, $.01 par value (the "Common Stock"), of CAL-MAINE
FOODS, INC., a Delaware corporation (the "Company"), at the initial exercise
price, subject to adjustment in certain events (the "Exercise Price"), of $____
per share of Common Stock upon surrender of this Warrant Certificate and
payment of the Exercise Price in cash or in warrants as provided in paragraphs
(a) and (b), as the case may be, of Section 2 of the Warrant Agreement (defined
below) at an office or agency of the Company, but subject to the conditions set
forth herein and in the Warrant Agreement dated as of __________, 1996 between
the Company and Paulson Investment Company, Inc. (the "Warrant Agreement").
Payment of the Exercise Price, where payment is made in cash pursuant to
paragraph (a) of Section 2 of the Warrant Agreement, shall be made by certified
or official bank check in New York Clearing House funds payable to the order of
the Company or, where payment is made
in Warrant(s) pursuant to paragraph (b) of Section 2 of the Warrant Agreement, by surrender of this Warrant Certificate, as provided in the Warrant Agreement.
The Warrant(s) may not be exercised after 5:00 p.m., Pacific time, on the Expiration Date, at which time the Warrant(s) shall become null and void.
The Warrants evidenced by this Warrant Certificate have been issued pursuant to the Warrant Agreement, dated as of _______, 1996, between Cal-Maine Foods, Inc. and Paulson Investment Company, Inc. (the "Warrant Agreement") which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations and duties thereunder of the Company and the holder (the word "holder" meaning the registered holder) of the Warrant(s).
The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price and the type and/or number of the Company's securities issuable upon exercise of the Warrant(s) may, subject to certain conditions, be adjusted. In such event, the Company will, at the request of the holder, issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrant(s); provided, however, that the failure of the Company to issue such new Warrant Certificate shall not in any way change, alter, or otherwise impair, the rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant Certificate at an office or agency of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing a like number of securities for which this Warrant may be exercised shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax or other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the securities for which this Warrant may be exercised, the Company shall forthwith issue to the holder hereof a new Warrant Certificate representing the remaining number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary.
All terms use in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its corporate seal.
Dated as of , 1996
--------------
CAL-MAINE FOODS, INC.
[Seal]
By:
-------------------------
Name:
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Title:
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 2(a)
OF THE BELOW DESCRIBED WARRANT AGREEMENT
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ___________________ shares of Common Stock and herewith tenders in payment for such securities a certified or official bank check payable in New York Clearing House funds to the order of Cal-Maine Foods, Inc. in the amount of $________________, all in accordance with the terms of Section 2(a) of the Warrant Agreement, dated as of ____________, 199___, between Cal-Maine Foods, Inc. and Paulson Investment Company, Inc. The undersigned requests that a certificate for such securities be registered in the name of _____________________ whose address is __________________________ and that such certificate be delivered to ______________ whose address is _____________________________.
Dated:
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 2(b)
OF THE BELOW DESCRIBED WARRANT AGREEMENT
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase __________________ shares
of Common Stock and herewith tenders in payment for such securities such number
of the Warrant(s) as shall be determined in accordance with the terms of
Section 2(b) of the Warrant Agreement, dated as of _________, 1996, between
Cal-Maine Foods, Inc. and Paulson Investment Company, Inc. The undersigned
requests that a certificate for such securities be registered in the name of
_________________________whose address is_________________________________and
that such certificate be delivered to __________________ whose address is
________________________________________. The undersigned also requests that a
certificate for the remaining number of unexercised warrants be registered in
the name of ___________________ whose address is
______________________________________ and that such certificate be delivered
to ________________________ whose address is
______________________________________________.
Dated:
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the Warrant Certificate or any part thereof, such assignment to be subject to restrictions of the Warrant Agreement referred to in the Warrant Certificate.)
FOR VALUE RECEIVED, ______________________ hereby sells, assigns and transfers unto
(Please print name and address of transferee)
[this Warrant Certificate] [________ warrants exercisable pursuant to this Warrant Certificate], together with all right, title and interest therein. The undersigned requests that a certificate for such securities be registered in the name of _________________________whose address is_________________________________and that such certificate be delivered to __________________ whose address is ________________________________________. The undersigned also requests that a certificate for the remaining number of unexercised warrants be registered in the name of ___________________ whose address is ______________________________________ and that such certificate be delivered to ________________________ whose address is ______________________________________________.
EXHIBIT 5
October 24, 1996
Cal-Maine Foods, Inc.
3320 Woodrow Wilson Drive
Jackson, Mississippi 39209
Re: Cal-Maine Foods, Inc.
Registration Statement on Form S-1
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Gentlemen:
We have acted as counsel to Cal-Maine Foods, Inc. (the "Company") in connection with the preparation of the Registration Statement on Form S-1 filed with the Commission today (together with all exhibits thereto, the "Registration Statement"). The Registration Statemetn relates to an underwritten public offering of up to 2,500,000 shares of the Company's common stock, par value $.01 per share (the "Common Stock") to be made through a group of investment bankers (the "Underwriters") headed by Paulson Investment Company, Inc. (the "Representative"). In addition, the Registration Statement relates to up to 375,000 shares of Common Stock that may be issued to the Underwriters upon the exercise of an over-allotment option and up to 250,000 shares of Common Stock that may be issued under the exercise of Warrants to be issued to the Representative. A form of underwriting agreement is filed as Exhibit 1, and a form of warrant agreement is filed as Exhibit 4.3 to the Registration Statemetn (respectively, the "Underwriting Agreemtn" and "Warrant Agreement"). The 3,125,000 shares of Common Stock referred to above are collectively referred to herein as the "Shares".
We have examined (1) the Amended and Restated Certificate of Incorporation of the Company, certified by the Secretary of State of the State of Delaware, (2) the By-Laws, as amended, of the Company, certified by the Secretary of the Company as being those currently in effect, (3) the Registration Statement, (4) the Underwriting Agreement, (5) the Warrant Agreement, and (6) such other corporate records, certificates, documents and other instruments as in our opinion are necessary or appropriate in connection with expressing the opinions set forth below:
Based upon the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and existing under the laws of the State of Delaware.
2. When the following events shall have occurred:
(a) the Registration Statement shall have been ordered effective by the Commission in accordance with the Securities Act of 1933, as amended, and
(b) the Shares shall have been paid for and issued in accordance with the terms of the Underwriting Agreement and the Warrant Agreement, and as provided in the Registration Statement,
the Shares thus sold will be legally issued, fully paid and nonassessable.
This firm hereby consents to the reference to it under the heading "Legal Matters" appearing in the Prospectus which is part of the Registration Statement.
Sincerely,
WELLS, MOORE, SIMMONS & NEELD
EXHIBIT 10.1
AMENDED AND RESTATED
TERM LOAN AGREEMENT
DATED AS OF MAY 29, 1990
BETWEEN
CAL-MAINE FOODS, INC.,
BORROWER,
AND
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH,
BANK
TABLE OF CONTENTS
PAGE
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ARTICLE I - AMOUNT AND TERM OF THE ADVANCE . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.01. The Advance. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.02. Making the Additional Advance. . . . . . . . . . . . . . . . . . . 3
Section 1.03. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Interest Rate. . . . . . . . . . . . . . . . . . . . . . . 3
(b) Interest Period. . . . . . . . . . . . . . . . . . . . . . 4
Section 1.04. Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.05. Evidence of Debt. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.06. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II - TERMS OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.01. Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.02. Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Mandatory . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Optional. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.03. Payments and Computations. . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.01. Conditions Precedent to the Advance. . . . . . . . . . . . . . . . 6
ARTICLE IV - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.01. Representations and Warranties of the Borrower. . . . . . . . . . . 9
ARTICLE V - COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.01. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . 12
(a) Compliance with Laws, etc. . . . . . . . . . . . . . . . . 12
(b) Payment of Taxes, etc. . . . . . . . . . . . . . . . . . . 12
(c) Preservation of Corporate Existence, etc. . . . . . . . . . 12
(d) Keeping of Books. . . . . . . . . . . . . . . . . . . . . . 13
(e) Visitation Rights. . . . . . . . . . . . . . . . . . . . . 13
(f) Maintenance of Properties, etc. . . . . . . . . . . . . . . 13
(g) Maintenance of Insurance. . . . . . . . . . . . . . . . . . 13
(h) Working Capital . . . . . . . . . . . . . . . . . . . . . . 13
(i) Tangible Net Worth. . . . . . . . . . . . . . . . . . . . . 13
(j) Debt to Equity Ratio. . . . . . . . . . . . . . . . . . . . 14
(k) Reporting Requirements. . . . . . . . . . . . . . . . . . . 14
(l) Appraisals. . . . . . . . . . . . . . . . . . . . . . . . . 15
(m) Further Assurances . . . . . . . . . . . . . . . . . . . . 15
(n) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.02. Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Guaranteed Indebtedness. . . . . . . . . . . . . . . . . . 15
(b) Dividends, etc. . . . . . . . . . . . . . . . . . . . . . . 16
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(c) Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(d) Maintenance of Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . 16
(e) Mergers, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(f) Sales, etc. of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(g) Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(h) Liens, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII - DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.01. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.02. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.01. Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.02. Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.03. No Waiver; Remedies. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.04. Costs, Expenses and Taxes. . . . . . . . . . . . . . . . . . . . . 25
Section 8.05. Limitation and Adjustment of Interest. . . . . . . . . . . . . . . 26
Section 8.06. Right of Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.07. Severability of Provisions . . . . . . . . . . . . . . . . . . . . 27
Section 8.08. Binding Effect; Governing Law. . . . . . . . . . . . . . . . . . . 27
Section 8.09. Consent to Jurisdiction; Process Agent. . . . . . . . . . . . . . . 27
Section 8.10. Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.11. Entire Agreement; Amendment and Restatement. . . . . . . . . . . . 28
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INDEX TO EXHIBITS
Exhibit A - Form of Note Exhibit B - Form of Amended Borrower Mortgage Exhibit C - Form of Amended Cal-Maine Mortgage Exhibit D - Form of New Mortgage Exhibit E - Form of Process Agent's Letter Exhibit F - Form of Borrowing Base Certificate Schedule 1 - New Properties |
AMENDED AND RESTATED
TERM LOAN AGREEMENT
Dated as of May 29, 1990
This AMENDED AND RESTATED TERM LOAN AGREEMENT is between CAL-MAINE
FOODS, INC., a Delaware corporation (the "Borrower") and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND," New York branch (the
"Bank").
R E C I T A L S:
A. Borrower and Bank have entered into that certain Term Loan Agreement dated as of May 15, 1986, as amended by (i) that certain Amendment dated as of December 1, 1987, (ii) that certain Amendment dated as of December 31, 1988, (iii) that certain Amendment dated as of June 2, 1989, and (iv) that certain Amendment dated as of June 30, 1989 (the Term Loan Agreement, as the same has previously been amended, is hereinafter referred to as the "Previous Term Loan Agreement").
B. Pursuant to the Previous Term Loan Agreement, Bank made a Four Million Five Hundred Thousand Dollar ($4,500,000.00) term loan to Borrower (the "Existing Loan"). The Borrower has made principal payments on the Existing Loan reducing the outstanding principal balance thereof to Two Million Eight Hundred Twelve Thousand Five Hundred Dollars ($2,812,500.00) as of the date hereof.
C. Borrower has requested that the Bank make an additional term loan to the Borrower in an amount up to Ten Million Six Hundred Three Thousand Five Hundred Dollars ($10,603,500.00) (the "Additional Advance").
D. Borrower, Bank, and Barclays Bank PLC (herein "Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of the date hereof (as the same may be amended, the "Revolving Credit Agreement") which amended and restated in its entirety that certain Revolving Credit Agreement dated as of October 18, 1984 between Borrower and Bank (as the same had previously been amended, herein referred to as the "Previous Revolving Credit Agreement").
E. Borrower and Bank have entered into that certain Fourth Amendment to Reimbursement and Credit Agreement (herein the "Fourth Amendment to Reimbursement Agreement") dated as of the date hereof which amended that certain Reimbursement and Credit Agreement dated as of December 1, 1987 (as amended by the Amendment dated as of May 31, 1988, the Amendment dated as of December 31, 1988, the Amendment dated as of June 2, 1989 and the Fourth Amendment to Reimbursement Agreement and as the same may hereafter be amended, herein referred to as the "Reimbursement Agreement").
F. To secure certain of the obligations and indebtedness of Borrower to the Bank under the Previous Term Loan Agreement, the Previous Revolving Credit Agreement, the
Reimbursement Agreement and the other documents executed in connection therewith, the Borrower, Cal-Maine Farms, Inc., and Cal-Maine Egg Products, Inc., executed certain security agreements and mortgages (as amended but excluding the collateral documents executed in connection with the Reimbursement Agreement, such security agreements and mortgages herein called the "Existing Collateral Documents").
G. To induce the Bank to make the Additional Advance, the Borrower has agreed to grant to Bank security interests and liens in the real properties described on Schedule 1 attached hereto and the personal property relating thereto (the "New Properties").
H. To induce Barclays to agree to extend credit to Borrower under the Revolving Credit Agreement, Borrower, Cal-Maine Farms, Inc., and Cal-Maine Egg Products, Inc. have agreed to grant security interests and liens to Barclays in the New Properties, to the extent applicable, and in the properties covered by the Existing Collateral Documents (herein the "Existing Properties" and together with the New Properties herein referred to as the "Properties").
I. The Bank and Barclays have entered into that certain Intercreditor Agreement dated the date hereof (as the same may be amended, the "Intercreditor Agreement") pursuant to which the Bank and Barclays set forth therein their respective rights and priorities in and with respect to the Properties and appointed the Bank as agent for itself and Barclays (in such capacity herein referred to as the "Agent") to act as agent with respect to the Properties as therein provided.
J. To facilitate the collateral arrangements contemplated by this Agreement, the Revolving Credit Agreement, the Reimbursement Agreement and the Intercreditor Agreement, the Bank has assigned all of its right, title, and interest in and to the Existing Collateral Documents to the Agent pursuant to that certain Assignment Agreement dated the date hereof (as the same may be amended, herein the "Assignment"); provided that with respect to that certain Collateral Pledged Agreement dated October 17, 1984 executed by Borrower, Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc. for the benefit of the Bank which is an existing Collateral Document, Bank, Borrower, Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc. only amended the terms thereof to provide that both the Bank and Barclays shall be pledgees thereunder pursuant to that certain Amendment to Collateral Pledge Agreement and Assignment of Interest dated the date hereof (such Collateral Pledge Agreement, as amended, herein the "Pledge Agreement" and together with the Collateral Chattel Mortgage Note pledged pursuant thereto and the Act of Collateral Chattel Mortgage on Inventory dated October 17, 1984 executed by Borrower, Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc. in connection therewith, herein collectively referred to as the "Louisiana Collateral Documents").
K. Borrower and the Bank now desire to amend the Previous Term Loan Agreement in its entirety as herein set forth to provide for the Additional Advance, provide for the grant of the security interests and liens in the New Properties and to reflect the assignment and amendment of the Existing Collateral Documents to the Agent.
AGREEMENTS:
ARTICLE ARTICLE I.
AMOUNT AND TERM OF THE ADVANCE
Section 1.1. The Advance. The Bank has made an advance to Borrower on May 19, 1986 (the "Initial Closing Date") in the original principal amount of Four Million Five Hundred Thousand Dollars ($4,500,000.00) (the "Initial Advance"). The Bank agrees, on the terms and conditions hereinafter set forth, to make one additional advance (the "Additional Advance") to the Borrower on the Closing Date (this and certain other capitalized terms are defined in Section 7.01) in the amount up to Ten Million Six Hundred Three Thousand Five Hundred Dollars ($10,603,500.00); provided that after giving effect to such Additional Advance the aggregate principal amount of the Advance shall not exceed the Borrowing Base.
Section 1.2. Making the Additional Advance.
(a) The Additional Advance shall be made on at
least two Business Days notice from the Borrower to the Bank
specifying the Closing Date (which shall be a Business Day) and amount
thereof and selecting the Interest Period therefor pursuant to Section
1.03(b). Not later than 2:00 P.M. (New York City time) on the Closing
Date and upon fulfillment of the conditions set forth in Article III,
the Bank, subject to Section 8.04(c), will make the Additional Advance
available to the Borrower in United States dollars (i) in same day
funds at the Bank's address referred to in Section 8.02 or (ii) by
wire transfer of immediately available funds for the account of the
Borrower or such other person as the Borrower shall designate in
writing in a Bank with an account in the Federal Reserve wire system.
The Additional Advance will be made available per clause (i) unless
the Borrower shall designate in the Closing Date notice referred to
above the information necessary for the Bank to wire the Additional
Advance in accordance with clause (ii).
(b) The notice specified in subsection (a) of this Section 1.02 shall be irrevocable and binding on the Borrower and the Borrower shall indemnify the Bank against any loss or expense incurred by the Bank as a result of any failure to fulfill on or before the Closing Date the conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits) or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Bank to fund the Additional Advance to be made by the Bank if the Additional Advance, as a result of such failure, is not made on the Closing Date.
Section 1.3. Interest.
(a) Interest Rate. The Borrower shall pay interest on the unpaid principal amount of the Advance quarterly on the last Business Day of each June, September, December and March commencing June 29, 1990 until and including March 31, 2000 and on June 30, 2000, at an interest rate per annum equal to 1.65% per annum above the Term Federal Funds Rate for the applicable Interest Period; provided,
that such rate shall in no event be higher than the maximum interest rate permitted by law; and provided, further, that any amount of principal which is not paid when due (whether at stated maturity, by acceleration or otherwise) shall bear interest, from the date on which such amount is due until such amount is paid in full, at the Default Rate.
(b) Interest Period. The period between the Closing Date and the date of payment in full of the Advance shall be divided into successive periods, each such period being an Interest Period. The period commencing on the Initial Closing Date has been divided into successive periods, each of such periods also being an Interest Period. The Interest Period in existence under the Previous Term Loan Agreement shall continue hereunder until, and shall end on, the Closing Date. The initial Interest Period under this Agreement and with respect to the total amount of the Advance shall begin on the Closing Date and end on the last day of such period as selected by the Borrower, and thereafter, each subsequent Interest Period shall begin on the last day of the immediately preceding Interest Period and end on the last day of such period as selected by the Borrower. The duration of each Interest Period shall be of one, three, six, nine or twelve whole months, as the Borrower may select, upon notice, specifying the first day and duration of such Interest Period, received by the Bank before 2:00 P.M. (New York City time) one Business Day prior to the first day of such Interest Period or, if the Bank shall, in its sole discretion, determine that funds are available to it for periods longer than twelve months, such longer period as the Borrower shall select after consultation with the Bank; provided, however, that if the Borrower fails so to select the duration of any Interest Period, the duration of such Interest Period shall be one month and; provided, further, that the duration of any Interest Period which commences before any principal repayment installment date and otherwise ends after such date shall end on such date, and no Interest Period shall end after the last principal repayment date.
Section 1.4. Increased Costs. If, on or after the date
hereof, the introduction of or any change (including, without limitation, any
change by way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation or the compliance by the Bank with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), shall result in any increase in the
cost to the Bank of agreeing to make or making, funding, or maintaining the
Advance, or to reduce the amount of any sums received or receivable by the Bank
under this Agreement or the Note, then, the Borrower shall from time to time,
upon demand by the Bank, pay such additional amounts as will compensate the
Bank for such increased cost or reduced amount. A certificate of the Bank,
submitted to the Borrower, setting forth the amounts of such increased cost or
reduced amount and the additional amounts to be paid to the Bank under this
Section shall be conclusive. After the Bank notifies the Borrower of any
increased cost pursuant to this Section 1.04, the Borrower may upon at least
five Business Days written notice to the Bank prepay in full or in part the
Advance, provided the Borrower shall comply with the prepayment provisions of
Section 2.02(b) and reimburse the Bank for all such increased costs incurred by
the Bank and pay to the Bank all amounts due pursuant to Section 8.04(b).
Section 1.5. Evidence of Debt. The indebtedness of the Borrower resulting from the Advance shall be evidenced by a promissory note of the Borrower, in substantially the form of Exhibit A hereto (the "Note"), delivered to the Bank pursuant to Article III.
Section 1.6. Use of Proceeds. The proceeds of the Initial Advance were used partially for the purpose of re-financing the Borrower's purchase of an egg production facility and feed mill at Bethune, South Carolina and partially for the purpose of financing the operations at such facilities. The process of the Additional Advance shall be used to refinance the purchase of the New Properties and to refinance the repurchase of certain preferred stock issued by Borrower to Sunny Fresh Foods, Inc.
ARTICLE II.
TERMS OF PAYMENTS
Section 2.1. Repayment. The Borrower shall repay the aggregate unpaid principal amount of the Advance in accordance with this Agreement and the terms of the Note evidencing the indebtedness resulting from the Advance and delivered to the Bank pursuant to Article III.
Section 2.2. Prepayments.
(a) Mandatory. If at any time the aggregate principal amount of the Advance at such time outstanding shall exceed the Borrowing Base at such time, the Borrower shall immediately prepay the Advance in an aggregate amount equal to the difference between such outstanding amount and the Borrowing Base at such time (the "Prepayment Amount") and upon such prepayment the Borrower shall pay to the Bank all amounts due pursuant to Section 8.04(b) as a result of such prepayment. Any amount received by the Bank at the time of such prepayment shall first be applied to the Prepayment Amount.
(b) Optional. The Borrower may, upon at least five Business Days notice to the Bank, prepay the outstanding amount of the Advance on the last day of any Interest Period in whole or in part with (i) accrued interest to the date of such prepayment on the amount so prepaid and (ii) all amounts due pursuant to Section 8.04(b) as a result of such prepayment, provided, that each such partial prepayment shall be in a principal amount not less than $500,000 or an integral multiple thereof.
Section 2.3. Payments and Computations.
(a) The Borrower shall make each payment of principal, interest and other amounts due hereunder and under the Note not later than 12:00 noon (New York City time) on the day when due in lawful money of the United States of America to the Bank at its office at 245 Park Avenue, New York, New York 10167, in same day funds. Each payment or (unless otherwise specified by the Borrower or otherwise specified by this Agreement) prepayment made on account of principal or interest hereunder shall be applied, first, to interest then payable on the Advance and, then,
to the then unpaid principal of the Advance. The Borrower hereby authorizes the Bank, if and to the extent payment is not made when due hereunder or under the Note, to charge from time to time against the Borrower's accounts with the Bank any amount so due.
(b) All computations of interest hereunder and under the Note, shall be made by the Bank on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Each determination by the Bank of an interest rate hereunder shall be conclusive and binding for all purposes.
(c) whenever any payment to be made hereunder or under the Note shall be stated to be due, or whenever the last day of any Interest Period would otherwise occur, on a day other than a Business Day, such payment shall be made, and the last day or such Interest Period shall occur, on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest.
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to the Advance. The obligation of the Bank to make the Additional Advance is subject to the condition precedent that the conditions precedent set forth in the Revolving Credit Agreement shall have been satisfied and the Bank shall have received on or before the Closing Date the following, each dated such day (unless otherwise indicated), in form-and substance satisfactory to the Bank:
(a) The Note.
(b) The Borrower Mortgages, duly executed by the Borrower and, to the extent applicable, Cal-Maine Farms, Inc. and the Amended Cal-Maine Mortgage, duly executed by Cal-Maine Farms, Inc. together with:
(i) title insurance policies, binders or endorsements issued by or on behalf of a reputable title insurance company approved by the Bank insuring title to each of the Encumbered Properties and assuring the Agent that each of the Mortgages is valid and enforceable, that the lien of each of the Mortgages covering each of the Encumbered Properties is free and clear of all defects and encumbrances (executed Permitted Encumbrances), and naming the Agent as an additional insured;
(ii) evidence of all insurance required by the Mortgages;
(iii) evidence of the completion of all necessary recordings and filings of the Borrower and Cal-Maine Farms, Inc. as may be necessary or, in
the opinion of the Bank, desirable to perfect the security interests and liens in favor of the Agent created by the Mortgages;
(iv) evidence that there exists no lien or encumbrance on any of the Encumbered Properties (and the buildings thereon) that is superior to the lien created by the Mortgages, as the case may be (other than the liens and encumbrances specifically permitted by the Mortgages or such superior liens as to which the Borrower shall have delivered instruments satisfactory to the Bank which when filed and recorded by the Bank will result in the discharge of such superior liens);
(v) copies of all recorded easements, rights-of-way, restrictive covenants, leases, encumbrances, and other documents and instruments filed of record that affect the Encumbered Properties, together with evidence satisfactory to Bank that the Encumbered Properties are properly zoned for their respective present use;
(vi) an environmental report addressed to Agent and prepared by an environmental engineer acceptable to Agent certifying that the Encumbered Properties and Borrower's or Cal-Maine Foods, Inc.'s operations thereon comply with all environmental laws, that the Encumbered Properties are free of hazardous substances (as determined under environmental laws), and that the Encumbered Properties and any structures thereon are free of any conditions that present indoor or outdoor air hazards; and
(vii) evidence that all other actions necessary or, in the opinion of the Bank, desirable to perfect and protect the lien created by each of the Mortgages have been taken.
(c) The Revolving Credit Agreement, duly executed by the Borrower and Barclays;
(d) The Intercreditor Agreement duly executed by
Barclays;
(e) The Assignment and the Amendment to
|
Collateral Pledge Agreement duly executed;
(f) The Amended Guaranty Agreements duly executed by each Guarantor, as applicable;
(g) Certified copies of (i) resolutions of the
Board of Directors of the Borrower evidencing approval of each Loan
Document to which it is a party and the matters contemplated thereby,
(ii) resolutions of each other Loan Party evidencing approval of each
Loan Document to which it is a party and the matters contemplated
thereby, and (iii) all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to each such
Loan Document;
(h) A certificate of the Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of such Loan Party authorized to sign each Loan Document to which it is a party and the other documents contemplated hereby or to be delivered by it hereunder. The Bank may conclusively rely on each such certificate until it shall receive a further certificate of the Secretary or an Assistant Secretary of the respective Loan Party canceling, amending or replacing the prior certificate;
(i) A copy of the appraisals of the Encumbered Properties satisfactory in form and substance to the Bank;
(j) A letter from the Process Agent in substantially the form of Exhibit E hereto extending the term of its appointment as "Process Agent" in connection with the Loan Documents, the Reimbursement Agreement and the Revolving Loan Documents;
(k) A Borrowing Base Certificate;
(l) A certificate from each insurer or the insurance broker evidencing compliance of the insurance requirements of the Mortgages and the Security Agreements and naming the Agent as primary loss payee in form and substance satisfactory to the Bank;
(m) A favorable opinion of counsel for the Borrower and the Guarantors, in form and substance acceptable to the Bank and addressing such matters as the Bank may reasonably request;
(n) A certificate from an authorized officer of each of the Loan Parties affirming that on and as of the Closing Date the representations and warranties set forth herein and in other Loan Documents are correct as though made on and as of such date and certifying that no event or condition has occurred and is continuing or would result from the consummation of the transactions contemplated hereby that constitutes a default, event of default or Event of Default under any such document to which it is a party; and
(o) a fee in the amount equal to three quarters of one percent (3/4 of 1%) of the Additional Advance payable by the Borrower to the Bank in United States Dollars and in immediately available funds in consideration for the Bank's commitment to make the Additional Advance available to the Borrower.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows:
(a) Each of the Borrower and each Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction where the nature of its business requires it to be so qualified and has all power, corporate or otherwise, to conduct its business and to own, or hold under lease, its assets and properties, and to execute and deliver, and to perform, to the extent applicable, all of its obligations under the Loan Documents to which it is, or will be, a party.
(b) The execution, delivery and performance by each of the Borrower and each Guarantor of each Loan Document to which it is or will be a party are within the Borrower's or each Guarantor's, as the case may be, corporate powers, have been duly authorized by all necessary corporate action, do not contravene (i) the Borrower's or either Guarantor's, as the case may be, charter or by-laws or (ii) law or any contractual restriction binding on or affecting the Borrower or either Guarantor, as the case may be, and do not result in or require the creation of any lien, security interest or other charge or encumbrance (other than pursuant hereto or pursuant to any Loan Document or Revolving Loan Document) upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required (i) for the due execution, delivery and performance by Borrower and each Guarantor of any Loan Document to which it is or will be a party, (ii) for the grant by Borrower and each Guarantor of the security interests granted by the Mortgages and the Security Agreements, (iii) for the perfection of or exercise by the Agent or the Bank of their respective rights and remedies under any Loan Document, or (iv) for the continued effectiveness of the valid and perfected first priority security interests and liens created by the Security Agreements and the Mortgages and the Security Agreements and Mortgages do not adversely affect the security interests and liens created by the Existing Collateral Documents.
(d) This Agreement is and the Note and each other Loan Document to which the Borrower or either Guarantor is or will be a party when delivered hereunder will be, legal, valid and binding obligations of the Borrower or the Guarantors, as the case may be, enforceable against the Borrower or the Guarantors, as the case may be, in accordance with their respective terms.
(e) The consolidated balance sheet of the Borrower and its Subsidiaries as at June 3, 1989, and the related consolidated statements of income and retained earnings of the Borrower and its Subsidiaries for the Fiscal Year then ended,
certified by Ernst & Whinney, independent public accountants, and the consolidated balance sheet of the Borrower and its Subsidiaries as at March 31, 1990, and the related consolidated statements of income and retained earnings of the Borrower and its Subsidiaries for the nine month period then ended, copies of each of which have been furnished to the Bank, fairly present the financial condition of the Borrower and its Subsidiaries as at the dates reflected therein and the results of the operations of the Borrower and its Subsidiaries for the period ended on the dates reflected therein, all in accordance with generally accepted accounting principles consistently applied, and since March 31, 1990, there has been no material adverse change in such condition or operations.
(f) The Borrower and each Subsidiary have filed all tax returns (Federal, State and local) required to be filed and paid all taxes shown thereon to be due, including interest and penalties, or provided adequate reserves for payment thereof.
(g) There is no pending or threatened action or proceeding affecting the Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator, which may (i) materially adversely affect the financial condition or operations of the Borrower or any of its Subsidiaries or (ii) call into question the legality, validity or enforceability of any Loan Document or any Revolving Loan Document.
(h) The Guarantors and Sunbelt Freight, Inc. are the only Subsidiaries of, and are wholly-owned by, the Borrower.
(i) Following application of the proceeds of the Advance, not more than 25 percent (25%) of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section 5.02(e) or 5.02(f) or subject to any restriction contained in any agreement or instrument, between the Borrower or any of its Subsidiaries and the Bank or any affiliate of the Bank relating to Debt and within the scope of Section 6.01(d) will be margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System).
(j) The Fiscal Year for the Borrower and its Subsidiaries is the 52 or 53 week period, as the case may be, beginning on the date which is one day after the date of the preceding Fiscal Year end, and ending on the Saturday closest to May 31.
(k) The proceeds of the Initial Advance were used partially for the purpose of refinancing the Borrower's purchase of an egg production facility and feed mill at Bethune, South Carolina and partially for the purpose of financing the operations at such facilities. The proceeds of the Additional Advances shall be used to refinance the purchase of the New Properties and to refinance the repurchase of certain preferred stock issued by Borrower to Sunny Fresh Foods, Inc.
(l) The policies of title insurance required hereunder and under the mortgages and the all perils insurance of which the Agent is primary loss payee hereunder and under the Mortgages and Security Agreements are currently fully paid and non-assessable.
(m) There are no mortgages, deeds of trust,
pledges, liens, security interests or other charges or encumbrances
(including liens or retained security titles of conditional vendors)
of any nature whatsoever on the Encumbered Properties or Collateral
other than the Permitted Encumbrances and the liens created pursuant
to the Existing Collateral Documents.
(n) From and after the time of the Advance, the Borrower or the Guarantors, as the case may be, will be the beneficial owner of all of the presently existing Collateral covered by the Security Agreements and the Encumbered Property covered by the Mortgages, free and clear of all mortgages, deeds of trust, pledges, liens, security interests, options and other charges or encumbrances, except for those created or permitted by the Loan Documents, and the Borrower or the Guarantors, as the case may be, will be the record owner of all of such presently existing Collateral and Encumbered Property.
(o) From and after the recording of the Mortgages, they will create valid and perfected mortgage liens on and security interests in the Encumbered Properties, subject only to Permitted Encumbrances, enforceable against the Borrower and Cal Maine Farms, Inc., as the case may be, and all third parties and securing the payment of all obligations purported to be secured thereby and all filings and other actions necessary or desirable to perfect and protect such mortgage liens and security interests will have been duly taken.
(p) The liens and security interests created and granted by the Security Agreements constitute valid and perfected security interests in the Collateral securing payment of all Obligations subject only to the prior filings made in favor of the Bank in connection with the Existing Collateral Documents, and all filings and other actions necessary or desirable to perfect and protect such security interests have been duly taken. Neither the Borrower nor either Guarantor has made a contract or arrangement of any kind, the performance of which contract or arrangement by another party would give rise to a lien on the Collateral.
(q) Neither the Borrower nor either Guarantor is a party to any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter or corporate restriction that currently has or may reasonably be expected to have a material adverse effect on the business, properties, assets, operations, prospects or condition, financial or otherwise, of the Borrower or either Guarantor, or on the ability of the Borrower or either Guarantor, to carry out its obligations under any Loan Document to which it is a party.
(r) No proceeds of the Advance will be used to acquire any security in any transaction which is subject to Sections 13 and 14 of the Securities Exchange Act of 1934.
(s) Borrower and each Subsidiary have complied with all applicable minimum funding requirements and all other applicable and material requirements of ERISA, and there are no existing conditions that would give rise to liability thereunder. No Reportable Event has occurred in connection with any Plan that might constitute grounds for the termination thereof by the Pension Benefit Guaranty corporation or for the appointment by the appropriate United States District Court of a trustee to administer such Plan.
(t) The present fair salable value of the Assets
of the Borrower and each Subsidiary is greater than the amount that
will be required to pay its probable liability on its existing Debts
as they become absolute and matured. For the purposes of this clause
(t), "Assets" means any property of the party in question not exempt
from liability for its Debts, and "Debts" means any legal liability,
including the liability under the Loan Documents, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed or contingent.
Neither the Borrower nor any of its Subsidiaries intends to, or
believe that it will, incur Debts beyond its ability to pay as they
mature.
(u) Neither the Borrower nor any of its Subsidiaries is "insolvent" (as defined in 11 U.S.C. Section 101(29)). Neither the Borrower nor any of its Subsidiaries is engaged, and does not intend to engage, in any business or transaction for which its property, excluding an amount equal to the obligations, is an unreasonably small capital. Neither the Borrower nor any of its Subsidiaries intends through the transactions contemplated by the Loan Documents to hinder, delay, or defraud either present or future creditors.
ARTICLE V.
COVENANTS OF THE BORROWER
Section 5.1. Affirmative Covenants. So long as any amount payable hereunder or under the Note shall remain unpaid, the Borrower will, unless the Bank shall otherwise consent in writing:
(a) Compliance with Laws, etc. Comply, and cause each of its Subsidiaries to comply, in all material respects with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon any of its property except to the extent contested in good faith.
(b) Payment of Taxes, etc. Pay and discharge, and cause each Subsidiary to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property,
and (ii) all lawful claims which, if unpaid, might by law become a lien upon its property; provided, however, that neither the Borrower nor any Subsidiary shall be required to pay or discharge any such tax, assessment, charge or claim which is being contested in good faith and by proper proceedings.
(c) Preservation of Corporate Existence, etc. Preserve and maintain, and cause each Subsidiary to preserve and maintain, its corporate existence, rights (charter and statutory) and franchises.
(d) Keeping of Books. Keep, and cause each Subsidiary to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each Subsidiary in accordance with generally accepted accounting principles consistently applied.
(e) Visitation Rights. At any reasonable time and from time to time, permit the Bank or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their respective officers or directors.
(f) Maintenance of Properties, etc. Maintain and preserve, and cause each Subsidiary to maintain and preserve, all of its properties which are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted. Perform and promptly comply with, and cause all of its property to be maintained, used and operated in accordance with, all policies of insurance at any time in force with respect to any of the property of the Borrower and each Subsidiary, the failure of which would result in the cancellation or invalidation of such policies of insurance, or result in a substantial increase in premiums owed under such policies of insurance.
(g) Maintenance of Insurance. In addition to any insurance of which the Agent is primary loss payee pursuant to any Loan Document, maintain, and cause each Subsidiary to maintain, insurance with responsible and reputable insurance companies or associations satisfactory to the Bank in such amounts and covering such risks as is usually carried by companies engaged in similar properties in the same general areas in which the Borrower or such Subsidiary operates.
(h) Working Capital. Maintain a ratio of current assets to current liabilities (excluding deferred taxes) of not less than 1.25 to 1 and a ratio of consolidated current assets to consolidated current liabilities (excluding deferred taxes) of the Borrower and its Subsidiaries of not less than 1.25 to 1. Current liabilities and consolidated current liabilities shall include the current portion of the indebtedness incurred pursuant to this Agreement, the Reimbursement Agreement and the Revolving Credit Agreement.
(i) Tangible Net Worth. Maintain an excess of consolidated total tangible assets over consolidated total liabilities of the Borrower and its Subsidiaries in an amount not less than the amount set forth below for the applicable period set forth below:
(i) from the date hereof through June 2, 1990, Twenty-Two Million Dollars ($22,000,000); and
(ii) from June 3, 1990 and at all times thereafter, the sum of (i) Twenty-Two Million Dollars ($22,000,000) plus (ii) fifty percent (50%) of the net income of Borrower and its Subsidiaries for the period from the beginning of the Fiscal Year existing as of the date of determination to the date of determination plus (iii) fifty percent (50%) of the net income of Borrower and its Subsidiaries for each Fiscal Year ending after June 3, 1990 but only if the Fiscal Year has completely elapsed.
If net income for a period is negative, no adjustment to the requisite level of net worth shall be made.
(j) Debt to Equity Ratio. Maintain a ratio of consolidated total liabilities (excluding deferred income taxes) to Net Worth of not more than 3.30 to 1 at all times throughout the Fiscal Year ending June 2, 1990, 3.05 to 1 at all times throughout the Fiscal Year ending June 1, 1991, and 2.55 to 1 at all times after the Fiscal Year ending June 1, 1991. Total liabilities shall include the indebtedness incurred pursuant to this Agreement, the Reimbursement Agreement and the Revolving Credit Agreement.
(k) Reporting Requirements. Furnish to the Bank:
(i) as soon as possible and in any event within five days after the occurrence of each Event of Default or each event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, continuing on the date of such statement, a statement of the chief financial officer of the Borrower setting forth details of such Event of Default or event and the action which the Borrower proposes to take with respect thereto;
(ii) as soon as available and in any event within 30 days after the end of each of the first eleven calendar months of each Fiscal Year of the Borrower, consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as of the end of such month and consolidated statements of income and retained earnings of the Borrower and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such month, certified by the chief financial officer of the Borrower;
(iii) as soon as available and in any event within 90 days after the end of each Fiscal Year of the Borrower, a copy of the annual report for such year or the Borrower and its Subsidiaries, including therein consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as of the end of such Fiscal Year and consolidated and consolidating statements of income and retained earnings and of source and applications of funds of the Borrower and its Subsidiaries for such Fiscal Year certified in a manner acceptable to the Bank by Ernst & Whinney or other independent public accountants acceptable to the Bank;
(iv) promptly after the sending or filing thereof, copies of all reports which the Borrower sends to any of its security holders, and copies of all reports and registration statements which the Borrower files with the Securities and Exchange Commission or any national securities exchange;
(v) on or before the fifth day after an appraisal has been furnished pursuant to section 5.01(l) hereof, a Borrowing Base Certificate dated as of such day;
(vi) promptly after the receiving thereof, notice of any change of address of the Process Agent; and
(vii) such other information respecting the business, properties, condition or operations, financial or otherwise, of the Borrower as the Bank may from time to time reasonably request.
(l) Appraisals. In addition to the appraisal reports furnished on or before the Closing Date pursuant to Section 3.01(l) and at the request of the Bank, which request may not be made more frequently than once in every two of the Borrower's Fiscal Years commencing with the Fiscal Year ended June 3, 1990, pay for and furnish to the Bank an appraisal report, prepared by an appraiser selected by the Borrower with the prior written approval of the Bank, of the fair market value of the Encumbered Properties. At the Bank's own cost, the Bank may request appraisals on a more frequent basis.
(m) Further Assurances. Promptly correct, or cause to be corrected, any defect or error that may be discovered in any Loan Document or in the execution, acknowledgment or recordation thereof and execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, and record and re-record, file and re-file and register and re-register, any and all such further acts, deeds, conveyances, mortgages, deeds of trust, trust deeds, assignments, estoppel certificates, financing statements and continuations thereof, notices of assignment, transfers, certificates, assurances and other instruments as the Bank may require from time to time in order to carry out more effectively the purposes of this Agreement or any Loan Document, and to better assure, convey, grant, assign, transfer, preserve, protect and confirm unto the Bank or Agent the rights granted or now or hereafter intended to be granted to the Bank under any Loan Document or under any other instrument executed in connection with any Loan Document or that the Borrower may be or become bound to convey, mortgage or assign to the Bank or Agent in order to carry out the intention or facilitate the performance of the provisions of any Loan
Document. The Borrower will furnish to the Bank evidence satisfactory to the Bank of every such recording, filing or registration.
(n) ERISA. Comply and cause each Subsidiary to comply, with all minimum funding requirements, and all other material requirements, of ERISA, if applicable, so as not to give rise to any liability thereunder.
Section 5.2. Negative Covenants. So long as any amount payable hereunder or under the Note shall remain unpaid, the Borrower will not, without the written consent of the Bank:
(a) Guaranteed Indebtedness. Create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any Debt (as defined in clause (iii) of the definition of Debt) except pursuant to the Amended Guaranty Agreements, except by reason of endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business and except for that certain guaranty agreement executed by Borrower for the benefit of Barclays Bank PLC guaranteeing the obligations of American Egg Products; provided the liability thereunder does not exceed $418,950.00 in the aggregate.
(b) Dividends, etc. Except for the purchase of up to a maximum of two percent (2%) of the Borrower's outstanding common shares in any Fiscal Year at an aggregate purchase price in such year not exceeding the lesser of (i) the book value of such shares or (ii) $500,000.00, declare or pay any dividends, purchase or otherwise acquire for value any of its capital stock now or hereafter outstanding, or make any distribution of assets to its stockholders as such, or permit any of its Subsidiaries to purchase or otherwise acquire for value any stock of the Borrower.
(c) Capital Expenditures. Make, or permit any subsidiary to make, any expenditures for fixed or capital assets, excluding rolling stock, which would cause the aggregate of all such expenditures made by the Borrower and its Subsidiaries in any period of 12 consecutive months to exceed $3,500,000.
(d) Maintenance of Ownership of Subsidiaries. Sell or otherwise dispose of any shares of capital stock of any Subsidiary or permit any Subsidiary to issue, sell or otherwise dispose of any shares of its capital stock or the capital stock of any other Subsidiary, except to the Borrower or another Subsidiary.
(e) Mergers, etc. Merge with or into or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any person, or permit any Subsidiary to do so, except that any Subsidiary may merge or consolidate with or transfer assets to or acquire assets from any other Subsidiary and except that any Subsidiary may merge into or transfer assets to the Borrower provided in each case that, immediately after giving effect thereto, no event shall occur and be continuing
which constitutes an Event of Default or which with the giving of notice or lapse of time or both would constitute an Event of Default.
(f) Sales, etc. of Assets. Sell, lease, transfer or otherwise dispose of, or permit any Subsidiary to sell, lease, transfer or otherwise dispose of, any substantial part of its assets, including (without limitation) substantially all assets constituting the business of a division, branch or other unit operation, except in the ordinary course of its business or in connection with a transaction authorized by subsection (e) of this Section.
(g) Fiscal Year. Change, or permit any Subsidiary to change, its Fiscal Year.
(h) Liens, etc. Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, or through any act or failure to act acquiesce, or permit any of its Subsidiaries to acquiesce, in the placing of, or allow to remain, any deed of trust, mortgage, trust deed, voluntary or involuntary lien, whether statutory, constitutional or contractual, security interest, encumbrance or charge, conditional sale or other title retention document, or any other type of preferential arrangement upon or with respect to the Encumbered Properties or any of the Collateral, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, in each case to secure or provide for the payment of any Debt of any person or entity, other than the liens securing the obligations of the Borrower under the Loan Documents, or any Permitted Encumbrances and shall not further encumber, or permit any of its Subsidiaries to further encumber, any such Permitted Encumbrance or change, modify or amend any document or agreement relating thereto without the prior written consent of the Bank.
ARTICLE VI.
EVENTS OF DEFAULT
Section 6.1. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any amount payable hereunder or under the Note when due; or
(b) Any representation or warranty made or deemed made by the Borrower (or any of its officers) or any of its Subsidiaries (or any of its officers) under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or
(c) The Borrower or either Guarantor shall fail to perform or observe, any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed and any such failure shall remain unremedied for 30 days after its occurrence or in the case of covenants contained in Section 1.03 of the
Mortgages the Borrower or Cal-Maine Farms, Inc. as the case may be, shall fail to perform or observe any covenant in Section 1.03 of the Mortgages, as the case may be, on its part to be performed or observed and any such failure shall remain unremedied for 30 days after notice thereof from the Bank; or
(d) The Borrower or any of its Subsidiaries shall fail to pay any Debt (excluding Debt hereunder or under the Note but including Debt under the Revolving Loan Documents and Reimbursement Agreement) of the Borrower or any of its Subsidiaries (as the case may be), or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other default under any agreement or instrument relating to any such Debt, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof. The occurrence of an Event of Default under this clause (d) includes without limitation the occurrence of any event of default under the Revolving Loan Documents or the Reimbursement Agreement; or
(e) The Borrower or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property; or the Borrower or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of $750,000 (the liability for which is not covered by insurance) shall be rendered against the Borrower or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or
(g) Any of the Mortgages or the Security Agreements shall for any reason, except to the extent permitted by the terms thereof, cease to create valid and perfected first priority security interest in any of the Encumbered Properties or the Collateral, as the case may be, purported to be covered thereby; or
(h) Any provision of any Loan Document shall, at any time after delivery thereof, for any reason, except to the extent permitted by the terms thereof, cease to be valid and binding on the Borrower or either Guarantor (as the case may be), or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Borrower or either Guarantor or a proceeding shall be commenced by any governmental agency or authority having jurisdiction over the Borrower or either Guarantor seeking to establish the invalidity or unenforceability thereof and such proceeding shall remain undismissed or unstayed for a period of 60 days, or the Borrower or either Guarantor shall deny that it has any or further liability or obligation thereunder; or
(i) Either Guarantor shall cease to be a wholly-owned Subsidiary of the Borrower; or
(j) Any event of default shall occur under any
Loan Document; or
(k) Any of the following events shall occur or
|
exist with respect to Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving any Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; (iv) any event or circumstance that might constitute grounds entitling the Pension Benefit Guaranty Corporation to institute proceedings under Section 4042 of ERISA for the termination of, or for the appointment of a trustee to administer, any Plan, or the institution by the Pension Benefit Guaranty Corporation of any such proceedings; (v) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization, insolvency, or termination of any Multiemployer Plan; and in each case above, such event or condition, together with all other events or conditions, if any, have subjected or could in the reasonable opinion of the Bank subject Borrower to any tax, penalty, or other liability to a Plan, a Multiemployer Plan, the Pension Benefit Guaranty Corporation, or otherwise (or any combination thereof) which in the aggregate exceed or could reasonably be expected to exceed One Hundred Thousand Dollars ($100,000.00);
then, and in any such event, the Bank may, by notice to the Borrower, terminate its commitment to make the Additional Advance, declare the Note, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Note, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower or any of its Subsidiaries under the Federal Bankruptcy Code, the Note, all such interest and all such amounts shall automatically become and be due and payable and the commitment of the Bank to make the Additional Advance shall automatically terminate, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.
ARTICLE VII.
DEFINITIONS AND ACCOUNTING TERMS
Section 7.1. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
"Additional Advances" has the meaning specified in Section 1.01.
"Advance" means, together, the Initial Advance and the Additional Advance.
"Agent" has the meaning specified in the recitals hereto.
"Agreement" means this Amended and Restated Term Loan Agreement.
"Amended Borrower Mortgage" means the Second Amendatory Mortgage, Security Agreement and Financing Statement in substantially the form of Exhibit B and all amendments, supplements and other modifications thereto.
"Amended Borrower Security Agreement" has the meaning set forth in the Revolving Credit Agreement.
"Amended Cal-Maine Mortgage" means the Second Amendatory Mortgage, Security Agreement and Financing Statement in substantially the form of Exhibit C and all amendments, supplements and other modifications thereof.
"Amended Cal-Maine Security Agreement" has the meaning set forth in the Revolving Credit Agreement.
"Amended Egg Products Security Agreement" has the meaning set forth in the Revolving Credit Agreement.
"Amended Guaranty Agreement" has the meaning set forth in the Revolving Credit Agreement.
"Appraised Value" means the value determined pursuant to Section 5.01(l).
"Assignment" has the meaning specified in the recitals hereto.
"Barclays" has the meaning specified in the recitals hereto.
"Borrower's Collateral" means the Collateral covered by the Amended Borrower Security Agreement.
"Borrower's Encumbered Property" means the New Properties and the properties covered by the Amended Borrower Mortgage.
"Borrower Mortgages" the Amended Borrower Mortgage and the New Mortgages.
"Borrowing Base" on the date of any computation thereof means 65% of the Appraised Value then in effect for the Encumbered Properties as set forth in the Borrowing Base Certificate delivered by the Borrower on the Closing Date and thereafter as required by Section 5.01(k).
"Borrowing Base Certificate" means a certificate setting forth the information and calculations necessary to determine the Borrowing Base, in substantially the form of Exhibit F, signed by the chief financial officer or the president of the Borrower.
"Business Day" means any day other than a Saturday, Sunday' or a public or bank holiday or the equivalent for banks generally under the laws of the State of New York.
"Cal-Maine Encumbered Property" means the properties covered by the Amended Cal-Maine Mortgage.
"Closing Date" means the date specified in the notice given by the Borrower pursuant to Section 1.02(a) as the date the Bank is to make the Additional Advance available to the Borrower.
"Collateral" means the property covered by the Security Agreements.
"Costs and Expenses" means all costs, expenses and taxes to be paid for by the Borrower pursuant to Section 8.04.
"Debt" means (i) indebtedness for borrowed money or for the deferred purchase price of property or services, (ii) obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, and (iii) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clause (i) or (ii) above.
"Default Rate" means a daily fluctuating interest rate equal to 4% per annum above the Term Federal Funds Rate. Each change in such daily fluctuating interest rate shall take effect simultaneously with the corresponding change in the Term Federal Funds Rate as determined by the Bank in its sole discretion at 12:00 noon (New York City time).
"Encumbered Properties" means the Borrower Encumbered Property and Cal-Maine Encumbered Property.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated) which is a member of a group of which the Borrower is a member and which is under common
control within the meaning of Section 414 of the Internal Revenue Code of 1976, as amended from time to time, and the regulations promulgated and rulings issued thereunder.
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Collateral Documents" has the meaning specified in the recitals hereto.
"Existing Loan" has the meaning specified in the recitals hereto.
"Existing Properties" has the meaning specified in the recitals hereto.
"Fiscal Year" means the 52 or 53 week period, as the case may be, beginning on the date which is one day after the date of the preceding Fiscal Year end, and ending on the Saturday closest to May 31.
"Fourth Amendment to Reimbursement Agreement" has the meaning specified in the recitals hereto.
"Guarantors" means each of Cal-Maine Egg Products, Inc., a Delaware corporation, and Cal-Maine Farms, Inc., a Delaware corporation.
"Intercreditor Agreement" has the meaning specified in the recitals hereto.
"Initial Advance" has the meaning specified in Section 1.01.
"Initial Closing Date" has the meaning specified in Section 1.01.
"Interest Period" has the meaning set forth in Section 1.03(b).
"Loan Documents" means this Agreement (as it may be amended or otherwise modified from time to time), the Note, the Mortgages, the Security Agreements, the Amended Guaranty Agreements, the Intercreditor Agreement, the Assignment and all other certificates and documents delivered by the Borrower or its Subsidiaries hereunder.
"Loan Party" means the Borrower and each of the Guarantors.
"Louisiana Collateral Documents" has the meaning set forth in the recitals hereto.
"Mortgages" means the Borrower Mortgages and the Amended Cal-Maine Mortgage.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of
the preceding three plan years made or accrued an obligation to make
contributions.
"Net Worth" means the excess of consolidated total assets over consolidated total liabilities of the Borrower and its Subsidiaries.
"New Mortgages" means the Mortgage, Deed of Trust, Future Advance Deed of Trust, Security Agreement, Assignment of Rents and Financing Statement in substantially the form of Exhibit D, one each to be filed in the states where the New Properties are located and all amendments, supplements and other modifications thereof.
"New Properties" has the meaning specified in the recitals hereto.
"Note" has the meaning set forth in Section 1.05.
"Obligations" means all obligations of the Borrower now or hereafter existing under this Agreement, the Note and any other Loan Documents to which Borrower is a party whether for principal, interest, fees, expenses or otherwise.
"Permitted Encumbrances" means the encumbrances against the Encumbered Properties permitted by the mortgages.
"Plan" means an employee benefit plan, other than a Multiemployer Plan, maintained for employees of the Borrower or any ERISA Affiliate and subject to Title IV of ERISA.
"Pledge Agreement" has the meaning set forth in the recitals hereto.
"Prepayment Amount" has the meaning set forth in section 2.02(a).
"Previous Revolving Credit Agreement" has the meaning specified in the recitals hereto.
"Previous Term Loan Agreement" has the meaning specified in the recitals hereto.
"Process Agent" means CT Corporation System which pursuant to the Loan Documents, the Revolving Loan Documents and the Reimbursement Agreement has been appointed as the agent of the Borrower and the Guarantors, respectively, for the receipt of service of process pursuant to the Loan Documents and the Revolving Loan Documents.
"Prohibited Transaction" means any transaction set forth in Section 406 of ERISA or Section 4975 of the Code.
"Properties" has the meaning specified in the recitals hereto.
"Reportable Event" means any of the events set forth in Section 4043 of ERISA.
"Revolving Credit Agreement" has the meaning specified in the recitals hereto.
"Revolving Loan Documents" means the Revolving Credit Agreement and all documents, instruments, and agreements executed and delivered in connection therewith, including without limitation, the Security Agreements, the Amended Guaranty Agreements and the Mortgages.
"Reimbursement Agreement" has the meaning specified in the recitals hereto.
"Security Agreements" means the Amended Borrower Security Agreement, the Amended Cal-Maine Security Agreement, the Louisiana Collateral Documents and the Amended Egg Products Security Agreement.
"Subsidiary" means any corporation, including but not limited to the Guarantors, of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether or not at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries.
"Term Federal Funds Rate" for any Interest Period means an interest rate per annum equal at all times during such Interest Period to the rate of interest per annum at which the Bank, as a branch of a foreign bank, in its sole discretion, can acquire federal funds in the interbank term federal funds market in New York City through brokers of recognized standing on the first day of the Interest Period for a period equal to such Interest Period and in the amount of the Advance.
Section 7.2. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistently applied except as otherwise stated herein, and all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Amendments, etc. No amendment or waiver of any provision of this Agreement or the other Loan Documents, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Bank and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 8.2. Notices, etc. All notices and other communications provided for hereunder shall be in writing (including telegraphic communication) and mailed or telegraphed or delivered, if to the Borrower, at its address at 3320 Woodrow Wilson Drive, Jackson, Mississippi 39209; Attention: Fred Adams, Jr., Chief Executive Officer, with a copy to Bobby J. Raines, Vice President at the same address; and if to the Bank, at its address at 245 Park Avenue, New York, New York 10167; Attention: Corporate Services, with a copy to One Galleria Tower, 13355 Noel Road, Suite 1000, Dallas, Texas 75240, Attention: Jess E. Jarratt; or, as to each party, at such other address as shall be designated by such party in a written notice to the other party. All such notices and communications shall, when mailed or telegraphed, be effective when deposited in the mails or delivered to the telegraph company, respectively, addressed as aforesaid, except that notices to the Bank
pursuant to the provisions of Articles I and II shall not be effective until received by the Bank.
Section 8.3. No Waiver; Remedies. No failure on the part of the Bank to exercise, and no delay in exercising, any right under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law.
Section 8.4. Costs, Expenses and Taxes.
(a) The Borrower agrees to pay on demand all costs, expenses and taxes in connection with the preparation, execution, delivery, filing, recording and administration of the Loan Documents and the other documents to be delivered under the Loan Documents, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Bank, and local counsel who may be retained by said counsel, with respect thereto and with respect to advising the Bank as to its rights and responsibilities under the Loan Documents, and all losses, costs and expenses (including counsel fees and expenses) in connection with the enforcement of the Loan Documents and the other documents to be delivered under the Loan Documents, including, without limitation, losses, costs and expenses sustained as a result of a default by the Borrower in the performance of its obligations contained in any of the Loan Documents or the other documents or instruments delivered under the Loan Documents. In addition, the Borrower shall pay all costs and expenses in connection with appraisals, audits and search reports, all insurance costs and any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of the Loan Documents and the other documents to be delivered under the Loan Documents, and agrees to save the Bank harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.
(b) If, as a result of a payment made by the Borrower due to acceleration of the maturity of the Advance and the Note pursuant to Section 6.01, or any payment or mandatory or voluntary prepayment or due to any other reason, the Bank receives payment of any principal amount of the Advance on a day other than the last day of the Interest Period, or if the Interest Period existing under the Previous Term Loan Agreement is terminated hereunder prior to the end of such Interest Period, the Borrower shall pay to the Bank on demand that amount, if any, required to compensate the Bank for additional losses, costs or expenses which it may accrue as a result of such payment or termination (as determined in good faith in the sole discretion of the Bank), including, without limitation, an amount equal to the losses, if any, on the reinvestment of the amounts prepaid, which for purposes of this Agreement shall be deemed equal to the difference between the interest rate in effect hereunder on the amounts prepaid as of the date of such prepayment and the interest rate at which the Bank reinvests such amounts, multiplied by such amounts
prepaid and a fraction, the numerator of which is the number of days (including the first day but excluding the last day) from the date of prepayment through the last day of the applicable Interest Period and the denominator of which is 360.
(c) All Costs and Expenses incurred and billed up to and including the Closing Date (as set forth in a schedule delivered to the Borrower) shall be paid for by the Borrower on the Closing Date by deducting the amount of such Costs and Expenses from the proceeds of the Additional Advance made pursuant to Section 1.02(a) hereof. The Borrower further agrees to pay to the Bank all Costs and Expenses that may be incurred and billed after the date of this Agreement on demand by the Bank.
(d) The Borrower's obligations under this Section
and the Borrower's and Cal-Maine Farms, Inc.'s obligations under
Section 3.03 of the Mortgages shall not be affected by the absence or
unavailability of insurance covering the same or by the failure or
refusal by any insurance carrier to perform any obligation on its part
under any such policy of insurance.
If any claim, action or proceeding is made or brought under the Mortgages or the Bank, the Borrower shall resist or defend, or cause either Guarantor to resist or defend, against the same, if necessary in the name of the Bank or Agent, as applicable, by attorneys for the Borrower's or Guarantors', as the case may be, insurance carrier (if the same is covered by insurance) or otherwise by attorneys approved by the Bank. Notwithstanding the foregoing, the Bank or Agent, in its discretion, may engage its own attorneys to resist or defend, or assist therein, and the Borrower shall pay, or, on demand, shall reimburse the Bank for the payment of, the fees and disbursements of said attorneys.
Section 8.5. Limitation and Adjustment of Interest. No provision of this Agreement or the Note shall require the payment or permit the collection of interest in excess of the maximum rate permitted by applicable law:
(a) If the amount of interest computed without giving effect to this Section 8.05 and payable on any interest payment date in respect of the preceding interest computation period would exceed the amount of interest computed in respect to such period at the maximum rate of interest from time to time permitted (after taking into account all consideration which constitutes interest) by laws applicable to the Bank (such maximum rate being the "Maximum Permissible Rate"), the amount of interest payable to the Bank on such date in respect of such period shall be computed at the Maximum Permissible Rate.
(b) If at any time and from time to time (i) the amount of interest payable to the Bank on any interest payment date shall be computed at the Maximum Permissible Rate pursuant to the preceding Section 8.05(a) and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to the Bank would be less than the amount of interest payable to the Bank computed at the Maximum Permissible Rate, then the amount of interest payable, to the Bank in respect of such subsequent interest computation period shall continue to be
computed at the Maximum Permissible Rate until the amount of interest payable to the Bank shall equal the total amount of interest which would have been payable to the Bank if the total amount of interest had been computed without giving effect to the preceding Section 8.05(a).
Section 8.6. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, the Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Bank to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under any Loan Document, irrespective of whether or not the Bank shall have made any demand under such Loan Document and although such deposits, indebtedness or obligations may be unmatured or contingent. The Bank agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Bank under this Section 8.06 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Bank may have.
Section 8.7. Severability of Provisions. Any provision of this Agreement or of any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 8.8. Binding Effect; Governing Law. This Agreement shall be binding upon and inure to the benefit of the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This Agreement and the Note shall be governed by, and construed in accordance with, the laws of the State of New York.
Section 8.9. Consent to Jurisdiction; Process Agent.
(a) The Borrower hereby irrevocably submits to the jurisdiction of any New York State or Federal court sitting in New York City in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, and the Borrower hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. The Borrower hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower hereby irrevocably appoints CT Corporation System (the "Process Agent"), with an office on the date hereof at 1633 Broadway, New York, New York 10019, as its agent to receive on behalf of the Borrower and its property service of copies of the summons and complaint and any other process which may be served in any such action or proceeding. Such service on the Process Agent may be made by mailing or
delivering a copy of such process to the Borrower in care of the Process Agent at the Process Agent's above address and the Borrower hereby irrevocably directs the Process Agent to accept such service on its behalf. As an alternative method of service, the Borrower also irrevocably consents to the service of any and all process in any such action or proceeding by any other method permitted by applicable law. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.
(b) Nothing in this Section shall affect the right of the Bank to serve legal process in any other manner permitted by law or affect its right to bring any action or proceeding against the Borrower or its property in any other court.
Section 8.10. Security. The obligations of the Borrower under this Agreement are guaranteed by the Amended Guaranty Agreements and secured by the Security Agreements and the Mortgages.
Section 8.11. Entire Agreement; Amendment and Restatement. This Agreement amends and restates in its entirety the Previous Term Loan Agreement. This Agreement and the other Loan Documents referred to herein embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to the subject matter hereof and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
BORROWER:
CAL-MAINE FOODS, INC.
BANK:
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK, B.A.
"RABOBANK NEDERLAND", NEW YORK BRANCH
*******************************************************************************
Amended and Restated Revolving Credit Agreement
among
Cal-Maine Foods, Inc.,
Borrower
and
Barclays Bank PLC (New York)
and
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
as Banks
29 May 1990
*******************************************************************************
TABLE OF CONTENTS
ARTICLE I - AMOUNTS AND TERMS OF THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.01. The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.02. Making the Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.03. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.04. Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.05. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.06. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.07. Evidence of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.08. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II - TERMS OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.01. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.02. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.03. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.01. Conditions Precedent to the Initial Advance . . . . . . . . . . . . . . 8
SECTION 3.02. Conditions Precedent to All Advances . . . . . . . . . . . . . . . . . 10
ARTICLE IV - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.01. Representations and Warranties of the Borrower . . . . . . . . . . . . 11
ARTICLE V - COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.01. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.02. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.02. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.02. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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SECTION 8.01. Amendments, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 8.02. Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 8.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 8.04. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 8.05. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 8.06. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 8.07. Binding Effect; Governing Law . . . . . . . . . . . . . . . . . . . . . 25 SECTION 8.08. Consent to Jurisdiction; Process Agent . . . . . . . . . . . . . . . . . 26 SECTION 8.09. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 8.10. Entire Agreement; Amendment and Restatement . . . . . . . . . . . . . . 26 |
INDEX TO EXHIBITS
Exhibit Description of Exhibit Section
- ------- ---------------------- -------
A Form of Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . 1.07
B Form ofAmended Guaranty Agreement . . . . . . . . . . . . . . . . . . . . . 3.01(c)
C Form ofAmended Borrower Security Agreement . . . . . . . . . . . . . . . . . 3.01(b)
D Form of Amended Cal-Maine Security Agreement . . . . . . . . . . . . . . . . 3.01(b)
E Form of Egg Products Security Agreement . . . . . . . . . . . . . . . . . . 3.01(b)
F Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 5.01(k)
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AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of May 29, 1990
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (the "Agreement") is among CAL-MAINE FOODS, INC., a Delaware corporation (the "Borrower"), BARCLAYS BANK PLC (NEW YORK) ("Barclays") and COOPERATIEVE CENTRALE RAIFFEISEN BOERENLEENBANK B.A., "Rabobank Nederland" ("Rabobank" and, together with Barclays, hereinafter referred to individually as a "Bank" and collectively as the "Banks").
R E C I T A L S:
A. Borrower and Rabobank have entered into a Revolving Credit Agreement dated as of October 18, 1984, as amended by that certain Amendment dated as of September 29, 1985, that certain Amendment dated as of March 31, 1987, that certain Third Amendment to Revolving Credit Agreement dated as of December 31, 1987, that certain Amendment dated as of May 31, 1988, that certain Amendment and waiver dated as of September 30, 1988, that certain Amendment dated December 31, 1988, that certain Amendment dated as of June 2, 1989 and that certain Amendment dated as of June 30, 1989, Letter Amendment dated May 9, 1990 (the Revolving Credit Agreement, as the same has previously been amended, is hereinafter referred to as the "Previous Revolving Credit Agreement").
B. Pursuant to the Previous Revolving Credit Agreement, Rabobank made a revolving credit loan (the "Existing Loan") to Borrower with advances thereunder not exceeding an aggregate principal amount of Twenty-Five Million Dollars ($25,000,000) at any time outstanding. Advances are outstanding under the Existing Loan on the date hereof (the "Existing Advances").
C. Borrower has requested that Rabobank renew and extend the Existing Loan such that the aggregate advances outstanding to Borrower from Rabobank do not exceed an aggregate principal amount of Twenty Million Dollars ($20,000,000) outstanding at any time, and Borrower has requested that Barclays make a revolving credit loan to Borrower (the "New Barclays Loan") with advances thereunder not to exceed an aggregate principal amount of Ten Million Dollars ($10,000,000) outstanding at any time.
D. Borrower and Rabobank have entered into that certain Amended and Restated Term Loan Agreement dated as of the date hereof (as the same may be amended, the "Term Loan Agreement") which amended and restated in its entirety that certain Term Loan Agreement dated as of May 15, 1986, between Borrower and Rabobank (as the same had previously been amended, herein referred to as the "Previous Term Loan Agreement").
E . Borrower and Rabobank have entered into that certain Fourth Amendment to Reimbursement and Credit Agreement (herein the "Fourth Amendment to Reimbursement Agreement") dated as of the date hereof which amended that certain Reimbursement and
Credit Agreement dated as of December 1, 1987, (as amended by the Amendment dated as of May 31, 1988, the Amendment dated as of December 31, 1988, the Amendment dated as of June 2, 1989 and the Fourth Amendment to Reimbursement Agreement and as the same may hereafter be amended, herein referred to as the "Reimbursement Agreement".
F. To secure certain of the obligations and indebtedness of Borrower to Rabobank under the Previous Revolving Credit Agreement, the Previous Term Loan Agreement, the Reimbursement Agreement and the other documents executed in connection therewith, Borrower, Cal-Maine Farms, Inc., and Cal-Maine Egg Products, Inc. executed certain security agreements and mortgages (as amended but excluding the collateral documents executed in connection with the Reimbursement Agreement, such security agreements and mortgages herein called, the "Existing Collateral Documents").
G. To induce Rabobank to continue to extend credit to the Borrower, the Borrower has agreed to grant to Rabobank security interests and liens in the real properties described on Schedule 1 to the Term Loan Agreement and the personal property relating thereto (the "New Properties").
H. To induce Barclays to make the New Barclays Loan, Borrower, Cal-Maine Farms, Inc., and Cal-Maine Egg Products, Inc. have agreed to grant security interests and liens to Barclays in the New Properties, to the extent applicable, and in the properties covered by the Existing Collateral Documents (herein the "Existing Properties" and together with the New Properties herein referred to as the "Properties").
I. Rabobank and Barclays have entered into that certain Intercreditor Agreement dated the date hereof (as the same may be amended, the "Intercreditor Agreement") pursuant to which Rabobank and Barclays set forth therein their respective rights and priorities in and with respect to the Properties and appointed Rabobank as agent for itself and Barclays (in such capacity herein referred to as the "Agent") to act as agent with respect to the Properties as therein provided.
J. To facilitate the collateral arrangements contemplated by this Agreement, the Term Loan Agreement, the Reimbursement Agreement and the Intercreditor Agreement, Rabobank has assigned 'all of its right, title, and interest in and to the-Existing Collateral Documents to the Agent pursuant to that certain Assignment Agreement dated the date hereof (as the same may be amended, herein the "Assignment"); provided that with respect to that certain Collateral Pledged Agreement dated October 17, 1984 executed by Borrower, Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc. for the benefit of Rabobank which is an existing Collateral Document, Rabobank, Borrower, Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc. only amended the terms thereof to provide that both Rabobank and Barclays shall be pledgees thereunder pursuant to that certain Amendment to Collateral Pledge Agreement and Assignment of Interest dated the date hereof (such Collateral Pledge Agreement, as amended, herein the "Pledge Agreement" and together with the Collateral Chattel Mortgage Note pledged pursuant thereto and the Act of Collateral Chattel Mortgage on Inventory dated October 17, 1984 executed by Borrower, Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc. in connection therewith, herein collectively referred to as the "Louisiana Collateral Documents").
K. Borrower and the Banks now desire to amend the Previous Revolving Credit Agreement in its entirety as herein set forth to provide for the New Barclays Loan and the modification of the Existing Loan, provide for the grant of the security interests and liens in the New Properties and to reflect the assignment and amendment of the Existing Collateral Documents to the Agent.
ARTICLE I
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 1.01. The Advances. Each Bank severally agrees, on the terms
and conditions hereinafter set forth, to make advances (such advances,
collectively with the Existing Advances herein the "Advances") to the Borrower
from time to time during the Period from the date hereof to and including the
Termination Date (this and certain other capitalized terms are defined in
Section 8.01), provided that (a) at any time the aggregate outstanding amount
of the Advances shall not exceed the lesser of (i) the Revolving Credit
Commitments, as such amount may be reduced pursuant to Section 1.04, or (ii)
the Borrowing Base, (b) any time the aggregate outstanding amount of a Bank's
Advances shall not exceed its Revolving Credit Commitment and (c) at all times
the aggregate outstanding amount of the Advances made by a Bank shall never be
less than an amount equal to the sum of its Pro Rata Part (determined based on
the Revolving Credit Commitments) of the then aggregate outstanding amount of
all Advances minus up to $500,000.00. Each Advance shall be in an amount not
less %than $250,000.00. Each Bank, subject to the other terms hereof, shall
have an obligation to make only the Advances requested from such Bank by
Borrower, whether or not the other Bank makes its Advances to Borrower. Within
the limits of the Revolving Credit Commitments, the Borrower may borrow, prepay
pursuant to Section 2.02 and reborrow under this Section 1.01.
SECTION 1.02. Making the Advances. Each Advance shall be made on notice from the Borrower to the Bank from which an Advance is requested (a copy of which notice shall be given by the Borrower to each Guarantor) specifying the date (which shall be a Business Day) and amount thereof and selecting the Interest Period therefor pursuant to Section 1.05(b). Borrower may request an Advance from either Barclays or Rabobank or may request Advances from both Banks subject to the terms of Subsection 1.01(b). Such notice shall be given not later than 11:00 a.m. (New York City time) on the date of the requested Advance. Not later than 2:00 P.M. (New York City time) on the date of such Advance and upon fulfillment of the applicable conditions set forth in Article III, the Bank from which an Advance is requested will make such Advance available to the Borrower in same day funds at such Bank's address referred to in Section 8.02.
SECTION 1.03. Commitment Fee. The Borrower agrees to pay to each Bank its Pro Rata Part of a commitment fee on the average daily unused portion of the Revolving Credit Commitments from the date hereof until the Termination Date at the rate of 1/4 of 1% per annum. payable quarterly on the last day of each calendar quarter during the term of the Commitment, commencing June 30, 1990, and ending on the Termination Date.
SECTION 1.04. Reduction of Commitment. The Borrower shall have the
right, upon at least five Business Days notice to either Bank, to terminate in
whole or reduce in part the unused portion of such Bank's Revolving Credit
Commitment, provided that each partial reduction shall be in the amount of
$500,000 or an integral multiple thereof and provided further that Borrower
shall simultaneously prepay the amount by which the unpaid principal amount of
the Advances from such Bank exceeds such Bank's Revolving Credit Commitment
(after giving effect to such notice) plus accrued and unpaid interest on the
principal amount so prepaid together with all other amounts due pursuant to
Section 8.04(b) as a result of such prepayment.
SECTION 1.05. Interest.
(a) Interest Rate. The Borrower shall pay interest on the unpaid- principal amount of each Advance during each Interest Period for such Advance, payable quarterly on the last day of each calendar quarter and on the last day of such Interest Period at an interest rate equal to 1.5% per annum above the Term Federal Funds Rate with respect to Advances made by Rabobank and at an interest rate equal to 1.5% per annum. above the Cost of Funds Rate with respect to Advances made by Barclays, for the applicable Interest Period; provided that such rate shall in no event be higher than the maximum interest rate permitted by law; and provided further that any amount of principal which is not paid when due (whether at stated maturity, by acceleration or otherwise) sh - all bear interest, from the date on which such amount is due until such amount is paid in full, at the Default Rate. No provision of this Agreement or the Notes shall require the payment or permit the collection of interest in excess of the maximum rate permitted by applicable law:
(i) If the amount of interest computed without giving effect to this provision of Section 1.05(a) and payable on any interest payment date in respect of the preceding interest computation period would exceed the amount of interest computed in respect of such period at the maximum rate of interest from time to time permitted (after taking into account all consideration which constitutes interest) by laws applicable to a Bank (such maximum rate being the "Maximum Permissible Rate"), the amount of interest payable to such Bank on such date in respect of such period shall be computed at the Maximum Permissible Rate.
(ii) If at any time and from time to time (A) the amount of interest payable to a Bank on any interest payment date shall be computed at the Maximum Permissible Rate pursuant to the preceding clause (ii) and (B) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Bank would be less than the amount of interest payable to such Bank computed at the Maximum Permissible Rate, then the amount of interest payable to such Bank in respect of such subsequent interest computation period shall continue to be computed at the Maximum Permissible Rate until the amount of interest which would have been payable to such Bank if the total amount of interest had been computed without giving effect to this provision of Section 1.01(a).
(b) Interest Period. The period between the date of each
Advance and the date of payment in full of such Advance shall be
divided into successive periods, each such period being an Interest
Period for such Advance. The Interest Periods in effect for the
Existing Advances under the Previous Revolving Credit Agreement shall
continue in effect hereunder until the end thereof as determined
pursuant to the Previous Revolving Credit Agreement and the subsequent
Interest Period or Periods hereunder with respect thereto shall being
on the last day of the Interest Period or Periods existing under the
Previous Revolving Credit Agreement. The initial Interest Period for
each Advance (other than the Existing Advances) shall begin on the day
of such Advance and each subsequent Interest Period for such Advance
shall begin on the last day of the immediately preceding Interest
Period for such Advance. Each Interest Period for each Advance made
by Rabobank shall end on the corresponding day in the first, second or
third week thereafter or the numerically corresponding day in the
first, third, sixth, ninth or twelfth calendar month thereafter (as
Borrower may select as provided in Section 1.02 hereof or on such
other day as Borrower may request if Rabobank can (in its sole
discretion) make such an Interest Period available to the Borrower and
each Interest Period for each Advance made by Barclays shall end on
the corresponding day in the first, second or third week thereafter or
on the numerically corresponding day in the first, third or sixth
calendar month thereafter (as Borrower may select as provided in
Section 1.02 hereof) or on such other day as Borrower may request if
Barclays can (in its sole discretion) make such an Interest Period
available to the Borrower, except that each Interest Period measured
in months which commences on the last Business Day of a calendar month
(or on any day for which there is no numerically corresponding day in
the appropriate subsequent calendar month) shall end on the last
Business Day of the appropriate subsequent calendar month and no
Interest Period for any Advance made by Barclays shall extend beyond
the date one hundred eighty days from the date such Interest Period
commenced. Notwithstanding the foregoing: M any Interest Period which
would otherwise extend beyond the date which is three (3) months after
the Termination Date (the "Repayment Date") shall end on the Repayment
Date; and (ii) if the Borrower fails to select the duration of any
Interest Period, the duration of such Interest Period shall be three
months.
(c) Contingent Interest. The Borrower hereby agrees to pay to Rabobank as contingent interest (the "Contingent Interest"), payable in one or more payments at Rabobank's option, as of the last day of each of the Borrower's Fiscal Years 1992, 1993 and 1994 and upon receipt of the audited financial statements of the Borrower for such year, an amount equal to 3% of the aggregate audited consolidated pre-tax earnings of the Borrower and its Subsidiaries during the Borrower's Fiscal Years 1990 through 1994, provided, however, that, if on the date of any payment of Contingent Interest hereunder, the consolidated, pre-tax earnings for the most recently ended Fiscal Year is less than 200% of the payment of Contingent Interest to be made on such date then such Contingent Interest shall be payable on such date only to the extent it is equal to 50% of pre-tax earnings for the most recently ended Fiscal Year and the remaining amount of Contingent Interest shall be payable at the end of each fiscal quarter thereafter, subject, in the case of the payment of Contingent Interest on the end of each such subsequent fiscal quarter, to such
payment equaling 50% of pre-tax earnings for such then ended fiscal quarter and, provided further, however, that, notwithstanding the immediately preceding proviso, the Borrower shall pay to Rabobank a minimum of $100,000 of Contingent Interest by Fiscal Year-end 1994 and the Borrower shall pay to Rabobank in the aggregate a maximum of Contingent Interest hereunder of $500,000. Notwithstanding any other provision in this Section 1.05(c), the Borrower further agrees that upon (i) a termination of the Revolving Credit Commitment of Rabobank pursuant to Section 1.04 or (ii) an acceleration of all amounts outstanding hereunder pursuant to Section 6.02, the Borrower shall owe to Rabobank as of the date of such event as Contingent Interest an amount equal to the greater of (x) $100,000 and (y) 3% of the audited consolidated pre-tax earnings of the Borrower and its Subsidiaries during Fiscal Years 1990 through 1994 having then ended, up to a maximum of $500,000.
SECTION 1.06. Increased Costs. If, on or after the date hereof, the introduction of or any change in or in the interpretation of any law or regulation or the compliance by either Bank with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), shall impose, modify or deem applicable any reserve, special deposit or similar requirement against all or any assets held by, deposits or accounts with, or credit extended by or to, such Bank or impose on either Bank any other condition affecting the Advances, the Notes or such Bank's obligation to make Advances, or subject such Bank to, or cause the termination or reduction of a previously granted exemption with respect to, any tax, levy, impost, deduction, charge or withholding with respect to the Advances, the Notes or such Bank's obligation to make Advances or change the basis of taxation of payment to such Bank of the principal of or interest on the Advances or any other amounts under this Agreement (except for a change in the rate of tax on the overall net income of such Bank imposed by the jurisdiction in which either such Bank's principal executive office or the lending office is located), and the result of any of the foregoing events is to increase the cost to either Bank of agreeing to make or making, funding, or maintaining the Advances, or to reduce the amount of any sums received or receivable by either Bank under this Agreement or the Notes, then, the Borrower shall from time to time, upon demand by the applicable Bank, pay such additional amounts as will compensate such Bank for such increased cost or reduced amount. A certificate of such Bank, submitted to the Borrower, setting forth the amounts of such increased cost or reduced amount and the additional amounts to be paid to such Bank under this Section shall be conclusive. After such Bank notifies the Borrower of any increased cost pursuant to this Section 1.06, the Borrower may upon at least five Business Days' written notice to such Bank prepay in full or in part any Advance then outstanding and affected by such increased costs, provided the Borrower shall comply with the prepayment provisions of Section 2.02(b) and reimburse such Bank for all such increased costs incurred by such Bank and pay to such Bank all amounts due pursuant to 8.04(b).
SECTION 1.07. Evidence of Debt. The indebtedness of the Borrower to each Bank resulting from all Advances made from time to time by such Bank-and interest thereon shall be evidenced by a promissory note of the Borrower, in substantially the form of Exhibit A hereto (each a "Note" and collectively the "Notes"), payable to the order of such Bank, in the principal amount of such Bank's Revolving Credit Commitment delivered to such Bank pursuant to Article III.
SECTION 1.08. Use of Proceeds. The proceeds of the Advances made by Barclays will be used solely for the purposes of financing the egg and egg product processing operations of the Borrower and its Subsidiaries. The proceeds of the Advances made by Rabobank will be used solely for the purposes of (a) financing the egg and egg product processing operations of the Borrower and its Subsidiaries, W partially financing the acquisition of certain real and personal property from Sunny Fresh Foods, Inc., and (c) partially financing the repurchase by Borrower of certain preferred stock issued by Borrower to Sunny Fresh Foods, Inc. Any Advances received by the Borrower when the aggregate amount of the then outstanding Advances exceeds the Parent Borrowing Base shall be utilized so that each Guarantor shall directly benefit from the amount of such excess Advances by an amount reasonably equivalent to the Borrowing Base valuation of such Guarantor's Collateral.
ARTICLE II
TERMS OF PAYMENTS
SECTION 2.01. Repayment. The Borrower shall repay the aggregate unpaid principal amount of all Advances in accordance with the terms of the Notes and this Agreement.
SECTION 2.02. Prepayments.
(a) Mandatory. If at any time the aggregate principal amount of Advances at such time outstanding shall exceed the Borrowing Base at such time, the Borrower shall immediately prepay the Advances in an aggregate amount equal to the difference between such outstanding amount and the Borrowing Base at such time as follows: M to Rabobank an amount equal to Rabobank's Pro Rata Part of the amount by which the outstanding principal amount of the Advances exceeds the Borrowing Base, and (ii) to. Barclays an amount equal to Barclays' Pro Rata Part of the amount by which the outstanding principal amount of the Advances exceeds the Borrowing Base. If at any time the aggregate principal amount of Advances made by a Bank shall be less than an amount equal to the sum of its Pro Rata Part (determined based on the Revolving Credit Commitments) of the then aggregate outstanding amount of all Advances minus up to $500,000.00, the Borrower shall immediately request an Advance from such Bank or prepay to the other Bank, Advances made by such Bank, in an aggregate amount such that after the Advance or prepayment, as applicable, the aggregate principal amount of Advances made by the Bank in question shall be an amount equal to an amount that is not less than the sum of its Pro Rata Part (determined based on the Revolving Credit commitments) of the then aggregate outstanding amount of all Advances minus $500,000.00. The prepayments required under this Section 2.02(a) shall be made without duplication. Upon any prepayment under this Section 2.02(a), the Borrower shall pay to each Bank all amounts due pursuant to Section 8.04(b) as a result of such prepayment.
(b) Optional. The Borrower may, upon at least one Business Day notice to either Bank, prepay any Advance from such Bank on the last day of any Interest Period for such Advance in whole or in part with M accrued interest to the date of such prepayment on the amount so prepaid and (ii) all amounts due pursuant to Section 8.04(b) as a result of such prepayment, provided, that each such prepayment shall be in a principal amount not less than $500,000.
SECTION 2.03. Payments and Computations.
(a) The Borrower shall make each payment of principal, interest and other amounts due hereunder and under the Notes not later than 12:00 noon (New York City time) on the day when due in lawful money of the United States of America by depositing such amount in same day funds M with respect to amounts payable to Rabobank, at the office of Rabobank at 245 Park Avenue, New York, New York 10167, and (ii) with respect to amounts payable to Barclays, at the office of Barclays at 75 Wall Street, New York, New York 10265.
(b) All computations of interest and commitment fees hereunder and under the Notes shall be made by the Banks on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees is payable. Each determination by the Banks of an interest rate hereunder shall be conclusive and binding for all purposes.
(c) Whenever any payment to be made hereunder or under the Notes shall be stated to be due, or whenever the last day of any Interest Period would otherwise occur, on a day other than a Business Day, such payment shall be made, and the last day of such Interest Period shall occur, on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest and commitment fees, as the case may be.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Initial Advance. The obligation of Barclays to make its initial Advance hereunder and the obligation of Rabobank to make its initial Advance hereunder (excluding the Existing Advances) are subject to the condition precedent that the conditions precedent set forth in Section 3.01 of the Term Loan Agreement shall have been satisfied and that the Banks shall have received on or before the date of such initial Advance the following, each dated such day, in form and substance satisfactory to the Banks:
(a) The Notes.
(b) The Amended Borrower Security Agreement, duly executed by the Borrower, the Amended Cal-Maine Security Agreement, duly executed by Cal-Maine Farms, Inc. and the Amended Egg Products Security Agreement, duly executed by Cal-Maine Egg Products, Inc., together with:
(i) acknowledgment copies of proper Financing Statements (Form UCC-1, UCC-lF or EFS-1) duly filed under the Food and Security Act of 1985 and/or the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of the Banks, desirable in order to perfect the security interests created by each of the Security Agreements;
(ii) acknowledgment copies of proper Assignments of Financing Statements (Form UCC-3) duly filed under the Uniform Commercial Code of all jurisdictions as may be necessary, in the opinion of the Banks, in order to assign the Financing Statements (Form UCC-1) filed in connection with the Previous Revolving Credit Agreement and Previous Term Loan Agreement to the Agent;
(iii) certified copies of responses to Requests for Information or copies (Form UCC-11), or equivalent reports, listing the Financing Statements referred to in paragraph M above and all other effective financing statements which name the Borrower (under its present name and any previous name) or Cal-Maine Farms, Inc. (Under its present name and any previous name) or Cal-Maine Egg Products, -Inc. (under its present name and any previous name) as debtor and which are filed in the jurisdictions referred to in said paragraph W, together with copies of such other financing statements (none of which shall cover the collateral purported to be covered by the Security Agreements except for those filed in favor of Rabobank in connection with the Previous Revolving Credit Agreement and Previous Term Loan Agreement or those as to which the Borrower shall have delivered instruments satisfactory to Banks which when filed by the Banks will result in the termination of said financing statements);
(iv) evidence of the completion of all recordings and filings of the Borrower, Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc. as may be necessary or, in the opinion of the Banks, desirable to perfect the security interest and liens created by the Security Agreements;
(v) evidence of the insurance required by the terms of the Security Agreements; and
(vi) evidence that all other actions necessary, in the opinion of the Banks, to perfect and protect the security interests created by each of the Security Agreements have been taken.
(c) The Amended Guaranty Agreements, duly executed by each Guarantor.
(d) The Amendment to Collateral Pledge Agreement duly executed by Borrower and the Guarantors.
(e) The Term Loan Agreement, duly executed by the Borrower.
(f) The Fourth Amendment to Reimbursement Agreement, duly executed by the Borrower.
(g) The Intercreditor Agreement duly executed by the Agent, the Banks and acknowledged by the Borrower and Guarantors.
(h) The Assignment duly executed by Rabobank.
(i) Certified copies of (i) resolutions of the Board of Directors of each Loan Party evidencing approval of each Loan Document to which it is a party and the matters contemplated thereby, and (ii) all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to each such Loan Document.
(j) A certificate of the Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of such Loan Party authorized to sign each Loan Document to which it is a party and the other documents contemplated hereby or to be delivered by it hereunder. The Banks may conclusively rely on each such certificate until they shall receive a further certificate of the Secretary or an Assistant Secretary of the respective Loan Party canceling, amending or replacing the prior certificate.
(k) A Borrowing Base Certificate dated the date of the initial Advance.
(l) A favorable opinion of counsel for the Borrower and the Guarantors, in form and substance acceptable to the Banks and addressing such matters as the Banks may reasonably request.
SECTION 3.02. Conditions Precedent to All Advances. The obligation of each Bank to make each Advance (including the initial Advance) shall be subject to the further conditions precedent that on the date of such Advance, both immediately before and immediately after given effect thereto, (a) the following statements shall be true and the acceptance by the Borrower of the proceeds of such Advance shall constitute a representation and warranty by each Loan Party (as to each Loan Document to which it is a party), that:
(i) The representations and warranties contained in Section 4.01 of this Agreement and contained in each other Loan Document are correct on and as of the date of such Advance as though made on and as of such date;
(ii) No event has occurred and is continuing, or would result from such Advance, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time elapse or both;
(iii) The aggregate principal amount of Advances outstanding, after giving effect to such Advance, does not exceed the Borrowing Base;
(iv) The aggregate principal amount of Advances outstanding from the Bank requested to make such Advance, after giving effect to such Advance, does not exceed such Bank's Revolving Credit Commitment or such Bank's Pro Rata
Part of the Borrowing Base; and
(v) The aggregate outstanding amount of the Advances made by a Bank is not less than an amount equal to the sum of its Pro Rata Part of the aggregate outstanding amount of all Advances minus up to $500,000.00;
and (b) the Bank making such Advance shall have received such other approvals, opinions or documents as it may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction where the nature of its business requires it to be so qualified.
(b) The execution, delivery and performance by the Borrower of each Loan Document to which it is or will be a party are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, do not contravene (i) the Borrower's charter or bylaws or (ii) any law or any contractual restriction binding on or affecting the Borrower, and do not result in or require the creation of any lien, security interest or other charge or encumbrance (other than pursuant hereto) upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Borrower of any Loan Document to which it is or will be a party.
(d) This Agreement is and the Notes and each other Loan Document to which the Borrower is or will be a party when delivered hereunder will be, legal, valid
and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms.
(e) The consolidated balance sheet of the Borrower and its Subsidiaries as at June 3, 1989, and the related consolidated statements of income and retained earnings of the Borrower and its Subsidiaries for the Fiscal Year then ended, certified by Ernst & Whinney, independent public accountants, and the consolidated balance sheet of the Borrower and its Subsidiaries as at March 31, 1990, and the related consolidated statements of finance and retained earnings of the Borrower and its Subsidiaries for the nine month period then ended, copies of each of which have been furnished to the Banks, fairly present the financial condition of the Borrower and its Subsidiaries as at such date and the results of the operations of the Borrower and its Subsidiaries for the period ended on the dates reflected therein, all in accordance with generally accepted accounting principles consistently applied, and since March 31, 1990, there has been no material adverse change in such condition or operations.
(f) The Borrower and each Subsidiary have filed all tax returns (Federal, State and local) required to be filed and paid all taxes shown thereon to be due, including interest and penalties, or provided adequate reserves for payment thereof.
(g) There is no pending or threatened action or proceeding affecting the Borrower before any court, governmental agency or arbitrator, which may materially adversely affect the financial condition or operations of the Borrower or any of its Subsidiaries.
(h) The Guarantors and Sunbelt Freight, Inc. are the only Subsidiaries of, and are wholly-owned by, the Borrower.
(i) Following application of the proceeds of each Advance, not more than 25 percent of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Sections 5.02(e) or 5.02(f) or subject to any restriction contained in any agreement or instrument, between the Borrower or any of its Subsidiaries and either Bank or any affiliate of either Bank relating to Debt and within the scope of Section 6.01(d) will be margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System).
(j) The Fiscal Year for the Borrower and its Subsidiaries is the 52 or 53 week period, as the case may be, beginning on the date which is one day after the date of the preceding Fiscal Year end, and ending on the Saturday closest to May 31.
(k) The market value of the Collateral (as defined in each of the Security Agreements) located in the State of Louisiana is approximately $1,500,000. As of the date hereof, neither Borrower nor either Guarantor maintains any commodity futures margin accounts.
(1) The present fair salable value of the Assets of the Borrower and each Subsidiary is greater than the amount that will be required to pay its probable liability for its existing Debts as they become absolute and matured. For the purposes of this clause (1), "Assets" means any property of the party in question not exempt from liability for its Debts, and "Debts" means any legal liability, including the liability under the Loan Documents, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent. Neither the Borrower nor any of its Subsidiaries intends to, or believes that it will, incur Debts beyond its ability to pay as they mature.
(m) Neither the Borrower nor any of its Subsidiaries is "insolvent" (as defined in 11 U.S.C. Section 101(29)). Neither the Borrower nor any of its Subsidiaries is engaged, nor does it intend to engage, in any business or transaction for which its property, excluding an amount equal to the Obligations, is an unreasonably small capital. Neither the Borrower nor any of its Subsidiaries intends through the transactions contemplated by the Loan Documents to hinder, delay, or defraud either present or future creditors.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any amount payable hereunder or under the Notes shall remain unpaid or either Bank shall have any Revolving Credit Commitment hereunder, the Borrower will, unless the Banks shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, paying before the same become delinquent all taxes, assessments and governmental charges imposed upon it or upon any of its property except to the extent contested in good faith.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each Subsidiary to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property, and (ii) all lawful claims which, if unpaid, might by law become a lien upon its property; provided, however, that neither the Borrower nor any Subsidiary shall be required to pay or discharge any such tax, assessment, charge or claim which is being contested in good faith and by proper proceedings.
(c) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each Subsidiary to preserve and maintain, its corporate existence, rights (charter and statutory) and franchises.
(d) Keeping of Books. Keep, and cause each Subsidiary to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each Subsidiary in accordance with generally accepted accounting principles consistently applied.
(e) Visitation Rights. At any reasonable time and from time to time, permit either Bank or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their respective officers or directors.
(f) Maintenance of Properties, Etc. Maintain and preserve, and cause each Subsidiary to maintain and preserve, all of its properties which are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.
(g) Maintenance of Insurance. Maintain, and cause each Subsidiary to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses in the same general areas in which the Borrower or such Subsidiary operates.
(h) Working Capital. Maintain a ratio of current assets
to current liabilities (excluding current deferred income taxes) of
not less than 1.25 to I and a ratio of consolidated current assets to
consolidated current liabilities (excluding current deferred income
taxes) of the Borrower and its Subsidiaries of not less than 1.25 to
1. Current liabilities and consolidated current liabilities shall
include the current portion of the indebtedness incurred pursuant to
this Agreement, the Reimbursement Agreement and the Term Loan
Agreement.
(i) Tangible Net Worth. Maintain an excess of consolidated total tangible assets over consolidated total liabilities of the Borrower and its Subsidiaries in an amount not less than the amount set forth below for the applicable period set forth below:
(a) from the date hereof through June 2, 1990, Twenty-Two Million Dollars ($22,000,000); and
(b) from June 3, 1990 and at all times thereafter, the sum of (i) Twenty-Two Million Dollars ($22,000,000) plus (ii) fifty percent (50%) of the net income of Borrower and its Subsidiaries for the period from the beginning of the Fiscal Year existing as of the date of determination to the date of determination plus (iii) fifty percent (50%) of the net income of Borrower and its Subsidiaries for each Fiscal Year ending after June 3, 1990 but only if the Fiscal Year has completely elapsed.
If net income for a period is negative, no adjustment to the requisite level of net worth shall be made.
(j) Debt to Equity Ratio. Maintain a ratio of consolidated total liabilities (excluding deferred income taxes) to Net Worth of not more than 3.30 to 1 at all times throughout the Fiscal Year ending June 2, 1990, 3.05 to 1 at all times throughout the Fiscal Year ending June 1, 1991, and 2.55 to 1 at all times after the Fiscal Year ending June 1, 1991. Total liabilities shall include the indebtedness pursuant to this Agreement, the Reimbursement Agreement and the Term Loan Agreement.
(k) Reporting Requirements. Furnish to each Bank: (i) as soon as possible and in any event within five days after the occurrence of each Event of Default or each event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default, continuing on the date of such statement, a statement of the chief financial officer of the Borrower setting forth details of such Event of Default or event and the action which the Borrower proposes to take with respect thereto; (ii) as soon as available and in any event within 30 days after the end of each of the first eleven calendar months of each Fiscal Year of the Borrower, consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as of the end of such month and consolidated statements of income and retained earnings of the Borrower and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the end of such month, certified by the chief financial officer of the Borrower; (iii) as soon as available and in any event within 90 days after the end of each Fiscal Year of the Borrower, a copy of the annual report for such year for the Borrower and its Subsidiaries, including therein consolidated and consolidating balance sheets of the Borrower and its Subsidiaries as of the end of such Fiscal Year and consolidated and consolidating statements of income and retained earnings and of source and applications of funds of the Borrower and its Subsidiaries for such Fiscal Year certified in a manner acceptable to the Banks by Ernst & Whinney or other independent public accountants acceptable to the Banks; (iv) promptly after the sending or filing thereof, copies of all reports which the Borrower sends to any of its securityholders, and copies of all reports and registration statements which the Borrower files with the Securities and Exchange Commission or any national securities exchange; (v) on or before the last 'Business Day of each calendar month, a Borrowing Base Certificate dated as of the last day of the next preceding calendar month; and (vi) such other information respecting the business, properties, condition or operations, financial or otherwise, of the Borrower as either Bank may from time to time reasonably request.
SECTION 5.02. Negative Covenants. So long as any amount payable hereunder or under the Notes shall remain unpaid or either Bank shall have any Revolving Credit Commitment hereunder, the Borrower will not, without the written consent of the Banks:
(a) Guaranteed Indebtedness. Create, incur, assume or suffer to exist, or permit any Subsidiary to create, incur, assume or suffer to exist, any Debt (as defined in clause (iii) of the definition of Debt) except pursuant to the Guaranties and except
by reason of endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business and except for that certain guaranty agreement executed by Borrower for the benefit of Barclays Bank PLC guaranteeing the obligations of American Egg Products, provided the liability thereunder does not exceed $418,950.00 in the aggregate.
(b) Dividends, Etc. Except for the purchase of up to a maximum of two percent (2%) of the Borrower's outstanding common shares in any Fiscal Year at an aggregate purchase price in such year not exceeding the lesser of M the book value of such shares or (ii) $500,000.00, declare or pay any dividends, purchase or otherwise acquire for value any of its capital stock now or hereafter outstanding, or make any distribution of assets to its stockholders as such, or permit any of its Subsidiaries to purchase or otherwise acquire for value any stock of the Borrower.
(c) Capital Expenditures. Make, or permit any Subsidiary to make, any expenditures for fixed or capital assets excluding rolling stock, which would cause the aggregate of all such expenditures made by the Borrower and its Subsidiaries in any period of 12 consecutive months to exceed $3,500,000.
(d) Maintenance of Ownership of Subsidiaries. Sell or otherwise dispose of any shares of capital stock of any Subsidiary or permit any Subsidiary to issue, sell or otherwise dispose of any shares of its capital stock or the capital stock of any other Subsidiary, except to the Borrower or another Subsidiary.
(e) Mergers, Etc. Merge with or into or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets %whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any person, or permit any Subsidiary to do so, except that any Subsidiary may merge or consolidate with or transfer assets to or acquire assets from any other Subsidiary and except that any Subsidiary may merge into or transfer assets to the Borrower provided in each case that, immediately after giving effect thereto, no event shall occur and be continuing which constitutes an Event of Default or which with the giving of notice or lapse of time or both would constitute an Event of Default.
(f) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of, or permit any Subsidiary to sell, lease, transfer or otherwise dispose of, any substantial part of its assets, including (without limitation) substantially all assets constituting the business of a division, branch or other unit operation, except in the ordinary course of its business or in connection with a transaction authorized by subsection (e) of this Section.
(g) Fiscal Year. Change, or permit any Subsidiary to change, its Fiscal Year.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. Each of the following shall be deemed an "Event of Default":
(a) The Borrower shall fail to pay any amount payable hereunder or under either of the Notes when due.
(b) Any representation or warranty made or deemed made by any Loan Party (or any of its officers) under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made or deemed made.
(c) Any Loan Party shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed and any such failure shall remain unremedied for 30 days after its occurrence, or in the case of covenants contained in Section 1.03 of the Mortgages, the Borrower or Cal-Maine Farms, Inc. shall fail to perform or observe any covenant in Section 1.03 of the Borrower Mortgages or the Cal-Maine Farms Mortgage, as the case may be, on its part to be performed or observed and any such failure shall remain unremedied for 30 days after notice thereof from either Bank.
(d) The Borrower or any of its Subsidiaries shall fail to pay any Debt (excluding Debt hereunder or under the Notes but including Debt under the Term Loan Agreement and the promissory note executed pursuant to the Term Loan Agreement) of the Borrower or any of its Subsidiaries (as the case may be), or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other default under any agreement or instrument relating to any such Debt, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof. The occurrence of an Event of Default under this clause (d) includes, without limitation, the occurrence of any event of default under the Term Loan Agreement or the Reimbursement Agreement.
(e) The Borrower or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally. or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its
property; or the Borrower or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection W.
(f) Any judgment or order for the payment of money in excess of $750,000 (the liability for which is not covered by insurance) shall be rendered against the Borrower or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.
(g) Any Security Agreement or Mortgage shall for any reason cease to create a valid and perfected first priority security interest in or a first mortgage lien on (as the case may be) any of the Collateral or Encumbered Property purported to be covered thereby except as otherwise contemplated therein.
(h) Any provision of any Loan Document shall, at any time after delivery thereof under Section 3.01, for any reason cease to be valid and binding on the Borrower or on any of its Subsidiaries (as the case may be) , or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the Borrower or any of its Subsidiaries, or a proceeding shall be commenced by any governmental agency or authority having jurisdiction over the Borrower or any of its Subsidiaries seeking to establish the invalidity or unenforceability thereof and such proceeding shall remain undismissed or unstayed for a period of 60 days, or the Borrower or any of its Subsidiaries shall deny that it has any or further liability or obligation thereunder.
(i) The occurrence of any event of default under any Loan Document.
SECTION 6.02. Remedies. Upon the occurrence of an Event of Default,
each Bank may independently, but subject to the Intercreditor Agreement, by
notice to the Borrower do any one or more of the following, (i) declare its
obligations to make Advances to be terminated, whereupon the same shall
forthwith terminate, (ii) declare its Note, all interest thereon and all other
amounts payable to it under this Agreement to be forthwith due and payable,
whereupon such Note, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
(iii) reduce any claim to judgment, (iv) take such steps as the Banks
(or a Bank, as determined pursuant to the Intercreditor Agreement) may deem
appropriate to foreclose or otherwise enforce any lien granted to Agent for the
benefit of Banks in accordance with the terms of the Loan Documents (including
the Intercreditor Agreement), and (iv) exercise any and all rights and remedies
afforded by law, by any of the Loan Documents, by equity or otherwise;
provided, Barclays shall have no right to take any action with respect to the
liens granted pursuant to the mortgages; provided, further, however, that in
the event of an actual or deemed entry of an order for relief with respect to
the Borrower or any of its Subsidiaries under the Federal Bankruptcy Code, the
Notes, all interest thereon and all other amounts payable under this Agreement
shall automatically become and be due and payable, and the
Revolving Credit Commitments shall automatically terminate, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.
ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS
SECTION 7.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
"Advance" has the meaning set forth in Section 1.01.
"Agent" has the meaning set forth in the Recitals hereto.
"Amended Borrower Security Agreement" means the Amended and Restated Security Agreement in substantially the form of Exhibit C and all amendments, supplements and other modifications thereto.
"Amended Cal-Maine Security Agreement" means the Amended and Restated Security Agreement in substantially the form of Exhibit D and all amendments, supplements and other modifications thereto.
"Amended Egg Products Security Agreement" means the Amended and Restated Security Agreement in substantially the form of Exhibit E and all amendments, supplements and other modifications thereto.
"Amended Guaranty Agreement" means the Amended and Restated Guaranty of each Guarantor in substantially the form of Exhibit B and all amendments, supplements and other modifications thereto.
"Assignment" has the meaning set forth in the Recitals hereto.
"Borrowing Base" on the date of any computation thereof means
the sum of (i) 75% of the face amount of the Eligible Receivables,
(ii) 50% of the lower of cost or market value of Eligible Poultry
Inventory, (iii) 50% of the lower of cost or market value of Eligible
Egg and Egg Product Inventory, (iv) 80% of the market value of
Eligible Feed Inventory (excluding silage) , (v) 75% of the market
value of unhedged Eligible Livestock, (vi) 85% of the market value of
hedged and forward priced Eligible Livestock and (vii) 100% of the
value of the commodity futures margin account deposits in which the
Agent has been assigned an interest by the Borrower or any of its
Subsidiaries.
"Borrowing Base Certificate" means a certificate setting forth the information and calculations necessary to determine the Borrowing Base, in substantially the form
of Exhibit F, signed by the chief financial officer or the President of the Borrower and each of the Guarantors.
"Business Day" means any day other than a Saturday, Sunday or a public or bank holiday or the equivalent for banks generally under the laws of the State of New York.
"Collateral" means the property covered by the Security Agreements.
"Cost of Funds Rate" for each Advance to which it applies shall mean a rate determined by Barclays in its sole and absolute discretion with reference to its funding sources, as notified to the Borrower prior to the date such Advance is made.
"Debt" means (i) indebtedness for borrowed money or for the referred purchase price of property or services, (ii) obligations as lessee under leases which shall have been or should be, in accordance with generally accepted accounting principles, recorded as capital Leases, (iii) obligations under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clause M or (ii) above, and (iv) liabilities in respect of unfunded vested benefits under plans covered by Title IV of ERISA.
"Default Rate" means a daily fluctuating interest rate which
is, with respect to amounts owed to Rabobank, equal to the lesser of
(i) 2-1/2% per annum above the 30 day Term Federal Funds Rate, or (ii)
the maximum Permissible Rate, and, with respect to amounts owed to
Barclay's, equal to the lesser of (i) 2-1/2% per annum above the 30
day Cost of Funds Rate or (ii) the Maximum Permissible Rate. Each
change in such daily fluctuating interest rate shall take effect
simultaneously with the corresponding change in the Term Federal Funds
Rate or the Cost of Funds Rate, as applicable, as determined by the
applicable Bank in its sole discretion at 12:00 noon (New York City
time).
"Eligible Egg and Egg Product Inventory" means all eggs and egg products of Borrower and its Subsidiaries including shell eggs (both processed and unprocessed), liquid, dried and frozen eggs, and all ingredients used in egg products, such as salt, sugar and syrup, and all packing and other supplies used in the production of eggs and processing of shell eggs, in which Agent has a perfected first priority security interest.
"Eligible Feed Inventory" means all feed of Borrower and its Subsidiaries, including shelled corn and other feed grains, soybean meal, feed additives and chemicals used in the manufacture of feed, and processed "finished" feed, in which Agent has a perfected first priority security interest.
"Eligible Livestock" means all grazing cattle on pasture and cattle of Borrower and its Subsidiaries in a feedlot and all live hogs of Borrower and Subsidiaries of whatsoever age, in which Agent has a perfected first priority security interest
"Eligible Poultry Inventory" means all live poultry and chickens of Borrower and its Subsidiaries, including broilers, pullets, layers, breeders and recycles, in which Agent has a perfected first priority security interest.
"Eligible Receivable" means the indebtedness arising out of a sale of goods or services by the Borrower or a Guarantor to a third party, in which Agent has a perfected first priority security interest, and may include the right to payment of any interest or finance charges and other obligations of such third party with respect thereto:
(i) which is required to be paid in full within 60 days of the original billing date therefor;
(ii) as to which any payment, or part thereof, does not remain unpaid for more than 60 days from the original due date for such payment and which would, in the ordinary course of business of the Borrower or a Guarantor, not be written off as uncollectible;
(iii) which is an account receivable representing all or part of the sales price of goods or services;
(iv) which is an "account" within the meaning of
Section 9-106 of the UCC of the State of New York;
(v) which is denominated and payable only in United States dollars in the United States; and
(vi) which complies, on and after the 30th day following notice by either Bank to the Borrower of any other criteria or requirements, with such other criteria and requirements as the Banks shall have specified in such notice.
"Encumbered Property" has the meaning set forth in the Term Loan Agreement.
"Existing Advances" has the meaning set forth in the Recitals hereto.
"Existing Collateral Documents" has the meaning set forth in the Recitals hereto.
"Existing Loan" has the meaning set forth in the Recitals hereto.
"Existing Properties" has the meaning set forth in the Recitals hereto.
"Fiscal Year" means the 52 or 53 week period, as the case may be, beginning on the date which is one day after the date of the preceding Fiscal Year end, and ending on the Saturday closest to May 31.
"Guarantor" means each of Cal-Maine Egg Products. Inc a Delaware corporation, and Cal-Maine Farms, Inc., a Delaware corporation.
"Intercreditor Agreement" has the meaning set forth in the Recitals hereto.
"Interest Period" has the meaning set forth in Section 1.05(b).
"Loan Documents" means this Agreement (as it may be amended or otherwise modified from time to time), the Notes, the Amended Guaranty Agreements, the Assignment, the Security Agreements, the Intercreditor Agreement, the Mortgages and all other certificates and documents delivered by the Borrower or its Subsidiaries hereunder.
"Loan Party" means the Borrower and each of the Guarantors.
"Louisiana Collateral Documents" has the meaning set forth in the Recitals hereto.
"Maximum Permissible Rate" has the meaning set forth in
Section 1.01(a).
"Mortgages" has the meaning set forth in the Term Loan Agreement.
"Net Worth" means the excess of consolidated total assets over consolidated total liabilities of the Borrower and its Subsidiaries.
"New Barclays Loan" has the meaning set forth in the Recitals hereto.
"New Properties" has the meaning set forth in the Recitals hereto.
"Note" has the meaning set forth in Section 1.07.
"Parent Borrowing Base" means the Borrowing Base valuation of the Borrower's Collateral only.
"Pledge Agreement" has the, meaning set forth in the Recitals hereto.
"Previous Revolving Credit Agreement" has tn meaning set forth in the Recitals hereto.
"Previous Term Loan Agreement" has the meaning set forth in the Recitals hereto.
"Pro Rata Part" means, (a) with respect to the Banks' Commitment to make Advances to Borrower hereunder and with respect to the Borrowing Base, the proportion to which each Bank's Revolving Credit Commitment bears to the sum of the Revolving Credit Commitments, (b) with respect to payments and repayments made by Borrower hereunder as well as with respect to proceeds of Collateral, the proportion which the obligations, indebtedness and liabilities then owed to each Bank under this Agreement bear to the total of all obligations, indebtedness and liabilities then owed by Borrower under this Agreement, and (c) with respect to the commitment fee described in Section 1.03, the proportion to which the unused portion of each Bank's Revolving Credit Commitment bears to the total unused portion of the Revolving Credit Commitments.
"Properties" has the meaning set forth in the Recitals hereto.
"Reimbursement Agreement" has the meaning set forth in the Recitals hereto.
"Repayment Date" has the meaning set forth in Section 1.05(b).
"Revolving Credit Commitment" means the obligation of each Bank to make the Advances to be made pursuant to Section 1.01 in a principal amount not exceeding Twenty Million Dollars ($20,000,000) with respect to Rabobank and a principal amount not exceeding Ten million Dollars ($10,000,000) with respect to Barclays.
"Security Agreements" means the Amended Borrower Security Agreement, the Amended Cal-Maine Security, the Louisiana Collateral Documents and the Amended Egg Products Security Agreement, collectively.
"Subsidiary" means any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether or not at the time capital stock of any other class or classes of such corporation shall or might have voting power upon% the occurrence of any contingency) is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or ' by one or more other Subsidiaries.
"Term Federal Funds Rate" for any Interest Period for any Advance means an interest rate per annum equal at all times during such Interest Period to the rate of interest at which Rabobank, as a branch of a foreign bank, in its sole discretion, can acquire federal funds in the interbank term federal funds market in New York City through brokers of recognized standing at the time the Borrower specifies the Interest Period for such Advance on the date of such Advance for a period equal to such Interest Period for such Advance and in the amount of such Advance.
"Term Loan Agreement" means that certain Amended and Restated Term Loan Agreement between Borrower and Rabobank of even date herewith as the same may be amended or otherwise modified.
"Termination Date" means December 31, 1990 or the earlier date of termination in whole of the Commitment pursuant to Sections 1.04 or 6.02.
SECTION 7.02. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e), and all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Banks and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
SECTION 8.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telegraphic communication) and mailed or telegraphed or delivered, if to the Borrower, at its address at 3320 Woodrow Wilson Drive, Jackson, Mississippi 39209; Attention: Bobby J. Raines, Vice President and if to Rabobank, at its address at 245 Park Avenue, New York, New York 10167; Attention: Corporate Services, with a copy to One Galleria Tower, 13355 Noel Road, Suite 1000, Dallas, Texas 75240, Attention: Jess E. Jarratt; and if to Barclays at its address at 75.Wall Street, New York, New York 10265; Attention: Sascha Sandberg, with a copy to Len Bailey; or, as to each party, at such other address as shall be designated by such party in a written notice to the other party. All such notices and communications shall, when mailed or telegraphed, be effective when deposited in the mails or delivered to the telegraph company, respectively, addressed as aforesaid, except that notices to the Banks pursuant to the provisions of Article II shall not be effective until received by the Banks.
SECTION 8.03. No Waiver; Remedies. No failure on the part of either Bank to exercise, and no delay in exercising, any right under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The remedies provided in the Loan Documents are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses and Taxes.
(a) The Borrower agrees to pay on demand all costs and expenses in connection with the preparation, execution, delivery, filing, recording and administration of the Loan Documents and the other documents to be delivered under the Loan Documents, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Banks and Agent, and local counsel who may be retained by said counsel, with respect thereto and with respect to advising the Banks and Agent as to its rights and responsibilities under the Loan Documents, and all costs and expenses (including counsel fees and expenses) in connection with the administration and enforcement of the Loan Documents and the other documents to be delivered under the Loan Documents including, without limitation, all costs and expenses incurred by either Bank in connection with any inspections of the Collateral and the Borrower's and Guarantors' other properties, books and records. In addition, the Borrower shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording, of the Loan Documents and the other documents to be delivered under the Loan Documents, and agrees to save the Banks harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.
(b) If, as a result of a payment made by the Borrower due to acceleration of the maturity of the Advances and the Notes pursuant to Section 6.02, mandatory or voluntary prepayment or due to any other reason, either Bank receives payment of any principal amount of any Advance on a day other than the last day of the, Interest Period for such Advance, the Borrower shall pay to such Bank on demand that amount, if any, required to compensate such Bank for additional losses, costs or expenses which it may accrue as a result of such payment (as determined in good faith in the sole discretion of such Bank), including, without limitation, an amount equal to the losses, if any, on the reinvestment of the amounts prepaid, which for purposes of this Agreement shall be deemed equal to the difference between the interest rate in effect hereunder on the amounts prepaid as of the date of such prepayment and the interest rate at which such Bank reinvests such amounts, multiplied by such amounts prepaid and a fraction, the numerator of which is the number of days (including the first day but excluding the last day) from the date of prepayment through the last day of the applicable Interest Period and the denominator of which is 360.
SECTION 8.05. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default and subject to the terms of the Intercreditor Agreement, each Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Bank to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under any Loan Document, irrespective of whether or not such Bank shall have made any demand under such Loan Document and although such deposits, indebtedness or obligations may be unmatured or
contingent. Each Bank agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Banks under this Section 8.05 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Banks may have.
SECTION 8.06. Severability of Provisions. Any provision of this Agreement or of any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
SECTION 8.07. Binding Effect; Governing Law. This Agreement shall be binding upon and inure to the benefit of the Borrower and the Banks and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Banks. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.
SECTION 8.08. Consent to Jurisdiction; Process Agent.
(a) The Borrower hereby irrevocably submits to the jurisdiction of any New York State or Federal court sitting in New York City in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, and the Borrower hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. The Borrower hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower hereby irrevocably appoints CT Corporation System (the "Process Agent"), with an office on the date hereof at 1633 Broadway, New York, New York 10019, as its agent to receive on behalf of the Borrower and its property service of copies of the summons and complaint and any other process which may be served in any such action or proceeding. Such service on the Process Agent may be made by mailing or delivering a copy of such process to the Borrower in care of the Process Agent, at the Process Agent's above address and the Borrower hereby irrevocably directs the Process Agent to accept such service on its behalf. As an alternative method of service, the Borrower also irrevocably consents to the service of any and all process in any such action or proceeding by any other method permitted by applicable law. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.
(b) Nothing in this Section shall affect the right of Banks to serve legal process in any other manner permitted by law or affect its right to bring any action or proceeding against the Borrower or its property in any other court.
SECTION 8.09. Security. The obligations of the Borrower under this Agreement are guaranteed by the Amended Guaranties and secured by the Security Agreements and the Mortgages.
SECTION 8.10. Entire Agreement; Amendment and Restatement. This Agreement amends and restates in its entirety the Previous Revolving Credit Agreement. This Agreement and the other Loan Documents referred to herein embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements representations and understandings, whether written or oral, relating to the subject matter hereof and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
CAL-MAINE FOODS, INC.
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "Rabobank
Nederland",
New York branch
BARCLAYS BANK PLC
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
CAL-MAINE FOODS, INC.
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "Rabobank
Nederland", New York branch
BARCLAYS BANK PLC
AMENDMENT
Dated as of December 31, 1990
This AMENDMENT between CAL-MAINE FOODS, INC., a Delaware corporation
(the "Borrower"), COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"Rabobank Nederland", Now York Branch ("Rabobank") and BARCLAYS BANK PLC (New
York) ("Barclays", and together with Rabobank, the "Banks").
PRELIMINARY STATEMENTS. The Borrower and the Banks have entered into an Amended and Restated Revolving Credit Agreement dated an of May 29, 1990 (said Agreement being the "Credit Agreement"; the terms defined in the Credit Agreement are used herein as therein defined). The Borrower and the Banks wish to amend the Credit Agreement to extend the Termination Date and amend certain other provisions thereof.
NOW, THEREFORE, the Borrower and the Bank agree as follows:
SECTION 1. Amendment to Credit Agreement. The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2 hereof, hereby amended (a) by extending the Termination Date to December 31, 1992 by amending Section 7.01 by deleting the date "December 31, 1990" appearing in the definition of "Termination Date" and substituting, in lieu thereof, the date "December 31, 1992", and
(b) by deleting the amount "Twenty-Two Million Dollars ($22,000,000)" each time it appears in clause (i) of Section 5.01 and substituting in lieu thereof, the amount "Twenty-Five Million Dollars ($25,000,000)".
SECTION 2. Conditions of Effectiveness. This Amendment shall become effective when, and only when, the Bank shall have received counterparts of this Amendment executed by the Borrower, and Section I hereof shall become effective when, and only when, the Banks shall have additionally received, in form and substance satisfactory to the Banks:
(a) A certificate signed by a duly authorized officer of the Borrower stating that:
(i) The representations and warranties contained in
Section 3 hereof are correct on and as of the date of such certificate
as though made on and as of such date, and
(ii) No event has occurred and is continuing which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both.
(b) A consent duly executed by each Guarantor in the form of Exhibit A hereto.
SECTION 3. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation.
(b) The execution delivery and performance by the Borrower of this
Amendment, and the Credit Agreement as amended hereby, are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action and do not contravene (i) the Borrower's charter or bylaws, or
(ii) law or any contractual restriction binding on or affecting the Borrower,
or result in, or require, the creation of any lien, security interest or other
charge, encumbrance or upon or with respect to any of the properties.
(c) No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Borrower of this Amendment or the Credit Agreement, as amended hereby.
(d) This Amendment and the Credit Agreement, as amended hereby, constitute, legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, subject, however, to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and (ii) the effect of general principles of equity (regardless whether such enforceability is considered in a proceeding in equity or at law).
(e) There is no pending or threatened action or proceeding affecting the Borrower or any of its subsidiaries before any court, governmental agency or arbitrator, which may materially adversely affect the financial condition or operations of the Borrower.
SECTION 4. Reference to and Effect on the Credit Agreement. (a) Upon the effectiveness of Section 1 hereof, on and after the date hereof, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import shall mean and be a reference to the Credit Agreement as amended hereby, and each reference in the Notes to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement and the Notes shall remain in full force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Bank under the Credit Agreement, nor constitute a waiver of any provision of the Credit Agreement.
SECTION 5. Costs, Expenses and Taxes. The Borrower agrees to pay on demand all costs and expenses of the Banks in connection with the preparation, execution and
delivery of this Amendment and the other instruments and documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel (who may be in-house counsel) for each Bank with respect thereto and with respect to advising each Bank as to its rights and responsibilities hereunder and thereunder. In addition, the Borrower shall pay any and all stamp and other taxes payable or determined to be payable in connection with the execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder, and agrees to save the Banks harmless, from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes.
SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of counterparts, each of which when no executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.
SECTION 7. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Now York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.
CAL-MAINE FOODS, INC.
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "Rabobank Nederland", New
York Branch
BARCLAYS BANK PLC (New York)
EXHIBIT A
CONSENT
Dated as of December 31, 1990
Each of the undersigned, CAL-MAINE EGG PRODUCTS, a company organized and existing under the laws of Delaware, and CAL-MAINE FARMS, INC., a company organized and existing under the laws of Delaware, an Guarantor respectively under the Amended and Restated Guaranty dated an of May 29, 1990 (respectively for each Guarantor, the "Guaranty") in favor of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland", New York Branch and BARCLAYS BANK PLC (New York) hereby consents to the foregoing amendment and hereby confirms and agrees that its Guaranty is, and shall continue to be in full force and effect and is hereby ratified and confirmed in all respects except that, upon the effectiveness of, and on and after the date of, the said amendment, all references in its Guaranty to the Loan Documents referred to in the said amendment, "thereunder, "thereof" or words of like import referring to the Loan Documents shall mean the Loan Documents an amended by the said amendment.
CAL-MAINE EGG PRODUCTS, INC.
CAL-MAINE FARMS, INC.
SECOND AMENDMENT
to
AMENDED AND RESTATED REVOLVING
CREDIT AGREEMENT
among
CAL-MAINE FOODS, INC.,
TRUST COMPANY BANK,
and
COOPERTIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.
New York Branch
1 October 1991
SECOND AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING AGREEMENT (the
"Amendment"), dated as of October 1, 1991, is among CAL-MAINE FOODS, INC., a
Delaware corporation ("Borrower"), TRUST COMPANY BANK, a Georgia state banking
corporation ("TCB"), and COOPERATIEVE CENTRAL RAIFFEISEN-BOERENLEENBANK B.A.,
"Rabobank Nederland", New York branch, as agent (in such capacity, herein
called Agent and, together with TCB, hereinafter sometimes referred to
individually as a "Bank" and collectively as the "Banks").
RECITALS:
A. Borrower, and Barclays Bank PLC (New York) ("Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990, as amended by that certain Amendment dated as of December 31, 1990 (as amended, the "Agreement").
B. Barclays has assigned all of its right, title, interest and obligations under the Loan Documents (as defined in the Agreement) to TCB pursuant to that certain Assignment and Assumption Agreement dated October 1, 1991 between Barclays and TCB (the "Assignment and Assumption Agreement").
C. Borrower and the Banks now desire to amend the Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby.
ARTICLE II
Amendments
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 1
Section 2.01. Amendment to Section 1.05. Effective as of the date hereof, subpart (b) of Section 1.05 of the Agreement is hereby amended in its entirety to read as follows:
(b) Interest Period. The period between the date of each
Advance and the date of payment in full of such Advance shall be
divided into successive periods, each such period being an Interest
Period for such Advance. The Interest Periods in effect for the
Existing Advances under the Previous Revolving Credit Agreement shall
continue in effect hereunder until the end thereof as determined
pursuant to the Previous Revolving Credit Agreement and the subsequent
Interest Period or Periods hereunder with respect thereto shall being
on the last day of the Interest Period or Periods existing under the
Previous Revolving Credit Agreement. The Interest Periods in effect
hereunder on the effective date of the assignment by Barclays Bank PLC
(herein the "Prior Bank") to TCB of its right, title and interest
hereunder which related to Advances made by the Prior Bank shall
terminate as of such date and the payment by TCB to the Prior Bank of
the consideration for such assignment shall be deemed to be Advances
made by TCB to Borrower as of such date. The initial Interest Period
for each Advance (other than the Existing Advances) shall begin on the
day of such Advance and each subsequent Interest Period for such
Advance shall begin on the last day of the immediately preceding
Interest Period for such Advance. Each Interest Period for each
Advance shall begin on the last day of the immediately preceding
Interest Period for such Advance.. Each Interest Period for each
Advance made by Rabobank shall end on the corresponding day in the
first, second or third week thereafter or the numerically
corresponding day in the first, third, sixth, ninth or twelfth
calendar month thereafter (as Borrower may select as provided in
Section 1.02 hereof) or on such other day as Borrower may request if
Rabobank can (in its sole discretion) make such an Interest Period
available to the Borrower and each Interest Period for each Advance
made by TCB shall end on the corresponding day in the first, second or
third week thereafter or on the numerically corresponding day in the
first, third or sixth calendar month thereafter (as Borrower may
select as provided in Section 1.02 hereof) or on such other day as
Borrower may request if TCB can (in its sole discretion) make such an
Interest Period available to the Borrower, except that each Interest
Period measured in months which commences on the last Business Day of
a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall
end on the last Business Day of the appropriate subsequent calendar
month and no Interest Period for any Advance made by TCB shall extend
beyond the date one hundred and eighty (180) days from the date such
Interest Period commenced. Notwithstanding the foregoing: (i) any
Interest Period which would otherwise extend beyond the date which is
three (3) months after the
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 2
Termination Date (the "Repayment Date") shall end on the Repayment
Date; and (ii) if the Borrower fails to select the duration of any
Interest Period, the duration of such Interest Period shall be three
(3) months.
Section 2.02. Amendment to Section 2.03. Effective as of the date hereof, subpart (a)(ii) of Section 2.03 of the Agreement is hereby amended in its entirety to read as follows:
"(ii) with respect to amounts payable to TCB, at the office of TCB at 25 Park Place, Atlanta, Georgia 30303."
Section 2.03. Amendment to Section 4.01. Effective as of the date hereof, Section 4.01 is hereby amended to add the following subpart (n) to read in its entirety as follows:
"(n) Cal-Maine Farms, Inc. owns and will operate the pullet growing, egg production, and processing facility located near Edwards, Mississippi and the egg production and processing facility located near Greensburg, Louisiana (together the "New Locations").
Section 2.04. Amendment to Section 5.01. Effective as of the date hereof, subpart (h) is hereby added to Section 5.01 of the Agreement to read in its entirety as follows:
(h) New Locations. In accordance with the provisions of the Security Agreements, Borrower shall cause Cal-Maine Farms, Inc. to comply with Sections 5 and 6 of its Security Agreement prior to moving any of its Collateral to the New Locations.
Section 2.05. Amendment to Subpart (c) of Section 5.02. Effective as of January 1, 1991, subpart (c) of Section 5.02 of the Agreement is hereby amended in its entirety to read as follows:
(c) Capital Expenditures. make, or permit any Subsidiary to make, any expenditures for fixed or capital assets excluding rolling stock, which would cause the aggregate of all such expenditures made by the Borrower and its Subsidiaries during any Fiscal Year of Borrower to exceed $5,000,000.00. The Agent and the Banks acknowledge, however, that (i) expenditures made by Borrower in its 1990 and 1991 Fiscal Years in respect of the construction of a new pullet growing, egg production, and processing facility to be located near Edwards, Mississippi (the "Edwards Facility") and (ii) expenditures made by Borrower in its 1990 and 1991 Fiscal Years, in respect of a new egg production and processing facility located near Greensburg, Louisiana (the "Greensburg Facility") shall not be considered capital expenditures for the purposes of this Section 5.02(c), to the extent that expenditures made by Borrower in respect of the Edwards Facility do not exceed $11,500,000.00, and
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 3
to the extent that expenditures made by Borrower in respect of the Greensburg Facility do not exceed $6,500,000.00.
Section 2.06. Amendment to Section 7.01.
(a) Effective as of the date hereof, Section 7.01 of the Agreement is hereby amended to add the following definitions:
"Sunnyside" means Sunnyside Eggs, Inc., a North Carolina corporation.
"Sunnyside Guaranty Agreement" means that certain guaranty agreement dated October 1, 1991 and executed by Sunnyside for the benefit of the Agent.
"Sunnyside Security Agreement" means that certain security agreement dated as of October 1, 1991 and executed by Sunnyside for the benefit of the Agent, and all amendments, supplements and other modifications thereto.
"TCB" means Trust Company Bank, a Georgia state banking corporation.
(b) Effective as of the date hereof, the following definitions are amended in their entirety to read as follows:
"Amended Guaranty Agreement" means the Amended and Restated Guaranty Agreements executed by Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc., in substantially the form of Exhibit B, the Sunnyside Guaranty Agreement, and all amendments, supplements and other modifications thereto.
"Bank" means (i) for the purposes of the recitals hereto, Barclays Bank PLC or Rabobank, and (ii) for all other purposes herein, TCB or Rabobank.
"Banks" means (i) for the purposes of the recitals hereto, Barclays Bank PLC and Rabobank, and (ii) for all other purposes herein, TCB and Rabobank.
"Barclays" means (i) for the purposes of the recitals hereto, Barclays Bank PLC, and (ii) for all other purposes herein, TCB.
"Guarantors" means each of Cal-Maine Egg Products, Inc., a Delaware corporation, Cal-Maine Farms, Inc., a Delaware corporation, and Sunnyside Eggs, Inc., a North Carolina corporation and any reference to either or both
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 4
Guarantors in any Loan Documents shall mean a reference to any or all of the Guarantors, as applicable.
"Security Agreements" means the Amended Borrower Security Agreement, the Amended Cal-Maine Security Agreement, the Louisiana Collateral Documents, the Amended Egg Products Security Agreement, and the Sunnyside Security Agreement, collectively.
Section 2.07. Amendment to Section 8.02. Effective as of the date hereof, Section 8.02 of the Agreement is hereby amended in its entirety to read as follows:
SECTION 8.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telegraphic and telecopy communications) and mailed or telegraphed or delivered, if to the Borrower, at its address at 3320 Woodrow Wilson Drive, Jackson, Mississippi 39209; Attention: Bobby J. Raines, Vice President and if to Rabobank, at its address at 245 Park Avenue, New York, New York 10167; Attention: Corporate Services, with a copy to One Galleria Tower, 13355 Noel Road, Suite 1000, Dallas, Texas 75240, Attention: Jess E. Jarratt; and if to TCB at its address at 25 Park Place, Atlanta, Georgia 30303; Attention: James O. Clarke, III; or, as to each party, at such other address as shall be designated by such party in a written notice to the other party. All such notices and communications shall, when mailed or telegraphed, be effective when deposited in the mails or delivered to the telegraph company, respectively, addressed as aforesaid, except that notices to the Banks pursuant to the provisions of Article II shall not be effective until received by the Banks.
Section 2.08. Amendment to Exhibit F. Effective as of the date hereof, Exhibit F to the Agreement is hereby amended to replace the reference to and address of Barclays with the following reference and address: "Trust Company Bank, 25 Park Place, Atlanta, Georgia 30303, Attn: James O. Clarke, III."
ARTICLE III
Conditions Precedent
Section 3.01. Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:
(a) Agent shall have received all of the following, each dated (unless otherwise indicated) the date of this Amendment, in form and substance satisfactory to Agent:
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 5
(1) Resolutions. Resolutions of the Board of Directors of Sunnyside certified by its Secretary or an Assistant Secretary which authorize the execution, delivery, and performance by Sunnyside of the Sunnyside Security Agreement, Sunnyside Guaranty Agreement and the other Loan Documents to which Sunnyside is or is to be a party hereunder;
(2) Incumbency Certificate. A certificate of incumbency certified by the Secretary or an Assistant Secretary of Sunnyside certifying the names of the officers of Sunnyside authorized to sign the Sunnyside Security Agreement, Sunnyside Guaranty Agreement and each of the other Loan Documents to which Sunnyside is or is to be a party hereunder (including the certificates contemplated herein) together with specimen signatures of such officers;
(3) Articles of Incorporation. The articles of incorporation of Sunnyside certified by the Secretary of State for the State of North Carolina within ten (10) days prior to the date of this Amendment;
(4) Bylaws. The bylaws of Sunnyside certified by the Secretary or an Assistant Secretary of Sunnyside;
(5) Governmental Certificates. Certificates of the appropriate government officials of the state of incorporation of Borrower and each Guarantor as to the existence and good standing of the applicable Loan Party, each dated within ten (10) days prior to the date of this Amendment;
(6) Promissory Note. Agent shall have received a Note duly executed by the Borrower and payable to TCB substantially in the form of Annex I hereto;
(7) Sunnyside Guaranty Agreement. Agent shall have received a Guaranty Agreement substantially in the form of Annex III attached hereto executed by Sunnyside;
(8) Sunnyside Security Agreement. Agent shall have received the Sunnyside Security Agreement substantially in the form of Annex II hereto, duly executed by Sunnyside;
(9) First Amendment to Term Loan Agreement. Agent shall have received the First Amendment to Amended and Restated Term Loan Agreement, in form and substance satisfactory to Agent and each Bank, duly executed by Borrower, and acknowledged by Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc.;
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 6
(10) First Amendment to Intercreditor Agreement. Agent shall have received the First Amendment to Intercreditor Agreement, in form and substance satisfactory to Agent and each Bank, duly executed by Agent and the Banks;
(11) Assignment and Assumption Agreement. Agent shall have received the Assignment and Assumption Agreement, in form and substance satisfactory to Agent and each Bank, duly executed between TCB and Barclays;
(12) Sixth Amendment to Reimbursement and Credit Agreement. Agent shall have received the Sixth Amendment to Reimbursement and Credit Agreement, in form and substance satisfactory to Agent and each Bank, duly executed by Borrower and Rabobank Nederland;
(13) Release. Agent shall have received a release, in form and substance acceptable to Rabobank Nederland, duly executed by Barclays and releasing Rabobank Nederland, in its capacities as Agent and a Bank, from claims or causes of action arising under or in connection with the Loan Documents;
(14) Landlord and Mortgagee Subordinations. Agent shall have received landlord and/or mortgagee subordinations, duly executed and in form and substance satisfactory to Agent and each Bank, with respect to the properties identified in subpart (a) of Schedule 1 to the Sunnyside Security Agreement;
(15) Second Amendment to Collateral Pledge Agreement and Assignment of Interest. Agent shall have received the Second Amendment to Collateral Pledge Agreement and Assignment of Interest, in form and substance satisfactory to Agent and each Bank, duly executed by Borrower, Cal-Maine Farms, Inc., Cal-Maine Egg Products, Inc., TCB and Rabobank Nederland, and acknowledged by Barclays;
(16) Perfection of Security Interests. Agent shall have received:
(a) acknowledgment copies of proper Financing Statements (Form UCC-1, UCC-1F or EFS-1) duly filed under the Food and Security Act of 1985 and/or the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of the Banks, desirable in order to perfect the security interests created by the Sunnyside Security Agreement;
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 7
(b) a certified copy of responses to or
request for information or copies (Form UCC-11), or
equivalent reports, listing all effective financing
statements which name Sunnyside as debtor and which
are filed in the jurisdictions referred to in clause
(a) above together with copies of such other
financing statements (none of which shall cover the
collateral reported to be covered by the Sunnyside
Security Agreement except for those as to which
Sunnyside shall have delivered instruments
satisfactory to the Banks which when filed by the
Banks will result in the termination of such
financing statements);
(c) evidence of the insurance required by the terms of the Sunnyside Security Agreement; and
(d) evidence that all other actions, in the opinion of the Banks, to perfect and protect the security interest created by the Sunnyside Security Agreement has been taken;
(17) Process Agent. A letter from CT Corporation pursuant to which they agree to act as Sunnyside's agent for purposes of service of process in accordance with the terms hereof;
(18) Opinion of Counsel. Agent shall have received an opinion of counsel rendered by Wells, Moore, Simmons, Stubblefield & Neeld, substantially in the form of Annex IV hereto;
(19) First Amendment to Cal-Maine Security Agreement. Agent shall have received from Farms that certain First Amendment to Security Agreement duly executed by an authorized representative of Farms, substantially in the form of Annex V attached hereto; and
(20) Additional Information. Agent shall have received such additional documents, instruments and information as Agent or its legal counsel may request; and
(b) The representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date hereof as if made on the date hereof;
(c) No Event of Default shall have occurred and be continuing and no event or condition shall have occurred that with the giving of notice or lapse of time or both would be an Event of Default.
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 8
(d) All corporate proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments, and other legal matters incident thereto shall be satisfactory to the Agent and its legal counsel.
ARTICLE IV
Ratifications, Representations and Warranties
Section 4.01. Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect. The Borrower, the Agent and the Banks agree that the Agreement as amended hereby and the other Loan Documents shall continue to be legal, valid, binding and enforceable in accordance with their respective terms. All parties hereto also agree and acknowledge (a) that the promissory note executed by Borrower payable to TCB pursuant to this Amendment (the "TCB Note") is a "Note" as defined in the Agreement and utilized in the other Loan Documents, (b) that the obligations, indebtedness and liabilities secured by the Security Agreements, the Louisiana Collateral Documents and the Mortgages, includes without limitation, the obligations, indebtedness and liabilities of the Borrower arising hereunder and under the TCB Note, (c) the term "Subsidiary" as defined in the Agreement and utilized in the Loan Documents, includes without limitation, Sunnyside and (d) the term "Louisiana Collateral Documents" as defined in the Agreement and utilized in the Loan Documents includes without limitation, the Second Amendment to Collateral Pledge Agreement and Assignment of Interest executed pursuant hereto.
Section 4.02. Representations and Warranties. Borrower hereby represents and warrants to the Agent and the Banks that (i) the execution, delivery and performance of this Amendment and any and all other Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite corporate action on the part of Borrower and will not violate the articles of incorporation or bylaws of Borrower, (ii) the representations and warranties contained in the Agreement, as amended hereby, and any other Loan Document are true and correct on and as of the date hereof as though made on and as of the date hereof, (iii) no Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, (iv) Borrower is in full compliance with all covenants and agreements contained in the Agreement as amended hereby and the other Loan Documents, and (v) the articles of incorporation, bylaws, certificates of secretary, and corporate resolutions delivered by Borrower and each Guarantor in connection with execution of the Agreement which were effective, true and correct on May 29, 1990 have not been amended, revoked or otherwise modified in any manner and remain true and correct and in full force and effect on and as of the date hereof as though delivered on and as of the date hereof.
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 9
ARTICLE V
Miscellaneous
Section 5.01. Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other Loan Document including any Loan Document connection with this Amendment shall survive the execution and delivery of this Amendment and the other Loan Documents,, and no investigation by Agent or any Bank, 6r any closing shall affect the representations and warranties or the right of the Agent or any Bank to rely upon them.
Section 5.02. Reference to Agreement. Each of the Loan Documents, including the Agreement and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Agreement shall mean a reference to the Agreement as amended hereby.
Section 5.03. Expenses of Agent and the Banks. As provided in the Agreement, Borrower agrees to pay on demand all costs and expenses incurred by Agent and the Banks in connection with the preparation, negotiation, and execution of this Amendment and the other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including without limitation the costs and fees of legal counsel to the Agent and/or a Bank, and all costs and expenses incurred by Agent and the Banks in connection with the enforcement or preservation of any rights under the Agreement, as amended hereby, or any other Loan Document, including without limitation the costs and fees of legal counsel to the Agent and/or a Bank.
Section 5.04. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 5.05. Applicable Law. This Amendment and all other Loan Documents executed pursuant hereto shall be deemed to have been made and to be performable in New York, New York and shall be governed by and construed in accordance with the laws of the State of New York.
Section 5.06. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the Agent, the Banks, and Borrower and their respective successors and assigns, except Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Agent.
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 10
Section 5.07. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 5.08. Effect of Waiver. No consent or waiver, express or implied, by Agent or any Bank to or for any breach of or deviation from any covenant, condition or duty by Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 5.09. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 5.10. Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
Executed as of the date first written above.
CAL-MAINE FOODS, INC.
OOPERATIEVE CENTRALE RAIFFEISEN-
OERENLEENBANK B.A., "Rabobank
ederland", New York branch
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 11
TRUST COMPANY BANK
Guarantor Acknowledgment
Cal-Maine, Farms, Inc. ("Farms") and Cal-Maine Egg Products, Inc. ("Egg Products") hereby consent and agree to this Amendment and agree that their respective Amended Guaranty Agreements, their respective Security Agreements (in the case of Farms, as amended by that certain First Amendment to Security Agreement dated as of the date hereof), and all other Loan Documents executed by each of them shall remain in full force and effect and shall continue to be the legal, valid and binding obligations of each, enforceable against each in accordance with their respective terms. Farms and Egg Products acknowledge and agree that obligations, indebtedness and liabilities guaranteed by their respective Amended Guaranty Agreements and secured by their respective Security Agreements and the mortgages, include without limitation, the obligation, indebtedness and liabilities evidenced by this Amendment and the TCB Note.
CAL-MAINE FARMS, INC.
CAL-MAINE EGG PRODUCTS, INC.
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - PAGE 12
FIRST AMENDMENT
to
AMENDED AND RESTATED TERM
LOAN AGREEMENT
between
CAL-MAINE FOODS, INC.
and
COOPERTIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.
New York Branch
1 October 1991
FIRST AMENDMENT TO AMENDED AND
RESTATED TERM LOAN AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED TERM LOAN AGREEMENT (the "Amendment"), dated as of October 1, 1991, is between CAL-MAINE FOODS, INC., a Delaware corporation ("Borrower"), and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland", New York Branch (the "Bank").
RECITALS:
A. Borrower and Bank have entered into that certain Amended and Restated Term Loan Agreement (the "Agreement") dated as of May 29, 1990.
B. Borrower and Bank now desire to amend the Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby.
ARTICLE II
Amendments
Section 2.01. Amendment to Subpart (a) of Section 2.02. Effective as of the date hereof, subpart (a) of Section 2.02 of the Agreement is hereby amended to add the following sentence to the end thereof:
"The principal amount of each prepayment made under this Section 2.01(a) shall be applied to the principal installments due under the Note in the inverse order of maturity."
Section 2.02. Amendment to Subpart (b) of Section 2.02. Effective as of June 30, 1991, subpart (b) of Section 2.02 of the Agreement is hereby amended in its entirety to read as follows:
FIRST AMENDMENT TO AMENDED AND
RESTATED TERM LOAN AGREEMENT - Page 1
"(b) Optional. The Borrower may, upon at least five Business Days notice to the Bank, prepay the outstanding amount of the Advance in whole at any time or from time to time in part with (i) accrued interest to the date of such prepayment on the amount so prepaid and (ii) all amounts due pursuant to Section 8.04(b) as a result of such prepayment, provided, that each such partial prepayment shall be in a principal amount not less than $500,000.00 or an integral multiple thereof. The principal amount of each such prepayment made under this Section 2.01(b) shall be applied to the principal installments due under the Note in the inverse order of maturity; provided, however, the principal amount of any prepayment made under this Section 2.01(b) may be applied to the installments due under the Note in the order of maturity if (i) Borrower shall have notified Bank of its desire to prepay the installments due under the Note in the order of maturity and shall have identified the installments to be prepaid within ten days prior to the date of prepayment, (ii) Borrower shall make the prepayment on a regularly scheduled date for payment of installments of principal under the Note and (iii) the principal amount prepaid shall not exceed an amount equal to the sum of all principal installments due under the terms of the Note during the twelve month period following the date of such prepayment and if the principal amount to be prepaid is in excess of such amount, any excess shall be applied to the installments due under the Note in the inverse order of maturity.
Section 2.03. Amendment to Subpart (i) of Section 5.01. Effective as of May 29, 1990, subpart (i) of Section 5.01 of the Agreement is hereby amended in its entirety to read as follows:
(i) Tangible Net Worth. Maintain an excess of consolidated total tangible assets over consolidated total liabilities of the Borrower and its Subsidiaries in an amount not less than the amount set forth below for the applicable period set forth below:
(a) from the date hereof through June 2, 1990, Twenty-Five Million Dollars ($25,000,000.00); and
(b) from June 3, 1990 and at all times thereafter, the sum of (i) Twenty-Five Million Dollars ($25,000,000.00), plus (ii) fifty percent (50%) of the net income of Borrower and its Subsidiaries for the period from the beginning of the Fiscal Year existing as of the date of determination to the date of determination, plus (iii) fifty percent (50%) of the net income of Borrower and its Subsidiaries for each Fiscal Year ending after June 3, 1990 but only if the Fiscal Year has completely elapsed.
If net income for a period is negative, no adjustment to the requisite level of net-worth shall be made.
FIRST AMENDMENT TO AMENDED AND
RESTATED TERM LOAN AGREEMENT - Page 2
Section 2.04. Amendment to Subpart (c) of Section 5.02. Effective as of January 1, 1991, subpart (c) of Section 5.02 of the Agreement is hereby amended in its entirety to read as follows:
(c) Capital Expenditures. Make, or permit any Subsidiary to make, any expenditures for fixed or capital assets excluding rolling stock, which would cause the aggregate of all such expenditures made by the Borrower and its Subsidiaries during any Fiscal Year of Borrower to exceed $5,000,000.00. The Bank acknowledges, however, that (i) expenditures made by Borrower in its 1990 and 1991 Fiscal Years in respect of the construction of a new pullet growing, egg production, and processing facility to be located near Edwards, Mississippi (the "Edwards Facility") and (ii) expenditures made by Borrower in its 1990 and 1991 Fiscal Years, in respect of a new egg production and processing facility located near Greensburg, Louisiana (the "Greensburg Facility") shall not be considered capital expenditures for the purposes of this Section 5.02(c), to the extent that expenditures made by Borrower in respect of the Edwards Facility do not exceed $11,500,000.00, and to the extent that expenditures made by Borrower in respect of the Greensburg Facility do not exceed $6,500,000.00.
Section 2.05. Amendment to Section 7.01. Effective as of the date hereof, the following definitions are amended in their entirety to read as follows:
"Barclays" means (i) for the purposes of the recitals hereto, Barclays Bank PLC, and (ii) for all other purposes hereof, Trust Company Bank, a Georgia state banking corporation.
"Guarantors" means any of Cal-Maine Egg Products, Inc., a Delaware corporation, Cal-Maine Farms, Inc., a Delaware corporation, and Sunnyside Eggs, Inc., a North Carolina corporation and any reference herein to either or both Guarantors shall mean a reference to any or all Guarantors, as applicable.
"Security Agreements" means the Amended Borrower Security Agreement, the Amended Cal-Maine Security Agreement, the Louisiana Collateral Documents, the Amended Egg Products Security Agreement, and that certain security agreement executed by Sunnyside Eggs, Inc. for the benefit of the Agent, as agent for the Banks (as therein defined) and dated as of October 1, 1991.
ARTICLE III
Conditions Precedent
Section 3.01. Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:
FIRST AMENDMENT TO AMENDED AND
RESTATED TERM LOAN AGREEMENT - Page 3
(a) The Bank shall have received all of the documents required under the terms of that certain Second Amendment to Amended and Restated Revolving Credit Agreement dated as of the date hereof executed among the Borrower, the Bank, and Trust Company Bank, a Georgia state banking corporation, in form and substance satisfactory to the Bank;
(b) The Bank shall have received such additional documents, instruments and information as Bank or its legal counsel may request;
(c) The representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date hereof as if made on the date hereof;
(d) No Event of Default shall have occurred and be continuing and no event or condition shall have occurred that with the giving of notice or lapse of time or both would be an Event of Default; and
(e) All corporate proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments, and other legal matters incident thereto shall be satisfactory to the Bank and its legal counsel.
ARTICLE IV
Ratifications, Representations, Warranties, Waivers
Section 4.01. Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Agreement and except as expressly modified and superseded by this Amendment, the terms and provisions of the Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force and effect. Borrower and the Bank agree that the Agreement as amended hereby and the other Loan Documents shall continue to be legal, valid, binding and enforceable in accordance with their respective terms. Borrower acknowledges and agrees that (a) the term "Subsidiary" as defined in the Agreement and utilized in the Loan Documents, includes without limitation, Sunnyside Eggs, Inc. and (b) the term "Louisiana Collateral Documents" as defined in the Agreement and utilized in the Loan Documents, includes without limitation, the Pledge Agreement as amended by that certain Second Amendment to Collateral Pledge Agreement and Assignment of Interest dated the date hereof among Borrower, CalMaine Farms, Inc., Cal-Maine Egg Products, Inc., Bank and Trust Company Bank.
Section 4.02. Representations and Warranties. Borrower hereby represents and warrants to the Bank that (i) the execution, delivery and performance of this Amendment and any and all other Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite corporate action on the part of Borrower and will not violate the articles of
FIRST AMENDMENT TO AMENDED AND
RESTATED TERM LOAN AGREEMENT - Page 4
incorporation or bylaws of Borrower, (ii) the representations and warranties
contained in the Agreement, as amended hereby, and any other Loan Document are
true and correct on and as of the date hereof as though made on and as of the
date hereof, (iii) no Event of Default has occurred and is continuing and no
event or condition has occurred that with the giving of notice or lapse of time
or both would be an Event of Default, (iv) Borrower is in full compliance with
all covenants and agreements contained in the Agreement as amended hereby, and
(v) the articles of incorporation, by-laws, certificates' of secretary and
corporate resolutions delivered by each Loan Party in connection with execution
of the Agreement which were effective, true and correct on May 29, 1990 have
not been amended, revoked or otherwise modified in any manner and remain true
and correct and in full force and effect on and as of the date hereof as though
delivered on and as of the date hereof.
ARTICLE V
Miscellaneous
Section 5.01. Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other Loan Document including any Loan Document furnished in connection with this Amendment shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Bank or any closing shall affect the representations and warranties or the right of Bank to rely upon them.
Section 5.02. Reference to Agreement. Each of the Loan Documents, including the Agreement and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Agreement shall mean a reference to the Agreement as amended hereby.
Section 5.03. Expenses of Bank. As provided in the Agreement, Borrower agrees to pay on demand all costs and expenses incurred by Bank in connection with the preparation, negotiation, and execution of this Amendment and the other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including without limitation the costs and fees of Bank's legal counsel, and all costs and expenses incurred by Bank in connection with the enforcement or preservation of any rights under the Agreement, as amended hereby, or any other Loan Document, including without limitation the costs and fees of Bank's legal counsel.
Section 5.04. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
FIRST AMENDMENT TO AMENDED AND
RESTATED TERM LOAN AGREEMENT - Page 5
Section 5.05. Applicable Law. This Amendment and all other Loan Documents executed pursuant hereto shall be deemed to have been made and to be performable in New York, New York and shall be governed by and construed in accordance with the laws of the State of New York.
Section 5.06. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Bank and Borrower and their respective successors and assigns, except Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of Bank.
Section 5.07. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 5.08. Effect of Waiver. No consent or waiver, express or implied, by Bank to or for any breach of or deviation from any covenant, condition or duty by Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 5.09. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 5.10. Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
FIRST AMENDMENT TO AMENDED AND
RESTATED TERM LOAN AGREEMENT - Page 6
Executed as of the date first written above.
Borrower:
CAL-MAINE FOODS, INC.
Bank:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, "Rabobank Nederland",
New York Branch
FIRST AMENDMENT TO AMENDED AND
RESTATED TERM LOAN AGREEMENT - Page 7
Guarantor Acknowledgment
Cal-Maine Farms, Inc. ("Farms") and Cal-Maine Egg Products, Inc. ("Egg Products") hereby consent and agree to this Amendment and agree that the Loan Documents executed by either of them shall remain in full force and effect and shall continue to be the legal, valid and binding obligations of Farms and Egg Products enforceable against Farms and Egg Products in accordance with their respective terms.
CAL-MAINE FARMS, INC.
CAL-MAINE EGG PRODUCTS, INC.
FIRST AMENDMENT TO AMENDED AND
RESTATED TERM LOAN AGREEMENT - Page 8
THIRD AMENDMENT
to
AMENDED AND RESTATED REVOLVING
CREDIT AGREEMENT
among
CAL-MAINE FOODS, INC.,
TRUST COMPANY BANK,
and
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.
New York Branch
31 December 1991
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (the "Amendment") , dated as of December 31, 1991, is among CAL-MAINE
FOODS, INC., a Delaware corporation ("Borrower"), TRUST COMPANY BANK, a
Georgia state banking corporation ("TCB"), and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland", New York branch
("Rabobank", and together with TCB, hereinafter sometimes referred to
individually as a "Bank" and collectively as the "Banks").
RECITALS:
A. Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990, as amended by that certain Amendment dated as of December 31, 1990 and that certain Second Amendment to Amended and Restated Revolving Credit Agreement dated as of October 1, 1991 (such Amended and Restated Revolving Credit Agreement, as amended, the "Agreement").
B. Barclays has assigned all of its right, title, interest and obligations under the Loan Documents (as defined in the Agreement) to TCB pursuant to that certain Assignment Agreement dated as of October 1, 1991 among Barclays, TCB and Rabobank.
C. Borrower and the Banks now desire to amend the Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby.
ARTICLE II
Amendments
Section 2.01. Amendment to Section 1.01. Effective as o the date hereof, Section 1.01 of the Agreement is hereby amended in its entirety to read as follows:
SECTION 1.01. The Advances. Each Bank severally agrees, on the terms and conditions hereinafter set forth, to make advances (such advances, collectively with the Existing Advances herein the "Advances") to the Borrower from time to time during the period from the date hereof to and including the Termination Date (this and certain other capitalized terms are defined in Section 7.01), provided that (a) at any time the aggregate outstanding amount of the Advances and Credit Liabilities shall not exceed the lesser of (i) the Revolving Credit Commitments, as such amount may be reduced pursuant to Section 1.04, or (ii) the Borrowing Base, (b) at any time the aggregate outstanding amount of a Bank's Advances and its Pro Rata
Part (determined based on the Revolving Credit Commitments) of the
Credit Liabilities shall not exceed its Revolving Credit Commitment and (c) at all times the aggregate outstanding amount of the Advances made by a Bank shall never be less than an amount equal to the sum of its Pro Rata Part (determined based on the Revolving Credit commitments) of the then aggregate outstanding amount of all Advances minus up to $500,000.00. Each Advance shall be in an amount not less than $250,000.00. Each Bank, subject to the other terms hereof, shall have an obligation to make only the Advances requested from such Bank by Borrower, whether or not the other Bank makes its Advances to Borrower. Within the limits of the Revolving Credit Commitments, the Borrower may borrow, prepay pursuant to Section 2.02 and reborrow under this Section 1.01.
Section 2.02. Amendment to Section 1.04. Effective as of the date hereof, Section 1.04 of the Agreement is hereby amended by adding the following to the end thereof:
Borrower may not terminate a Bank's Revolving Credit Commitment while Letters of Credit are outstanding and Borrower may not reduce a Bank's Revolving Credit Commitment below an amount equal to the aggregate unused portion of the stated amount of the Letters of Credit then outstanding.
Section 2.03. Amendment to Section 1.08. Effective as of the date hereof, Section 1.08 of the Agreement is hereby amended in its entirety to read as follows:
SECTION 1.08. Use of Proceeds. The proceeds of the Advances made by either Bank will be used solely for the purposes of (a) financing the normal
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT - Page 2
operations of the Borrower and its Subsidiaries as such operations exist as of the date hereof and (b) reimbursing the Banks for drawings under Letters of Credit. Any Advances received by the Borrower when the aggregate amount of the then outstanding Advances and Credit Liabilities exceeds the Parent Borrowing Base shall be utilized so that each Guarantor shall directly benefit from the amount of such excess Advances by an amount reasonably equivalent to the Borrowing Base valuation of such Guarantor's Collateral.
Section 2.04. Addition to Article I. Effective as of the date hereof, Sections 1.09, 1.10, 1.11 and 1.12 are hereby added to Article I of the Agreement to read in their entirety as follows:
SECTION 1.09. Letters of Credit. Subject to the terms and conditions of this Agreement, Rabobank agrees to consider upon Borrower's request issuing one or more Letters of Credit for the account of Borrower from time to time from December 31, 1991 to but excluding the Termination Date; provided, however, that the aggregate amount of all Advances and Credit Liabilities outstanding hereunder shall never exceed the lesser of the Borrowing Base or the Revolving Credit Commitments. Upon Rabobank's receipt of a request for issuing a Letter of Credit, Rabobank shall determine, in its sole discretion after consultations with TCB, whether to issue the Letter of Credit requested. Each Letter of Credit shall have an expiration date on or prior to the Termination Date, shall be payable in United States dollars, must support a transaction that is entered into in the ordinary course of Borrower's business, must be satisfactory in form and substance to Rabobank and shall be issued pursuant to an Application for Letter of Credit and such other documentation and agreements as Rabobank may require. Notwithstanding anything in any Application for Letter of Credit or in any such other documentation and agreements to the contrary, each Letter of Credit and all' such documentation and agreements shall be subject to the Uniform Customs and Practice for Documentary Credits (1983 Revision) of the International Chamber of Commerce Publication No. 400 and to the extent not inconsistent therewith the laws of the State of New York. In the event that there is any conflict between the provisions of the other Loan Documents and the provisions of any Application for Letter of Credit or any other documentation or agreements executed in connection with the issuance of any Letter of Credit, whether now or hereafter executed, the provision of the other Loan Documents shall govern and control.
SECTION 1.10. Procedure for Issuing Letters of Credit. For Rabobank to consider issuing a Letter of Credit, Borrower must deliver to Rabobank a written request in accordance with this Section 1.10 requesting the issuance of a Letter of Credit by not later than 12:00 noon (New York, New York time) on a Business Day, and if such written request is not received by such time, it shall be deemed
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT - Page 3
to be received on the next succeeding Business Day. Each notice
requesting the issuance of a Letter of Credit shall describe the
proposed terms of such Letter of Credit and the transactions proposed
to be supported thereby and shall certify to the Banks that the
representations and warranties contained in Article IV shall be true
and correct and that no Event of Default nor any event that with the
giving of notice or passage of time, or both, would be an Event of
Default shall have occurred and shall be continuing. Rabobank at its
option may accept telephonic requests for a Letter of Credit, provided
that such acceptance shall not constitute a waiver of Rabobank's right
to require delivery of written notice in connection with subsequent
Letters of Credit. if, after delivery of a written request under this
Section 1.10, Rabobank determines in its sole discretion (after
consultation with TCB) to issue a Letter of Credit as requested by
Borrower, then Rabobank shall issue such Letter of Credit no sooner
than five (5) Business Days after receipt of (a) the applicable
written request for the issuance of the Letter of Credit and (b) such
other information and documentation as Rabobank may request. At the
time of issuance of each Letter of Credit, Rabobank shall be deemed,
without further action by any party hereto, to have sold to TCB, and
TCB shall be deemed, without further action by any party hereto, to
have purchased from Rabobank, a participation in such Letter of Credit
to the extent of TCB's Pro Rata Part (determined based on the
Revolving Credit Commitments) of such Letter of Credit and the related
Credit Liabilities. If Rabobank determines not to issue a Letter of
Credit as requested by Borrower, Rabobank shall advise the Borrower in
writing of its decision not to issue the Letter of Credit within four
(4) Business Days after receipt of the applicable written request.
SECTION 1.11. Reimbursement. Upon receipt by Rabobank of any drawing under a Letter of Credit, Rabobank shall promptly notify TCB and the Borrower as to the payment date for such drawing and the amount to be paid as a result of the drawing. Notwithstanding anything contained in any Application for Letter of Credit to the contrary, the Borrower agrees to do one of the following not later than 11:00 A.M. (New York, New York time) on the payment date:
(a) make available to Rabobank the amount to be paid as a result of the drawing on the Letter of Credit at Rabobank's office for payments specified herein, in immediately available funds, or
(b) request an Advance pursuant to Section 1.02 hereof to make the payment required by Section 1.11(a) hereof.
If the Borrower has not provided Rabobank as of the date and time specified above with immediately available funds in the amount to be paid as a result of the
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT - Page 4
drawing on a Letter of Credit, or has not requested an Advance as provided above, each Bank shall make and the Borrower shall accept an Advance on the date of such drawing in the amount equal to such Bank's Pro Rata Part (determined based on the Revolving Credit Commitments) of the amount to be paid as a result of the drawing -under the Letter of Credit notwithstanding the fact that either or both Advances may cause the credit limits set forth herein to be exceeded, or that the conditions set forth in Section 3.02 have not been satisfied, but without impairing the obligations of the Borrower under Subsection 2.02(a); provided, however, that such Advances may be applied by the Banks directly to the amount to be paid as a result of the drawing under the Letter of Credit.
SECTION 1.12. Letter of Credit Fees. Borrower agrees to pay Rabobank (for the account of Rabobank and TCB) in immediately available funds a fee for the issuance and maintenance of a Letter of Credit (each Bank to be entitled to its Pro Rata Part thereof) which shall be computed at an annual rate to be agreed upon by Rabobank, TCB and Borrower before the issuance of such Letter of Credit, such annual rate to be applied to the average amount of the Credit Liabilities outstanding for the applicable Payment Period (hereinafter defined), based on a 360 day year and the actual number of days to elapse and shall be payable on the last day of each calendar quarter and on the Termination Date, commencing on the first such date after the issuance of the initial Letter of Credit. The term "Payment Period" as used in this Section 1.12 means initially the period from and including the date that the initial Letter of Credit is issued to but excluding the date on which such initial quarterly fee is to be paid hereunder and thereafter means each period of time from and including the last day of the preceding calendar quarter to but excluding the date on which the quarterly fee in question is to be paid.
Section 2.05. Amendment to Subsection 2.02(a). Effective as of the date hereof, Subsection 2.02(a) of the Agreement is hereby amended in its entirety to read as follows:
(a) Mandatory. If at any time the aggregate principal amount of Advances and Credit Liabilities at such time outstanding shall exceed the Borrowing Base at such time, the Borrower shall immediately prepay the Advances in an aggregate amount equal to the difference between such outstanding amount and the Borrowing Base at such time as follows: (i) to Rabobank an amount equal to Rabobank's Pro Rata Part (determined based on the outstanding obligations owed by Borrower hereunder) of the amount by which the outstanding principal amount of the Advances and Credit Liabilities exceeds the
THIRD AMENDMENT TO AMENDED AND
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Borrowing Base, and (ii) to TCB an amount equal to TCB's Pro Rata Part (determined based on the outstanding obligations owed by Borrower hereunder) of the amount by which the outstanding principal amount of the Advances and Credit Liabilities exceeds the Borrowing Base and after all amounts outstanding under the Notes have been paid, or if no such amounts are outstanding, such prepayment shall be paid to Rabobank to be held by Rabobank for the benefit of itself and TCB as additional collateral, pursuant to such documentation and agreements as the Banks may request, to secure or pay the Credit Liabilities outstanding, if any. If at any time the aggregate principal amount of Advances made by a Bank shall be less than an amount equal to the sum of its Pro Rata Part (determined based on the Revolving Credit Commitments) of the then aggregate outstanding amount of all Advances minus up to $500,000.00, the Borrower shall immediately request an Advance from such Bank or prepay to the other Bank Advances made by such Bank, in an aggregate amount such that after the Advance or prepayment, as applicable, the aggregate principal amount of Advances made by the Bank in question shall be an amount equal to an amount that is not less than the sum of its Pro Rata Part (determined based on the Revolving Credit Commitments) of the then aggregate outstanding amount of all Advances minus $500,000.00. The prepayments required under this Section 2.02(a) shall be made without duplication. Upon any prepayment under this Section 2.02(a), the Borrower shall pay to each Bank all amounts due pursuant to Section 8.04(b) as a result of such prepayment.
Section 2.06. Amendment to Subsections 3.02(a)(iii) and (iv). Effective as of the date hereof, Subsections 3.02(a)(iii) and (iv) are hereby amended in their entirety to read as follows:
(iii) The aggregate principal amount of Advances and Credit Liabilities outstanding, after giving effect to such Advance, does not exceed the Borrowing Base,
(iv) The aggregate principal amount of Advances outstanding from the Bank requested to make such Advance, together with such Bank's Pro Rata Part of the Credit Liabilities, after giving effect to such Advance, does not exceed such Bank's Revolving Credit commitment or such Bank's Pro Rata Part of the Borrowing Base, and
Section 2.07. Amendment to Section 6.01. Effective as of the date hereof, Section 6.01 of the Agreement is hereby amended by adding Subsection 6.01(j) thereto to read in its entirety as follows:
(j) Notwithstanding the effects of any financial losses on the other covenants and provisions contained herein, the Borrower shall incur material financial losses in any of its operations other than its normal egg and egg processing operations.
THIRD AMENDMENT TO AMENDED AND
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Section 2.08. Amendments to Section 7.01.
(a) Effective as of the date hereof, Section 7.01 of the Agreement is hereby amended to add the following definitions thereto:
"Application for Letter of Credit" means any application for letter of credit or commercial credit pursuant to which Borrower requests Rabobank to issue a Letter of Credit.
"Credit Liabilities" means, at any time, all fixed and contingent liabilities of the Banks under Letters of Credit.
"Letter of Credit" means a letter of credit issued by Rabobank for the account of Borrower pursuant to Article I hereof. The term "Letter of Credit" shall not include and this Agreement shall not govern any letter of credit issued by Rabobank for the account of Borrower in connection with any industrial revenue or industrial development bond financings and specifically such term shall not include the letter of credit issued pursuant to the Reimbursement Agreement or to be issued in connection with the industrial revenue bond financing to be utilized to finance the construction of Borrower's new 1400 head dairy milking facility in Hinds County, Mississippi.
(b) Effective as of the date hereof, the following definitions contained in Section 7.01 are hereby amended in their entirety to read as follows:
"Pro Rata Part" means, unless otherwise indicated by the terms hereof, (a) with respect to (i) the Banks' Commitment to make Advances to Borrower hereunder, (ii) the Borrowing Base and (iii) a Bank's interest in a Letter of Credit, related Credit Liabilities and related letter of credit fees paid pursuant to Section 1.12, the proportion to which each Bank's Revolving Credit Commitment bears to the sum of the Revolving Credit Commitments, (b) with respect to payments and repayments made by Borrower hereunder as well as with respect to proceeds of Collateral, the proportion which the obligations, indebtedness and liabilities then owed to each Bank under this Agreement bear to the total of all obligations, indebtedness and liabilities then owed by Borrower under this Agreement (in making the calculations under this clause (b), all Credit Liabilities shall be included as obligations then owed by Borrower under this Agreement), and (c) with respect to the commitment fee described in Section 1.03, the proportion to which the unused portion of each Bank's Revolving Credit
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT - Page 7
Commitment bears to the total unused portion of the Revolving Credit Commitments.
"Termination Date" means December 31, 1993, or the earlier date of termination in whole of the Commitment pursuant to Sections 1.04 or 6.02.
Section 2.09. Amendment to Exhibit "F". Effective as of the date hereof, Exhibit "F" to the Agreement is hereby amended in its entirety to read as set forth in Annex I hereto.
ARTICLE III
Conditions Precedent
Section 3.01. Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:
(a) The Banks shall have received all of the following, each dated (unless otherwise indicated) the date of this Amendment, in form and substance satisfactory to the Banks:
(1) Resolutions. Resolutions of the Board of Directors of Borrower certified by its Secretary or an Assistant Secretary which authorize the execution, delivery, and performance by Borrower of this Amendment and the other Loan Documents to which it is or is to be a party hereunder;
(2) Incumbency Certificate. A certificate of incumbency certified by the Secretary or an Assistant Secretary of Borrower certifying the names of the officers of Borrower authorized to sign this Amendment and each of the other Loan Documents to which Borrower is or is to be a party hereunder (including the certificates contemplated herein) together with specimen signatures of such officers;
(3) Articles of Incorporation. The articles of incorporation of Borrower certified by the Secretary of State for the State of Delaware within ten (10) days prior to the date of this Amendment;
(4) Bylaws. The bylaws of Borrower certified by the Secretary or an Assistant Secretary of Borrower;
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT - Page 8
(5) Governmental Certificates. Certificates of the appropriate government officials of the state of incorporation of Borrower and each Guarantor as to the existence and good standing of the applicable Loan Party, each dated within ten (10) days prior to the date of this Amendment;
(6) Intercreditor Agreement. A Second Amendment to the Intercreditor Agreement in form and substance acceptable to the Banks, duly executed by the parties to the Intercreditor Agreement; and
(7) Additional Information. The Banks shall have received such additional documentation, instruments and information as either Bank or its legal counsel may request.
(b) The representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date hereof as if made on the date hereof.
(c) No Event of Default shall have occurred and be continuing and no event or condition shall have occurred that with the giving of notice or lapse of time or both would be an Event of Default.
(d) All corporate proceedings taken in connection with the transactions contemplated by this Amendment and all documentation, instruments, and other legal matters incident thereto shall be satisfactory to the Banks and their legal counsel.
ARTICLE IV
Ratifications, Representations and Warranties
Section 4.01. Ratifications. The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Agreement and except as expressly modified and superseded by
this Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. The Borrower and the Banks agree that the Agreement as amended hereby
and the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms. Without limiting the
generality of the foregoing, the parties hereto also agree and acknowledge that
(a) the term "Loan Documents" as defined in the Agreement and as used in the
Loan Documents includes, without limitation, the Letters of Credit and the
Applications for Letter of Credit, (b) the obligations, indebtedness and
liabilities secured by the Security Agreements, the Louisiana Collateral
Documents and the Mortgages include, without limitation, the obligations,
indebtedness and liabilities of the Borrower arising hereunder and
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT - Page 9
under the Letters of Credit and Applications for Letter of Credit, (c) the term "Revolving Obligations" as defined in the Intercreditor Agreement includes, without limitation, the obligations, indebtedness and liabilities of Borrower arising hereunder and under the Letters of Credit and the Applications for Letter of Credit and (d) any reference in the Loan Documents to the Assignment and Assumption Agreement dated October 1, 1991 between Barclays and TCB shall be deemed to be a reference to that certain Assignment Agreement dated as of October 1, 1991 among Barclays, TCB and Rabobank.
Section 4.02. Representations and Warranties. Borrower hereby represents and warrants to the Banks that (a) the execution, delivery and performance of this Amendment and any and all other Loan Documents executed and/or delivered in connection herewith have been authorized by all requisite corporate action on the part of Borrower and will not violate the articles of incorporation or bylaws of Borrower, (b) the representations and warranties contained in the Agreement, as amended hereby, and any other Loan Document are true and correct on and as of the date hereof as though made on and as of the date hereof, (c) no Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, (d) Borrower is in full compliance with all covenants and agreements contained in the Agreement as amended hereby and the other Loan Documents, and (e) the articles of incorporation, by-laws, certificates of secretary, and corporate resolutions delivered by Borrower and each Guarantor in connection with execution of the Agreement which were effective, true and correct on May 29, 1990 have not been amended, revoked or otherwise modified in any manner and remain true and correct and in full force and effect on and as of the date hereof as though delivered on and as of the date hereof.
ARTICLE V
Miscellaneous
Section 5.01. Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other Loan Document, including any Loan Document furnished in connection with this Amendment, shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by a Bank or any closing shall affect the representations and warranties or the right of a Bank to rely upon them.
Section 5.02. Reference to Agreement. Each of the Loan Documents, including the Agreement and any and all other agreements, instruments or documentation now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Agreement shall mean a reference to the Agreement as amended hereby.
THIRD AMENDMENT TO AMENDED AND
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Section 5.03. Expenses of the Banks. As provided in the Agreement, Borrower agrees to pay on demand all costs and expenses incurred by the Banks in connection with the preparation, negotiation, and execution of this Amendment and the other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including without limitation the fees and expenses of legal counsel to the Banks, and all costs and expenses incurred by the Banks in connection with the enforcement or preservation of any rights under the Agreement, as amended hereby, or any other Loan Document, including without limitation the fees and expenses of legal counsel to the Banks.
Section 5.04. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 5.05. Applicable Law. This Amendment and all other Loan Documents executed pursuant hereto shall be deemed to have been made and to be performable in New York, New York and shall be governed by and construed in accordance with the laws of the State of New York.
Section 5.06. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the Banks and Borrower and their respective successors and assigns, except Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Banks.
Section 5.07. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 5.08. Effect of Waiver. No consent or waiver, express or implied, by a Bank to or for any breach of or deviation from any covenant, condition or duty by Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 5.09. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 5.10. Entire Agreement. This Amendment and all other instruments, agreements and documentation executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements,, representations and understandings, whether written or oral, relating to this
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT - Page 11
Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
THIRD AMENDMENT TO AMENDED AND
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Executed as of the date first written above.
CAL-MAINE FOODS, INC.
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "Rabobank
Nederland", New York branch
TRUST COMPANY BANK
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT - Page 13
GUARANTOR ACKNOWLEDGMENT
Cal-Maine Farms, Inc. ("Farms"), Cal-Maine Egg Products, Inc. ("Egg Products") and Sunnyside Eggs, Inc. ("Sunnyside") hereby consent and agree to this Amendment and agree that their respective Amended Guaranty Agreements, their respective Security Agreements (in the case of Farms, as amended by that certain First Amendment to Security Agreement dated as of October 1, 1991), and all other Loan Documents executed by each of them shall remain in full force and effect and shall continue to be the legal, valid and binding obligations of each, enforceable against each in accordance with their respective terms. Without limiting the generality of the foregoing, Farms, Egg Products and Sunnyside acknowledge and agree that (a) the obligations, indebtedness and liabilities guaranteed by their respective Amended Guaranty Agreements and secured by their respective Security Agreements and the Mortgages include, without limitation, the obligations, indebtedness and liabilities arising under this Amendment and under the Letters of Credit and the Applications for Letter of Credit, (b) the term 'Revolving Obligations" as defined in the Intercreditor Agreement includes, without limitation, the obligations, indebtedness and liabilities of Borrower arising under this Amendment and under the Letters of Credit and the Applications for Letter of Credit and (c) any reference in the Loan Documents to the Assignment and Assumption Agreement dated October 1, 1991 between Barclays and TCB shall be deemed to be a reference to that certain Assignment Agreement dated as of October 1, 1991 among Barclays, TCB and Rabobank.
CAL-MAINE FARMS, INC.
CAL-MAINE EGG PRODUCTS, INC.
SUNNYSIDE EGGS, INC.
THIRD AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT - Page 14
January 13, 1992
Cal-Maine Foods, Inc.
P. O. Box 2960
Jackson, MI 39207
Attention: B. J. Raines
Chief
Dear Sirs:
Reference is made to the Revolving Credit Agreement dated as of December 31, 1990, as amended (as so amended, the "Credit Agreement") among you, Rabobank Nederland and Trust Company Bank (as assignee of Barclays Bank PLC).
You have asked us to waive the requirement of Section 5.02(b) of the Credit Agreement for your fiscal year ending May 1992. The undersigned hereby waive your compliance with said Section 5.02(b) but only to the extent necessary to allow you to repurchase in the 1992 fiscal year up to $900,000 of your stock.
Except as expressly set forth herein, this letter does not constitute a waiver of any of our rights under the Credit Agreement or a modification of any of its terms.
Very truly yours,
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., "Rabobank Nederland",
New York Branch
TRUST COMPANY BANK
AMENDMENT TO LOAN DOCUMENTS
(including Modifications to Mortgages and Deeds of Trust)
THIS AMENDMENT TO LOAN DOCUMENTS (the "Amendment"), dated as of May 1,1992, is among CAL-MAINE FOODS, INC. (the "Company"), CAL-MAIN EGG PRODUCTS, INC. ("Egg Products"), CAL-MAINE FARMS, INC. ("Cal-Maine Farms"), SUNNYSIDE EGGS, INC. ("Sunnyside" and collectively with Cal-Maine Farms and Egg Products herein referred to as the "Guarantors"), TRUST COMPANY BANK ("Trust Company") and COOPERATIEVE CENTRALE RAIFEISSEN- BOERENLEENBANK B.A., "RABOBANK NEDERLAND" NEW YORK BRANCH ("Rabobank Nederland") and Rabobank Nederland, as agent for itself and Trust Company (the "Agent").
RECITALS:
A. Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990 (such Amended and Restated Revolving Credit Agreement, as the same has been amended, and as the same may be further amended or otherwise modified, herein referred to as the "Revolving Credit Agreement"). Pursuant to the Second Amendment to Amended and Restated Revolving Credit Agreement dated October 1, 1991, Trust Company was substituted as a lender under the Revolving Credit Agreement in the place of Barclays and Barclays is no longer a party to the Revolving Credit Agreement.
B. The Company and Rabobank have entered into that certain Amended and Restated Term Loan Agreement dated as of May 29, 1990 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Term Loan Agreement").
C. The Company and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of December 1, 1987 (as the same has been amended, and as the same may be further amended or otherwise modified herein the "Egg Facility Reimbursement Agreement" and the Egg Facility Reimbursement Agreement, collectively with the Revolving Credit Agreement and the Term Loan Agreement, herein the "Credit Agreements").
D. To secure certain of the obligations and indebtedness of the Company to Rabobank and Trust Company under the Credit Agreements, and the other documents executed in connection therewith, the Company and the Guarantors executed certain guaranties, security agreements, deeds of trust and mortgages (as more fully described and identified in the Credit Agreements, and as the same have been or may hereafter be amended or otherwise modified, such guaranties, security agreements, deeds of trust and mortgages herein referred as the "Collateral Documents"). The Collateral Documents include, without limitation, the deeds of trust and mortgages described on Schedule 1 hereto which are filed in the real property records of the jurisdictions listed on Schedule 1 as indicated therein (the "Mortgages").
AMENDMENT TO LOAN DOCUMENTS - Page 1
E. To facilitate the collateral arrangements contemplated by the Collateral Documents, Rabobank and Barclays have entered into that certain Intercreditor Agreement dated May 29, 1990 (as such agreement has been and may hereafter be amended or otherwise modified, herein the "Intercreditor Agreement"). Barclays assigned all its right, title and interest in and to the Intercreditor Agreement to Trust Company and Barclays is no longer a party thereto.
F. The Company has requested that Rabobank issue a letter of credit (herein the "Letter of Credit") pursuant to the terms and provisions of that certain Reimbursement and Credit Agreement dated as of May 1, 1992 between the Company and Rabobank (as the same may be amended or otherwise modified herein the "Dairy Facility Reimbursement Agreement") in order to provide credit and liquidity support for $2,900,000.00 of Hinds County, Mississippi, Adjustable Rate Demand Industrial Revenue Bonds, Series 1992 (Taxable), Cal-Maine Foods, Inc., Dairy Project (herein the "Bonds").
G. In order to induce Rabobank to issue the Letter of Credit, the parties hereto now desire to enter into this Amendment.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Revolving Credit Agreement, as amended hereby or the Dairy Facility Reimbursement Agreement, as applicable.
ARTICLE II
Amendments to Credit Agreements
Section 2.01. Amendment to Working Capital Covenants. Each of the Credit Agreements require the Company to maintain a certain ratio of current assets to current liabilities and consolidated current assets to consolidated current liabilities as specified therein (the "Working Capital Covenants"). Effective as of the date hereof, the Working Capital Covenant set forth in each Credit Agreement are each hereby amended to provide that for purposes each such covenant, current liabilities and consolidated current liabilities shall include the current portion of the indebtedness under the Dairy Facility Reimbursement Agreement and the Loan Documents (as defined in the Dairy Facility Reimbursement Agreement).
Section 2.02. Egg Facility Reimbursement Agreement. The definition "Tangible Net Worth" as set forth in the Egg Facility Reimbursement Agreement is hereby amended in its entirety to read as follows:
AMENDMENT TO LOAN DOCUMENTS - Page 2
"Net Worth" means the excess of consolidated total assets over consolidated total liabilities of the Company and its Subsidiaries.
Section 2.03. Debt to Equity Ratio. Each of the Credit Agreements require the Company to maintain a certain ratio of consolidated total liabilities to net worth as specified therein (the "Debt to Equity Covenants"). Effective as of the date hereof, each of the Debt to Equity Covenants set forth in the Credit Agreements are each hereby amended to provide that for purposes of such covenants, consolidated total liabilities shall include the indebtedness under the Dairy Facility Reimbursement Agreement and the Loan Documents (as defined in the Dairy Facility Reimbursement Agreement).
Section 2.04. Limitation on Dividends. Each of the Credit Agreements require that the Company shall not purchase or otherwise acquire for value any of its capital stock except as set forth therein (the "Restricted Payment Covenants"). Effective as of the date hereof, each of the Restricted Payment Covenants contained in the Credit Agreements are hereby amended to permit the Company to purchase up to a maximum of 2% of the Company's outstanding common shares (i) in its 1992 fiscal year at an aggregate purchase price therefore not to exceed $900,000.00 and (ii) in any other fiscal year of Borrower, at an aggregate purchase price therefore not to exceed $500,000.00.
Section 2.05. Capital Expenditures. Each of the Credit Agreements limits the ability of the Company to make capital expenditures as set forth therein (the "Capital Expenditure Covenants"). Effective as of the date hereof, each of the Capital Expenditure Covenants is hereby amended to provide that in calculating compliance with the limitations under each such covenant for any period which includes any portion of 1992, the capital expenditures made by the Company in connection with the initial construction of the project financed with the proceeds of the Bonds shall be excluded.
Section 2.06. Events of Default. Each of the Credit Agreements define the term "Event of Default". Effective as of the date hereof, the term "Event of Default" as defined in each Credit Agreement shall include the occurrence of an Event of Default under the Dairy Facility Reimbursement Agreement.
ARTICLE III
Amendments to Collateral Documents
(Including the Mortgages)
Section 3.01. Amendment to Obligations. Effective as of the date hereof, each Collateral Document (including the Mortgages) is hereby amended to provide that the obligations secured or guaranteed thereby include without limitation, the obligations, indebtedness and liability of the Company (including any contingent reimbursement obligations) under the Dairy Facility Reimbursement Agreement, any Short Term Loan Note and the other Related Documents, whether for principal, interest, fees (including attorneys' fees), premium, commissions, expenses
AMENDMENT TO LOAN DOCUMENTS - Page 3
or otherwise (collectively, the "New Obligations") and in furtherance of the foregoing, the parties hereto agree to and acknowledge the following:
(a) The term "Credit Agreements" as defined in each Collateral Document is hereby amended to include without limitation, the Dairy Facility Reimbursement Agreement, the term "Loan Documents", as defined in each Collateral Document includes without limitation, the "Related Documents", the term "Advances", as defined in each Collateral Document, includes without limitation, advances to be made under the Dairy Facility Reimbursement Agreement to Borrower, the term "Indenture". as used in each Collateral Document, includes without limitation, the indenture entered into in connection with the Dairy Facility Reimbursement Agreement, the term "Notes", as defined in each Collateral Document includes without limitation, the Short Term Loan Notes and the term "Reimbursement Agreement", as defined in the Collateral Documents is hereby amended to include both the Egg Facility Reimbursement Agreement and the Dairy Facility Reimbursement Agreement.
(b) The term "Obligations" as defined in each Collateral Document, includes without limitation, the "New Obligations".
(c) The term "Event of Default" as used in each Collateral Document includes without limitation, an "Event of Default" as defined in the Dairy Facility Reimbursement Agreement.
(d) The Collateral Pledge Agreement dated October 17, 1984, executed by Borrower, Cal-Maine Farms and Egg Products, as the same has been amended, shall secure, in addition to the other obligations secured thereby, the New Obligations and upon any Event of Default (as defined in clause (c) above), the Agent shall have the right, but not the duty, to exercise all remedies provided for in the Collateral Pledge Agreement on behalf of Trust Company and itself.
(e) The term "Credit Agreements", as defined in that certain Assignment of Leasehold Interests dated December 1, 1987 executed by the company in favor of Rabobank, includes without limitation, and in addition to the Dairy Facility Reimbursement Agreement, the Revolving credit Agreement, the Term Loan Agreement and the Egg Facility Reimbursement Agreement.
Section 3.02. Amendment to Borrower Security Agreement. Effective as of the date hereof, Schedule 1 to the Borrower Security Agreement is hereby amended to add thereto, the Project which is located in the Second Judicial District of Hinds County, Mississippi.
AMENDMENT TO LOAN DOCUMENTS - Page 4
ARTICLE IV
Amendment to Intercreditor Agreement
Section 4.01. Amendment to Intercreditor Agreement. Effective as of the date hereof, the following definitions contained in the Intercreditor Agreement are hereby amended as follows:
(a) The term "Obligations", as defined in the Intercreditor Agreement is hereby amended to include without limitation, the New Obligations.
(b) The term "Credit Agreements", as defined in the Intercreditor Agreement is hereby amended to include without limitation, the Dairy Facility Reimbursement Agreement.
(c) The term "Loan Documents", as defined in the Intercreditor Agreement is hereby amended to include without limitation, the Dairy Facility Reimbursement Agreement and the Related Documents (as defined in the Dairy Facility Reimbursement Agreement).
(d) The term "Reimbursement Agreement", as defined in the Intercreditor Agreement is hereby amended to include without limitation, the Dairy Facility Reimbursement Agreement.
(e) The term "Letter of Credit", as defined in the Intercreditor Agreement is hereby amended to include without limitation, the Letter of Credit (as defined in the Dairy Facility Reimbursement Agreement).
(f) The term "Collateral Documents", as defined in the Intercreditor Agreement is hereby amended to specifically exclude the Assignment (as defined in the Dairy Facility Reimbursement Agreement) and the Deed of Trust (as defined in the Dairy Facility Reimbursement Agreement).
(g) The term "Collateral", as defined in the Intercreditor Agreement is hereby amended to mean the real and personal property covered by the Collateral Documents (as such term is defined therein) and to specifically exclude, notwithstanding anything in any Collateral Document to the contrary, the property covered by the Assignment (as defined in the Dairy Facility Reimbursement Agreement) and the property covered by the Deed of Trust (as defined in the Dairy Facility Reimbursement Agreement).
(h) The term "Revolving Collateral" as defined in the Intercreditor Agreement is hereby amended to specifically exclude the property covered by the Assignment (as defined in the Dairy Facility Reimbursement Agreement) and the property covered by the Deed of Trust (as defined in the Dairy Facility
AMENDMENT TO LOAN DOCUMENTS - Page 5
Reimbursement Agreement) notwithstanding anything in the Revolving Collateral Documents (as defined in the Intercreditor Agreement) to the contrary.
ARTICLE V
Ratifications, Representations and Warranties
Section 5.01. Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Documents and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Documents are ratified and confirmed and shall continue in full force and effect. The liens, security interests and assignments created and evidenced by the Collateral Documents are valid and existing liens, security interests and assignments of the respective priority recited in the Collateral Documents and no party hereto has any claims, offsets, defenses or counterclaims to the terms and provisions of the Loan Documents or arising out of any acts or omissions of any party with respect thereto. Each of the parties hereto agree that the Loan Documents as amended hereby shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.
Section 5.02. Representations and Warranties. To induce Rabobank to enter into the Dairy Facility Reimbursement Agreement, each Guarantor represents and warrants to Rabobank and Trust Company that:
(a) The representations and warranties of each Guarantor contained in the Loan Documents, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof.
(b) No Event of Default (as defined in the Revolving Credit Agreement) has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, and each Guarantor is in full compliance with all covenants and agreements binding on them contained in the Loan Documents, as amended hereby.
(c) The execution, delivery, and performance by it of this Amendment and the other Related Documents to which it is or may become a party have been duly authorized by all requisite action on its part and do not and will not violate or conflict with its articles of incorporation or bylaws or any law, rule, or regulation or any order, writ, injunction, or decree of any court, governmental authority, or arbitrator, and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the creation or imposition of any Lien (except as provided herein) upon any of its revenues or assets pursuant to the provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement by which it or any of its properties is bound.
AMENDMENT TO LOAN DOCUMENTS - Page 6
(d) This Amendment constitutes, and the Loan Documents as amended hereby to which it is party, constitutes its legal, valid, and binding obligations, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditor's rights.
(e) No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party is or will be necessary for its execution, delivery, or performance of this Amendment and the other Related Documents to which it is or may become a party or the validity or enforceability thereof.
(f) No statement, information, report, representation, or warranty made by it in this Amendment or in any other Related Document or furnished to Rabobank or Trust Company in connection with this Amendment or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to it which has a material adverse effect, or which might in the future have a material adverse effect, on its business, condition (financial or otherwise), operations, prospects, or properties that has not been disclosed in writing to Rabobank and Trust Company.
ARTICLE VI
Miscellaneous
Section 6.01. Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other Related Documents shall survive the execution and delivery of this Amendment and the other Related Documents, and no investigation by Rabobank or Trust Company or any closing shall affect the representations and warranties or the right of Rabobank or Trust Company to rely upon them.
Section 6.02. Reference to Loan Documents. Each of the Loan Documents are hereby amended so that any reference in such Loan Documents to the other Loan Documents shall mean a reference to such Loan Documents as amended hereby.
Section 6.03. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 6.04. Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York except to the extent that the provisions of the Loan Documents are governed by the laws of another state, the amendment to those provisions pursuant hereto shall be governed by the laws of such other state.
AMENDMENT TO LOAN DOCUMENTS - Page 7
Section 6.05. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, except neither the Company nor any Guarantor may assign or transfer any of its rights or obligations hereunder without the prior written consent of Rabobank and Trust Company.
Section 6.06. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 6.07. Effect of Waiver. No consent or waiver, express or implied, by Rabobank, the Agent or Trust Company to or for any breach of or deviation from any covenant, condition or duty by the Company or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 6.08. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 6.09. Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
Executed as of the date first written above.
CAL-MAINE FOODS, INC.
CAL-MAINE EGG PRODUCTS, INC.
AMENDMENT TO LOAN DOCUMENTS - Page 8
CAL-MAINE FARMS, INC.
SUNNYSIDE EGGS, INC.
TRUST COMPANY BANK
COOPERATIEVE CENTRALE
RAIFEISSEN-BOERENLEENBANK B.A.
"RABOBANK/,.NEDERLAND", NEW YORK
BRANCH
AMENDMENT TO LOAN DOCUMENTS - Page 9
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid _______________________________________, well known by me to be _______________ _____________________, of CAL-MAINE FOODS, INC., a Delaware corporation, who acknowledged to me that he signed and delivered the above Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this _______ day of ___________________, 19___.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid _______________________________________, well known by me to be _______________ _____________________, of CAL-MAINE EGG PRODUCTS, INC., a Delaware corporation, who acknowledged to me that he signed and delivered the above Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this _______ day of ___________________, 19___.
My Commission Expires:
AMENDMENT TO LOAN DOCUMENTS - Page 10
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid _______________________________________, well known by me to be _______________ _____________________, of CAL-MAINE FARMS, INC., a Delaware corporation, who acknowledged to me that he signed and delivered the above Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this _______ day of ___________________, 19___.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid _______________________________________, well known by me to be _______________ _____________________, of SUNNYSIDE EGGS, INC., a Delaware corporation, who acknowledged to me that he signed and delivered the above Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this _______ day of ___________________, 19___.
My Commission Expires:
AMENDMENT TO LOAN DOCUMENTS - Page 11
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid _______________________________________, well known by me to be _______________ _____________________, of TRUST COMPANY BANK, a Georgia state banking corporation, who acknowledged to me that he signed and delivered the above Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this _______ day of ___________________, 19___.
My Commission Expires:
AMENDMENT TO LOAN DOCUMENTS - Page 12
Schedule 1 to Amendment to Loan Agreement
Mortgages
(1) Mortgage, Security Agreement and Financing Statement executed by the Company, dated as of May 15, 1985, filed of record on May 20, 1986 and duly recorded in the office of the County Clerk, Kershaw County, South Carolina, Book IX of Real Estate Mortgages, Page 1239, as the same has been and may hereafter be amended or otherwise modified from time to time.
(2) Mortgage, Security Agreement and Financing Statement dated as of May 15, 1986, executed by the Company and Cal-Maine Farms, filed of record of May 20, 1986 and duly recorded in the office the County Clerk, Kershaw County, South Carolina, Book IX of Real Estate Mortgages, Page 1238, as the same has been and may hereafter be amended or otherwise modified from time to time.
(3) Mortgage, Deed of Trust, Future Advance Deeds of Trust, Security Agreement, Assignment of Rents and Financing Statements dated as of May 29, 1990, executed by the Company and Cal-Main Farms to Jess Jarratt, Trustee and/or the Agent, filed for record in the Real Property Records as follows, as the same has been and may hereafter be amended or otherwise modified from time to time:
Date Volume
Jurisdiction Filed and Page
------------ ----- --------
(a) Clay County, AL 6/7/90 Fiche Record H39, Page 01-91
(b) Morgan County, AL 6/1/90 Book 1332, Page 0155
(c) Washington, AR 6/1/90 Book 1369, Page 411
(d) Reno County, KS 6/1/90 Book 565, Page 174
(e) Bernalillo County, NM 6/1/90 Document Number 90-42648
(f) Franklin County, NC 6/1/90 Book 924, Page 386
(g) Caldwell County, TX 6/1/90 Book 44, Page 786
(h) Fayette County, TX 6/4/90 Volume 802, Page 357
(i) Smith County, TX 6/1/90 Volume 3014, Page 730
|
Schedule 1 to Amendment to Loan Documents, Solo Page
FIFTH AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (the "Amendment"), dated as of December 31, 1992, is among CAL-MAINE
FOODS, INC., a Delaware corporation ("Borrower"), TRUST COMPANY BANK, a Georgia
state banking corporation ("TCB"), and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland", New York branch
("Rabobank", and together with TCB, hereinafter sometimes referred to
individually as a "Bank" and collectively as the "Banks").
RECITALS:
A. Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990, as amended by that certain Amendment dated as of December 31, 1990, that certain Second Amendment to Amended and Restated Revolving Credit Agreement dated as of October 1, 1991, that certain Third Amendment to Amended and Restated Revolving Credit Agreement dated as of December 31, 1991 and that certain Amendment to Loan Documents (including Modifications to Mortgages and Deeds of Trust) dated as of May 1, 1992 (such Amended and Restated Revolving Credit Agreement, as amended, the "Agreement").
B. Barclays has assigned all of its rights, title, interest and obligations under the Loan Documents (as defined in the Agreement) to TCB pursuant to that certain Assignment Agreement dated as of October 1, 1991 among Barclays, TCB and Rabobank.
C. Borrower and the Banks now desire to amend the Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
FIFTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - Page 1
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Agreement, as amended hereby.
ARTICLE II
Amendments
Section 2.01. Amendment to 7.01. Effective as of the date hereof, the definition of the term "Termination Date" contained in Section 7.01 of the Agreement is hereby amended in its entirety to read as follows:
"Termination Date" means December 31, 1994, or the earlier date of termination in whole of the Revolving Credit Commitments pursuant to Sections 1.04 or 6.02.
ARTICLE III
Conditions Precedent
Section 3.01. Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:
(a) The Banks shall have received certificates of the appropriate government officials of the state of incorporation of Borrower and each Guarantor as to the existence and good standing of the applicable Loan Party, each dated a current date and such additional documentation, instruments and information as either Bank or its legal counsel may request.
(b) The representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date hereof as if made on the date hereof.
(c) No Event of Default shall have occurred and be continuing and no event or condition shall have occurred that with the giving of notice or lapse of time or both would be an Event of Default.
(d) All corporate proceedings taken in connection with the transactions contemplated by this Amendment and all documentation, instruments, and other legal matters incident thereto shall be satisfactory to the Banks and their legal counsel.
ARTICLE IV
FIFTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - Page 2
Ratifications, Representations and Warranties
Section 4.01. Ratifications. the terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Agreement and except as expressly modified and superseded by
this Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. The Borrower and the Banks agree that the Agreement, as amended hereby
and the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms. Without limiting the
generality of the foregoing, the parties hereto also agree and acknowledge that
(a) the obligations, indebtedness and liabilities secured by the Security
Agreements, the Louisiana Collateral Documents and the Mortgages include,
without limitation, the obligations, indebtedness and liabilities of the
Borrower arising hereunder and (b) the term "Revolving Obligations" as defined
in the Intercreditor Agreement includes, without limitation, the obligations,
indebtedness and liabilities of Borrower arising hereunder.
Section 4.02. Representations and Warranties. Borrower hereby represents and warrants to the Banks that (a) the execution, delivery and performance of this Amendment has been authorized by all requisite corporate action on the part of Borrower and each Guarantor and will not violate the articles of incorporation or bylaws of Borrower or any Guarantor, (b) the representations and warranties contained in the Agreement, as amended hereby, and any other Loan Document are true and correct on and as of the date hereof as though made on and as of the date hereof, (c) no Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, (d) Borrower and each Guarantor are each in full compliance with all covenants and agreements contained in the Agreement, as amended hereby and the other Loan Documents and (e) the articles of incorporation, by-laws, certificates of secretary, and corporate resolutions delivered by Borrower and each Guarantor in connection with execution of the Agreement which were, in the case of all Loan Parties other than Sunnyside, effective, true and correct on June 1, 1990 and in the case of Sunnyside, effective, true and correct on October 1, 1991, have not been amended, revoked or otherwise modified in any manner and remain true and correct and in full force and effect on and as of the date hereof as though delivered on and as of the date hereof.
ARTICLE V
Miscellaneous
Section 5.01. Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other Loan Document, shall survive the execution and delivery of this Amendment and the other Loan Documents and no investigation by a Bank or any closing shall affect the representations and warranties or the right of a Bank to rely upon them.
Section 5.02. Reference to Agreement. Each of the Loan Documents, including the Agreement, are hereby amended so that any reference in such Loan Documents to the Agreement shall mean a reference to the Agreement as amended hereby.
FIFTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - Page 3
Section 5.03. Expenses of the Banks. As provided in the Agreement, Borrower agrees to pay on demand all costs and expenses incurred by the Banks in connection with the preparation, negotiation, and execution of this Amendment, including without limitation the fees and expenses of legal counsel to the Banks, and all costs and expenses incurred by the Banks in connection with the enforcement or preservation of any rights under the Agreement, as amended hereby, or any other Loan Document, including without limitation the fees and expenses of legal counsel to the Banks.
Section 5.04. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 5.05. Applicable Law. This Amendment shall be deemed to have been made and to be performable in New York, New York and shall be governed by and construed in accordance with the laws of the State of New York.
Section 5.06. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the Banks and Borrower and their respective successors and assigns, except Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Banks.
Section 5.07. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 5.08. Effect of Waiver. No consent or waiver, express or implied, by a Bank to or for any breach of or deviation from any covenant, condition or duty by Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 5.09. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 5.10. Entire Agreements. This Amendment embodies the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
EXECUTED as of the date first written above.
CAL-MAINE FOODS, INC.
FIFTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - Page 4
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "Rabobank
Nederland", New York branch
TRUST COMPANY BANK
FIFTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - Page 5
GUARANTOR ACKNOWLEDGMENT
Cal-Maine Farms, inc. ("Farms"), Cal-Maine Egg Products, Inc. ("Egg Products") and Sunnyside Eggs, Inc. ("Sunnyside") hereby consent and agree to this Amendment and agree that their respective Amended Guaranty Agreements, their respective Security Agreements (in the case of Farms, as amended by that certain First Amendment to Security Agreement dated as of October 1, 1991), and all other Loan Documents executed by each of them shall remain in full force and effect and shall continue to be the legal, valid and binding obligations of each, enforceable against each in accordance with their respective terms. Without limiting the generality of the foregoing, Farms, Egg Products and Sunnyside acknowledge and agree that (a) the obligations, indebtedness and liabilities guaranteed by their respective Amended Guaranty Agreements and secured by their respective Security Agreements and the Mortgages include, without limitation, the obligations, indebtedness and liabilities arising under this Amendment and (b) the term "Revolving Obligations" as defined in the Intercreditor Agreement includes without limitation, the obligations, indebtedness and liabilities of Borrower arising under this Amendment.
CAL-MAINE FOODS, INC.
CAL-MAINE EGG PRODUCTS, INC.
SUNNYSIDE EGGS, INC.
FIFTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT - Page 6
SECOND AMENDMENT TO LOAN DOCUMENTS
(including Modifications to Mortgages and Deeds of Trust)
THIS SECOND AMENDMENT TO LOAN DOCUMENTS (the "Amendment"), dated as of November 5, 1993, is among CAL-MAINE FOODS, INC. (the "Borrower"), CAL-MAINE EGG PRODUCTS, INC. ("Egg Products"), CAL-MAINE FARMS, INC. ("Cal-Maine Farms" and together with Egg Products herein referred to as the "Guarantors"), TRUST COMPANY BANK ("Trust Company") and COOPERATIEVE CENTRALE RAIFEISSEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND" NEW YORK BRANCH ("Rabobank Nederland") and Rabobank Nederland, as agent for itself and Trust Company (the "Agent").
RECITALS:
A. Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990 (such Amended and Restated Revolving Credit Agreement, as the same has been amended, and as the same may be further amended or otherwise modified, herein referred to as the "Revolving Credit Agreement"). Pursuant to the Second Amendment to Amended and Restated Revolving Credit Agreement dated October 1, 1991, Trust Company was substituted as a lender under the Revolving Credit Agreement in the place of Barclays and Barclays is no longer a party to the Revolving Credit Agreement.
B. The Borrower and Rabobank have entered into that certain Amended and Restated Term Loan Agreement dated as of May 29, 1990 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Term Loan Agreement").
C. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of December 1, 1987 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Egg Facility Reimbursement Agreement").
D. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of May 1, 1992 (as the same may be amended or otherwise modified, herein the "Dairy Facility Reimbursement Agreement" and the Dairy Facility
Second Amendment to Loan Documents - Page 1
Reimbursement Agreement, collectively with the Revolving Credit Agreement, the Term Loan Agreement and the Egg Facility Reimbursement Agreement, herein the "Credit Agreements").
E. To secure certain of the obligations and indebtedness of the Borrower to Rabobank Nederland and Trust Company under the Credit Agreements, and the other documents executed in connection therewith, the Borrower, Sunnyside Eggs, Inc. ("Sunnyside") and the Guarantors executed certain guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages (as more fully described and identified in the Credit Agreements, and as the same have been or may hereafter be amended or otherwise modified, all such guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages other than the Sunnyside Guaranty and the Sunnyside Security Agreement, are herein referred as the "Collateral Documents"). The Collateral Documents include, without limitation, the deeds of trust, mortgages and assignment of leasehold interests described on Schedule 1 hereto which are filed in the real property records of the jurisdictions listed on Schedule 1 as indicated therein (the "Mortgages").
F. Sunnyside has dissolved and is no longer in existence and all of its assets have been transferred to Borrower, subject to the Liens created by the Sunnyside Security Agreement.
G. To facilitate the collateral arrangements contemplated by the Collateral Documents, Rabobank Nederland and Barclays have entered into that certain Intercreditor Agreement dated May 29, 1990 (as such agreement has been and may hereafter be amended or otherwise modified, herein the "Intercreditor Agreement"). Barclays assigned all its right, title and interest in and to the Intercreditor Agreement to Trust Company and Barclays is no longer a party thereto.
H. The Borrower has requested that (i) Rabobank Nederland make a term loan to the Borrower in an amount equal to $1,000,000 (the "New Term Loan") pursuant to the terms of that certain Term Loan Note dated the date hereof executed by the Borrower and payable to the order of Rabobank Nederland in the original principal amount of $1,000,000 (as the same may be amended or otherwise modified, herein the "New Term Note") and (ii) Rabobank Nederland and Trust Company agree to modify the Credit Agreements as herein set forth.
Second Amendment to Loan Documents - Page 2
I. In order to induce Rabobank Nederland to make the New Term Loan and to induce Rabobank Nederland and Trust Company to modify the Credit Agreements, the parties hereto now desire to enter into this Amendment.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Revolving Credit Agreement, as amended hereby.
ARTICLE II
Amendments to Credit Agreements and Other Loan Documents
Section 2.01. Amendment to Working Capital Covenants. Each of the Credit Agreements require the Borrower to maintain a certain ratio of current assets to current liabilities and consolidated current assets to consolidated current liabilities as specified therein (the "Working Capital Covenants"). Effective as of the date hereof, the Working Capital Covenant set forth in each Credit Agreement is hereby amended to provide that for purposes of such covenant, current liabilities and consolidated current liabilities shall include the current portion of the indebtedness under the Credit Agreements and the New Term Note.
Section 2.02. Amendment to Tangible Net Worth Covenant. Each of the Credit Agreements require the Borrower to maintain an excess of consolidated total tangible assets over consolidated total liabilities of the Borrower and the Subsidiaries as specified therein (the "Tangible Net Worth Covenants"). Effective as of the date hereof, each Tangible Net Worth Covenant is hereby amended in its entirety to read as follows:
Tangible Net Worth. Maintain an excess of consolidated total tangible assets over consolidated total liabilities of
Second Amendment to Loan Documents - Page 3
the Borrower and the Subsidiaries in an amount not less than the amount set forth below for the applicable period set forth below:
(a) from the date hereof through the Borrower's Fiscal Year ending in 1994, Thirty-Eight Million Dollars ($38,000,000); and
(b) from the first day of Borrower's Fiscal Year ending 1995 and at all times thereafter, the sum of
(i) Thirty-Eight Million Dollars ($38,000,000); plus
(ii) fifty percent (50%) of the net income of Borrower and the Subsidiaries for each Fiscal Year beginning with the Fiscal Year ending in 1994 but only if the Fiscal year has completely elapsed; plus
(iii) one hundred percent (100%) of all capital contributions made to the Borrower since October 1, 1993, net of all reasonable costs associated with the issuance of the securities relating to such capital contribution or otherwise necessary to obtain such capital contributions; plus
(iv) one hundred percent (100%) of the principal amount of all Debt of Borrower which is subordinated to the senior debt of Borrower and which has, since October 1, 1993 been converted or exchanged for equity interests in the Borrower.
If net income for a period is negative, no adjustment to the requisite level of net worth shall be made. Consolidated total liabilities shall include all indebtedness outstanding under the Credit Agreements and the New Term Note.
Section 2.03. Debt to Equity Ratio. Each of the Credit Agreements require the Borrower to maintain a certain ratio of consolidated total liabilities to net worth as specified therein (the "Debt to Equity Covenants"). Effective as of the date hereof, each of the Debt to Equity Covenants set forth in the Credit Agreements are deleted therefrom in their entirety.
Second Amendment to Loan Documents - Page 4
Section 2.04. Net Tangible Assets to Funded Debt Ratio. Effective as of the date hereof, each of the Credit Agreements is hereby amended to add thereto a positive covenant to read in its entirety as follows:
Net Tangible Assets to Funded Debt. Maintain a ratio of
(i) the sum of the following for
Borrower and the Subsidiaries (A) consolidated total
assets minus (B) consolidated intangible assets minus
(C) consolidated current liabilities (excluding
current deferred income taxes from such consolidated
current liabilities) to
(ii) consolidated long term Debt of Borrower and the Subsidiaries (calculated excluding the amounts outstanding under the Revolving Credit Agreement to the extent such amounts are consolidated long term Debt and excluding deferred income taxes to the extent such deferred income taxes are consolidated long-term Debt)
of not less than (x) 1.80 to 1.00 at all times throughout Fiscal Year ending in 1994; (y) 1.90 to 1.00 at all times throughout Fiscal Year ending in 1995; and (2) 2.00 to 1.00 at all times after the Fiscal Year ending in 1995; provided that, in the event Borrower receives a capital contribution at any time prior to the end of the Fiscal Year ending in 1995, then the ratio required to be maintained hereby shall be 2.0 to 1.00 at all times.
Section 2.05. Cash Flow Coverage Ratio. Effective as of the date hereof, each of the Credit Agreements is hereby amended to add thereto a positive covenant to read in its entirety as follows:
Cash Flow Coverage Ratio. Maintain a ratio of Operating Cash Flow to Fixed Charges of 1.50 to 1.0 calculated on the basis of the Operating Cash Flow and Fixed Charges for the completed twelve quarter period immediately proceeding the date of determination. As used herein the following terms shall have the following meanings:
"Fixed Charges" means, for any period, the sum of the following for the Borrower and the Subsidiaries
Second Amendment to Loan Documents - Page 5
(calculated without duplication on a consolidated basis): (i)
all cash interest paid or payable for such period; and (ii)
the current maturities of long term Debt for such period
(including payments made under capital leases).
"Operating Cash Flow" means for any period, net income of Borrower and the Subsidiaries determined on a consolidated basis for such period plus the sum of, but without duplication and only in each case to the extent deducted in determining net income for such period (i) depreciation and amortization expenses for such period; (ii) all cash interest paid or payable by Borrower and the Subsidiaries for such period; and (iii) all cash franchise and income taxes paid or payable by Borrower and the Subsidiaries during such period.
Section 2.06. Capital Expenditures. Each of the Credit Agreements limits the ability of the Borrower and the Subsidiaries to make capital expenditures as set forth therein (the "Capital Expenditure Covenants"). Effective as of the date hereof, each of the Capital Expenditure Covenants is hereby amended to provide that the Borrower will not make, or permit any Subsidiary to make any expenditure for fixed or capital assets excluding rolling stock, which would cause the aggregate of all such expenditures made by the Borrower and the Subsidiaries in any period of 12 consecutive months to exceed the consolidated depreciation of Borrower and the Subsidiaries for such period; provided that, the expenditures in an aggregate amount not to exceed $11,400,000 made in connection with the construction and acquisition of a new in-line processing facility at Cal-Maine Farm's, Gonzales, Texas plant shall not be included in calculating compliance with the Capital Expenditure Covenants. To the extent that the expenditures made in connection with such facility exceed $11,400,000 in the aggregate, the amount of the excess shall be included in calculating compliance with the Capital Expenditure Covenants.
Section 2.07. Events of Default. Each of the Credit Agreements define the term "Event of Default". Effective as of the date hereof, the definition of Event of Default in each Credit Agreement is amended so that an "Event of Default" shall exist under each Credit Agreement if any of the following occur:
Second Amendment to Loan Documents - Page 6
(a) The Borrower shall fail to pay any amount payable hereunder or under the New Term Note when due.
(b) Any representation or warranty made or deemed made by any Loan Party (or any of its officers) under or in connection with this Amendment or the New Term Note shall prove to have been incorrect in any material respect when made or deemed made.
(c) The Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Amendment or the New Term Note on its part to be performed or observed and any such failure shall remain unremedied for 30 days after its occurrence.
(d) Fred Adams or his spouse or children shall cease to beneficially own and control, directly or indirectly, at least fifty one percent (51%) of the rights to vote (without regard to the occurrence of any contingency and otherwise on a fully diluted basis) for the election of a majority of the members of the board of directors of the Borrower.
As used in the New Term Note, the term "Event of Default" shall mean the occurrence of any Event of Default, as such term is modified hereby, under any Credit Agreement whether or not the Debt outstanding in connection with any such Credit Agreement remains outstanding or such Credit Agreement has been terminated.
Section 2.08. Amendments to Revolving Credit Agreement. Effective as of the date hereof, (a) the definition of the term "Eligible Feed Inventory" set forth in Section 7.01 of the Revolving Credit Agreement is hereby amended by adding the following to the end thereof:
"Eligible Feed Inventory shall not include any silage."
and (b) the definition of the term "Termination Date" set forth in Section 7.01 of the Revolving Credit Agreement is hereby amended in its entirety to read as follows:
"Termination Date" means December 31, 1995 or the earlier date of termination in whole of the Commitment pursuant to Sections 1.04 or 6.02.
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Section 2.10. Amendment to Term Loan Agreement. Effective as of
the date hereof, the definition of the term "Loan Documents" set forth in
Section 7.01 of the Term Loan Agreement is hereby amended to add the New Term
Note thereto.
Section 2.11. Amendment to Loan Documents to Exclude Sunnyside. Effective as of the date hereof, the following definitions contained in any of the Loan Documents are hereby amended as follows:
(a) the definition of "Guarantors" shall be modified to mean Cal-Main Farms and Egg Products and any reference to both or either Guarantor shall mean both or either Guarantor, as applicable;
(b) the definition of "Amended Guaranty Agreement" shall be modified to exclude the Sunnyside Guaranty Agreement; and
(c) the definitions of "Security Agreements", "Collateral Documents" and "Revolving Collateral Documents" shall all be modified to exclude the Sunnyside Security Agreement.
In addition, for purposes of the representations, warranties, covenants and Borrowing Base calculations set forth in the Credit Agreements, Sunnyside shall no longer be a Subsidiary of Borrower.
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ARTICLE III
Amendments to Collateral Documents
(Including the Mortgages)
Section 3.01. Assumption of Sunnyside Obligations. Borrower hereby assumes all of the Obligations of Sunnyside under the Sunnyside Security Agreement and acknowledges that all assets of Sunnyside acquired by Borrower were acquired subject to the Liens granted by Sunnyside under the Sunnyside Security Agreement in favor of the Agent securing the Obligations (as defined therein but as interpreted pursuant to this Amendment) (collectively the "Sunnyside Liens"). Borrower, Agent, Trust Company and Rabobank Nederland agree that, effective as of the date hereof, the Borrower Security Agreement shall be deemed to amend and restate in its entirety the Sunnyside Security Agreement, the Sunnyside Liens shall not be extinguished but shall continue to encumber the assets of Sunnyside acquired by Borrower under the terms of the Borrower Security Agreement, and the Sunnyside Security Agreement and Sunnyside Guaranty Agreement shall no longer be valid, binding or enforceable.
Section 3.02. Amendment to Obligations. Effective as of the date hereof, each Collateral Document (including the Mortgages) is hereby amended to provide that the obligations secured or guaranteed thereby include without limitation, the obligations, indebtedness and liability of the Borrower under this Amendment and the New Term Note, whether for principal, interest, fees (including attorneys' fees), premium, commissions, expenses or otherwise (collectively, the "New Obligations") and in furtherance of the foregoing, the parties hereto agree to and acknowledge the following:
(a) The term "Credit Agreements" as defined in each Collateral Document is hereby amended to include without limitation, the New Term Note; the term "Loan Documents", as defined in each Collateral Document includes without limitation, the New Term Note; the term "Advances", as defined in each Collateral Document, includes without limitation, advances to be made to Borrower by Rabobank Nederland and evidenced by the New Term Note; and the term "Notes", as defined in each Collateral Document includes without limitation, the New Term Notes.
Second Amendment to Loan Documents - Page 9
(b) The term "Obligations" as defined in each Collateral Document, includes without limitation, the "New Obligations".
(c) The term "Event of Default" as used in each Collateral Document includes without limitation, an "Event of Default" as interpreted in accordance with Section 2.07 of this Amendment.
(d) The Collateral Pledge Agreement dated October 17, 1984, executed by Borrower, Cal-Maine Farms and Egg Products, as the same has been amended, shall secure, in addition to the other obligations secured thereby, the New Obligations and upon any Event of Default (as interpreted in accordance with Section 2.07 of this Amendment), the Agent shall have the right, but not the duty, to exercise all remedies provided for in the Collateral Pledge Agreement on behalf of Trust Company and itself.
Section 3.03. Amendment to Borrower Security Agreement. Effective as of the date hereof, (a) clause (c) of Section 4.09 of the Borrower Security Agreement is hereby amended in its entirety to read as follows:
(c) The Inventory and the Farm Products are in the exclusive possession and control of the Grantor or certain contractors identified on Schedule 1 hereto. Each contractor possesses and controls such Inventory and Farm Products pursuant to the terms and conditions of written agreements duly executed and delivered by and between such contractor and either Grantor or one of the Guarantors. Any such agreements entered into after the date hereof comply with the requirements imposed by Section 6(c).
(b) Section 6 of the Borrower Security Agreement is hereby amended to add a clause (c) thereto to read in its entirety as follows:
(c) The Grantor shall not permit any contractor possessing and controlling any of the Inventory or the Farm Products, to possess and control any inventory or farm products for the benefit and use of such contractor or for the benefit or use of any other person or entity which is of the same form or similar to the Grantor's Inventory or Farm Products at the same physical location as the location of any of Grantor's Inventory or Farm Products. Grantor shall
Second Amendment to Loan Documents - Page 10
include in each agreement (whether new or in modification of an existing agreement) entered on or after October 1993 with each such contractor, a contractual provision substantially similar in substance and form to the following:
[Name of Contractor] ("Contractor") acknowledges that the inventory and farm products (including without limitation poultry, eggs, and agricultural products and supplies) (herein the "Collateral") owned by Cal-Maine Foods, Inc. ("Foods") which Foods has placed or may from time to time place in the Contractor's possession are subject to a first priority security interest granted in favor of an agent (the "Agent") for a group of banks or other lending institutions who extended credit to Foods. The Contractor agrees for the benefit of the Agent that upon the Agent's delivery to the Contractor of a copy of the security agreement executed by Foods covering the Collateral, it will release such Collateral to the Agent named in such security agreement on demand and will follow any other direction of the Agent with respect to the Collateral, provided that the Agent pays all of the Contractor's accrued charges on the Collateral being released and the Contractor's accrued charges arising in connection with the Contractor's compliance with the directions of the Agent. Foods agrees and confirms that the Contractor will not be liable to Foods in any way for following the Agent's direction with respect to the Collateral.
(c) Schedule 1 to the Borrower Security Agreement is hereby amended to read in its entirety as set forth on Schedule 2 hereto.
Section 3.04. Amendment to Mortgages; Maturity Date of Obligations. Notwithstanding any term or provision regarding the maturity date of the Obligations contained in any Mortgage to the contrary, each Mortgage is hereby amended to provide that the Obligations secured thereby mature from time to time but in no event later than September 30, 2000.
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ARTICLE IV
Amendment to Intercreditor Agreement
Section 4.01. Amendment to Intercreditor Agreement. Effective as of the date hereof, the following definitions contained in the Intercreditor Agreement are hereby amended as follows:
(a) The term "Obligations", as defined in the Intercreditor Agreement, is hereby amended to include without limitation, the New Obligations.
(b) The term "Credit Agreements", as defined in the Intercreditor Agreement, is hereby amended to include without limitation, the New Term Note.
(c) The term "Loan Documents", as defined in the Intercreditor Agreement is hereby amended to include without limitation, this Amendment and the New Term Note.
(d) The term "Term Obligations", as defined in the Intercreditor Agreement is hereby amended to include without limitation, the New Obligations and the obligations, indebtedness and liability arising in connection with the Dairy Facility Reimbursement Agreement.
Section 4.02. Exercise of Rights in Separate Collateral Documents. Upon the occurrence and during the continuance of any Potential Default or Event of Default (both as defined in the Intercreditor Agreement) the parties hereto agree and acknowledge that notwithstanding anything in the Intercreditor Agreement to the contrary, Rabobank Nederland shall have the exclusive right to exercise, without the consent of or notice to Trust Company, any or all rights and remedies available to it under the terms of the Assignment of Leasehold Interests described on Schedule 1 hereto and under the Deed of Trust, Security Agreement, Assignment of Rents and Financing Statement described as item (4) on Schedule 1 hereto (the "Separate Collateral Documents"). Trust Company shall have no right to direct Rabobank Nederland to exercise any rights or remedies with respect to the Separate Collateral Documents and shall have no interest in any proceeds of the collateral described therein.
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ARTICLE V
Ratifications, Representations and Warranties
Section 5.01. Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Documents and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Documents are ratified and confirmed and shall continue in full force and effect. The liens, security interests and assignments created and evidenced by the Collateral Documents are valid and existing liens, security interests and assignments of the respective priority recited in the Collateral Documents and no party hereto has any claims, offsets, defenses or counterclaims to the terms and provisions of the Loan Documents or arising out of any acts or omissions of any party with respect thereto. Each of the parties hereto agree that the Loan Documents, as amended hereby, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.
Section 5.02. Representations and Warranties. To induce Rabobank Nederland to make the New Term Loan and to induce Rabobank Nederland and Trust Company to modify the Credit Agreements as herein set forth, the Borrower and each Guarantor represents and warrants to Rabobank Nederland and Trust Company that:
(a) The representations and warranties of the Borrower and each Guarantor contained in the Loan Documents, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof.
(b) No Event of Default (as interpreted in accordance with Section 2.07 hereof) has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, and the Borrower and each Guarantor is in full compliance with all covenants and agreements binding on them contained in the Loan Documents, as amended hereby.
(c) The execution, delivery, and performance by it of this Amendment and the New Term Note, as applicable, have been duly authorized by all requisite action on its part and do not and will not violate or conflict with its articles of incorporation or bylaws or any law, rule, or regulation or any
Second Amendment to Loan Documents - Page 13
order, writ, injunction, or decree of any court, governmental authority, or arbitrator, and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the creation or imposition of any Lien (except as provided herein) upon any of its revenues or assets pursuant to the provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement by which it or any of its properties is bound.
(d) This Amendment and New Term Note constitute, and the other Loan Documents as amended hereby to which it is party, constitute its legal, valid, and binding obligations, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditor's rights.
(e) No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party is or will be necessary for its execution, delivery, or performance of this Amendment or the New Term Note or the validity or enforceability thereof.
(f) No statement, information, report, representation, or warranty made by it in this Amendment or furnished to Rabobank Nederland or Trust Company in connection with this Amendment or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to it which has a material adverse effect, or which might in the future have a material adverse effect, on its business, condition (financial or otherwise), operations, prospects, or properties that has not been disclosed in writing to Rabobank Nederland and Trust Company.
(g) The proceeds of the New Term Loan will be used to finance the construction of a new breeder hen farm on the Property (as defined in the New Term Note) and no such proceeds will be used to acquire any security in any transaction which is subject to Sections 13 and 14 of the Securities Exchange Act of 1934.
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ARTICLE VI
Miscellaneous
Section 6.01. Survival of Representations and Warranties. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by Rabobank Nederland or Trust Company or any closing shall affect the representations and warranties or the right of Rabobank Nederland or Trust Company to rely upon them.
Section 6.02. Reference to Loan Documents. Each of the Loan Documents are hereby amended so that any reference in such Loan Documents to the Loan Documents amended hereby shall mean a reference to such Loan Documents as amended hereby.
Section 6.03. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 6.04. Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York except to the extent that the provisions of the Loan Documents are governed by the laws of another state, the amendment to those provisions pursuant hereto shall be governed by the laws of such other state.
Section 6.05. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, except neither the Borrower nor any Guarantor may assign or transfer any of its rights or obligations hereunder without the prior written consent of Rabobank Nederland and Trust Company.
Section 6.06. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 6.07. Effect of Waiver. No consent or waiver, express or implied, by Rabobank Nederland, the Agent or Trust Company to or for any breach of or deviation from any covenant,
Second Amendment to Loan Documents - Page 15
condition or duty by the Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 6.08. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 6.09. Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
Section 6.10. Facility Fee. In consideration of Rabobank Nederland agreeing to make the New Term Loan, the Borrower agrees to pay Rabobank Nederland a facility fee in an amount equal to $10,000.00 on the date the New Term Loan is made.
Executed as of the date first written above.
CAL-MAINE FOODS, INC.
CAL-MAINE EGG PRODUCTS, INC.
CAL-MAINE FARMS, INC.
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TRUST COMPANY BANK
COOPERATIEVE CENTRALE RAIFEISSEN-
BOERENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH;
individually and as Agent
Second Amendment to Loan Documents - Page 17
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid B.J. Raines, well known by me to be Vice President of CAL-MAINE FOODS, INC., a Delaware corporation and, CAL-MAINE EGG PRODUCTS, INC., a Delaware corporation and CAL-MAINE FARMS, INC., a Delaware corporation, who acknowledged to me that he signed and delivered the above Second Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporations so to do.
Given under my hand and official seal on this ____ day of November 1993.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of TRUST COMPANY BANK, a Georgia state banking corporation, who acknowledged to me that he signed and delivered the above Second Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of November 1993.
Second Amendment to Loan Documents - Page 18
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of TRUST COMPANY BANK, a Georgia state banking corporation, who acknowledged to me that he signed and delivered the above Second Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of November 1993.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of COOPERATIEVE CENTRALE RAIFEISSEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Nederlands, who acknowledged to me that he signed and delivered the above Second Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporation so to do.
Second Amendment to Loan Documents - Page 19
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of COOPERATIEVE CENTRALE RAIFEISSEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Nederlands, who acknowledged to me that he signed and delivered the above Second Amendment to Loan Documents for and on behalf of said corporation after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of November 1993.
My Commission Expires:
Second Amendment to Loan Documents - Page 20
Schedule 1 to Second Amendment to Loan Documents - Page 1 of 2
THIRD AMENDMENT TO LOAN DOCUMENTS
(including Modifications to Mortgages and Deeds of Trust)
THIS THIRD AMENDMENT TO LOAN DOCUMENTS (this "Amendment"), dated as of July 22, 1994, is among CAL-MAINE FOODS, INC. (the "Borrower"), CAL-MAINE EGG PRODUCTS, INC. ("Egg Products"), CAL-MAINE FARMS, INC. ("Cal-Maine Farms" and together with Egg Products herein referred to as the "Guarantors"), TRUST COMPANY BANK ("Trust Company") and COOPERATIEVE CENTRALE RAIFEISSEN- BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank Nederland") and Rabobank Nederland, as agent for itself and Trust Company (in such capacity as agent, the "Agent").
RECITALS:
A.Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990 (such Amended and Restated Revolving Credit Agreement, as the same has been amended, and as the same may be further amended or otherwise modified, herein referred to as the "Revolving Credit Agreement"). Pursuant to the Second Amendment to Amended and Restated Revolving Credit Agreement dated October 1, 1991, Trust Company was substituted as a lender under the Revolving Credit Agreement in the place of Barclays and Barclays is no longer a party to the Revolving Credit Agreement.
B.The Borrower and Rabobank have entered into that certain Amended and Restated Term Loan Agreement dated as of May 29, 1990 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Term Loan Agreement").
C.The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of December 1, 1987 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Egg Facility Reimbursement Agreement").
D.The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of May 1, 1992 (as the same may be amended or otherwise modified, herein the "Dairy Facility Reimbursement Agreement").
E.The Borrower has executed and delivered that certain Term Loan Note dated November 5, 1993 payable to the order of Rabobank Nederland in the original principal amount of $1,000,000 (as the same may be amended or otherwise modified, therein the "New Term Note" and the New Term Note, collectively with the Dairy Facility Reimbursement Agreement, the Revolving Credit Agreement, the Term Loan Agreement and the Egg Facility Reimbursement Agreement, herein the "Credit Agreements").
F.To secure certain of the obligations and indebtedness of the Borrower to each of Rabobank Nederland, Trust Company and the Agent under the Credit Agreements and the other documents executed in connection therewith, the Borrower, Sunnyside Eggs, Inc. ("Sunnyside") and the Guarantors executed certain guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages (as more fully described and identified in the Credit Agreements, and as the same have been or may hereafter be amended or otherwise modified, all such guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages other than the Sunnyside Guaranty and the Sunnyside Security Agreement, are herein referred as the "Collateral Documents"). The Collateral Documents include, without limitation, the deeds of trust, mortgages and assignment of leasehold interests described on Schedule 1 hereto which are filed in the real property records of the jurisdictions listed on Schedule 1 as indicated therein (the "Mortgages"). The Mortgage filed in Reno County Kansas encumbers the real property described on Schedule 2 hereto.
G.Sunnyside has dissolved and is no longer in existence and all of its assets have been transferred to Borrower, subject to the Liens created by the Sunnyside Security Agreement and, pursuant to the Second Amendment to Loan Documents dated as of November 5, 1993, Borrower has assumed all of the Obligations of Sunnyside under the Sunnyside Security Agreement.
H.To facilitate the collateral arrangements contemplated by the Collateral Documents, Rabobank Nederland and Barclays have entered into that certain Intercreditor Agreement dated May 29, 1990 (as such agreement has been and may hereafter be amended or otherwise modified, herein the "Intercreditor Agreement"). Barclays assigned all its right, title and interest in and to the Intercreditor Agreement to Trust Company and Barclays is no longer a party thereto.
I.The Borrower has requested that Rabobank Nederland amend the Term Loan Agreement to increase the term loan made pursuant thereto by $3,000,000 (such increase is referred to herein as the "Term Loan Increase").
J.In order to induce Rabobank Nederland to make the Term Loan Increase, the parties hereto now desire to enter into this Amendment.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01.Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Term Loan Agreement; provided that the term "Loan Documents" as used herein and as previously used in the Prior Amendments (hereafter defined) shall have the meaning as set forth in the Mortgage described as item (3) on Schedule 1 hereto.
ARTICLE II
Amendments to Term Loan Agreement
Section 2.01.Amendment to Section 1.01. Section 1.01 of the Term Loan Agreement is hereby amended in its entirety to read as follows:
Section 1.01. The Advance. The Bank has made an advance to Borrower on May 19, 1986 (the "Initial Closing Date") in the original principal amount of Four Million Five Hundred Thousand Dollars ($4,500,000) (the "Initial Advance"). The Bank has made an advance to Borrower on the Closing Date (this and certain other capitalized terms are defined in Section 7.01) in the amount of Ten Million Six Hundred Three Thousand Five Hundred Dollars ($10,603,500) (the "Additional Advance" and together with the Initial Advance herein the "Previous Advances"). As of July 1, 1994, $8,944,000 of the principal amount of the Previous Advances remains outstanding. The Bank agrees, on the terms and conditions hereinafter set forth, to make one or more additional advances (each such additional advance referred to herein as a "Tranche C Advance") to the Borrower from and including the Third Closing Date to and including December 31, 1995 in an aggregate amount not to exceed Three Million Dollars ($3,000,000); provided that after giving effect to each Tranche C Advance, the aggregate principal amount of the Advance shall not exceed the Borrowing Base. Once repaid, Tranche C Advances may not be reborrowed.
Section 2.02.Amendment to Section 1.02. Section 1.02 of the Term Loan Agreement is hereby amended by the addition of the following subsections (c) and (d):
(c)Each Tranche C Advance shall be made on at least two Business Days notice from the Borrower to the Bank specifying the date (which shall be a Business Day) and amount thereof and selecting the Interest Period or Periods therefore pursuant to Section 1.03. Not later than 2:00 p.m. (New York City time) on the date of each such advance and upon fulfillment of the conditions set forth in Article III applicable to Tranche C Advances, the Bank will make the applicable Tranche C Advance available to the Borrower in United States dollars (i) in same day funds at the Bank's address referred to in Section 8.02 or (ii) by wire transfer of immediately available funds for the account of the
Borrower or such other person as the Borrower shall designate in writing in a bank with an account in the Federal Reserve wire system. Each Tranche C Advance will be made available per clause (i) unless the Borrower shall designate in the notice referred to above in this subsection (c) the information necessary for the Bank to wire the Tranche C Advance in accordance with clause (ii). Each Tranche C Advance shall be in a minimum amount of Five Hundred Thousand Dollars ($500,000).
(d)The notice specified in subsection (c) of this Section 1.02 shall be irrevocable and binding on the Borrower and the Borrower will indemnify the Bank against any loss or expense incurred by the Bank as a result of any failure to fulfill on or before the date of each proposed Tranche C Advance the conditions set forth in Article III applicable to Tranche C Advances (including, without limitation, any loss [including loss of anticipated profits] or expense incurred by the liquidation or reemployment of deposits or other funds acquired by the Bank to fund the Tranche C Advance to be made by the Bank if a Tranche C Advance, as a result of such failure, is not made on the date such Tranche C Advance is requested).
Section 2.03.Amendment to Section 1.03. Section 1.03 of the Term Loan Agreement is hereby amended in its entirety to read as follows:
Section 1.03. Interest. (a) Rate The unpaid principal amount of each Fixed Rate Advance shall bear interest prior to maturity at the rate per annum equal to Term Federal Funds Rate (hereafter defined) plus (i) in the case of Fixed Rate Advances applicable to the Previous Advances, 1.65% and (ii) in the case of Fixed Rate Advance applicable to the Tranche C Advances, 1.50%; provided that such rate shall in no event be higher than the maximum interest rate permitted by law. All past due principal and interest shall bear interest at the Default Rate provided that such rate shall in no event be higher than the maximum interest rate permitted by law.
(b) Payment of Interest. The Borrower shall pay interest on the unpaid principal amount of the Advance quarterly on the last Business Day of each June, September, December and March commencing June 29, 1990 until and including March 31, 2000 and on June 30, 2000.
(c) Continuations. Subject to the terms and provisions hereof, Borrower shall have the right from time to time to continue the Interest Period relating to any Fixed Rate Advance for an Interest Period applicable to the whole amount of such Fixed Rate Advance or an Interest Period applicable to the aggregate amount of any Fixed Rate Advances or for different Interest Periods relating to any portion of such Fixed Rate Advance (each such aggregation or portion becoming a Fixed Rate Advance) by giving Bank notice by not later than 2:00 p.m (New York, New York time) one Business Day prior to the first day of the applicable Interest Period, specifying: (i) the continuation date, (ii) the
amount of the Fixed Rate Advance or Fixed Rate Advances to be continued; and
(iii) the duration of the applicable Interest Period or Interest Periods. If
Borrower shall fail to give Bank the notice as specified above for continuation
prior to the end of an Interest Period, such Interest Period shall
automatically be continued on the last day thereof for an Interest Period of
thirty (30) days with the same principal amount of the Advance attributable
thereto.
(d) Definitions. As used in this Section 1.03 the following terms shall have the following meaning:
"Fixed Rate Advance" means any principal portion of the Advance the amount of which is selected by Borrower to be subject to an Interest Period in accordance with clause (c) above or which is, prior to the Third Closing Date, subject to an Interest Period; provided, however, (a) the principal amount of each Fixed Rate Advance shall be in a minimum amount equal to $500,000, and (b) Fixed Rate Advances applicable to the Previous Advances and the Tranche C Advances shall be selected separately and no Fixe Rate Advance shall be made up of principal outstanding under the Previous Advance and principal outstanding under the Tranche C Advances.
"Interest Period" means with respect to any Fixed Rate Advance, each period commencing on the date such advance is made and in the case of each subsequent, successive Interest Period, the last day of the next proceeding Interest Period with respect to such advance, and ending on the numerically corresponding day in the first, third, sixth or twelfth month thereafter as Borrower may select as provided in subsection (c) above or if the Bank shall, in its sole discretion, determine that funds are available to it for periods longer than twelve months, such longer period as the Borrower shall select after consultation with the Bank. Notwithstanding the foregoing: (i) each Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day; (ii) no Interest Period applicable to the Advance may extend beyond a principal repayment date unless, after giving effect thereto, the aggregate principal amount of the Fixed Rate Advances having Interest Periods that end after such principal payment date shall be equal to or less than the principal amount of the Advance to be outstanding hereunder after such principal repayment date; and (iii) any Interest Period which would otherwise extend beyond June 30, 2000 shall end on June 30, 2000.
"Term Federal Funds Rate" means the rate per annum at which the Bank, as a branch of a foreign bank, in its sole discretion, can acquire federal funds in the interbank term federal funds market in New York City through brokers of recognized standing on the first day of the Interest Period for the applicable Fixed Rate Advance for a period equal to such Interest Period for such Fixed Rate Advance and in the amount of such Fixed Rate Advance. For purposes of calculating the Default Rate, the applicable Interest Period shall be one day and the applicable Fixed Rate Advance
shall be equal to the amounts which are to accrue interest at the Default Rate.
Section 2.04.Amendment to Section 1.06. Section 1.06 of the Term Loan Agreement is hereby amended by adding the following sentence to the end thereof:
The proceeds of the Tranche C Advances shall be used to finance the improvements to the in-line laying facility at the Borrower's Bethune, South Carolina plant.
Section 2.05.Amendment to Article III. Article III of the Term Loan Agreement is hereby amended by the addition of the following Sections 3.02 and 3.03:
Section 3.02. Conditions Precedent to the Initial Tranche C Advance. The obligation of Bank to make the initial Tranche C Advance is subject to the satisfaction of all the conditions set forth below on or before the Third Closing Date:
(a)Each of the Loan Parties shall have performed in all material respects all agreements which the Loan Documents provide shall be performed on or before the Third Closing Date by such Loan Party.
(b)Borrower shall cause to be delivered to Bank the documents listed below, each, unless otherwise noted, dated the Third Closing Date, duly executed, in form and substance reasonably satisfactory to Bank and in quantities designated by Bank (except for the Amended and Restated Note, of which only the original shall be signed).
(1)An amended and restated promissory note in the maximum principal amount of the Advance in the form of Exhibit A (the "Amended and Restated Term Note" which Amended and Restated Term Note is a "Note" as defined herein).
(2)Certified copies of (i) resolutions of the Board of Directors of the Borrower evidencing approval of that certain Third Amendment to Loan Documents (including Modifications to Mortgages and Deeds of Trust) (the "Amendment"), the Amended and Restated Term Note and each other Loan Document delivered in connection with the Amendment to which it is a party (collectively the "Amendment Documents"), and the matters contemplated thereby, (ii) resolutions of each other Loan Party evidencing approval of each Amendment Document to which it is a party and the matters contemplated thereby, and (iii) all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to each such Amendment Document;
(3)A certificate of the Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of such Loan Party authorized to sign each Amendment Document to which it is a party to the extent such officers have changed since the Closing Date. The Bank may conclusively rely on each such certificate until it shall receive a further
certificate of the Secretary or an Assistant Secretary of the respective Loan Party canceling, amending or replacing the prior certificate; and
(4)A favorable opinion of counsel for the Loan Parties, in form and substance acceptable to the Bank and addressing such matters as the Bank may reasonably request.
(c)The Bank shall have received a fee in the amount of Thirty Thousand Dollars ($30,000) payable by the Borrower to the Bank in United States dollars and in immediately available funds in consideration for the Bank's commitment to make the Tranche C Advances available to the Borrower.
Section 3.03.Conditions Precedent to All Tranche C Advances. The obligation of the Bank to make each Tranche C Advance (including the initial Tranche C Advance) shall be subject to the further conditions precedent that on the date of each such Tranche C Advance, both immediately before and immediately after given effect thereto, (a) the following statements shall be true and the acceptance by the Borrower of the proceeds of each such Tranche C Advance shall constitute a representation and warranty by each Loan Party (as to each Loan Document to which it is a party), that:
(i)The representations and warranties contained in this Agreement and contained in each other Loan Document are correct on and as of the date of such Tranche C Advance as though made on and as of the such date,
(ii)No event has occurred and is continuing, or would result from such Tranche C Advance which constitutes an Event of Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both,
(iii)The aggregate principal amount of the Advance outstanding, after giving effect to such Tranche C Advance, does not exceed the Borrowing Base.
and (b) the Bank shall have received such other approvals, opinions or documents as it may reasonably request.
Section 2.06.Amendment to Section 4.01(k). Section 4.01(k) of the Term Loan Agreement is hereby amended to add the following sentence to the end hereof:
The proceeds of the Tranche C Advances shall be used to finance improvements to the in-line laying facility at the Borrower's Bethune, South Carolina plant.
Section 2.07.Amendment to Section 6.01. The phrase "Additional Advance" as used in Section 6.01 of the Term Loan Agreement is hereby amended to mean, for purposes of Section 6.01 only, the Tranche C Advances.
Section 2.08.Amendment to Existing Definitions in Section 7.01. The definition of the quoted terms set forth below which are set out in Section 7.01 of the Term Loan Agreement are hereby amended in their entirety to read as follows:
"Advance" means, collectively the Previous Advances and the Tranche C Advances.
"Interest Period" has the meaning set forth in Section 1.03.
"Note" means the note described in Section 1.05, and all amendments, restatements, extensions and other modifications thereof.
"Term Federal Funds Rate" has the meaning set forth in Section 1.03.
Section 2.09.Addition of Defined Terms to Section 7.10 . Section 7.01 of the Term Loan Agreement is further amended by the addition of the following definitions:
"Fixed Rate Advance" has the meaning set forth in Section 1.03.
"Previous Advances" has the meaning set forth in Section 1.01.
"Tranche C Advance" has the meaning set forth in Section 1.01.
"Third Closing Date" means July 22, 1994.
Section 2.10.Amendment to Section 8.04(b). The phrase "the Interest Period" in the sixth line of Section 8.04(b) of the Term Loan Agreement is hereby amended to read "an Interest Period".
Section 2.11. Amendment to Exhibit A. Exhibit A to the Term Loan Agreement is amended in its entirety to read as set forth on Exhibit A attached hereto.
ARTICLE III
Amendments to Collateral Documents
(Including the Mortgages)
Section 3.01.Amendment to Obligations. Effective as of the date hereof, each Collateral Document (including the Mortgages) is hereby amended to provide that the obligations secured or guaranteed thereby include without limitation, the obligations, indebtedness and liability of the Borrower arising in connection with the Term Loan Increase, under this Amendment and under the Amended and Restated Term Note, whether for principal, interest, fees (including attorneys' fees), premium, commissions, expenses or otherwise (collectively, the "New Obligations") and in furtherance of the foregoing, the parties hereto agree to and acknowledge the following:
(a)The term "Credit Agreements" as defined in each Collateral Document includes, without limitation, the Term Loan Agreement as amended hereby; the term "Loan Documents", as defined in each Collateral Document includes, without limitation, this Amendment and the Amended and Restated Term Note; the term "Term Loan Advance" and the term "Advances" as defined in each Collateral Document includes, without limitation, each Tranche C Advance; and the term "Notes" as defined in each Collateral Document includes, without limitation, the Amended and Restated Term Note.
(b)The term "Obligations" as defined in each Collateral Document includes, without limitation, the "New Obligations".
(c)The Collateral Pledge Agreement dated October 17, 1984, executed by Borrower, Cal-Maine Farms and Egg Products, as the same has been amended, shall secure, in addition to the other obligations secured thereby, the New Obligations and upon any Event of Default, the Agent shall have the right, but not the duty, to exercise all remedies provided for in the Collateral Pledge Agreement on behalf of Trust Company and itself.
Section 3.02.Amendment to Borrower Security Agreement. Schedule 1 to the Borrower Security Agreement is hereby amended to read in its entirety as set forth on Schedule 3 hereto.
Section 3.03Ratification of Assignment of Leasehold. The Borrower and each Guarantor agree and acknowledge that the term "Collateral Documents" as defined in that certain Amendment to Loan Documents dated May 1, 1992 among Sunnyside and the parties hereto incudes, without limitation, that certain Assignment of Leasehold Interests described as item (5) in Schedule 1 hereto.
ARTICLE IV
Amendment to Intercreditor Agreement
Section 4.01.Amendment to Intercreditor Agreement. Effective as of the date hereof, the following definitions contained in the Intercreditor Agreement are hereby amended as follows:
(a)The term "Obligations", as defined in the Intercreditor Agreement, is hereby amended to include, without limitation, the New Obligations.
(b)The term "Credit Agreements", as defined in the Intercreditor Agreement, is hereby amended to include, without limitation, the Term Loan Agreement as amended by this Amendment.
(c)The term "Loan Documents", as defined in the Intercreditor Agreement is hereby amended to include, without limitation, this Amendment and the Amended and Restated Term Note.
(d)The term "Term Obligations", as defined in the Intercreditor Agreement is hereby amended to include, without limitation, the New Obligations.
ARTICLE V
Ratifications, Representations and Warranties
Section 5.01.Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Documents and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Documents (including all amendments thereto which include, without limitation, that certain Amendment to Loan Documents dated May 1, 1992 and that certain Second Amendment to Loan Documents dated November 5, 1993, both as filed in the real property records where the Mortgages are filed as described on Schedule 1 [the "Previous Amendments"] and each of which are hereby incorporated herein by this reference as if set forth herein in their entirety) are ratified and confirmed and shall continue in full force and effect. The liens, security interests and assignments created and evidenced by the Loan Documents are valid and existing liens, security interests and assignments of the respective priority recited in the Loan Documents and no party hereto has any claims, offsets, defenses or counterclaims to the terms and provisions of the Loan Documents or arising out of any acts or omissions of any party with respect thereto. Each of the parties hereto agree that the Loan Documents, as amended hereby and by the other Previous Amendments, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.
Section 5.02.Representations and Warranties. To induce Rabobank Nederland and Trust Company to modify the Loan Documents as herein set forth, the Borrower and each Guarantor represents and warrants to Rabobank Nederland and Trust Company that:
(a)The representations and warranties of the Borrower and each Guarantor contained in the Loan Documents, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof.
(b)No Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, and the Borrower and each Guarantor is in full compliance with all covenants and agreements binding on them contained in the Loan Documents, as amended hereby.
(c)The execution, delivery, and performance by it of this Amendment and the Amended and Restated Term Note, as applicable, have been duly authorized by all requisite action on its part and do not and will not violate or conflict with its articles of incorporation or bylaws or any law, rule, or regulation or any order, writ, injunction, or decree of any court, governmental authority, or arbitrator, and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the creation or imposition of any Lien (except as provided herein) upon any of its revenues or assets pursuant to the
provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement by which it or any of its properties is bound.
(d)This Amendment and the Amended and Restated Term Note constitute its legal, valid, and binding obligations, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditor's rights.
(e)No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party is or will be necessary for its execution, delivery, or performance of this Amendment or the Amended and Restated Term Note or the validity or enforceability thereof.
(f)No statement, information, report, representation, or warranty made by it in this Amendment or furnished to Rabobank Nederland or Trust Company in connection with this Amendment or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to it which has a material adverse effect, or which might in the future have a material adverse effect, on its business, condition (financial or otherwise), operations, prospects, or properties that has not been disclosed in writing to Rabobank Nederland and Trust Company.
ARTICLE VI
Miscellaneous
Section 6.01.Survival of Representations and Warranties. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by Rabobank Nederland or Trust Company or any closing shall affect the representations and warranties or the right of Rabobank Nederland or Trust Company to rely upon them.
Section 6.02.Reference to Loan Documents. Each of the Loan Documents are hereby amended so that any reference in such Loan Documents to the Loan Documents amended hereby shall mean a reference to such Loan Documents as amended hereby.
Section 6.03.Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 6.04.Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the state of New York except to the extent that the provisions of the Loan Documents are governed by the laws of another state, the
amendment to those provisions pursuant hereto shall be governed by the laws of such other state.
Section 6.05.Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, except neither the Borrower nor any Guarantor may assign or transfer any of its rights or obligations hereunder without the prior written consent of Rabobank Nederland and Trust Company.
Section 6.06.Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 6.07.Effect of Waiver. No consent or waiver, express or implied, by Rabobank Nederland, the Agent or Trust Company to or for any breach of or deviation from any covenant, condition or duty by the Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 6.08.Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 6.09.Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
Executed as of the date first written above.
Attest: CAL-MAINE FOODS, INC.
CAL-MAINE EGG PRODUCTS, INC.
CAL-MAINE FARMS, INC.
BY:
----------------------------------------------------- -------------------------------------------------
James H. Neeld, III B. J. Raines
Assistant Secretary Vice President of Borrower and each
Guarantor
(Seal of Cal-Maine Foods)
(Seal of Cal-Maine Farms)
(Seal of Cal-Maine Egg Products, Inc.)
Signed and acknowledged in the presence of:
-----------------------------------------------------
Witness
-----------------------------------------------------
Witness
|
Signed and acknowledged in the presence of: TRUST COMPANY BANK
-----------------------------------------------------
Witness BY:
-------------------------------------------------
Name:
--------------------------------------
Title:
----------------------------------------------------- --------------------------------------
Witness
BY:
-------------------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Signed and acknowledged in the presence of: COOPERATIEVE CENTRALE RAIFEISSEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND", NEW YORK BRANCH; individually
and as Agent
By:
-------------------------------------------------
Jess E. Jarratt
----------------------------------------------------- Vice President
Witness
-----------------------------------------------------
Witness By:
-------------------------------------------------
Name:
--------------------------------------------
Title:
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|
STATE OF ____________Section Section COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, B.J. Raines, well known by me to be Vice President of CAL-MAINE FOODS, INC., a Delaware corporation and, CAL-MAINE EGG PRODUCTS, INC., a Delaware corporation and CAL-MAINE FARMS, INC., a Delaware corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporations so to do.
Given under my hand and official seal on this ____ day of July 1994.
Notary Public
My Commission Expires:
STATE OF MISSISSIPPI Section
Section
COUNTY OF HINDS Section
I, _______________, a Notary Public in and for said County and State, certify that James H. Neeld, III personally appeared before me this day and acknowledged that he is an Assistant Secretary of CAL-MAINE FOODS, INC., CAL-MAINE EGG PRODUCTS, INC. AND CAL-MAINE FARMS, INC., each a Delaware corporation, and that by authority duly given and as the act of each corporation, the foregoing instrument was signed in each such corporations' name by its Vice President, sealed with its corporate seal and attested by himself as Assistant Secretary of each such corporation.
WITNESS my hand and notarial seal, this the _______ day of _________, 1994.
(S E A L)
Notary Public - State of
My Commission Expires:
Printed Name of Notary Public
STATE OF ____________Section Section COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of TRUST COMPANY BANK, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of July 1994.
Notary Public
My Commission Expires:
STATE OF ____________Section
Section
COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of TRUST COMPANY BANK, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of July 1994.
Notary Public
My Commission Expires:
STATE OF ____________Section
Section COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, Jess E. Jarratt, well known by me to be a Vice President of COOPERATIEVE CENTRALE RAIFEISSEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Netherlands, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of July 1994.
Notary Public
My Commission Expires:
STATE OF ____________Section
Section
COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of
the jurisdiction aforesaid ________________________, well known
by me to be ________________________, of COOPERATIEVE CENTRALE
RAIFEISSEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking
cooperative organized under the laws of the Netherlands, who acknowledged to
me, being informed of the contents hereof, that he signed, executed and
delivered the above Third Amendment to Loan Documents for and on behalf of said
corporation voluntarily and for the consideration, uses and purposes therein
mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of July 1994.
Notary Public
My Commission Expires:
FOURTH AMENDMENT TO LOAN DOCUMENTS
THIS FOURTH AMENDMENT TO LOAN DOCUMENTS (this "Amendment"), dated as of December 31, 1994, is among CAL-MAINE FOODS, INC. (the "Borrower"), CAL-MAINE EGG PRODUCTS, INC. ("Egg Products"), CAL-MAINE FARMS, INC. ("Cal-Maine Farms" and together with Egg Products herein referred to as the "Guarantors"), TRUST COMPANY BANK ("Trust Company") and COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank") and Rabobank, as agent for itself and Trust Company (in such capacity as agent, the "Agent").
RECITALS:
A.Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990 (such Amended and Restated Revolving Credit Agreement, as the same has been amended, and as the same may be further amended or otherwise modified, herein referred to as the "Revolving Credit Agreement"). Pursuant to the Second Amendment to Amended and Restated Revolving Credit Agreement dated October 1, 1991, Trust Company was substituted as a lender under the Revolving Credit Agreement in the place of Barclays and Barclays is no longer a party to the Revolving Credit Agreement.
B.The Borrower and Rabobank have entered into that certain Amended and Restated Term Loan Agreement dated as of May 29, 1990 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Term Loan Agreement").
C.The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of December 1, 1987 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Egg Facility Reimbursement Agreement").
D.The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of May 1, 1992 (as the same may be amended or otherwise modified, herein the "Dairy Facility Reimbursement Agreement" and the Dairy Facility Reimbursement Agreement collectively with the Revolving Credit Agreement, the Term Loan Agreement and the Egg Facility Reimbursement Agreement, herein the "Credit Agreements").
E.The Borrower has executed and delivered that certain Term Loan Note dated November 5, 1993 payable to the order of Rabobank in the original principal amount of $1,000,000 (as the same may be amended or otherwise modified, therein the "New Term Note").
F.To secure certain of the obligations and indebtedness of the Borrower to each of Rabobank, Trust Company and the Agent under the Credit Agreements, the New Term Note and the other documents executed in connection therewith, the Borrower, Sunnyside Eggs, Inc. ("Sunnyside") and the Guarantors executed certain guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages (as more fully described and identified in the Credit Agreements, and as the same have been or may hereafter be amended or otherwise modified, all such guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages other than the Sunnyside Guaranty and the Sunnyside Security Agreement, are herein referred as the "Collateral Documents"). The Collateral Documents include, without limitation, the deeds of trust, mortgages and assignment of leasehold interests described on Schedule 1 hereto which are filed in the real property records of the jurisdictions listed on Schedule 1 as indicated therein (the "Mortgages"). The Mortgage filed in Reno County Kansas encumbers the real property described on Schedule 2 hereto.
G.Sunnyside has dissolved and is no longer in existence and all of its assets have been transferred to Borrower, subject to the Liens created by the Sunnyside Security Agreement and, pursuant to the Second Amendment to Loan Documents dated as of November 5, 1993, Borrower has assumed all of the Obligations of Sunnyside under the Sunnyside Security Agreement.
H.To facilitate the collateral arrangements contemplated by the Collateral Documents, Rabobank and Barclays have entered into that certain Intercreditor Agreement dated May 29, 1990 (as such agreement has been and may hereafter be amended or otherwise modified, herein the "Intercreditor Agreement"). Barclays assigned all its right, title and interest in and to the Intercreditor Agreement to Trust Company and Barclays is no longer a party thereto.
I.The Borrower has requested that Rabobank and Trust Company amend the Revolving Credit Agreement to extend the Termination Date thereunder and amend all the Credit Agreements to change the cash flow coverage ratio covenant set forth therein. In order to induce Rabobank and Trust Company to agree to such amendments, the parties hereto now desire to enter into this Amendment.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01.Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Revolving Credit Agreement;
provided that the term "Loan Documents" as used herein shall have the meaning as set forth in the Mortgage described as item (3) on Schedule 1 hereto.
ARTICLE II
Amendments
Section 2.01.Amendment to Section 7.01 of the Revolving Credit Agreement. The definition of the term "Termination Date" set forth in Section 7.01 of the Revolving Credit Agreement is hereby amended in its entirety to read as follows:
"Termination Date" means December 31, 1996 or the earlier date of the termination in whole of the Commitment pursuant to Sections 1.04 or 6.02.
Section 2.02.Cash Flow Coverage Ratio. The positive cash flow coverage ratio covenant added to each of the Credit Agreements pursuant to that certain Second Amendment to Loan Documents (including modifications to Mortgages and Deeds of Trust) dated November 15, 1993 among the parties hereto, is hereby amended in each Credit Agreement to read in its entirety as follows:
Cash Flow Coverage Ratio. Maintain a ratio of Operating Cash Flow to Fixed Charges of 1.25 to 1.0. As used herein the following terms shall have the following meanings:
"Fixed Charges" means, as of any date of determination, the sum of the following for the Borrower and the Subsidiaries (calculated without duplication on a consolidated basis) for the completed four quarter period immediately proceeding the date of determination: (i) all cash interest paid or payable for such period; and (ii) the current maturities of long term Debt as carried on the Borrower's consolidated balance sheet as of the date of determination (including payments made under capital leases).
"Operating Cash Flow" means, as of any date of determination, the sum of (A) plus (B), with
(A) equal to the quotient obtained by dividing by 3 the sum of (i) the net income of Borrower and the Subsidiaries determined on a consolidated basis for the completed twelve quarter period immediately proceeding the date of determination plus (ii), to the extent deducted in determining net income, all cash franchise and income taxes paid or payable by Borrower and the Subsidiaries during the completed twelve quarter period immediately proceeding the date of determination and with
(B) equal to the sum of, but without duplication and only in each case to the extent deducted in determining net income, (i) depreciation and amortization expenses for the completed four quarter period immediately proceeding the date of determination; plus (ii) all cash interest paid or payable by Borrower and the
Subsidiaries for the completed fourth quarter period immediately proceeding the date of determination;
ARTICLE III
Ratifications, Representations and Warranties
Section 3.01.Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Documents and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Documents (including all amendments thereto which include, without limitation, that certain Amendment to Loan Documents dated May 1, 1992, that certain Second Amendment to Loan Documents dated November 5, 1993 and that certain Third Amendment to Loan Documents dated July 22, 1994, all as filed in the real property records where the Mortgages are filed as described on Schedule 1 [the "Previous Amendments"] and each of which are hereby incorporated herein by this reference as if set forth herein in their entirety) are ratified and confirmed and shall continue in full force and effect. The liens, security interests and assignments created and evidenced by the Loan Documents are valid and existing liens, security interests and assignments of the respective priority recited in the Loan Documents and no party hereto has any claims, offsets, defenses or counterclaims to the terms and provisions of the Loan Documents or arising out of any acts or omissions of any party with respect thereto. Each of the parties hereto agree that the Loan Documents, as amended hereby and by the other Previous Amendments, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.
Section 3.02.Representations and Warranties. To induce Rabobank and Trust Company to modify the Loan Documents as herein set forth, the Borrower and each Guarantor represents and warrants to Rabobank and Trust Company that:
(a)The representations and warranties of the Borrower and each Guarantor contained in the Loan Documents, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof.
(b)No Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, and the Borrower and each Guarantor is in full compliance with all covenants and agreements binding on them contained in the Loan Documents, as amended hereby.
(c)The execution, delivery, and performance by it of this Amendment have been duly authorized by all requisite action on its part and do not and will not violate or conflict with its articles of incorporation or bylaws or any law, rule, or regulation or any order, writ, injunction, or decree of any court, governmental authority, or arbitrator, and do not and will
not conflict with, result in a breach of, or constitute a default under, or result in the creation or imposition of any Lien (except as provided herein) upon any of its revenues or assets pursuant to the provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement by which it or any of its properties is bound.
(d)This Amendment constitutes its legal, valid, and binding obligations, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditor's rights.
(e)No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party is or will be necessary for its execution, delivery, or performance of this Amendment or the validity or enforceability thereof.
(f)No statement, information, report, representation, or warranty made by it in this Amendment or furnished to Rabobank or Trust Company in connection with this Amendment or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to it which has a material adverse effect, or which might in the future have a material adverse effect, on its business, condition (financial or otherwise), operations, prospects, or properties that has not been disclosed in writing to Rabobank and Trust Company.
ARTICLE VI
Miscellaneous
Section 4.01.Survival of Representations and Warranties. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by Rabobank or Trust Company or any closing shall affect the representations and warranties or the right of Rabobank or Trust Company to rely upon them.
Section 4.02.Reference to Credit Agreements. Each of the Loan Documents are hereby amended so that any reference in such Loan Documents to the Credit Agreements shall mean a reference to such Credit Agreements as amended hereby.
Section 4.03.Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of
this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 4.04.Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the state of New York except to the extent that the provisions of the Loan Documents are governed by the laws of another state, the amendment to those provisions pursuant hereto shall be governed by the laws of such other state.
Section 4.05.Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, except neither the Borrower nor any Guarantor may assign or transfer any of its rights or obligations hereunder without the prior written consent of Rabobank and Trust Company.
Section 4.06.Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 4.07.Effect of Waiver. No consent or waiver, express or implied, by Rabobank, the Agent or Trust Company to or for any breach of or deviation from any covenant, condition or duty by the Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 4.08.Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 4.09.Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
Executed as of the date first written above.
Attest: CAL-MAINE FOODS, INC.
CAL-MAINE EGG PRODUCTS, INC.
CAL-MAINE FARMS, INC.
BY:
----------------------------------------------------- -------------------------------------------------
James H. Neeld, III B. J. Raines
Assistant Secretary Vice President of Borrower and each
Guarantor
(Seal of Cal-Maine Foods)
(Seal of Cal-Maine Farms)
(Seal of Cal-Maine Egg Products, Inc.)
Signed and acknowledged in the presence of:
-----------------------------------------------------
Witness
-----------------------------------------------------
Witness
|
Signed and acknowledged in the presence of: TRUST COMPANY BANK
-----------------------------------------------------
Witness BY:
-------------------------------------------------
Name:
--------------------------------------
Title:
----------------------------------------------------- --------------------------------------
Witness
BY:
-------------------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Signed and acknowledged in the presence of: COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND", NEW YORK BRANCH; individually
and as Agent
By:
-------------------------------------------------
Jess E. Jarratt
----------------------------------------------------- Vice President
Witness
-----------------------------------------------------
Witness By:
-------------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
|
STATE OF ____________Section Section COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, B.J. Raines, well known by me to be Vice President of CAL-MAINE FOODS, INC., a Delaware corporation and, CAL-MAINE EGG PRODUCTS, INC., a Delaware corporation and CAL-MAINE FARMS, INC., a Delaware corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporations so to do.
Given under my hand and official seal on this ____ day of December 1994.
Notary Public
My Commission Expires:
STATE OF MISSISSIPPI Section
Section
COUNTY OF HINDS Section
I, _______________, a Notary Public in and for said County and State, certify that James H. Neeld, III personally appeared before me this day and acknowledged that he is an Assistant Secretary of CAL-MAINE FOODS, INC., CAL-MAINE EGG PRODUCTS, INC. AND CAL-MAINE FARMS, INC., each a Delaware corporation, and that by authority duly given and as the act of each corporation, the foregoing instrument was signed in each such corporations' name by its Vice President, sealed with its corporate seal and attested by himself as Assistant Secretary of each such corporation.
WITNESS my hand and notarial seal, this the _______ day of December 1994.
(S E A L)
Notary Public - State of
My Commission Expires:
Printed Name of Notary Public
STATE OF ____________Section Section COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of TRUST COMPANY BANK, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of December 1994.
Notary Public
My Commission Expires:
STATE OF ____________Section
Section
COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of TRUST COMPANY BANK, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of December 1994.
Notary Public
My Commission Expires:
STATE OF ____________Section
Section COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, Jess E. Jarratt, well known by me to be a Vice President of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Netherlands, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of December 1994.
Notary Public
My Commission Expires:
STATE OF ____________Section
Section
COUNTY OF ___________Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Netherlands, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of December 1994.
Notary Public
My Commission Expires:
FIFTH AMENDMENT TO LOAN DOCUMENTS
(including Modifications to Mortgages and Deeds of Trust)
THIS FIFTH AMENDMENT TO LOAN DOCUMENTS (this "Amendment"), dated as of April 14, 1995, is among CAL-MAINE FOODS, INC. (the "Borrower"), CAL-MAINE EGG PRODUCTS, INC. ("Egg Products"), CAL-MAINE FARMS, INC. ("Cal-Maine Farms" and together with Egg Products herein referred to as the "Guarantors"), TRUST COMPANY BANK ("TCB"), COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), HARRIS TRUST AND SAVINGS BANK ("Harris" and collectively with Rabobank and Trust Company, herein the "Banks") and Rabobank, as agent for itself and TCB (in such capacity as agent, the "Agent").
RECITALS:
A. Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990 (such Amended and Restated Revolving Credit Agreement, as the same has been amended, and as the same may be further amended or otherwise modified, herein referred to as the "Revolving Credit Agreement"). Pursuant to the Second Amendment to Amended and Restated Revolving Credit Agreement dated October 1, 1991, TCB was substituted as a lender under the Revolving Credit Agreement in the place of Barclays and Barclays is no longer a party to the Revolving Credit Agreement.
B. The Borrower and Rabobank have entered into that certain Amended and Restated Term Loan Agreement dated as of May 29, 1990 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Term Loan Agreement").
C. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of December 1, 1987 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Egg Facility Reimbursement Agreement").
D. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of May 1, 1992 (as the same may be amended or otherwise modified, herein the "Dairy Facility Reimbursement Agreement").
E. The Borrower has executed and delivered that certain Term Loan Note dated November 5, 1993 payable to the order of Rabobank in the original principal amount of $1,000,000 (as the same may be amended or otherwise modified, therein the "New Term Note" and the New Term Note, collectively with the Dairy Facility Reimbursement Agreement, the Revolving Credit Agreement, the Term Loan Agreement and the Egg Facility Reimbursement Agreement, herein the "Existing Credit Agreements").
F. To secure certain of the obligations and indebtedness of the Borrower to each of Rabobank, TCB and the Agent under the Existing Credit Agreements and the other documents executed in connection therewith, the Borrower and the Guarantors executed certain guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages (as more fully described and identified in the Existing Credit Agreements, and as the same have been or may hereafter be amended or otherwise modified, all such guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages are herein referred as the "Collateral Documents"; the properties in which liens are granted pursuant thereto, herein the "Collateral"; all the Collateral Documents excluding the deed of trust described as item (4) on Schedule 1 hereto and the assignments of leasehold interest described as items (5) and (6) on Schedule 1 hereto, herein the "Shared Collateral Documents"; and the properties in which liens are granted pursuant to the Shared Collateral Documents herein the "Shared Collateral"). The Collateral Documents include, without limitation, the deeds of trust, mortgages and assignments of leasehold interest described on Schedule 1 hereto which are filed in the real property records of the jurisdictions listed on Schedule 1 as indicated therein (the "Mortgages"). The Mortgage filed in Reno County Kansas encumbers the real property described on Schedule 2 hereto.
G. To facilitate the collateral arrangements contemplated by the Shared Collateral Documents, Rabobank and Barclays have entered into that certain Intercreditor Agreement dated May 29, 1990 (as such agreement has been and may hereafter be amended or otherwise modified, herein the "Original Intercreditor Agreement"). Barclays assigned all its right, title and interest in and to the Original Intercreditor Agreement to TCB and Barclays is no longer a party thereto.
H. The Borrower and the Guarantors have requested that Harris extend credit to Borrower pursuant to that certain Facility Agreement dated the date hereof (as the same may be amended, herein the "Harris Credit Agreement" and collectively with the Existing Credit Agreements, herein the "Credit Agreements").
I. To induce Harris to extend credit under the Harris Credit Agreement from time to time, Borrower and Guarantors have agreed to provide liens in the Shared Collateral to secure the obligations, indebtedness and liabilities of the Borrower and Guarantors to Harris arising under the Harris Credit Agreement and the documents executed pursuant thereto and to facilitate the foregoing the Banks have entered into that certain Amended and Restated Intercreditor Agreement dated the date hereof (the "New Intercreditor Agreement") to amend and restated the Original Intercreditor Agreement in its entirety so that Rabobank is appointed as agent for not only itself and TCB but also for Harris with respect to the Shared Collateral and the Shared Collateral Documents and to set forth the Bank's respective rights and interests in and to the Shared Collateral.
J. The Borrower, the Banks and Agent desire to entre into this Amendment to amend the Loan Documents (as defined below), for among other purposes, to provide that the obligations, indebtedness and liabilities owed to Harris under the Harris Credit Agreement are secured by the Shared Collateral and to induce Rabobank, the Agent and TCB to agree to the foregoing.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Revolving Credit Agreement; provided that the term "Loan Documents" as used herein shall have the meaning as set forth in the New Intercreditor Agreement.
ARTICLE II
Amendments to Revolving Credit Agreement
Section 2.01. Amendment to Section 1.01. Effective as of the date hereof, Section 1.01 of the Revolving Credit Agreement is hereby amended in its entirety to read as follows:
SECTION 1.01 The Advances. Each Bank severally agrees, on
the terms and conditions hereinafter set forth, to make advances
(such advances, collectively with the Existing Advances herein the
"Advances") to the Borrower from time to time during the period from
the date hereof to and including the Termination Date (this and
certain other capitalized terms are defined in Section
7.01), provided that (a) at any time the aggregate outstanding amount
of the Advances and Credit Liabilities shall not exceed the lesser of
(i) the Revolving Credit Commitments, as such amount may be reduced
pursuant to Section 1.04, or (ii) the sum of the Borrowing Base minus
the aggregate outstanding principal amount of advances made by Harris
Trust and Savings Bank to Borrower under the terms of that certain
Facility Agreement dated April 14, 1995 (the sum of the foregoing,
herein the "Adjusted Borrowing Base"); (b) at any time the aggregate
outstanding amount of a Bank's Advances and its Pro Rata Part
(determined based on the Revolving Credit Commitments) of the Credit
Liabilities shall not exceed its Revolving Credit Commitment; and (c)
at all times the aggregate outstanding amount of the advances made by
a Bank shall never be less than an amount equal to the sum of its Pro
Rata Part (determined based on the Revolving Credit Commitments) of
the then aggregate outstanding amount of all Advances minus up to
$500,000.00. Each Advance shall be in an amount not less than
$250,000.00. Each Bank, subject to the other terms hereof, shall have
an obligation to make only the Advances requested from such Bank by
Borrower, whether or not the other Bank makes its Advances to
Borrower. Within the limits of the Revolving Credit Commitments, the
Borrower may borrow, prepay pursuant to Section 2.02 and reborrow
under this Section 1.01.
Section 2.02 Amendment to Sections 2.02(a), 3.02(a)(iii) and
3.02(a)(iv). Effective as of the date hereof, the term "Borrowing Base", as
used in each place it appears in Sections 2.02(a), 3.02(a)(iii) and 3.02(a)(iv)
of the Revolving Credit Agreement is hereby amended to mean the "Adjusted
Borrowing Base" as defined in Section 1.01 of the Revolving Credit Agreement,
as amended hereby.
Section 2.03 Amendment to Section 7.01. Effective as of the date hereof, the definition of the term "Pro Rata Part" in Section 7.01 of the Revolving Credit Agreement is hereby amended so that (a) the term "Borrowing Base", as used in each place it appears in such definition means the "Adjusted Borrowing Base" as defined in Section 1.01 of the Revolving Credit Agreement, as amended hereby and (b) the phrase "as well as with respect to proceeds of Collateral" set forth in clause (b) thereof is deleted therefrom.
Section 2.04 Amendment to Exhibits. Exhibit F to the Revolving Credit Agreement is hereby amended in its entirety to read as set forth on Exhibit A hereto.
ARTICLE III
Amendments to Collateral Documents
(Including the Mortgages)
Section 3.01. Amendment to Share Collateral Document. Effective as of the date hereof, each Shared Collateral Document is hereby amended to provide that, subject to the provisions of Subsection 3.01(b) below, the obligations secured or guaranteed thereby include without limitation, the obligations, indebtedness and liabilities of the Borrower and Guarantors arising under or in connection with this Amendment, the Harris Credit Agreement and the Loan Documents relating thereto, whether for principal, interest, fees (including attorneys' fees), premium, commissions, expenses or otherwise (collectively, the "New Obligations") and in furtherance of the foregoing, the parties hereto agree to and acknowledge the following:
(a) The term "Credit Agreements" as defined in each Shared Collateral Document includes, without limitation, the Harris Credit Agreement as the same may be amended; the term "Loan Documents", as defined in each Shared Collateral Document includes, without limitation, the Harris Credit Agreement and the promissory note executed pursuant to the Harris Credit Agreement; the term "Advances" as defined in each Shared Collateral Document includes, without limitation, advances made under the terms of the Harris Credit Agreement; and the term "Notes" as defined in each Shared Collateral Document includes, without limitation, the promissory note executed pursuant to the Harris Credit Agreement.
(b) The term "Obligations" as defined in each Shared Collateral Document includes, without limitation, the "New Obligations"; provided however, if as of January 1, 1996, Harris has not provided the Borrower with a committed line of credit on substantially the same terms as the line of credit provided under the Revolving Credit Agreement or such other terms as may be approved by TCB and
Rabobank, then as of such date and at all times thereafter the term "Obligations" as defined in each Shared Collateral Documents shall not (notwithstanding anything to the contrary) include a principal amount of obligations owed to Harris under the Harris Credit Agreement in excess of the sum of (i) the principal amount of the obligations owed to Harris under the Harris Credit Agreement as of January 1, 1996 minus (ii) the aggregate amount of all principal repayments made on the obligations owed under the Harris Credit Agreement since January 1, 1996 without giving effect to any increases in such principal amount after January 1, 1996.
(c) The Collateral Pledge Agreement dated October 17, 1984, executed by Borrower, Cal-Maine Farms and Egg Products, as the same has been amended, shall secure, in addition to the other obligations secured thereby, the New Obligations and upon any Event of Default, the Agent shall have the right, but not the duty, to exercise all remedies provided for in the Collateral Pledge Agreement on behalf of the Banks.
(d) The terms "Banks" and "Creditors" as defined and used in each Shared Collateral Document and whether used in the singular or the plural, include TCB, Rabobank and Harris.
(e) The term "Event of Default" as defined and used in each Shared Collateral Document includes, without limitation, an "Event of Default" as defined in the Harris Credit Agreement.
(f) The term "Intercreditor Agreement" as defined and used in each Shared Collateral Document means the New Intercreditor Agreement.
Notwithstanding the foregoing, for purposes of the exception in the last "Whereas" clause on page 4 of the New Mortgages (as defined in the Term Loan Agreement) relating to property located in Alabama only, the Harris Credit Agreement and the promissory note executed in connection therewith shall be deemed to be part of the Revolving Credit Agreement and the Revolving Credit Notes.
Section 3.02. Amendment to Collateral Document. Effective as of the date hereof, each Collateral Document is hereby amended, so that the term "Loan Documents" as used therein, includes, without limitation, this Amendment.
ARTICLE IV
Ratifications, Representations and Warranties
Section 4.01. Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Documents and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Documents (including all amendments thereto which include, without limitation, that certain Amendment to Loan Documents dated May 1, 1992, that certain Second Amendment to Loan Documents dated November 5, 1993 and that certain
Third Amendment to Loan Documents dated July 22, 1994, all as filed in the real property records where the Mortgages are filed as described on Schedule 1 and that certain Fourth Amendment to Loan Documents dated December 31, 1994 which is attached hereto as Exhibit B, [collectively, the "Previous Amendments"] and each of which are hereby incorporated herein by this reference as if set forth herein in their entirety) are ratified and confirmed and shall continue in full force and effect. The liens, security interests and assignments created and evidenced by the Loan Documents are valid and existing liens, security interests and assignments of the respective priority recited in the Loan Documents and no party hereto has any claims, offsets, defenses or counterclaims to the terms and provisions of the Loan Documents or arising out of any acts or omissions of any party with respect thereto. Each of the parties hereto agree that the Loan Documents, as amended hereby and by the Previous Amendments, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.
Section 4.02. Representations and Warranties. To induce Rabobank and TCB to modify the Loan Documents as herein set forth and to induce Harris to enter into the Harris Credit Agreement and this Amendment, the Borrower and each Guarantor represents and warrants to the Banks that:
(a) The representations and warranties of the Borrower and each Guarantor contained in the Loan Documents, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof.
(b) No Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, and the Borrower and each Guarantor is in full compliance with all covenants and agreements binding on them contained in the Loan Documents, as amended hereby.
(c) The execution, delivery, and performance by it of this Amendment have been duly authorized by all requisite action on its part and do not and will not violate or conflict with its articles of incorporation or bylaws or any law, rule, or regulation or any order, writ, injunction, or decree of any court, governmental authority, or arbitrator, and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the creation or imposition of any Lien (except as provided herein) upon any of its revenues or assets pursuant to the provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement by which it or any of its properties is bound.
(d) This Amendment constitutes its legal, valid, and binding obligations, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditor's rights.
(e) No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party is or will be necessary for its execution, delivery, or performance of this Amendment or the validity or enforceability thereof.
(f) No statement, information, report, representation, or warranty made by it in this Amendment or furnished to any Bank in connection with this Amendment or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to it which has a material adverse effect, or which might in the future have a material adverse effect, on its business, condition (financial or otherwise), operations, prospects, or properties that has not been disclosed in writing to the Banks.
(g) Borrower no longer owns any stock in Seaboard Foods, Inc. and therefore, that certain Stock Pledge Agreement dated May 15, 1986 executed by Borrower to Rabobank, which has been assigned to Agent, is no longer in effect.
Section 4.03 Independence of Covenants. All financial and other covenants in the Loan Documents shall be given independent effect so that if the additional Debt to be incurred under the Harris Credit Agreement results at any time in the violation of any of those financial covenants or any other such covenants to the extent not specifically addressed herein, the fact that the Banks have entered into this Amendment shall not avoid the occurrence of any Potential Default or any Event of Default resulting therefrom.
ARTICLE V
Miscellaneous
Section 5.01. Survival of Representations and Warranties. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by any Bank or any closing shall affect the representations and warranties or the right of each Bank to rely upon them.
Section 5.02. Reference to Loan Documents. Each of the Loan Documents are hereby amended so that any reference in such Loan Documents to the other Loan Documents shall mean a reference to such other Loan Documents as amended hereby.
Section 5.03. Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 5.04. Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the state of New York except to the extent that the provisions of the Loan Documents are governed by the laws of another state, the amendment to those provisions pursuant hereto shall be governed by the laws of such other state.
Section 5.05. Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, except
neither the Borrower nor any Guarantor may assign or transfer any of its rights or obligations hereunder without the prior written consent of the Banks.
Section 5.06. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 5.07. Effect of Waiver. No consent or waiver, express or implied, by Rabobank, the Agent, TCB or Harris to or for any breach of or deviation from any covenant, condition or duty by the Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 5.08. Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 5.09. Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
Executed as of the date first written above.
Attest: CAL-MAINE FOODS, INC.
CAL-MAINE EGG PRODUCTS, INC.
CAL-MAINE FARMS, INC.
By:
- ---------------------------------------- ----------------------------------------
James H. Neeld, III B.J. Raines
Assistant Secretary Vice President of Borrower and each
Guarantor
(Seal of Cal-Maine Foods)
Signed and acknowledged in the
presence of:
(Seal of Cal-Maine Farms)
----------------------------------------
Witness
(Seal of Cal-Maine Egg ----------------------------------------
Products, Inc.) Witness
|
Signed and acknowledged in the TRUST COMPANY BANK
presence of:
By:
- ---------------------------------------- -----------------------------------
Witness Name:
--------------------------
Title:
--------------------------
By:
- ---------------------------------------- -----------------------------------
Witness Name:
--------------------------
Title:
--------------------------
Signed and acknowledged in the COOPERATIEVE CENTRALE
presence of: RAIFFEISEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND", NEW YORK
BRANCH; individually and as Agent
By:
- ---------------------------------------- -----------------------------------
Witness Jess E. Jarratt
Vice President
By:
- ---------------------------------------- -----------------------------------
Witness Name:
--------------------------
Title:
--------------------------
Signed and acknowledged in the HARRIS TRUST AND SAVINGS BANK
presence of:
By:
- ---------------------------------------- -----------------------------------
Witness Carl A. Blackham
Vice President
- ----------------------------------------
Witness
|
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, B.J. Raines, well known by me to be Vice President of CAL-MAINE FOODS, INC., a Delaware corporation and, CAL-MAINE EGG PRODUCTS, INC., a Delaware corporation and CAL-MAINE FARMS, INC., a Delaware corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporations so to do.
Given under my hand and official seal on this ____ day of _______ 1995.
Notary Public
My Commission Expires:
STATE OF MISSISSIPPI Section
Section
COUNTY OF HINDS Section
|
I, _______________, a Notary Public in and for said County and State, certify that James H. Neeld, III personally appeared before me this day and acknowledged that he is an Assistant Secretary of CAL-MAINE FOODS, INC., CAL-MAINE EGG PRODUCTS, INC. AND CAL-MAINE FARMS, INC., each a Delaware corporation, and that by authority duly given and as the act of each corporation, the foregoing instrument was signed in each such corporations' name by its Vice President, sealed with its corporate seal and attested by himself as Assistant Secretary of each such corporation.
WITNESS my hand and notarial seal, this the _______ day of __________ 1995.
(S E A L) -----------------------------------
Notary Public - State of
My Commission Expires: -----------
- --------------------------------- -----------------------------------
Printed Name of Notary Public
|
STATE OF __________________ Section
Section
|
COUNTY OF _________________ Section
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of TRUST COMPANY BANK, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of ________ 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of TRUST COMPANY BANK, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of __________ 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, Jess E. Jarratt, well known by me to be a Vice President of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Netherlands, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of __________ 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________, of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Netherlands, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of ___________ 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, Carl A. Blackham, well known by me to be a Vice President of HARRIS TRUST AND SAVINGS BANK, a savings bank organized under the laws of Illinois, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Third Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ____ day of ___________ 1995.
My Commission Expires:
SIXTH AMENDMENT TO LOAN DOCUMENTS
(including Modifications to Mortgages and Deeds of Trust)
THIS SIXTH AMENDMENT TO LOAN DOCUMENTS (this "Amendment"), dated as of June 1, 1995, is among CAL-MAINE FOODS, INC. (the "Borrower"), CAL-MAINE EGG PRODUCTS, INC. ("Egg Products"), CAL-MAINE FARMS, INC. ("Cal-Maine Farms"), CAL-MAINE PARTNERSHIP, LTD. ("CM Partnership" and collectively with Cal-Maine Farms and Egg Products herein referred to as the "Guarantors"), SUNTRUST BANK, ATLANTA, formerly known as Trust Company Bank ("SunTrust"), COOPERATIEVE CENTRALE RAIFFEISENBOERENLEEN BANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), HARRIS TRUST AND SAVINGS BANK ("Harris" and collectively with Rabobank and SunTrust, herein the "Banks") and Rabobank, as agent for itself and the Banks (in such capacity as agent, the "Agent").
RECITALS:
A. Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990 (such Amended and Restated Revolving Credit Agreement, as the same has been amended, and as the same may be further amended or otherwise modified, herein referred to as the "Revolving Credit Agreement"). Pursuant to the Second Amendment to Amended and Restated Revolving Credit Agreement dated October 1, 1991, SunTrust was substituted as a lender under the Revolving Credit Agreement in the place of Barclays and Barclays is no longer a party to the Revolving Credit Agreement.
B. The Borrower and Rabobank have entered into that certain Amended and Restated Tern Loan Agreement dated as of May 29, 1990 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Term Loan Agreement").
C. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of December 1, 1987 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Egg Facility Reimbursement Agreement").
D. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of May 1, 1992 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Dairy Facility Reimbursement Agreement").
E. The Borrower has executed and delivered that certain Term Loan Note dated November 5, 1993 payable to the order of Rabobank in the original principal amount of $1,000,000 (as the same may be amended or otherwise modified, herein the "New Term Note").
F. Borrower and Harris have entered into that certain Facility Agreement dated April 14, 1995 (as the same may be amended or otherwise modified, herein the "Harris Credit Agreement" and the Harris Credit Agreement collectively with the New Term Note, the Dairy Facility Reimbursement Agreement, the Revolving Credit Agreement, the Tenn Loan Agreement and the Egg Facility Reimbursement Agreement, herein the "Credit Agreements").
G. To secure certain of the obligations and indebtedness of the Borrower, Cal-Maine Farms and Egg Products to each of Rabobank, SunTrust, Harris and the Agent under the Credit Agreements and the other documents executed in connection therewith (the "Secured Obligations"), the Borrower, Cal-Maine Farms and Egg Products executed certain guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages (as more fully described and identified in the Credit Agreements, and as the same have been or may hereafter be amended or otherwise modified, all such guaranties, security agreements, deeds of trust, assignment of leasehold interests and mortgages are herein referred to as the "Collateral Documents"; the properties in which liens are granted pursuant thereto, herein the "Collateral"). The Collateral Documents include, without limitation, the deeds of trust, mortgages and assignments of leasehold interest described on Schedule I hereto which are filed in the real property records of the jurisdictions listed on Schedule I as indicated therein (the "Mortgages"). The Mortgage filed in Reno County Kansas encumbers the real property described on Schedule 2 hereto.
H. To facilitate the collateral arrangements contemplated by the Collateral Documents, Rabobank, SunTrust, Agent and Harris have entered into that certain Amended and Restated Intercreditor Agreement dated April 14, 1995 (as such agreement may hereafter be amended or otherwise modified, herein the "Intercreditor Agreement").
I. Cal-Maine Farms desires to transfer to Borrower all of its assets located in Kansas and New Mexico, including, without limitation, all of its interest in the real property described in the Mortgages identified as items 3(d) and 3(e) on Schedule I hereto (the "Kansas/New Mexico Transfers").
J. Cal-Maine Farms and Borrower have created CM Partnership as a Texas limited partnership. In connection with the formation of CM Partnership, Borrower and Cal-Maine Farms desires to transfer all the assets each of them owns in Kentucky, Ohio and Texas to CM Partnership, including, without limitation, the real property described in the Mortgages identified as item 3(g), (h) and (i) on Schedule 1 hereto (collectively, the "Partnership Mortgages" and such transfers herein, the "Partnership Transfers"); provided that the documentation effectuating the transfers in Kentucky and Ohio will not be recorded
in the applicable real property records. In return for the Partnership Transfers, Cal-Maine Farms shall require a 99% limited partnership interest in CM Partnership and Borrower shall obtain a 1% general partnership interest in CM Partnership.
K. Borrower also desires to transfer all its assets located in
Alabama, Arkansas, North Carolina and South Carolina to Cal-Maine Farms,
including, without limitation, all of its interest in the real property
described in the Mortgages identified as items (1), (2), (3)(a), (b), (c) and
(f) on Schedule I hereto (the "Other Transfers", the Other Transfers, the
Partnership Transfers and the Kansas/New Mexico Transfers herein collectively,
the "Transfers" and the Mortgages identified as items (1), (2), (3)(a), (b),
(c) and (f) on Schedule 1 herein the "Additional Mortgages"); provided, that,
the documentation effectuating the transfers in Alabama, Arkansas and North
Carolina will not be filed of record in the applicable real property records.
L. Borrower and Guarantors have requested that the Banks and Agent consent to the Transfers and otherwise modify the Loan Documents as herein set forth and the Banks and Agent have agreed to do so subject to and on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01 Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Revolving Credit Agreement; provided that the term "Loan Documents" as used herein shall have the meaning as set forth in the Intercreditor Agreement.
ARTICLE II
Consent to Transfers
Section 2.01 Consent to Transfers. Subject to and upon the terms and conditions set forth in this Amendment and notwithstanding anything in any Loan Document to the contrary, the Banks and Agent hereby consent to the Transfers and agree that the Transfers shall not constitute a default or an event of default under any Loan Document. Each party receiving a Transfer (herein a "Transferee") specifically agrees and acknowledges that the Transfers are made subject to the liens and security interests created by the Collateral Documents.
Section 2.02 Assumption of Obligations Under Collateral Documents. As successor in interest as a result of the Transfers and in consideration for the Transfers, each Transferee agrees that it is a party to the Collateral Documents which encumber the assets it acquired in the Transfers (such Collateral Documents herein, as it applies to any Transferee, the "Existing Collateral Documents") to the same extent as the applicable transferor (i.e., the party from whom the applicable assets were acquired in the Transfer and herein a "Transferor") was prior to the date hereof, notwithstanding any defense, claim, counterclaim or offset any such Transferor may have or have had thereto. Each Transferee hereby expressly assumes all obligations, indebtedness and liability of its Transferor relating to the Transfers under the Existing Collateral Documents applicable to the assets it acquired in the Transfers, including, without limitation, all the obligations as the "Grantor" under such Existing Collateral Document. Without limiting the generality of the foregoing and as a result thereof, CM Partnership agrees that it is the "Grantor" under the Partnership Mortgages and Cal-Maine Farms agrees that it is the "Grantor" under the Additional Mortgages.
Section 2.03 Confirmation of Liens and Security Interests. Each Transferee expressly renews, carries forward, and extends the liens upon the assets it acquired in the Transfers and all other liens created by the Existing Collateral Documents applicable to it. Notwithstanding the foregoing, in the event that all or any portion of the Secured Obligations is not or cannot be secured by the Existing Collateral Documents as assumed by the Transferees, it is understood and agreed that in consideration of the Banks' and Agent's agreement to enter into this Amendment, for Ten and No/100 Dollars ($10.00) and for other consideration the receipt and sufficiency of which is hereby acknowledged, each Transferee does hereby GRANT, BARGAIN, SELL, MORTGAGE, WARRANT, CONVEY, ALIENATE, REMISE, RELEASE, TRANSFER, ASSIGN, GRANT A SECURITY INTEREST IN, SET OVER, DELIVER AND CONFIRM unto Mortgagee or Trustee (as both are defined in the Mortgages), its successors, assigns or substitutes, for the benefit of the Banks and Agents, the Premises and the Collateral (as such terms are defined in the applicable Existing Collateral Documents), to have and to hold together with all rights, hereditaments and appurtenances in any way pertaining to or belonging thereto, forever. This conveyance is given to secure the payment of the Secured Obligations and all renewals, extensions, increases and other modifications thereof or any part thereof. All provisions contained in the applicable Existing Collateral Documents as modified by this Amendment, are incorporated in the terms and provisions of this Section 2.03.
Section 2.04 Non-Release. Notwithstanding the foregoing assumptions, each Transferor agrees that it shall remain liable under the Existing Collateral Documents to which it is a party to the same extent as if the Transfers and such assumptions had not occurred.
ARTICLE III
Modification to Credit Agreements
Section 3.01 Amendment to Definitions.
(a) Effective as of the date hereof, each of the Credit Agreements (other than the Harris Credit Agreement) are hereby amended to add the following definitions:
"CM Partnership" means Cal-Maine Partnership, Ltd., a limited partnership.
"CM Partnership Guaranty Agreement" means that certain guaranty agreement dated June 1, 1995 and executed by CM Partnership for the benefit of the Agent.
"CM Partnership Security Agreement" means that certain security agreement dated as of June 1, 1995 and executed by CM Partnership for the benefit of the Agent, and all amendments, supplements and other modifications thereto.
(b) Effective as of the date hereof, the following definitions set forth in the Credit Agreements (other than the Harris Credit Agreement) are amended in their entirety to read as follows:
"Amended Guaranty Agreement" means the Amended and Restated Guaranty Agreements executed by Cal-Maine Farms, Inc. and Cal-Maine Egg Products, Inc. both dated May 29, 1990, the CM Partnership Guaranty Agreement, and all amendments, supplements and other modifications thereto.
"Guarantors" means each of Cal-Maine Egg Products, Inc., a Delaware corporation, Cal-Maine Farms, Inc., a Delaware corporation, and CM Partnership and any reference to either or both Guarantors in any Loan Documents shall mean a reference to any or all of the Guarantors, as applicable.
"Security Agreements" means the Amended Borrower Security Agreement, the Amended Cal-Maine Security Agreement, the Louisiana Collateral Documents,the Amended Egg Products Security Agreement, and the CM Partnership Security Agreement, collectively.
"Subsidiary" means any corporation or other business entity (including, without limitation, a general partnership or limited partnership) of which more than 50% of the outstanding capital stock or other equity interest having ordinary voting power to elect a majority of the Board of Directors (or similar governing body) of such corporation or other business entity (irrespective of whether or not at the time capital stock of any other class or classes of such corporation or other equity interest shall or might have voting power upon the occurrence of any contingency) is at the
time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries.
Section 3.02 Amendments to Harris Credit Agreement. Effective as of the date hereof, the term "Security Documents" as defined in the Harris Credit Agreement is hereby amended to include the CM Partnership Security Agreement and the term "Companies" as defined in the Harris Credit Agreement is hereby amended to include the CM Partnership.
Section 3.03 Amendment to Net Tangible Assets to Funded Debt Ratio Covenant. Each of the Credit Agreements require the Borrower to maintain a ratio of consolidated total tangible assets to funded debt of the Borrower and the Subsidiaries as specified therein (the "Asset to Debt Ratio Covenants"). Effective as of the date hereof, each Asset to Debt Ratio Covenant is hereby amended in its entirety to read as follows:
Net Tangible Assets to Funded Debt. Maintain a ratio of:
(i) the sum of the following for
Borrower and the Subsidiaries (A) consolidated total
assets minus (B) consolidated intangible assets minus
(C) consolidated current liabilities (excluding
current deferred income taxes from such consolidated
current liabilities) to
(ii) consolidated long term Debt of Borrower and the Subsidiaries (calculated excluding the amounts outstanding under the Revolving Credit Agreement to the extent such amounts are consolidated long term Debt and excluding deferred income taxes to the extent such deferred income taxes are consolidated long-term Debt)
of not less than 1.80 to 1.00 at all times prior to and through the Fiscal Year ending in 1996 and 1.90 to 1.00 at all times after the Fiscal Year ending in 1996.
To the extent any default or event of default has occurred under any Loan Document as a result of the violation of the Asset to Debt Ratio Covenants for any time up to and including the Fiscal Year ended 1995, the Agent and the Banks hereby waive such event of default and agree not to exercise any rights or remedies arising as a result thereof. The waiver specifically described herein shall not constitute and shall not be deemed a waiver of any other default or event of default under any Loan Document whether arising as a result of the further violation of the Asset to Debt Ratio Covenants or otherwise or a waiver of any rights or remedies arising as a result of such other default or event of default. The failure to comply with the Asset to Debt Ratio Covenants for any period after the 1995 Fiscal Year shall constitute an event of default under the Loan Documents.
Section 3.04 Subsidiary Representation. Any representation and warranty in any Credit Agreement as to the Borrower's ownership of Subsidiaries is hereby amended in their entirety to state that the Guarantors are the only Subsidiaries of Borrower and all such Subsidiaries are wholly owned by Borrower except CM Partnership whose 99% limited partnership interest is owned by Cal-Maine Farms and whose 1 % general partnership interest is owned by Borrower.
Section 3.05 Restriction on Sale of Subsidiaries. Each of the Credit Agreements (other than the Harris Credit Agreement) contains a negative covenant prohibiting the disposal of Subsidiary stock (the "Subsidiary Sale Restriction Covenants"). Each of the Subsidiary Sale Restriction Covenants is hereby amended in its entirety to read as follows (and Borrower agrees that it will not):
Maintenance of Ownership of Subsidiaries. Sell or otherwise dispose of any shares of capital stock or other ownership interests in any Subsidiary or permit any Subsidiary to issue, sell or otherwise dispose of shares of capital stock or other ownership interests in any other Subsidiary, except to Cal-Maine Foods, Inc. or any Subsidiary.
ARTICLE IV
Amendments to Collateral Documents
(including the Mortgages)
Section 4.01 Amendment to Collateral Document. Effective as of the date hereof, each Collateral Document is hereby amended so that the term "Loan Documents" as used therein, includes, without limitation, this Amendment, the CM Partnership Guaranty and the CM Partnership Security Agreement.
Section 4.02 Acknowledgment Regarding Security Interest. Each of Borrower and each Guarantor agree and acknowledge that any right, title and interest that it may have in and to any of the tradenames and trademarks described on Schedule 3 (collectively, the "Trademarks") are general intangibles in which it has granted the Agent a security interest pursuant to its Security Agreement and such Trademarks are therefore part of the Collateral as defined in its Security Agreement. Each of Borrower and each Guarantor represent and warrant that (a) the tradenames and trademarks and interest therein listed on Schedule 3 under its name constitute all of the trademarks, tradenames, copyrights and patents and all of the patents and trademark, tradename and copyright licenses owned by it, (b) applications for registration of all of the Trademarks it owns are pending, and (c) except as disclosed on
Schedule 3, it has not sold, assigned or otherwise conveyed any right, title or interest in and to the Trademarks to any person. Each of Borrower and each Guarantor shall concurrently herewith deliver to Agent all documents, instruments and other items as may be necessary for Agent to record Agent's security interests in the Trademarks with the United States Patent and Trademark Office and any similar domestic or foreign office, department or agency. Each of Borrower and each Guarantor shall: (a) prosecute diligently any trademark or trademark license application at any time pending; (b) preserve and maintain all rights in the Trademarks; and (c) upon and after the occurrence of an Event of Default, use its best efforts to obtain any consents, waivers or agreements necessary to enable Agent to exercise its remedies with respect to the Trademarks. Neither Borrower nor any Guarantor shall abandon any right to file a trademark application nor shall Borrower nor any Guarantor abandon any pending trademark application or trademark license without the prior written consent of Agent. Each of Borrower and each Guarantor represents and warrants to Agent and the Banks that the execution, delivery and performance of this Amendment by each Borrower and each Guarantor will not violate or cause a default under any of the Trademarks or any agreement in connection therewith. Each of Borrower and each Guarantor hereby assigns, transfers and conveys to Agent, effective upon the occurrence of any Event of Default hereunder, the nonexclusive right and license to use all Trademarks owned or used by Borrower or any Guarantor together with any goodwill associated therewith, all to the extent necessary to enable Agent to realize on the Collateral and any successor or assign to enjoy the benefits of the Collateral. This right and license shall inure to the benefit of all successors, assigns and transferees of Agent and its successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and license is granted free of charge, without requirement that any monetary payment whatsoever be made to Borrower or any Guarantor by Agent or any Bank.
Section 4.03 Amendment to Borrower Security Agreement. Effective as of the date hereof, Schedule 1 to the Borrower Security Agreement is hereby amended in its entirety to read as set forth on Schedule 4 hereto.
Section 4.04 Amendment to Amended Cal-Maine Security Agreement. Effective as of the date hereof, Schedule 1 to the Amended Cal-Maine Security Agreement is hereby amended in its entirety to read as set forth on Schedule 5 hereto.
Section 4.05 Separate Collateral Document. Effective as of the date hereof, the term "Debtor" as used in the Mortgage identified as item 4 on Schedule 1 hereto is hereby amended to include CM Partnership.
ARTICLE V
Amendment to Intercreditor Agreement
Section 5.01 Amendment to Intercreditor Agreement. Effective as of the date hereof, the following definitions contained in the Intercreditor Agreement are hereby amended as follows:
(a) The term "Collateral Documents," as defined in the Intercreditor Agreement is hereby amended to include the CM Partnership Security Agreement.
(b) The term "Revolving Collateral Documents," as defined in the Intercreditor Agreement is hereby amended to include the CM Partnership Security Agreement.
(c) The term "Guarantors," as defined in the Intercreditor Agreement is hereby amended to include the CM Partnership.
ARTICLE VI
Conditions Precedent
Section 6.01 Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:
(a) Agent shall have received all of the following, each dated (unless otherwise indicated) the date of this Amendment, in form and substance satisfactory to Agent:
(1) Resolutions. Resolutions of the Board of Directors of each Loan Party (other than CM Partnership) certified by its Secretary or an Assistant Secretary which authorize its (and in the case of Borrower, CM Partnership's) execution, delivery, and performance of this Amendment and the other Loan Documents to which it (and in the case of Borrower, CM Partnership) is or is to be a party hereunder;
(2) Incumbency Certificate. A certificate of incumbency certified by the Secretary or an Assistant Secretary of each Loan Party (other than CM Partnership) certifying the names of its officers authorized to sign this Amendment and each of the other Loan Documents to which it (and in the case of Borrower, CM Partnership) is or is to be a party hereunder (including the certificates contemplated herein) together with specimen signatures of such officers;
(3) Partnership Agreement. A certificate of the Secretary or an Assistant Secretary of Borrower certifying to a true and correct copy of the Partnership Agreement of CM Partnership;
(4) Certificate of Limited Partnership. The Certificate of Limited Partnership of CM Partnership certified by the Secretary of the State of Texas, dated as of a current date;
(5) Governmental Certificates. Certificates of the appropriate government officials of the state of organization or incorporation of Borrower and each Guarantor as to the existence and good standing of the applicable Loan Party, each dated within ten (10) days prior to the date of this Amendment;
(6) CM Partnership Guaranty Agreement. Agent shall have received the CM Partnership Guaranty Agreement substantially in the form of the existing guarantees, duly executed by CM Partnership;
(7) CM Partnership Security Agreement. Agent shall have received the CM Partnership Security Agreement substantially in the form of the existing security agreements, duly executed by CM Partnership;
(8) Perfection of Security Interests. Agent shall have received:
(i) copies of properly executed Financing Statements (Form UCC-1, UCCIF or EFS-1) to be filed under the Food and Security Act of 1985 and/or the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of the Banks, desirable in order to perfect the security interests created by the Security Agreements;
(ii) evidence of the insurance required by the terms of the CM Partnership Security Agreement; and
(iii) evidence that all other actions, in the opinion of the Banks, to perfect and protect the security interest created by the CM Partnership Security Agreement has been or will be taken;
(9) Process Agent. A letter from CT Corporation pursuant to which they agree to act as CM Partnership's agent for purposes of service of process in accordance with the terms of the CM Partnership Security Agreement;
(10) Opinion of Counsel. Agent shall have received an opinion of counsel rendered by Wells, Moore, Simmons & Neeld, in form and substance acceptable to the Banks;
(11) Modification Endorsements. Agent shall have received modification endorsements to the existing title insurance policies or lender's
title insurance policies issued by title insurers satisfactory to Agent in form and substance satisfactory to Agent assuring Agent that the Mortgages (other than the Mortgages identified as items 3(a), (b), (c) and (f) on Schedule 1) after giving effect to the Transfers and this Amendment, are valid and enforceable first priority mortgage liens on the properties covered by such Mortgages, free and clear of all defects and encumbrances except those permitted by such Mortgages;
(12) Additional Information. Agent shall have received such additional documents, instruments and information as Agent or its legal counsel may request; and
(b) The representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date hereof as if made on the date hereof;
(c) No Event of Default shall have occurred and be continuing and no event or condition shall have occurred that with the giving of notice or lapse of time or both would be an Event of Default; and
(d) All corporate proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments, and other legal matters incident thereto shall be satisfactory to the Agent and its legal counsel.
ARTICLE VII
Ratifications, Representations and Warranties Subordination
Section 7.01 Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Documents and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Documents (including all amendments thereto which include, without limitation, that certain Amendment to Loan Documents dated May 1, 1992, that certain Second Amendment to Loan Documents dated November 5, 1993 and that certain Third Amendment to Loan Documents dated July 22, 1994, and that certain Fifth Amendment to Loan Documents dated April 14, 1995, all as filed in the real property records where the Mortgages are filed as described on Schedule I and that certain Fourth Amendment to Loan Documents dated December 31, 1994 [collectively, the "Previous Amendments"] and each of which are hereby incorporated herein by this reference as if set forth herein in their entirety) are ratified and confirmed and shall continue in full force and effect. The liens, security interests and assignments created and evidenced by the Loan Documents are valid and existing liens, security interests and assignments of the respective
priority recited in the Loan Documents and no party hereto has any claims, offsets, defenses or counterclaims to the terms and provisions of the Loan Documents or arising out of any acts or omissions of any party with respect thereto. Each of the parties hereto agree that the Loan Documents, as amended hereby and by the Previous Amendments, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.
Section 7.02 Representations and Warranties. To induce Agent and the Banks to modify the Loan Documents as herein set forth, the Borrower and each Guarantor represents and warrants to the Banks that:
(a) The representations and warranties of the Borrower and each Guarantor contained in the Loan Documents, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof.
(b) No Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, and the Borrower and each Guarantor is in full compliance with all covenants and agreements binding on them contained in the Loan Documents, as amended hereby.
(c) The execution, delivery, and performance by it of this Amendment have been duly authorized by all requisite action on its part and do not and will not violate or conflict with its articles of incorporation, bylaws, partnership agreement or certificate of limited partnership or any law, rule, or regulation or any order, writ, injunction, or decree of any court, governmental authority, or arbitrator, and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the creation or imposition of any lien (except as provided herein) upon any of its revenues or assets pursuant to the provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement by which it or any of its properties is bound.
(d) This Amendment constitutes its legal, valid, and binding obligations, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditor's rights.
(e) No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party is or will be necessary for its execution, delivery, or performance of this Amendment or the validity or enforceability thereof.
(f) No statement, information, report, representation, or warranty made by it in this Amendment or furnished to any Bank in connection with this Amendment or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to it which has a material adverse effect, or which might in the future have a material adverse effect, on its business, condition (financial or otherwise), operations, prospects, or properties that has not been disclosed in writing to the Banks.
Section 7.03 Subordination Borrower and each Guarantor hereby agrees that the Subordinated Indebtedness (as defined below) shall be subordinate and junior in right of payment to the prior payment in full of all Secured Obligations as herein provided. The Subordinated Indebtedness shall not be payable, and no payment of principal, interest or other amounts on account thereof, and no property or guarantee of any nature to secure or pay the Subordinated Indebtedness shall be made or given, directly or indirectly by or on behalf of any Debtor (hereafter defined) or received, accepted, retained or applied by any Intercompany Creditor (hereafter defined) unless and until the Secured Obligations shall have been paid in full in cash; except that prior to occurrence and continuance of any Event of Default, an Intercompany Creditor shall have the right to receive payments on the Subordinated Indebtedness made in the ordinary course of business. After the occurrence and continuance of an Event of Default, no payments may be made or given, directly or indirectly, by or on behalf of any Debtor or received, accepted, retained or applied by any Intercompany Creditor unless and until the Secured Obligations shall have been paid in full in cash. If any sums shall be paid to any Intercompany Creditor by any Debtor or any other person or entity on account of the Subordinated Indebtedness when such payment is not permitted hereunder, such sums shall be held in trust by the Intercompany Creditor for the benefit of Banks and shall forthwith be paid to Agent without affecting the liability of such Intercompany Creditor with respect to the Secured Obligations and may be applied by the Banks against the Secured Obligations in such order and manner as the Banks may determine in their sole discretion. Upon the request of Agent, each Intercompany Creditor shall execute, deliver, and endorse to Agent such documentation as Agent may request to perfect, preserve, and enforce the rights of the Banks hereunder. The term "Subordinated Indebtedness" means all indebtedness, liabilities, and obligations of Borrower or any Guarantor (the "Obligated Parties") to another Obligated Party, whether such indebtedness, liabilities, and obligations now exist or are hereafter incurred or arise, or are direct, indirect, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such indebtedness, liabilities, or obligations are evidenced by a note, contract, open account, or otherwise, and irrespective of the person or persons in whose favor such indebtedness, obligations, or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired. The term "Debtor" means an Obligated Party in its capacity as owing sums to any other Obligated Party and the term "Intercompany Creditor" means an Obligated Party in its capacity of being owed sums by any other Obligated Party. Each Intercompany Creditor agrees that any and all liens (including any judgment liens), upon any Debtor's assets securing payment of any Subordinated Indebtedness shall be and remain inferior and subordinate to any and all liens upon any Debtor's assets securing payment of the Secured Obligations or any part thereof, regardless of whether such liens in favor of such Intercompany Creditor or Agent presently exist or are hereafter created or attached. Without the prior written consent of
the Banks, no Intercompany Creditor shall (i) file suit against any Debtor or exercise or enforce any other creditor's right it may have against any Debtor, or (ii) foreclose, repossess, sequester, or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any obligations of any Debtor to any Intercompany Creditor or any liens held by any Intercompany Creditor on assets of any Debtor. In the event of any receivership, bankruptcy, reorganization, rearrangement, debtor's relief, or other insolvency proceeding involving any Debtor as debtor, the Agent shall have the right to prove and vote any claim under the Subordinated Indebtedness and to receive directly from the receiver, trustee or other court custodian all dividends, distributions, and payments made in respect of the Subordinated Indebtedness until the Secured Obligations has been paid in full in cash. The Banks may apply any such dividends, distributions, and payments against the Secured Obligations in such order and manner as the Banks may determine in their sole discretion.
ARTICLE VIII
Miscellaneous
Section 8.01 Survival of Representations and Warranties. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by Agent or any Bank or any closing shall affect the representations and warranties or the right of Agent and each Bank to rely upon them.
Section 8.02 Reference to Loan Documents. Each of the Loan Documents are hereby amended so that any reference in such Loan Documents to the other Loan Documents shall mean a reference to such other Loan Documents as amended hereby.
Section 8.03 Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 8.04 Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the state of New York except to the extent that the provisions of the Loan Documents are governed by the laws of another state, the amendment to those provisions pursuant hereto shall be governed by the laws of such other state.
Section 8.05 Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, except neither the Borrower nor any Guarantor may assign or transfer any of its rights or obligations hereunder without the prior written consent of the Banks.
Section 8.06 Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 8.07 Effect of Waiver. No consent or waiver, express or implied, by Rabobank, the Agent, SunTrust or Harris to or for any breach of or deviation from any covenant, condition or duty by the Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 8.08 Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 8.09 Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
Executed as of the date first written above.
Attest: CAL-MAINE FOODS, INC.
CAL-MAINE EGG PRODUCTS, INC.
CAL-MAINE FARMS, INC.
By:
- ------------------------------------------- -----------------------------------------------
Charles F. Collins B.J. Raines
Assistant Secretary Vice President of each Company
(Seal of Cal-Maine Foods)
(Seal of Cal-Maine Farms)
(Seal of Cal-Maine Egg Products, Inc.)
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Signed and acknowledged in the CAL-MAINE PARTNERSHIP, LTD.
presence of:
By: Cal-Maine Foods, Inc., its general partner
-----------------------------------------------------
Witness By:
-----------------------------------------
B. J. Raines, Vice President
-----------------------------------------------------
Witness
Signed and acknowledged in the SUNTRUST BANK, ATLANTA,
presence of: formerly known as Trust Company Bank
By:
--------------------------------------------
Name:
----------------------------------------------------- ---------------------------------------
Witness Title:
--------------------------------------
By:
----------------------------------------------------- --------------------------------------------
Witness Name:
---------------------------------------
Title:
--------------------------------------
Signed and acknowledged in the COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
presence of: B.A.,"RABOBANK NEDERLAND", NEW YORK BRANCH,
individually and as Agent
By:
----------------------------------------------------- --------------------------------------------
Witness Name:
---------------------------------------
Title:
--------------------------------------
By:
--------------------------------------------
Name:
----------------------------------------------------- ---------------------------------------
Witness Title:
--------------------------------------
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Signed and acknowledged in the HARRIS TRUST AND SAVINGS BANK
presence of:
-----------------------------------------------------
Witness By:
--------------------------------------------
Carl A. Blackham
Vice President
-----------------------------------------------------
Witness
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STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, B.J. Raines, well known by me to be Vice President of CAL-MAINE FOODS, INC., a Delaware corporation (individually and in its capacity as general partner of Cal-Maine Partnership, Ltd.) CAL-MAINE EGG PRODUCTS, INC., a Delaware corporation and CAL-MAINE FARMS, INC., a Delaware corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Sixth Amendment to Loan Documents for and on behalf of said corporations and partnership voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporations so to do.
Given under my hand and official seal on this ________ day of ___________, 1995.
Notary Public
My Commission Expires:
STATE OF MISSISSIPPI Section
Section
COUNTY OF HINDS Section
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I, ________________________________________________, a Notary Public in and for said County and State, certify that Charles F. Collins personally appeared before me this day and acknowledged that he is an Assistant Secretary of CAL-MAINE FOODS, INC., CAL-MAINE EGG PRODUCTS, INC. AND CAL-MAINE FARMS, INC., each a Delaware corporation, and that by authority duly given and as the act of each corporation, the foregoing instrument was signed in each such corporations' name by its Vice President, sealed with its corporate seal and attested by himself as Assistant Secretary of each such corporation.
WITNESS my hand and notarial seal, this the _______________ day of __________, 1995.
(S E A L) -----------------------------------
Notary Public - State of
My Commission Expires: -----------
-----------------------------------
Printed Name of Notary Public
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid __________________________________,well known by me to be __________________________________ of CAL-MAINE PARTNERSHIP, LTD., a Texas limited partnership, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Sixth Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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THIS day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid _________________________________, well known by me to be __________________________________ of CAL-MAINE PARTNERSHIP, LTD., a Texas limited partnership, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Sixth Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________ of SUNTRUST BANK, ATLANTA, formerly known as Trust Company Bank, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Sixth Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid _______________________, well known by me to be _______________________________ of SUNTRUST BANK, ATLANTA, formerly known as Trust Company Bank, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Sixth Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, _____________________, well known by me to be a Vice President of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Netherlands, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Sixth Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
|
This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid well known by me to be of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Netherlands, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Sixth Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1995.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, Carl A. Blackham, well known by me to be a Vice President of HARRIS TRUST AND SAVINGS BANK, a savings bank organized under the laws of Illinois, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Sixth Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1995.
My Commission Expires:
SEVENTH AMENDMENT TO LOAN DOCUMENTS
(including Modifications to Mortgages and Deeds of Trust)
THIS SEVENTH AMENDMENT TO LOAN DOCUMENTS (this "Amendment"), dated as of April 30, 1996, is among CAL-MAINE FOODS, INC. (the "Borrower"), CAL-MAINE EGG PRODUCTS, INC. ("Egg Products"), CAL-MAINE FARMS, INC. ("Cal-Maine Farms"), CAL-MAINE PARTNERSHIP, LTD. ("CM Partnership" and collectively with Cal-Maine Farms and Egg Products herein referred to as the "Guarantors"), SUNTRUST BANK, ATLANTA, formerly known as Trust Company Bank ("SunTrust"), COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), HARRIS TRUST AND SAVINGS BANK ("Harris" and collectively with Rabobank and SunTrust, herein the "Banks") and Rabobank, as agent for itself and the Banks (in such capacity as agent, the "Agent").
RECITALS:
A. Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990 (such Amended and Restated Revolving Credit Agreement, as the same has been amended, and as the same may be further amended or otherwise modified, herein referred to as the "Revolving Credit Agreement"). Pursuant to the Second Amendment to Amended and Restated Revolving Credit Agreement dated October 1, 1991, SunTrust was substituted as a lender under the Revolving Credit Agreement in the place of Barclays and Barclays is no longer a party to the Revolving Credit Agreement.
B. The Borrower and Rabobank have entered into that certain Amended and Restated Tern Loan Agreement dated as of May 29, 1990 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Term Loan Agreement").
C. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of December 1, 1987 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Egg Facility Reimbursement Agreement").
D. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of May 1, 1992 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Dairy Facility Reimbursement Agreement").
E. The Borrower has executed and delivered that certain Term Loan Note dated November 5, 1993 payable to the order of Rabobank in the original principal amount of
$1,000,000 (as the same may be amended or otherwise modified, herein the "New Term Note" and the New Term Note, collectively with the Dairy Facility Reimbursement Agreement, the Revolving Credit Agreement, the Term Loan Agreement and the Egg Facility Reimbursement Agreement, herein the "Credit Agreements").
F. Borrower and Harris have entered into that certain Facility Agreement dated April 14, 1995 (as the same may be amended or otherwise modified, herein the "Harris Credit Agreement").
G. To secure certain of the obligations and indebtedness of the
Borrower, Cal-Maine Farms and Egg Products to each of Rabobank, SunTrust,
Harris and the Agent under the Credit Agreements, the Harris Credit Agreement
and the other documents executed in connection therewith (the "Secured
Obligations"), the Borrower, Cal-Maine Farms, Egg Products and CM Partnership
executed certain guaranties, security agreements, deeds of trust, assignment of
leasehold interests and mortgages (as more fully described and identified in
the Credit Agreements and the Harris Credit Agreement, and as the same have
been or may hereafter be amended or otherwise modified, all such guaranties,
security agreements, deeds of trust, assignment of leasehold interests and
mortgages are herein referred to as the "Collateral Documents"; all the
Collateral Documents excluding the deed of trust described as item (4) on
Schedule 1 hereto and the assignments of leasehold interest described as items
(5) and (6) on Schedule 1 hereto, herein the "Shared Collateral Documents"; and
the properties in which liens are granted pursuant to the Shared Collateral
Documents herein the "Shared Collateral"). The Collateral Documents include,
without limitation, the deeds of trust, mortgages and assignments of leasehold
interest described on Schedule 1 hereto which are filed in the real property
records of the jurisdictions listed on Schedule 1 as indicated therein (the
"Mortgages"). The Mortgage filed in Reno County Kansas encumbers the real
property described on Schedule 2 hereto.
H. To facilitate the collateral arrangements contemplated by the Collateral Documents, Rabobank, SunTrust, Agent and Harris have entered into that certain Amended and Restated Intercreditor Agreement dated April 14, 1995 (as such agreement may hereafter be amended or otherwise modified, herein the "Intercreditor Agreement").
I. The real properties located in Smith County, Texas and Morgan County, Alabama which are covered by the Mortgages filed in those jurisdictions (the "Released Properties") have been sold to a third party and the liens created by the Mortgages on the Released Property have been released.
J. Harris has agreed to become a "Bank" under the Revolving Credit Agreement on a committed basis and as a result, Harris, Borrower and Guarantors have requested that the Revolving Credit Agreement be amended as herein set forth. Borrower and Guarantors have also requested that the termination date set out in the Revolving Credit Agreement be extended.
K. The Banks have agreed to the requests set out in recital J and have otherwise agreed to modify the Loan Documents, all on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows effective as of the date hereof:
ARTICLE I
Definitions
Section 1.01 Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Revolving Credit Agreement; provided that the term "Loan Documents" as used herein shall have the meaning as set forth in the Intercreditor Agreement.
ARTICLE II
Amendments to Revolving Credit Agreement
Section 2.01. Amendment to Section 1.01.Clause (a) (ii) in Section 1.01 of the Revolving Credit Agreement is hereby amended in its entirety to read as follows: "(ii) the Borrowing Base;".
Section 2.02. Amendment to Section 1.02. The second sentence of
Section 1.02 of the Revolving Credit Agreement is amended in its entirety to
read as follows:
Borrower may request an Advance from any Bank or may request Advances from all or any number of Banks subject to the terms of Subsection 1.01(b).
Section 2.03. Amendment to Section 1.05. Section 1.05 of the Revolving Credit Agreement is amended as follows: (a) the term "Barclays" as used in clause (a) of Section 1.05 means "TCB or Harris" and (b) the fifth sentence of clause (b) of Section 1.05 is amended in its entirety to read as follows:
Each Interest Period for each Advance made by Rabobank shall end on the corresponding day in the first, second or third week thereafter or the numerically corresponding day in the first, third, sixth, ninth or twelfth calendar month thereafter (as Borrower may select) or on such other day as Borrower may request if Rabobank can (in its sole discretion) make such an Interest Period available to the Borrower, each Interest Period for each Advance made by TCB shall end on the corresponding day in the first, second or third week thereafter or the numerically corresponding day in the first,
third or sixth calendar month thereafter (as Borrower may select) or on such other day as Borrower may request if TCB can (in its sole discretion) make such an Interest Period available to the Borrower, each Interest Period for each Advance made by Harris shall end on the day not less than seven (7) and not more than two hundred forty (240) days thereafter (as Borrower may select) or on such other day as Borrower may request if Harris can (in it sole discretion) make such Interest Period available to Borrower, except that each Interest Period measured in months which commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month, no Interest Period for any Advance made by TCB shall extend beyond the date such Interest Period commenced and if any Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to be the next succeeding Business Day except as specified above.
Section 2.04 Amendment to Section 1.09. The term "TCB" as used in
Section 1.09 of the Revolving Credit Agreement is amended to mean "the other
Banks."
Section 2.05 Amendment to Section 1.10. The terms "TCB" and "TCB's" as used in Section 1.10 of the Revolving Credit Agreement are amended as follows: (a) as used in the fourth sentence thereof means "the other Banks"; (b) as used the first two times in the fifth sentence thereof means "each Bank"; and (c) used the third time in the fifth sentence thereof means "their."
Section 2.06 Amendment to Section 1.11 Section 1.11 of the Revolving Credit Agreement is amended as follows: (a) the term "TCB" is amended to mean "the other Banks"; and (b) the phrase "either or both" in the third sentence thereof is amended to mean "the."
Section 2.07 Amendment to Section 1.12 . The phrases "Rabobank and TCB" and "Rabobank, TCB" as used in Section 1.12 of the Revolving Credit Agreement are amended to mean "the Banks".
Section 2.08 Amendment to Section 2.02. Clause (ii) of Section
2.02 (a) of the Revolving Credit Agreement is amended as follows: (a) the
term "TCB" as used therein means "each other Bank"; and (b) the term "TCB's" as
used therein means "such Bank's";
Section 2.09 Amendment to Section 2.03. Clause (a) of Section 2.03 of the Revolving Credit Agreement is amended to add a clause (iii) thereto to read in its entirety as follows:
"and (iii) with respect to amounts payable to Harris, at the office of Harris at 111 West Monroe Street, Chicago, Illinois 60603."
Section 2.10 Amendment to Sections 2.02(a), 3.02(a)(iii) and
3.02(a)(iv). The phrase "Adjusted Borrowing Base," as used in each place it
appears in Sections 2.02(a), 3.02(a)(iii) and 3.02(a)(iv) of the Revolving
Credit Agreement is amended to mean the "Borrowing Base."
Section 2.11 Amendment to Section 6.01. The term "either" in clause (a) of Section 6.01 of the Revolving Credit Agreement is amended to mean "any."
Section 2.12 Amendment to Section 6.02. The phrase "Barclays shall have no" as used in Section 6.02 of the Revolving Credit Agreement is amended to mean "no Bank, other than Rabobank, shall have any".
Section 2.13 Amendment to Section 7.01. Section 7.01 of the Revolving Credit Agreement is amended as follows:
(a) to add the following definition:
"Harris" means Harris Trust and Savings Bank.
(b) to change the following definitions in their entirety to read as follows:
"Bank" means (i) for the purposes of the recitals hereto, Barclays Bank PLC or Rabobank, and (ii) for all other purposes herein, TCB, Rabobank or Harris. Any reference in this Agreement to the phrase "either Bank" shall mean a reference to "any Bank".
"Banks" means (i) for the purposes of the recitals hereto, Barclays Bank PLC and Rabobank, and (ii) for all other purposes herein, TCB, Rabobank and Harris.
"Business Day" means any day other than a Saturday, Sunday or a public or bank holiday or the equivalent for banks generally under the laws of the State of New York, the State of Georgia or the State of Illinois and, with respect to Advances by Harris, which is also a day on which it deals in U.S. Dollar deposits in London England and Nassau, Bahamas.
"Cost of Funds Rate" means (a) with respect to TCB and for each Advance to which it applies, a rate determined by TCB in its sole and absolute discretion with reference to its funding sources, as notified to the Borrower prior to the date such Advance is made and (b) with respect to Harris and for each Advance to which it applies and the related Interest Period, the rate per annum quoted to the Borrower by Harris for such Interest Period. The Borrower acknowledges and agrees that the interest rate quoted by Harris for any Advance and the related Interest Period may not be
the best or lowest rate offered to other customers of Harris and may not be the same rate offered to other customers of Harris for loans of similar amounts and maturities, but is the rate at which Harris in its sole and exclusive discretion is willing to make such Advances to the Borrower for the specified amount and maturity.
"Default Rate" means a daily fluctuation interest
rate which is, with respect to amount owed to Rabobank, equal
to the lesser of (i) 2-1/2% per annum above the 30 day Term
Federal Funds Rate, or (ii) the Maximum Permissible Rate, and,
with respect to amounts owed to TCB, equal to the lesser of
(i) 2-1/2% per annum above the 30 day Cost of Funds Rate or
(ii) the Maximum Permissible Rate and, with respect to amounts
owed to Harris, equal to the lesser of (i) 2-1/2% per annum
above the Cost of Funds Rate then in effect until the end of
the applicable Interest Period and thereafter or if no cost of
Funds Rate is then in effect, at 2-1/2% per annum above
Harris' prime commercial rate or (ii) the Maximum Permissible
Rate. Each change in such daily fluctuation interest rate
shall take effect simultaneously with the corresponding change
in the Term Federal Funds Rate, the Cost of Funds Rate or such
prime commercial rate, as applicable, as determined by the
applicable Bank in its sole discretion at 12:00 noon (New York
City time).
"Revolving Credit Commitment" means the obligation of each Bank to make the Advances to be made pursuant to Section 1.01 in a principal amount not exceeding Twenty Million Dollars ($20,000,000) with respect to Rabobank, a principal amount not exceeding Ten Million Dollars ($10,000,000) with respect to TCB and a principal amount not exceeding Five Million Dollars ($5,000,000) with respect to Harris.
"Termination Date" means December 31, 1997 or the earlier date of termination in whole of the Revolving Credit Commitment pursuant to Sections 1.04 or 6.02.
(c) the definition of the term "Pro Rata Part" in Section 7.01 of the Revolving Credit Agreement is hereby amended so that the term "Adjusted Borrowing Base," as used in each place it appears in such definition, means the "Borrowing Base."
Section 2.14. Amendment to Section 8.02. The first sentence of
Section 8.02 of the Revolving Credit Agreement is amended in its entirety to
read as follows:
All notices and other communications provided for hereunder shall be
in writing (including telegraphic and telecopy communications) and
mailed or telegraphed or delivered, if to the Borrower, at its address
at 3320 Woodrow Wilson Drive, Jackson, Mississippi 39209; Attention:
Bobby J. Raines, Vice President and if to Rabobank, at its address at
245 Park Avenue, New York, New York 10167; Attention:
Corporate Services, with a copy to 1201 West Peachtree Street, Atlanta, Georgia 30309-3400; Attention: Richard J. Beard; and if to TCB at its address at 25 Park Place, Atlanta, Georgia 30303; Attention: Greg Cannon and if to Harris, at its address at 111 West Monroe, Chicago, Illinois 60603; Attention: Agribusiness Division, or, as to each party, at such other address as shall be designated by such party in a written notice to the other party.
Section 2.15. Amendment to Exhibits. Exhibit F to the Revolving Credit Agreement is amended in its entirety to read as set forth on Exhibit A hereto.
ARTICLE III
Modification to Credit Agreements
Section 3.01 Amendment Reporting Requirements. The covenants in each Credit Agreement requiring Borrower to furnish financial statements thereunder are each hereby amended to require that, accompanying each financial statement delivered thereunder as of the end of any Fiscal Year or as of the end of any month that corresponds with the end of any quarter in any Fiscal Year, Borrower shall furnish to each Bank a properly completed and executed compliance certificate in substantially the form of Exhibit "B" hereto.
Section 3.02. Amendment to Term Loan Agreement. The terms "Properties" and "Encumbered Properties", as defined in the Term Loan Agreement, are hereby amended to exclude the Released Properties therefrom.
ARTICLE IV
Amendments to Collateral Documents
(including the Mortgages)
Section 4.01 Amendment to Share Collateral Document. Each Shared Collateral Document is hereby amended to provide that the obligations secured or guaranteed thereby include without limitation, the obligations, indebtedness and liabilities of the Borrower and Guarantors arising under or in connection with this Amendment and the Note executed by Borrower and payable to the order of Harris pursuant to this Amendment in the form of Exhibit "C" hereto (the "Harris Note"), whether for principal, interest, fees (including attorneys' fees), premium, commissions, expenses or otherwise (collectively, the "New Obligations") and to exclude therefrom the obligations, indebtedness and liabilities of the Borrower and Guarantors arising under or in connection with the Harris Credit Agreement and the Loan Documents relating thereto. In furtherance of the foregoing, the parties hereto agree to and acknowledge the following:
(a) The term "Credit Agreements" as defined in each Shared Collateral Document excludes the Harris Credit Agreement; the term "Loan Documents," as defined in each Collateral Document excludes the Harris Credit Agreement and the promissory note executed pursuant to the Harris Credit Agreement but includes, without limitation, this Amendment and the Harris Note; the term "Advances" as defined in each Shared Collateral Document includes, without limitation, advances made by Harris under the terms of the Revolving Credit Agreement (as amended hereby) but excludes advances made under the Harris Credit Agreement; the term "Notes" as defined in each Shared Collateral Document includes, without limitation, the Harris Note but excludes the promissory note executed pursuant to the Harris Credit Agreement; and the term "Collateral" as defined in any Collateral Document, excludes the Released Properties.
(b) The term "Obligations" as defined in each Shared Collateral Document includes, without limitation, the "New Obligations"; provided that the term "Obligations" as defined in each Shared Collateral Document shall not (notwithstanding anything to the contrary) include any obligations owed to Harris under the Harris Credit Agreement or the Loan Documents executed pursuant thereto (the "Old Harris Obligations").
(c) The Collateral Pledge Agreement dated October 17, 1984, executed by Borrower, Cal-Maine Farms and Egg Products, as the same has been amended, shall secure, in addition to the other obligations secured thereby, the New Obligations but shall not secure the Old Harris Obligations and upon any Event of Default, the Agent shall have the right, but no the duty, to exercise all remedies provided for in the Collateral Pledge Agreement on behalf of the Banks.
(d) An "Event of Default", as defined in the Harris Credit Agreement, shall not create an "Event of Default" as defined and used in each Shared Collateral Document.
ARTICLE V
Amendment to Intercreditor Agreement
Section 5.01 Amendment to Intercreditor Agreement. The Intercreditor Agreement is amended as follows:
(a) the term "Credit Agreement," as defined in the Intercreditor Agreement, is amended to include the Revolving Credit Agreement as amended hereby and to exclude the Harris Credit Agreement;
(b) the term "Revolving Credit Agreement," as defined in the Intercreditor Agreement, is amended to include the Revolving Credit Agreement as amended hereby and to exclude the Harris Credit Agreement;
(c) the term "Revolving Obligations," as defined in the Intercreditor Agreement, is amended to exclude any reference to the Harris Credit Agreement, to include the New Obligations and to delete the proviso therefrom in its entirety which begins "; provided however, if as of . . ." and ends "after January 1, 1996";
(d) the term "Obligations," as defined in the Intercreditor Agreement, is amended to include without limitation, the New Obligations;
(e) the term "Loan Documents," as defined in the Intercreditor Agreement, is amended to include without limitation, this Amendment and the Harris Note but to exclude the Harris Credit Agreement and the documents executed in connection therewith;
(f) the phrase "Harris Credit Agreement" as used in clause (c) of Section 4 is amended to mean "Revolving Credit Agreement";
(g) the terms "Collateral" and "Term Collateral", as defined in the Intercreditor Agreement, are each amended to exclude the Released Properties;
(h) the first sentence of section 5 is amended in its entirety to read as follows:
Subject to Section 3(c) hereto, no amendment or waiver of any provision of the Revolving Credit Agreement or any other Loan Documents executed in connection with the Revolving Credit Agreement (excluding this Agreement, the Term Loan Agreement, the Reimbursement Agreements, the Term Collateral Documents, the Amended Guaranty Agreements, the Revolving Collateral Documents and the Separate Collateral Documents) nor any consent to the departure therefrom shall in any event be effective unless the same shall be agreed or consented to by Rabobank, TCB and Harris, it being agreed that no other Bank shall have any right to agree or consent thereto.
(i) the third sentence of section 5 is deleted therefrom; and
(j) the phrases "or with respect to a sale by Harris, the Harris Credit Agreement" and "(or with respect to a sale by Harris, under the Harris Credit Agreement)" are each hereby deleted from section 12.
ARTICLE VI
Conditions Precedent
Section 6.01 Conditions. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:
(a) Agent shall have received all of the following, each dated (unless otherwise indicated) the date of this Amendment, in form and substance satisfactory to Agent:
(1) Resolutions. Resolutions of the Board of Directors of each Loan Party (other than CM Partnership) certified by its Secretary or an Assistant Secretary which authorize its (and in the case of Borrower, CM Partnership's) execution, delivery, and performance of this Amendment and the other Loan Documents to which it (and in the case of Borrower, CM Partnership) is or is to be a party hereunder;
(2) Incumbency Certificate. A certificate of incumbency certified by the Secretary or an Assistant Secretary of each Loan Party (other than CM Partnership) certifying the names of its officers authorized to sign this Amendment and each of the other Loan Documents to which it (and in the case of Borrower, CM Partnership) is or is to be a party hereunder (including the certificates contemplated herein);
(3) Governmental Certificates. Certificates of the appropriate government officials of the state of organization or incorporation of Borrower and each Guarantor as to the existence and good standing of the applicable Loan Party, each dated a current date;
(4) Harris Note. The Harris Note, duly executed by Borrower;
(5) Opinion of Counsel. An opinion of counsel rendered by Wells, Moore, Simmons & Neeld, in form and substance acceptable to the Banks;
(6) Modification Endorsements. Modification endorsements to the existing title insurance policies or lender's title insurance policies issued by title insurers satisfactory to Agent in form and substance satisfactory to Agent assuring Agent that the Mortgages (other than the Mortgages identified as items 3(a), (b), (c), (f) and(i) on Schedule 1) after giving effect to the Transfers (as defined in that certain Sixth Amendment to Loan Documents among the parties hereto dated June 1, 1995, the "Sixth Amendment"), the Sixth Amendment and this Amendment are valid and enforceable first priority mortgage liens on the properties covered by such Mortgages, free and clear of all defects and encumbrances except those permitted by such Mortgages;
(7) Term Loan Borrowing Base. A properly completed and executed Borrowing Base Certificate (as defined in the Term Loan Agreement) delivered under the Term Loan Agreement after giving effect to the sale of the Released Properties;
(8) Additional Information. Agent shall have received such additional documents, instruments and information as Agent or its legal counsel may request; and
(b) The representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date hereof as if made on the date hereof;
(c) No Event of Default shall have occurred and be continuing and no event or conditions shall have occurred that with the giving of notice or lapse of time or both would be an Event of Default; and
(d) All corporate proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments, and other legal matters incident thereto shall be satisfactory to the Agent and its legal counsel.
ARTICLE VII
Ratifications, Representations and Warranties Subordination
Section 7.01 Ratifications; Termination of Harris Credit Agreement. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Documents and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Documents (including all amendments thereto which include, without limitation, that certain Amendment to Loan Documents dated May 1, 1992, that certain Second Amendment to Loan Documents dated November 5, 1993 and that certain Third Amendment to Loan Documents dated July 22, 1994, and that certain Fifth Amendment to Loan Documents dated April 14, 1995, all as filed in the real property records where the Mortgages are filed as described on Schedule I and that certain Fourth Amendment to Loan Documents dated December 31, 1994 and the Sixth Amendment [collectively, the "Previous Amendments"] and each of which are hereby incorporated herein by this reference as if set forth herein in their entirety) are ratified and confirmed and shall continue in full force and effect. The liens, security interests and assignments created and evidenced by the Loan Documents are valid and existing liens, security interests and assignments of the respective priority recited in the Loan Documents and no party hereto has any claims,
offsets, defenses or counterclaims to the terms and provisions of the Loan Documents or arising out of any acts or omissions of any party with respect thereto. Each of the parties hereto agree that the Loan Documents, as amended hereby and by the Previous Amendments, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms. Harris and Borrower agree that as a result of the amendments contemplated hereby, the Harris Credit Agreement shall no longer be effective and no amounts are due and owing or otherwise outstanding thereunder.
Section 7.02 Addition of Harris as a Bank under the Revolving Credit Agreement. In order to facilitate the addition of Harris as a "Bank" under the Revolving Credit Agreement:
(a) the parties hereto agree that the commitment fee calculated under Section 1.03 of the Revolving Credit Agreement shall not begin to accrue on Harris's Revolving Credit Commitment until April 30, 1996 (the "Execution Date");
(b) on the Execution Date and notwithstanding anything in the Revolving Credit Agreement to the contrary, the Borrower shall request Advances from Harris and repay the Advances of the other Banks in such amounts as shall be necessary to cause the Borrower to be in compliance with clause (c) of Section 1.01 of the Revolving Credit Agreement; and
(c) on the Execution Date, Rabobank shall be deemed, without further action by any party hereto, to have (i) repurchased TCB's participation in any Letter of Credit issued under the Revolving Credit Agreement and outstanding on the Execution Date and (ii) to have sold to TCB and Harris, and each such Bank shall be deemed, without further action by any party hereto, to have purchased from Rabobank, a participation in each such Letter of Credit to the extent of each such Bank's Pro Rata Part (as defined in the Revolving Credit Agreement as amended hereby and as determined based on the Revolving Credit Commitments) of such Letter of Credit and the Related Credit Liabilities.
Section 7.02 Representations and Warranties. To induce Agent and the Banks to modify the Loan Documents as herein set forth, the Borrower and each Guarantor represents and warrants to the Agent and the Banks that:
(a) The representations and warranties of the Borrower and each Guarantor contained in the Loan Documents, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof.
(b) No Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, and the Borrower and each Guarantor is in full compliance
with all covenants and agreements binding on them contained in the Loan Documents, as amended hereby.
(c) The execution, delivery, and performance by it of this Amendment and the Harris Note have been duly authorized by all requisite action on its part and do not and will not violate or conflict with its articles of incorporation, bylaws, partnership agreement or certificate of limited partnership or any law, rule, or regulation or any order, writ, injunction, or decree of any court, governmental authority, or arbitrator, and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the creation or imposition of any lien (except as provided herein) upon any of its revenues or assets pursuant to the provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement by which it or any of its properties is bound.
(d) This Amendment and the Harris Note constitute its legal, valid, and binding obligations, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditor's rights.
(e) No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party is or will be necessary for its execution, delivery, or performance of this Amendment or the Harris Note or the validity or enforceability thereof.
(f) No statement, information, report, representation, or warranty made by it in this Amendment or furnished to any Bank in connection with this Amendment or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to it which has a material adverse effect, or which might in the future have a material adverse effect, on its business, condition (financial or otherwise), operations, prospects, or properties that has not been disclosed in writing to the Banks.
(g) The bylaws, articles or certificate of incorporation, partnership agreement and certificates of limited partnership of each Loan Party, as applicable, have not been revoked, amended or otherwise modified since June of 1995 and are all in full force and effect.
ARTICLE VIII
Miscellaneous
Section 8.01 Survival of Representations and Warranties. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by Agent or any Bank or any closing shall affect the representations and warranties or the right of Agent and each Bank to rely upon them.
Section 8.02 Reference to Loan Documents. Each of the Loan Documents are hereby amended so that any reference in such Loan Documents to the other Loan Documents shall mean a reference to such other Loan Documents as amended hereby.
Section 8.03 Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 8.04 Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the state of New York except to the extent that the provisions of the Loan Documents are governed by the laws of another state, the amendment to those provisions pursuant hereto shall be governed by the laws of such other state.
Section 8.05 Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, except neither the Borrower nor any Guarantor may assign or transfer any of its rights or obligations hereunder without the prior written consent of the Banks.
Section 8.06 Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 8.07 Effect of Waiver. No consent or waiver, express or implied, by Rabobank, the Agent, SunTrust or Harris to or for any breach of or deviation from any covenant, condition or duty by the Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 8.08 Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 8.09 Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of
prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
Executed as of the date first written above.
Attest: CAL-MAINE FOODS, INC.
CAL-MAINE EGG PRODUCTS, INC.
CAL-MAINE FARMS, INC.
By:
- ------------------------------------------- -----------------------------------------------
Charles F. Collins B.J. Raines
Assistant Secretary Vice President of each Company
(Seal of Cal-Maine Foods)
(Seal of Cal-Maine Farms)
(Seal of Cal-Maine Egg Products, Inc.)
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Signed and acknowledged in the CAL-MAINE PARTNERSHIP, LTD.
presence of:
- ----------------------------------- By: Cal-Maine Foods, Inc.,
Witness its general partner
By:
- ----------------------------------- ----------------------------------
Witness B.J. Raines, Vice President
SUNTRUST BANK, ATLANTA,
Signed and acknowledged in the formerly known as Trust Company Bank
presence of:
By:
------------------------------------------
- ----------------------------------- Name:
Witness ----------------------------
Title:
-----------------------------------
- -----------------------------------
Witness By:
------------------------------------------
Name:
Signed and acknowledged in the -----------------------------------
presence of: Title:
----------------------------------
COOPERATIEVE CENTRALE
- ----------------------------------- RAIFFEISEN-BOERENLEENBANK B.A.
Witness "RABOBANK NEDERLAND", NEW
YORK BRANCH, individually and as Agent
- ----------------------------------- By:
Witness ------------------------------------------
Name:
----------------------------
Signed and acknowledged in the Title:
presence of: -----------------------------------
By:
- ----------------------------------- ------------------------------------------
Witness Name:
-----------------------------------
Title:
----------------------------------
HARRIS TRUST AND SAVINGS BANK
- -----------------------------------
Witness By:
------------------------------------------
Carl A. Blackham
Vice President
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STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, B.J. Raines, well known by me to be Vice President of CAL-MAINE FOODS, INC., a Delaware corporation (individually and in its capacity as general partner of Cal-Maine Partnership, Ltd.) CAL-MAINE EGG PRODUCTS, INC., a Delaware corporation and CAL-MAINE FARMS, INC., a Delaware corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Seventh Amendment to Loan Documents for and on behalf of said corporations and partnership voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporations so to do.
Given under my hand and official seal on this ________ day of ___________, 1996.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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I, ________________________________________________, a Notary Public in and for said County and State, certify that Charles F. Collins personally appeared before me this day and acknowledged that he is an Assistant Secretary of CAL-MAINE FOODS, INC., CAL-MAINE EGG PRODUCTS, INC. AND CAL-MAINE FARMS, INC., each a Delaware corporation, and that by authority duly given and as the act of each corporation, the foregoing instrument was signed in each such corporations' name by its Vice President, sealed with its corporate seal and attested by himself as Assistant Secretary of each such corporation.
WITNESS my hand and notarial seal, this the _______________ day of __________, 1996.
(S E A L) -----------------------------------
Notary Public - State of
My Commission Expires: -----------
-----------------------------------
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- -----------------------------------
Printed Name of Notary Public
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid ________________________, well known by me to be ________________________ of SUNTRUST BANK, ATLANTA, formerly known as Trust Company Bank, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Seventh Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1996.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid _______________________, well known by me to be _______________________________ of SUNTRUST BANK, ATLANTA, formerly known as Trust Company Bank, a Georgia state banking corporation, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Seventh Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1996.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, _____________________, well known by me to be a Vice President of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Netherlands, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Seventh Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1996.
Notary Public
My Commission Expires:
STATE OF __________________ Section
Section
COUNTY OF _________________ Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid _______________________well known by me to be__________________________________ of COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, a banking cooperative organized under the laws of the Netherlands, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Seventh Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1996.
Notary Public
My Commission Expires:
STATE OF ILLINOIS Section
Section
COUNTY OF COOK Section
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This day, personally appeared before me, the undersigned authority of the jurisdiction aforesaid, Carl A. Blackham, well known by me to be a Vice President of HARRIS TRUST AND SAVINGS BANK, a savings bank organized under the laws of Illinois, who acknowledged to me, being informed of the contents hereof, that he signed, executed and delivered the above Seventh Amendment to Loan Documents for and on behalf of said corporation voluntarily and for the consideration, uses and purposes therein mentioned after having been duly authorized by said corporation so to do.
Given under my hand and official seal on this ______ day of _________________, 1996.
My Commission Expires:
EIGHTH AMENDMENT TO LOAN DOCUMENTS
THIS EIGHTH AMENDMENT TO LOAN DOCUMENTS (this "Amendment"), dated as of June 1, 1996, is among CAL-MAINE FOODS, INC. (the "Borrower"), CAL-MAINE EGG PRODUCTS, INC. ("Egg Products"), CAL-MAINE FARMS, INC. ("Cal-Maine Farms"), CAL-MAINE PARTNERSHIP, LTD. ("CM Partnership" and collectively with Cal-Maine Farms and Egg Products herein referred to as the "Guarantors"), SUNTRUST BANK, ATLANTA, formerly known as Trust Company Bank ("SunTrust"), COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), HARRIS TRUST AND SAVINGS BANK ("Harris" and collectively with Rabobank and SunTrust, herein the "Banks") and Rabobank, as agent for itself and the Banks (in such capacity as agent, the "Agent").
RECITALS:
A. Borrower, Rabobank and Barclays Bank PLC (New York) ("Barclays") have entered into that certain Amended and Restated Revolving Credit Agreement dated as of May 29, 1990 (such Amended and Restated Revolving Credit Agreement, as the same has been amended, and as the same may be further amended or otherwise modified, herein referred to as the "Revolving Credit Agreement"). Pursuant to the Second Amendment to Amended and Restated Revolving Credit Agreement dated October 1, 1991, SunTrust was substituted as a lender under the Revolving Credit Agreement in the place of Barclays and Barclays is no longer a party to the Revolving Credit Agreement.
B. The Borrower and Rabobank have entered into that certain Amended and Restated Tern Loan Agreement dated as of May 29, 1990 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Term Loan Agreement").
C. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of December 1, 1987 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Egg Facility Reimbursement Agreement").
D. The Borrower and Rabobank have entered into that certain Reimbursement and Credit Agreement dated as of May 1, 1992 (as the same has been amended, and as the same may be further amended or otherwise modified, herein the "Dairy Facility Reimbursement Agreement").
E. The Borrower has executed and delivered that certain Term Loan Note dated November 5, 1993 payable to the order of Rabobank in the original principal amount of
$1,000,000 (as the same may be amended or otherwise modified, herein the "New Term Note" and the New Term Note, collectively with the Dairy Facility Reimbursement Agreement, the Revolving Credit Agreement, the Term Loan Agreement and the Egg Facility Reimbursement Agreement, herein the "Credit Agreements").
F. Borrower and Guarantors have requested that the Tangible Net Worth Covenants in the Credit Agreements be amended as herein set forth and the Banks have agreed to such amendments on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows effective as of the date hereof:
ARTICLE I
Definitions
Section 1.01 Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Revolving Credit Agreement; provided that the term "Loan Documents" as used herein shall have the meaning as set forth in the Intercreditor Agreement.
ARTICLE II
Amendment to Credit Agreements
Section 2.01. Amendment to Tangible Net Worth Covenant. Each of the Credit Agreements require the Borrower to maintain an excess of consolidated total tangible assets over consolidated total liabilities of the Borrower and the Subsidiaries as specified therein (the "Tangible Net Worth Covenants"). Effective as of the date hereof, each Tangible Net Worth Covenant is hereby amended in its entirety to read as follows:
Tangible Net Worth. Maintain an excess of consolidated total tangible assets over consolidated total liabilities of the Borrower and the Subsidiaries in an amount not less than the amount set forth below for the applicable period set forth below:
(a) from the date hereof through the Borrower's Fiscal Year ending in 1997, Forty-One Million Dollars ($41,000,000); and
(b) from the first day of Borrower's Fiscal Year ending 1997 and at all times thereafter, the sum of
(i) Forty-One Million Dollars ($41,000,000); plus
(ii) fifty percent (50%) of the net income of Borrower and the Subsidiaries for each Fiscal Year beginning with the Fiscal Year ending in 1997 but only if the Fiscal year has completely elapsed; plus
(iii) one hundred percent (100%) of all capital contributions made to the Borrower since June 1, 1996, net of all reasonable costs associated with the issuance of the securities relating to such capital contribution or otherwise necessary to obtain such capital contributions; plus
(iv) one hundred percent (100%) of the principal amount of all Debt of Borrower which is subordinated to the senior debt of Borrower and which has, since June 1, 1996, been converted or exchanged for equity interests in the Borrower.
If net income for a period is negative, no adjustment to the requisite level of net worth shall be made. Consolidated total liabilities shall include all indebtedness outstanding under the Credit Agreements.
ARTICLE III
Ratifications, Representations and Warranties
Section 3.01 Ratifications;. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Loan Documents and except as expressly modified and superseded by this Amendment, the terms and provisions of the Loan Documents (including all amendments thereto which include, without limitation, that certain Amendment to Loan Documents dated May 1, 1992, that certain Second Amendment to Loan Documents dated November 5, 1993, that certain Third Amendment to Loan Documents dated July 22, 1994, that certain Fourth Amendment to Loan Documents dated December 31, 1994, that certain Fifth Amendment to Loan Documents dated April 14, 1995, that certain Sixth Amendment to Loan Documents dated June 1, 1995 and that certain Seventh Amendment to Loan Documents dated April 30, 1996, all as filed in the real property records where the Mortgages are filed as described on Schedule I [collectively, the "Previous Amendments"] and each of which are hereby incorporated herein by this reference as if set forth herein in their entirety) are ratified and confirmed and shall continue in full force and effect. The liens, security interests and assignments created and evidenced by the Loan Documents are valid and existing liens, security interests and assignments of the respective priority recited in the Loan Documents and no party hereto has any claims, offsets, defenses or counterclaims to the terms and provisions of the Loan Documents or arising out of any acts or omissions of any party with respect thereto. Each of the parties hereto agree that the Loan Documents, as amended hereby and by the Previous Amendments, shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.
Section 3.02 Representations and Warranties. To induce Agent and the Banks to modify the Loan Documents as herein set forth, the Borrower and each Guarantor represents and warrants to the Agent and the Banks that:
(a) The representations and warranties of the Borrower and each Guarantor contained in the Loan Documents, as amended hereby, are true and correct on and as of the date hereof as though made on and as of the date hereof.
(b) No Event of Default has occurred and is continuing and no event or condition has occurred that with the giving of notice or lapse of time or both would be an Event of Default, and the Borrower and each Guarantor is in full compliance with all covenants and agreements binding on them contained in the Loan Documents, as amended hereby.
(c) The execution, delivery, and performance by it of this Amendment has been duly authorized by all requisite action on its part and do not and will not violate or conflict with its articles of incorporation, bylaws, partnership agreement or certificate of limited partnership or any law, rule, or regulation or any order, writ, injunction, or decree of any court, governmental authority, or arbitrator, and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the creation or imposition of any lien (except as provided herein) upon any of its revenues or assets pursuant to the provisions of any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement by which it or any of its properties is bound.
(d) This Amendment constitutes its legal, valid, and binding obligations, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditor's rights.
(e) No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party is or will be necessary for its execution, delivery, or performance of this Amendment or the validity or enforceability thereof.
(f) No statement, information, report, representation, or warranty made by it in this Amendment or furnished to any Bank in connection with this Amendment or any of the transactions contemplated hereby contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to it which has a material adverse effect, or which might in the future have a material adverse effect, on its business, condition (financial or otherwise), operations, prospects, or properties that has not been disclosed in writing to the Banks.
(g) The bylaws, articles or certificate of incorporation, partnership agreement and certificates of limited partnership of each Loan Party, as applicable, have not been revoked, amended or otherwise modified since June of 1995 and are all in full force and effect.
ARTICLE IV
Miscellaneous
Section 4.01 Survival of Representations and Warranties. All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by Agent or any Bank or any closing shall affect the representations and warranties or the right of Agent and each Bank to rely upon them.
Section 4.02 Reference to Loan Documents. Each of the Loan Documents are hereby amended so that any reference in such Loan Documents to the other Loan Documents shall mean a reference to such other Loan Documents as amended hereby.
Section 4.03 Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable.
Section 4.04 Applicable Law. This Amendment shall be governed by and construed in accordance with the laws of the state of New York except to the extent that the provisions of the Loan Documents are governed by the laws of another state, the amendment to those provisions pursuant hereto shall be governed by the laws of such other state.
Section 4.05 Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, except neither the Borrower nor any Guarantor may assign or transfer any of its rights or obligations hereunder without the prior written consent of the Banks.
Section 4.06 Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same agreement.
Section 4.07 Effect of Waiver. No consent or waiver, express or implied, by Rabobank, the Agent, SunTrust or Harris to or for any breach of or deviation from any covenant, condition or duty by the Borrower or any Guarantor shall be deemed a consent or waiver to or of any other breach of the same or any other covenant, condition or duty.
Section 4.08 Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.
Section 4.09 Entire Agreement. This Amendment and all other instruments, documents and agreements executed and delivered in connection with this Amendment embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations and understandings, whether written or oral, relating to this Amendment, and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.
Executed as of the date first written above.
CAL-MAINE FOODS, INC.
CAL-MAINE EGG PRODUCTS, INC.
CAL-MAINE FARMS, INC.
CAL-MAINE PARTNERSHIP, LTD.
By: Cal-Maine Foods, Inc.,
its general partner
SUNTRUST BANK, ATLANTA,
formerly known as Trust Company Bank
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.
"RABOBANK NEDERLAND", NEW
YORK BRANCH, individually and as Agent
HARRIS TRUST AND SAVINGS BANK
Carl A. Blackham Vice President
DATE: October 10, 1996 FAX NUMBER: (601) 969-0905
TO: Bobby Raines COMPANY: Cal-Maine
PHONE NUMBER: (601) 948-6813
FROM: Rick Beard PHONE NUMBER: (404) 877-9107
FAX NUMBER: (404) 877-9150
|
Good afternoon, Bobby,
As we discussed, below please find the amendments which Rabobank approved today for the benefit of Cal-Maine. These amendments have been approved, in theory, by SunTrust and have been presented to Harris Trust for their consideration. Give me a call if any of these are ambiguous. Thanks!
We have approved:
an amendment to allow Cal-Maine to pay cash dividends. This amendment will only be effective upon successful completion of a currently contemplated public offering and subject to no other covenant being violated by a dividend payment. It will, further, be subject to a limitation on the payment of those dividends to exclude any fiscal year in which the company suffers a net loss; and,
an amendment to redefine the Cash Flow Coverage Ratio so as to include the payment of any cash dividends as part of the denominator of the required ratio calculation. The amended covenant will be:
NI + Taxes + depreciation and amortization + Interest Paid
----------------------------------------------------------1.25:1 Int + cm/ltd + Dividends
(with current definitions to remain in place)
RABOBANK
EXHIBIT 10.2
$12,257,000.00
NOTE PURCHASE AGREEMENT
DATED AS OF
NOVEMBER 10, 1993
BETWEEN
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
AND
CAL-MAINE FOODS, INC.
TABLE OF CONTENTS
[Not a part of the Agreement]
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
1.01 "Accounting Period(s)" . . . . . . . . . . . . . . . . . . . . . 1
--------------------
1.02 "Affiliates" . . . . . . . . . . . . . . . . . . . . . . . . . . 1
----------
1.03 "Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
------
1.04 "Business Day" . . . . . . . . . . . . . . . . . . . . . . . . . 1
------------
1.05 "Cash Flow" . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
1.06 "Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------
1.07 "Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------
1.08 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----
1.09 "Commitment" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------
1.10 "Committed Revolving Credit" . . . . . . . . . . . . . . . . . . 2
--------------------------
1.11 "Consolidated Basis" . . . . . . . . . . . . . . . . . . . . . . 2
------------------
1.12 "Controlled Group" . . . . . . . . . . . . . . . . . . . . . . . 2
----------------
1.13 "Current Assets" . . . . . . . . . . . . . . . . . . . . . . . . 2
--------------
1.14 "Current Liabilities" . . . . . . . . . . . . . . . . . . . . . . 2
-------------------
1.15 "Current Ratio" . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------------
1.16 "Debt Service" . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------
1.17 "Deed of Trust" . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------------
1.18 "Employee Benefit Plan" . . . . . . . . . . . . . . . . . . . . . 3
---------------------
1.19 "Environmental Laws" . . . . . . . . . . . . . . . . . . . . . . 3
------------------
1.20 "ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----
1.21 "ERISA Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
1.22 "Events of Default" . . . . . . . . . . . . . . . . . . . . . . . 3
-----------------
1.23 "Fiscal Year" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------
1.24 "Funded Debt" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------
1.25 "GAAP" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----
1.26 "Hazardous Material" . . . . . . . . . . . . . . . . . . . . . . 3
------------------
1.27 "Historical Financial Statements" . . . . . . . . . . . . . . . . 3
-------------------------------
1.29 "Liabilities" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------
1.30 "Lien" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----
1.31 "Loan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----
1.32 "Loan Documents" . . . . . . . . . . . . . . . . . . . . . . . . 4
--------------
1.33 "Mortgage" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------
1.34 "Most Recent Balance Sheets" . . . . . . . . . . . . . . . . . . 4
--------------------------
1.35 "Multiemployer Plan" . . . . . . . . . . . . . . . . . . . . . . 4
------------------
1.36 "Multiple Employer Plan" . . . . . . . . . . . . . . . . . . . . 4
----------------------
1.37 "Net Income" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------
1.38 "Net Tangible Assets" . . . . . . . . . . . . . . . . . . . . . . 4
-------------------
|
1.39 "Net Worth" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------
1.40 "Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----
1.41 "Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------
1.42 "Officer's Certificate" . . . . . . . . . . . . . . . . . . . . . 5
---------------------
1.43 "PBGC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----
1.44 "Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
------
1.45 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----
1.46 "Plan Administrator" . . . . . . . . . . . . . . . . . . . . . . 5
------------------
1.47 "Plan Sponsor" . . . . . . . . . . . . . . . . . . . . . . . . . 5
------------
1.48 "Responsible Officer" . . . . . . . . . . . . . . . . . . . . . . 5
-------------------
1.49 "Security Documents" . . . . . . . . . . . . . . . . . . . . . . 5
------------------
1.50 "Security Property" . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------
1.51 "Strip" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----
1.53 "Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------
1.54 "Tangible Assets" . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------
1.55 "Tangible Net Worth" . . . . . . . . . . . . . . . . . . . . . . 6
------------------
1.56 "Taxes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----
1.57 "Waste" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----
1.58 "Working Capital" . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------
SECTION 2. Purchase and Sale of Notes . . . . . . . . . . . . . . . . . . . 6
--------------------------
2.01 Authorization of Notes . . . . . . . . . . . . . . . . . . . . . 6
----------------------
2.02 Sale and Purchase of Notes . . . . . . . . . . . . . . . . . . . 6
--------------------------
2.03 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-------
SECTION 3. Conditions of Purchase . . . . . . . . . . . . . . . . . . . . . 7
----------------------
3.01 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------
3.02 Representations and Warranties . . . . . . . . . . . . . . . . . 8
------------------------------
3.03 Performance; No Default . . . . . . . . . . . . . . . . . . . . . 8
-----------------------
3.04 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . 8
----------------------
3.05 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . 8
-------------------
3.06 Recordation; Perfection . . . . . . . . . . . . . . . . . . . . . 9
-----------------------
3.07 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------
3.08 Committed Revolving Credit . . . . . . . . . . . . . . . . . . . 9
--------------------------
3.09 Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . 9
----------------
3.10 No Adverse Legislation, Action or Decision, etc. . . . . . . . . 9
------------------------------------------------
3.11 Compliance with Securities Laws . . . . . . . . . . . . . . . . . 10
-------------------------------
3.12 Environmental Information . . . . . . . . . . . . . . . . . . . . 10
-------------------------
3.13 No Actions Pending . . . . . . . . . . . . . . . . . . . . . . . 10
------------------
3.14 Proceedings and Documents . . . . . . . . . . . . . . . . . . . . 10
-------------------------
3.15 Payment of Closing Fees . . . . . . . . . . . . . . . . . . . . . 10
-----------------------
3.16 Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------
SECTION 4. Representations and Warranties . . . . . . . . . . . . . . . . . 10
------------------------------
4.01 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------
|
4.02 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------
4.03 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------------
4.04 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----------
4.05 No Conflicting Agreements . . . . . . . . . . . . . . . . . . . . 11
-------------------------
4.06 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------
4.07 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------
4.08 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----
4.09 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------
4.10 Violation of Laws, etc. . . . . . . . . . . . . . . . . . . . . . 12
-----------------------
4.11 Stock of the Company, etc. . . . . . . . . . . . . . . . . . . . 12
--------------------------
4.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------
4.13 Business and Financial Statements . . . . . . . . . . . . . . . . 13
---------------------------------
4.14 Changes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------
4.15 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . 13
------------------------
4.16 Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------
4.17 Committed Revolving Credit . . . . . . . . . . . . . . . . . . . 14
--------------------------
4.18 Title to and Condition of Properties; Liens . . . . . . . . . . . 14
-------------------------------------------
4.19 Compliance with Other Instruments . . . . . . . . . . . . . . . . 15
---------------------------------
4.20 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . 15
---------------------
4.21 Permits, Patents, Trademarks, etc. . . . . . . . . . . . . . . . 15
----------------------------------
4.22 Offer of Notes . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------------
4.23 Status Under Certain Federal Statutes . . . . . . . . . . . . . . 16
-------------------------------------
4.24 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 16
---------------------
4.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------
4.26 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 18
--------------------
4.27 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------
4.28 Compliance with Covenants . . . . . . . . . . . . . . . . . . . . 18
-------------------------
4.29 Employee Controversies . . . . . . . . . . . . . . . . . . . . . 18
----------------------
SECTION 5. Company's Covenants . . . . . . . . . . . . . . . . . . . . . . . 18
-------------------
5.01 Use of Loan Proceeds . . . . . . . . . . . . . . . . . . . . . . 18
--------------------
5.02 Annual Financials . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------
5.03 Interim Financials . . . . . . . . . . . . . . . . . . . . . . . 19
------------------
5.04 Other Information . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------
5.05 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------
5.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------
5.07 Preservation of Properties . . . . . . . . . . . . . . . . . . . 19
--------------------------
5.08 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------
5.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----
5.10 Maintain Existence . . . . . . . . . . . . . . . . . . . . . . . 19
------------------
5.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 20
--------------------
5.12 Reports to SEC and to Stockholders . . . . . . . . . . . . . . . 20
----------------------------------
5.13 Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------
5.14 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------
5.15 Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------
|
5.16 Working Capital Plus Committed Revolving Credit . . . . . . . . . 20
-----------------------------------------------
5.17 Net Tangible Asset Test . . . . . . . . . . . . . . . . . . . . . 20
-----------------------
5.18 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . 20
------------------
5.19 Cash Flow to Debt Service . . . . . . . . . . . . . . . . . . . . 21
-------------------------
5.20 Investment in Security Property . . . . . . . . . . . . . . . . . 21
-------------------------------
5.21 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------
5.22 Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------------
5.23 Mergers, Consolidations . . . . . . . . . . . . . . . . . . . . . 21
-----------------------
5.24 Transfer of Stock in Company . . . . . . . . . . . . . . . . . . 21
----------------------------
5.25 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------
5.26 Other Information . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------------
5.27 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------
5.28 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 24
---------------------
5.29 Maintenance of Properties; Insurance . . . . . . . . . . . . . . 25
------------------------------------
5.30 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------
5.31 Place of Payments . . . . . . . . . . . . . . . . . . . . . . . . 25
-----------------
SECTION 6. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------
6.01 Principal, Interest or Premium . . . . . . . . . . . . . . . . . 26
------------------------------
6.02 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------
6.03 Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----
6.04 Other Default . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------
6.05 Foreclosure, Seizure, etc. . . . . . . . . . . . . . . . . . . . 26
--------------------------
6.06 Receiver, Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . 26
--------------------------
6.07 Representations and Warranties . . . . . . . . . . . . . . . . . 27
------------------------------
6.08 Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . 27
------------------
SECTION 7. Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------
7.01 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------
7.02 Exercise of Rights and Remedies . . . . . . . . . . . . . . . . . 27
-------------------------------
7.03 Remedies, etc., Cumulative . . . . . . . . . . . . . . . . . . . 27
--------------------------
7.04 No Waiver, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------
7.05 Accounts and Set Off . . . . . . . . . . . . . . . . . . . . . . 28
--------------------
SECTION 8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------------
8.01 Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 28
--------------
8.02 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
--------
8.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------
8.04 Change, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------
8.05 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------
8.06 Terms Binding . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------
8.07 Gender, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------
8.08 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------
8.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------
8.10 Further Assurances and Corrective Instruments . . . . . . . . . . 30
---------------------------------------------
|
8.11 Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . 30
--------------------
8.12 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
----------
8.13 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
----------
8.14 Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
----------
8.15 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 30
----------------
EXHIBIT A Form of Note
EXHIBIT B Opinion of Wells Moore Simmons & Neeld
EXHIBIT C Opinion of Gaylord, Singleton, McNally, Strickland & Snyder
EXHIBIT D Opinion of Ohio Local Counsel for the Company
EXHIBIT E Opinion of Womble Carlyle Sandridge & Rice
EXHIBIT F Capitalization of the Company/Options/Convertible Stock
EXHIBIT G Subsidiaries
EXHIBIT H Liabilities
EXHIBIT I Changes, etc.
EXHIBIT J Funded Debt/Restrictions on Liabilities
EXHIBIT J-1 Amount of Committed Revolving Credit
EXHIBIT K UCC Financing Statements
|
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "Agreement") is made as of the10th day of November, 1993 by and between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation (the "Purchaser"); and CAL-MAINE FOODS, INC., a Delaware corporation (the "Company");
R E C I T A L S:
The Company has agreed to sell to Purchaser and Purchaser has agreed to purchase from Company at private sale, at par, an aggregate of $12,257,000.00 in principal amount of Secured Notes due 2003, upon and subject to the terms, conditions, and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:
SECTION 1. Definitions
All accounting terms not specifically defined herein shall have the meanings assigned to them as determined by generally accepted accounting principles, consistently applied. Unless the context otherwise requires, when used herein, the following terms shall have the following meanings:
1.01 "Accounting Period(s)" shall mean the accounting periods during each Fiscal Year of the Company which are determined as follows: Each Fiscal Year of the Company has four quarters and each quarter has three (3) Accounting Periods consisting of two (2) four-week Accounting Periods and one (1) five-week Accounting Period. The Accounting Periods shall not be changed without the prior written consent of the Purchaser.
1.02 "Affiliates" shall mean any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with the Company. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise.
1.03 "Assets" shall mean all assets owned or controlled by the Company or any Subsidiary or any right or interest therein of the Company or any Subsidiary, all determined on a Consolidated Basis.
1.04 "Business Day" shall mean any day other than a Saturday, a Sunday or a day on which commercial banks in Boston, Massachusetts, are required or authorized to be closed.
1.05 "Cash Flow" shall mean with respect to the applicable period, the sum of (i) Net Income before interest and taxes, (ii) depreciation expense, and (iii) amortization expense of the Company determined on a Consolidated Basis.
1.06 "Closing" shall have the meaning ascribed to such term in
Section 2.03 of this Agreement.
1.07 "Closing Date" shall have the meaning ascribed to such term in
Section 2.03 of this Agreement.
1.08 "Code" means the Internal Revenue Code of 1986, as amended, or any successor Federal tax code. Any reference to any provision of the Code shall also be deemed to be a reference to any successor provision or provisions thereof.
1.09 "Commitment" shall mean the commitment letter of the Purchaser described in Section 3.16 of this Agreement.
1.10 "Committed Revolving Credit" shall mean revolving credit facilities from institutional lenders in favor of Company evidenced by written loan agreements, financing agreements or other similar agreements which are in full force and effect obligating such institutional lenders to make loans or advances to Company on a revolving basis.
1.11 "Consolidated Basis" means that all Assets, Liabilities, income, equities, debts, or obligations, of the Company and any Subsidiary shall be consolidated for accounting purposes in calculating the various ratios, requirements, covenants, restrictions and agreements contained in this Agreement.
1.12 "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company, are treated as a single employer under Section 414 of the Code.
1.13 "Current Assets" shall mean, at any time, all Assets which normally will be converted into cash within one year.
1.14 "Current Liabilities" shall mean, at any time, any Liabilities
which must be paid or satisfied within a year, excluding any deferred taxes,
but including advances on revolving lines of credit with a maturity of twelve
(12) months or less.
1.15 "Current Ratio" shall mean the ratio of (a) Current Assets to
(b) Current Liabilities.
1.16 "Debt Service" shall mean, with respect to each applicable period, the sum of (i) interest charges plus (ii) principal payments or principal maturities which become due within the applicable period relating to Indebtedness.
1.17 "Deed of Trust" means the Deed of Trust, Assignment of Rents, Security Agreement and Financing Statement of even date herewith from the Company to The Fidelity Company, as trustee for the benefit of the Purchaser, covering certain real and personal property located in Pitt County, North Carolina, all as the same may be amended or modified from time to time.
1.18 "Employee Benefit Plan" shall mean each Plan and each other "employee benefit plan" as defined in Section 3(3) of ERISA, which is or, during the six-year period ending on the date hereof, has been established or maintained, or to which contributions are or, during the six-year period ending on the date hereof, have been made by the Company or any Subsidiary of the Company.
1.19 "Environmental Laws" shall mean any "Environmental Laws" as defined in Section 32 of the Deed of Trust or any "Environmental Laws" as defined in Section 32 of the Mortgage.
1.20 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor law. Any reference to any provision of ERISA shall also be deemed to be a reference to any successor provision or provisions thereof.
1.21 "ERISA Affiliate" means any member of the Controlled Group.
1.22 "Events of Default" means those events set forth in Section 6
hereof.
1.23 "Fiscal Year" or "fiscal year" shall mean the fiscal year of
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the Company. Each fiscal year of the Company currently ends on the Saturday which is closest to May 31 of each year. The fiscal year of the Company shall not be changed without the prior written consent of Purchaser.
1.24 "Funded Debt" shall mean the sum of all Indebtedness of the Company maturing more than one year after the date of determination whether secured or unsecured, excluding, however, revolving lines of credit and deferred taxes, all determined on a Consolidated Basis.
1.25 "GAAP" shall mean generally accepted accounting principles as set forth in the opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements of the Financial Accounting Standards Board or in such opinions and statements of such other entities as shall be approved by a significant segment of the accounting profession, provided, however, that any reference in Section 5, or in the definition of any term used in Section 5, to GAAP shall mean GAAP in effect on the date hereof.
1.26 "Hazardous Material" shall mean any "Hazardous Material" as defined in paragraph 32 of the Deed of Trust or any "Hazardous Material" as defined in Section 32 of the Mortgage.
1.27 "Historical Financial Statements" shall have the meaning set forth in Section 4.13 of this Agreement.
1.28 "Indebtedness" shall mean, as applied to any Person, (i) obligations of such Person for borrowed money, (ii) obligations of such Persons evidenced by bonds, debentures, notes or other similar instruments, (iii) obligations of such Person to pay the deferred purchase price of property or services, (iv) obligations of leases which would be classified as a capitalized lease in accordance with GAAP, (v) obligations of such Person to reimburse another Person in respect of amounts paid under a letter of credit or similar instrument, (vi) obligations with respect to interest rate and currency swaps and similar obligations obligating such Person to make payments, (vii) indebtedness secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by)
a Lien on any asset of such Person, (viii) any recourse obligation of such Person in connection with a sale of receivables, and (ix) guarantees or similar credit support by such Person of the Indebtedness of another Person.
1.29 "Liabilities" shall mean all Indebtedness or other obligations of Company and its Subsidiaries, all determined on a Consolidated Basis.
1.30 "Lien" means any mortgage, deed of trust, pledge, security interest, assignment, encumbrance, lien, or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction.
1.31 "Loan" means the indebtedness in the aggregate principal amount of $12,257,000.00 to be evidenced by the Notes purchased by the Purchaser pursuant to the terms and conditions of this Agreement.
1.32 "Loan Documents" means collectively the Notes, this Agreement, the Deed of Trust, the Mortgage and any other instrument, document, and agreement now and hereafter evidencing, securing, guarantying, indemnifying, and given by the Company or any third party in connection with the Loan or any of the other Obligations (including those documents set forth in Section 3 hereof) and any and all amendments thereto and modifications thereof.
1.33 "Mortgage" means the Mortgage, Assignment of Rents, Security Agreement and Financing Statement of even date herewith from the Company in favor of the Purchaser covering certain real and personal property located in Darke County, Ohio, all as the same may be amended or modified from time to time.
1.34 "Most Recent Balance Sheets" means collectively the consolidated balance sheets of the Company and their Subsidiaries dated as of September 25, 1993.
1.35 "Multiemployer Plan" shall mean any plan described in Section 4001(a)(3) of ERISA to which contributions are or, during the six-year period ending on the date hereof, have been made, or were required to have been made, by the Company, any Subsidiary of the Company, or any of their respective ERISA Affiliates, or as to which any such person has any obligation for contributions or withdrawal liability.
1.36 "Multiple Employer Plan" means a Plan described in Section 4063(a) of ERISA.
1.37 "Net Income" means for any period the net income of the Company and their Subsidiaries determined on a Consolidated Basis.
1.38 "Net Tangible Assets" shall mean Tangible Assets less Current
Liabilities.
1.39 "Net Worth" shall mean all Assets less all Liabilities.
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1.40 "Notes" mean collectively the Secured Notes described in
Section 2 hereof and any and all amendments thereto and modifications thereof
and all substitutions therefor.
1.41 "Obligations" means the obligation of the Company and its Subsidiaries to (a) pay the unpaid principal amount of the Notes, plus all accrued and unpaid interest thereon and (b) pay and perform all other charges, interest, expenses, obligations, indemnifications, covenants and agreements under this Agreement and the other Loan Documents.
1.42 "Officer's Certificate" shall mean a certificate executed on behalf of the Company by a Responsible Officer.
1.43 "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
1.44 "Person" includes a corporation, an association, a partnership, an organization, a business, an individual, or a government or political subdivision thereof or governmental agency.
1.45 "Plan" means any plan described in Section 4021(a) of ERISA and
not excluded pursuant to Section 4021(b) thereof, and any plan subject to
Section 412 of the Code or Section 302 of ERISA, which is or, during the
six-year period ending on the date hereof, was maintained, or to which
contributions are or, during the six-year period ending on the date hereof,
were made, or required to be made, by the Company, any Subsidiary or any of
their respective ERISA Affiliates, or as to which any such person has any
liability for contributions or withdrawal liability, but not including any
Multiemployer Plan.
1.46 "Plan Administrator" shall have the meaning assigned to the term "administrator" in Section 3(16)(A) of ERISA.
1.47 "Plan Sponsor" shall have the meaning assigned to the term "plan sponsor" in Section 3(16)(B) of ERISA.
1.48 "Responsible Officer" shall mean any of the Chairman or Vice Chairman of the Board of Directors, the Chief Executive Officer, the President, any Executive Vice President, the Vice President-Controller, any Vice President or the Treasurer of the Company.
1.49 "Security Documents" shall mean the Deed of Trust, the Mortgage, and all other assignments, documents or instruments, now or hereafter securing the Notes, all as the same may be modified or amended from time to time.
1.50 "Security Property" shall mean all the real property, personal property and other property described in the Deed of Trust, the Mortgage or the other Loan Documents and which has been granted or conveyed as security for the Loan.
1.51 "Strip" shall mean an act of spoiling the Security Property or the removal of items constituting Security Property from the land which constitutes part of the Security Property.
1.52 "Subordinated Debt" shall mean Indebtedness which is subject and inferior in right of payment and otherwise to the indebtedness evidenced by the Notes pursuant to subordination agreements in form satisfactory to the Purchaser.
1.53 "Subsidiary" shall mean any corporation, partnership,
association, or other business entity a majority (by number of votes) of the
outstanding shares of any class or classes of which shall at the time be owned
or controlled by the Company (or by a Subsidiary of the Company), if the
holders of the shares of such class or classes (i) are ordinarily, in the
absence of contingencies, entitled to elect a majority of the directors (or
persons performing similar functions) of the issuer thereof, even though the
right to vote has been suspended by the happening of such a contingency, or
(ii) are at the time entitled, as such holders, to elect a majority of the
directors (or persons performing similar functions) of the issuer thereof,
whether or not the right to vote exists by reason of the happening of a
contingency.
1.54 "Tangible Assets" shall mean: (a) all Assets minus (b) all intangible Assets including, without limitation, goodwill, licenses, patents, trademarks, trade names, copyrights, service marks, and brand names.
1.55 "Tangible Net Worth" shall mean Tangible Assets less all
Liabilities.
1.56 "Taxes" means all taxes and assessments whether general or
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special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all penalties or interest thereon), which at any time may be assessed, levied, confirmed, or imposed on the Company or any of their properties or assets or any part thereof or in respect of any of their franchises, businesses, income, or profits, and all claims for sums which by law have or might become a lien or charge upon any of their properties or assets.
1.57 "Waste" shall mean the destruction or material alteration or deterioration of the Security Property, or any improper use, abuse or mismanagement of the Security Property.
1.58 "Working Capital" shall mean Current Assets less Current Liabilities.
SECTION 2. Purchase and Sale of Notes
2.01 Authorization of Notes. The Company has authorized the issue and sale of $12,257,000 aggregate principal amount of its Secured Notes due December 1, 2003, to be substantially in the form of Exhibit A, with such changes therefrom, if any, as may be approved by Company and Purchaser.
2.02 Sale and Purchase of Notes. The Company will issue and sell to Purchaser and, subject to the terms and conditions hereof, the Purchaser will purchase from the Company, at the Closing provided for in Section 2.03, two (2) Secured Notes due December 1, 2003, one being in the principal amount of $6,257,000.00 and the other being in the principal amount of $6,000,000.00, at the purchase price of 100% of the principal amount thereof.
2.03 Closing. The closing of the sale of the Notes to be purchased by Purchaser (the "Closing") shall take place at the offices of Womble Carlyle Sandridge & Rice, at 10:00 A.M., Winston-Salem, North Carolina time, on November 3, 1993 or on such other Business Day thereafter on or prior to November 30, 1993 as may be agreed upon by the Company and Purchaser (the "Closing Date"). At the Closing, the Company will deliver to Purchaser the Notes to be purchased by Purchaser, dated the Closing Date and payable to the order of Purchaser (or Purchaser's nominee), against delivery by Purchaser to the Company of immediately available funds in the aggregate amount of the purchase price therefor, such delivery to be by wire transfer to the Company in accordance with instructions provided by the Company. If at the Closing the Company shall fail to tender such Notes to Purchaser as provided in this Section, or any of the conditions specified in Section 3 shall not have been fulfilled to Purchaser's satisfaction, Purchaser shall, at its election, be relieved of all further obligations hereunder, without thereby waiving any other rights Purchaser may have by reason of such failure or such nonfulfillment.
SECTION 3. Conditions of Purchase
Conditions Precedent to the Purchase. The obligation of the Purchaser to purchase the Notes is subject to the following express conditions precedent:
3.01 Loan Documents. The Company shall have delivered to the Purchaser the following:
(a) Notes. The executed Notes;
(b) Deed of Trust. The executed Deed of Trust;
(c) Mortgage. The executed Mortgage;
(d) Assignment of Rents. Assignments of Leases, Rents and Profits duly executed by the Company, one relating to the North Carolina Security Property and the other relating to the Ohio Security Property.
(e) Environmental Indemnification. A Certificate and Indemnification Regarding Environmental Matters duly executed by the Company.
(f) Authorization for Disbursement. An Authorization for Disbursement of the proceeds of the Loan duly executed by the Company.
(g) UCC Financing Statements. UCC Financing Statements duly executed by the Company covering the Security Property.
(h) Resolutions. A certified copy of resolutions of the Board of Directors of the Company authorizing the execution, delivery, and performance of this Agreement, the Notes, and the other Loan Documents.
(i) Charter and By-Laws. A copy, certified by the corporate secretary of the Company, of the charter and by-laws of the Company.
(j) Incumbency Certificate. A certificate of the corporate secretary of the Company as to the incumbency and signatures of the officers signing this Agreement, the Notes, the other Loan Documents, and any other documents to be delivered pursuant hereto.
(k) Good Standing Certificate. A certificate, as of the most recent date practicable, of the North Carolina Secretary of State as to the good standing of the Company.
(l) Good Standing Certificate. A certificate, as of the most recent date practicable, of the Delaware Secretary of State as to the good standing of the Company.
(m) Good Standing Certificate. A certificate, as of the most recent date practicable, of the Ohio Secretary of State as to the good standing of the Company.
(n) Miscellaneous. Such other documents, instruments, opinions, and agreements as the Purchaser and its counsel may require in their discretion.
3.02 Representations and Warranties. The representations and warranties of the Company contained herein and those otherwise made in writing by or on behalf of the Company in connection with the transactions contemplated hereby shall be correct in all material respects when made and at the time of the Closing.
3.03 Performance; No Default. The Company shall have performed and complied in all material respects with all agreements and conditions contained herein required to be performed or complied with by the Company prior to or at the Closing. At the time of the Closing no Event of Default shall have occurred and be continuing.
3.04 Compliance Certificate. The Company shall have delivered to Purchaser an Officer's Certificate, dated the Closing Date, certifying that the conditions specified in sections 3.02 and 3.03 have been fulfilled and certifying that, after giving effect to the issuance of all the Notes, the Company will be in compliance with all limitations on the incurrence by the Company of Liabilities contained in any instrument or agreement applicable to or binding on the Company.
3.05 Opinions of Counsel. Purchaser shall have received favorable opinions, dated the Closing Date and satisfactory to Purchaser, (a) from Messrs. Wells Moore Simmons & Neeld, special counsel for the Company, covering the matters set forth in Exhibit B and such other matters incident to the transactions contemplated hereby as Purchaser or Purchaser's special counsel may reasonably request, (b) from (i) Gaylord, Singleton, McNally, Strickland & Snyder, local counsel for the Company in North Carolina, and (ii) Marchal & Marchal, local counsel for the Company in Ohio, covering the matters set forth in Exhibit C and D, as the case may be, and such other matters incident to the transactions contemplated hereby as Purchaser or Purchaser's special counsel may reasonably request, and (c) from Womble Carlyle Sandridge & Rice, Purchaser's special counsel in connection
with such transactions, covering the matters set forth in Exhibit E and such other matters incident to the transactions contemplated hereby as Purchaser may reasonably request.
3.06 Recordation; Perfection. (a) Purchaser shall have received proof that the Security Documents or appropriate financing statements and other documents required by the Security Documents have been filed and/or recorded in such jurisdictions as Purchaser or Purchaser's special counsel shall have specified.
(b) The Company shall have duly paid all taxes, fees and other governmental charges in connection with the execution, delivery, recording, publication and filing of the Security Documents, and Purchaser shall have received satisfactory evidence of such payment.
(c) Purchaser shall have received copies of searches of records of financing statements filed under the Uniform Commercial Code, lien and judgment searches, title searches and surveys (which may be updates of surveys done previously under which have been furnished to and are satisfactory to Purchaser), as appropriate, with respect to the Security Property, which searches and surveys are reasonably satisfactory to Purchaser.
(d) The Purchaser shall have received binding policies of mortgagee's title insurance (with such co-insurance and/or reinsurance arrangements as are satisfactory to Purchaser) on each parcel of the Security Property specified by Purchaser pursuant to policies on the applicable ALTA form which will insure that the mortgagees thereunder will have a valid first mortgage lien in the amount of the value of such Security Property as reasonably determined by Purchaser, subject to such exceptions as are provided for in the Security Documents.
3.07 Insurance. Purchaser shall have received insurance binders for all policies of insurance required by this Agreement and any of the Security Documents, together with the loss payable endorsements required hereby and thereby.
3.08 Committed Revolving Credit. The Purchaser shall have received true and complete copies of each agreement and instrument relating to Committed Revolving Credit in effect on the Closing Date.
3.09 Legal Investment. On the Closing Date, Purchaser shall have determined to its satisfaction that Purchaser's purchase of the Notes shall be permitted by the laws and regulations of each jurisdiction to which Purchaser is subject, but without recourse to provisions permitting limited investments by insurance companies without restrictions as to the character of the particular investment.
3.10 No Adverse Legislation, Action or Decision, etc. No legislation shall have been enacted by either house of Congress or by any state legislature, no other action shall have been taken by any United States or state or local governmental authority, whether by order, regulation, rule, ruing or otherwise, and no decision shall have been rendered by any court of competent jurisdiction in the United States, which would materially adversely affect the Notes being purchased at the Closing by Purchaser as an investment.
3.11 Compliance with Securities Laws. The offering and sale of the Notes at the Closing shall have complied with all applicable requirements of federal and state securities laws, and Purchaser shall have received evidence thereof satisfactory to Purchaser.
3.12 Environmental Information. Purchaser shall have received at least 10 Business Days prior to the Closing Date such information regarding environmental matters as may be reasonably requested by Purchaser or Purchaser's special counsel, which information shall include environmental surveys, reports or audits prepared by an environmental consulting or engineering firm for or on behalf of the Company on any of the facilities, properties or operations of the Company, its Subsidiaries and their joint ventures, in scope, methodology and substance satisfactory to Purchaser.
3.13 No Actions Pending. There shall be no suit, action, investigation, inquiry or any other proceeding by any governmental body or any other Person, or any other legal or administrative proceeding pending or threatened against the Company or any of their Affiliates, which questions the validity, legality or enforceability of any of the Loan Documents and would materially adversely affect any of the parties hereto or any of the transactions contemplated hereby.
3.14 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory to Purchaser and Purchaser's special counsel, and Purchaser and Purchaser's special counsel shall have received all such counterpart originals or certified or other copies of such documents as Purchaser or special counsel may reasonably request.
3.15 Payment of Closing Fees. The Company shall have paid the reasonable fees, expenses and disbursements of Purchaser's special counsel which are reflected in statements of such counsel rendered prior to or on the Closing Date pursuant to section 8.01; and thereafter (without limiting the provisions of section 8.01) the Company will pay, promptly upon receipt of any supplemental statements therefor, additional reasonable fees, if any, and disbursements of Purchaser's special counsel in connection with the closing (including unpaid disbursements as of the Closing Date) and attention to post-Closing matters.
3.16 Commitment. The Company shall have complied with all the terms, conditions and covenants contained in that certain Loan Commitment dated September 9, 1993, issued by the Purchaser to the Company, as amended.
SECTION 4. Representations and Warranties
To induce the Purchaser to purchase the Notes hereunder, the Company hereby makes the following representations and warranties to the Purchaser:
4.01 Good Standing. The Company (a) is a corporation duly organized, existing, and in good standing under the laws of the jurisdiction of its formation, and (b) has the power to own its property and to carry on its business and is qualified to do business and is in good standing in each jurisdiction in which the character of properties owned by it or the transaction of its business makes such qualification necessary.
4.02 Authority. The Company has full power and authority to enter into this Agreement, to issue and sell the Notes hereunder, to execute and deliver the Notes and the other Loan Documents to which it is a party, and to perform and comply with the terms, conditions, and agreements set forth herein and therein, all of which have been duly authorized by all proper and necessary corporate action. No consent or approval of the shareholders of the Company or of any governmental authority is required as a condition to the validity of this Agreement, the Notes, or the other Loan Documents.
4.03 Binding Agreement. This Agreement constitutes, and the Notes and the other Loan Documents constitute the valid and legally binding obligations of the Company enforceable in accordance with their respective terms.
4.04 Litigation. There are no claims, actions, suits or proceedings pending or, so far as any person signing below as or on behalf of the Company knows, threatened or reasonably anticipated before any court or administrative agency which will materially adversely affect the financial condition or operations of the Company.
4.05 No Conflicting Agreements. There are no provisions of the Company's charter and by-laws and no provisions of any existing mortgage, deed of trust, indenture, contract, lease, or agreement binding on the Company or affecting the Company's property which the execution, delivery or carrying out of the terms of this Agreement, the Notes or the other Loan Documents would result in a breach of or constitute a default thereunder or conflict with or in any way prevent the execution, delivery, or carrying out of the terms of this Agreement, the Notes, or the other Loan Documents.
4.06 Financial Condition. The financial statements of the Company, copies of which have been furnished to the Purchaser, were prepared in accordance with generally accepted accounting principles consistently applied and are complete and correct and fairly and accurately present the financial condition of the Company as of their date and the results of their operations for the period then ended. There has been no material adverse change in the financial condition of the Company or the results of the Company's operations since the date of such financial statements.
4.07 Information. All information contained in any financial statement, application, schedule, report, certificate, opinion, or any other document given by the Company or by any other Person in connection with the Loan or with any of the Loan Documents is in all respects true and accurate, and the Company or such other person have not omitted to state any material fact or any fact necessary to make such information not misleading.
4.08 Taxes. All Taxes imposed upon the Company and its properties, operations, and income have been paid and discharged prior to the date when any interest or penalty would accrue for the nonpayment thereof except for those Taxes being contested in good faith, by appropriate proceedings by the Company and the amount thereof is adequately reserved.
4.09 Margin Stock. The Company does not own and has no present
intention of acquiring any "margin stock" within the meaning of Regulation G
(12 C.F.R. Section 207) or within the meaning of Regulation U (12 C.F.R.
Section 221) of the Board of Governors of the Federal Reserve System. None of
the proceeds of the Loan will be used, directly or indirectly, by the Company
for the purpose of
purchasing or carrying, or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry, any margin stock or for any other purpose which might constitute the transactions contemplated hereby a "purpose credit" within the meaning of Regulation G or Regulation U, or cause this Agreement to violate any other regulation of the Board of Governors of the Federal Reserve System or the Securities Exchange Act of 1934 or the Small Business Investment Act of 1958, as amended, or any rules or regulations promulgated under any of such statutes.
4.10 Violation of Laws, etc. Neither the consummation of the purchase and sale of the Notes nor the use, directly or indirectly, of all or any portion of the proceeds of the sale of the Notes hereunder will violate or result in a violation of any provision of any applicable statute, regulation, or order of, or any restriction imposed by, any state or the United States of America or by any authorized official, board, department, instrumentality, or agency thereof. The Company is in compliance with all applicable federal, state and local laws, rules, and regulations and orders of any court of other governmental authority having jurisdiction.
4.11 Stock of the Company, etc. The capitalization of the Company is as set forth in Exhibit F. All shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. No authorized but unissued or treasury shares of capital stock of the Company are subject to any option, warrant, right to call or commitment of any kind or character except as set forth on Exhibit F. The Company does not have any outstanding stock or securities convertible into or exchangeable for any shares of its capital stock, or any rights issued to any Person (either preemptive or other) to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to any of its capital stock or securities convertible into or exchangeable for any of its capital stock except as set forth on Exhibit F. Neither the Company nor any Subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any convertible securities, rights or options of the type described in the preceding sentence except as set forth on Exhibit F.
4.12 Subsidiaries. Exhibit G correctly lists (a) as to each Subsidiary on the date of this Agreement (i) its name, (ii) the jurisdiction of its incorporation, (iii) the percentage of its issued and outstanding shares owned by the Company or another Subsidiary (specifying such other Subsidiary), and (b) the name of each Person not included in clause (a) of this Section in which the Company owns any direct or indirect equity interest. Each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority (A) to own and operate its properties, (B) to carry on its business as now conducted and as proposed to be conducted, (C) to enter into each of the Documents to which it is a party, (D) to carry out the terms of each of the Loan Documents to which it is a party, (E) to assign and grant a security interest or mortgage in the Security in the manner and for the purpose contemplated by the Security Documents, to which it is a party and (F) to enter into and carry out the terms of all other agreements and instruments executed and delivered by it pursuant to or in connection with the Loan Documents to which it is a party. All the outstanding shares of capital stock of each Subsidiary are validly issued, fully paid and nonassessable, and all such shares indicated in Exhibit G as owned by the Company or by any other Subsidiary are so owned beneficially and of record by
the Company or by such other Subsidiary free and clear of any Lien. No authorized but unissued or treasury shares of capital stock of any Subsidiary are subject to any option, warrant, right to call or commitment of any kind or character.
4.13 Business and Financial Statements. The Company have delivered to Purchaser complete and correct copies of the audited balance sheets and income statements of the Company as of May 29, 1993, and interim unaudited financial statements for the seventeen (17) week period ending September 25, 1993 (collectively, the "Historical Financial Statements"). The Historical Financial Statements present fairly the financial position and results from operations of the Company, as of the respective dates and for the respective periods specified. To the best of the Company's knowledge, except as set forth in Exhibit H, neither the Company nor any of its Subsidiaries has any material liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, or any material unsatisfied judgments or any leases for a period in excess of five years which either individually or in the aggregate are material, except those (x) which are fully reflected or reserved against on the Most Recent Balance Sheets or (y) which are not in excess of and are incurred subsequent to the date of such balance sheets in the ordinary course of business consistent with past practice. The reserves reflected on the Most Recent Balance Sheets are appropriate and reasonable.
4.14 Changes, etc. Except as disclosed in Exhibit I, since the date of the Most Recent Balance Sheets, (a) there has been no change in the assets, liabilities or financial condition of, the Company and its Subsidiaries, taken as a whole, other than changes in the ordinary course of business which have not been, either in any case or in the aggregate, materially adverse to, the Company and its Subsidiaries, taken as a whole, and (b) neither the business, operations, condition (financial or otherwise), properties or prospects of the Company or any of its Subsidiaries have been affected by any occurrence or development (whether or not insured against) which has been, either in any case or in the aggregate, materially adverse to, as a whole, the Company and its Subsidiaries.
4.15 Tax Returns and Payments. The Company and its Subsidiaries have filed or caused to be filed all material tax returns which are required to be filed and have paid or caused to be paid all material taxes shown to be due and payable on said returns or on any assessments made against them or any of their respective properties and all other material taxes, fees or other charges imposed on them or any of their respective properties by any governmental authority (other than those the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with generally accepted accounting principles have been provided on the books of the Company or its Subsidiaries, as the case may be); and no tax liens have been filed and no claims are being asserted with respect to any such taxes, fees or other charges (other than such liens or claims, the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with generally accepted accounting principles have been provided). The Federal income tax liabilities of the Company have been finally determined by the Internal Revenue Service and satisfied, or the time for audit has expired, for all fiscal periods through fiscal year 1989. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of Federal, State and other income taxes for all fiscal periods through September 25, 1993 are adequate in the opinion of the Company, and the Company knows of no unpaid assessment for additional Federal, state or other income taxes for any period, or any basis for any assessment which would materially adversely affect the Company.
4.16 Funded Debt. Exhibit J correctly describes all Funded Debt of the Company and its Subsidiaries (including any significant intercompany items) outstanding, or for which the Company and its Subsidiaries have commitments, on the date of this Agreement, in each case to the extent such Funded Debt or commitment exceeds $500,000.00 individually, and identifies the collateral securing any secured Funded Debt. Neither the Company nor any Subsidiary is in default with respect to any Liabilities or any instrument or agreement relating thereto, and, except as set forth on Exhibit J, no instrument or agreement applicable to or binding on the Company or any Subsidiary contains any restrictions on the incurrence by the Company of additional Liabilities. No Indebtedness of the Company is senior in priority to payment of the Indebtedness of the Company incurred pursuant to the Notes and the other Loan Documents.
4.17 Committed Revolving Credit. The Company has provided the Purchaser with correct and complete copies of each agreement and instrument relating to Committed Revolving Credit in effect on the Closing Date. At the time of Closing, outstanding borrowings under the Committed Revolving Credit equal the amount set forth on Exhibit J-1. Neither the Company nor any Subsidiary is in default with respect to the Committed Revolving Credit or any instrument or agreement relating thereto.
4.18 Title to and Condition of Properties; Liens. At the time of the Closing and after giving effect to the transactions contemplated hereby, the Company and its Subsidiaries will have good and, in the case of real property, marketable title to all of its owned properties and assets. At the time of Closing, none of the Security Property will be subject to any Liens except such as are permitted by the Security Documents. At the time of the Closing and after giving effect to the transactions contemplated hereby, the Company and its Subsidiaries will be entitled to enjoy peaceful and undisturbed possession, as lessee, under all leases of real property on which facilities owned or operated by it are situated, and all such leases will be valid and subsisting and in full force and effect and no material default and, to the Company's knowledge, no other default on the part of the Company or its Subsidiaries shall exist thereunder. Substantially all items of real and material personal property owned by, leased to or used by the Company and/or each Subsidiary are in adequate operating condition and repair, ordinary wear and tear excepted, are free and clear of any known defects, except such defects as do not substantially interfere with the continued use thereof in the conduct of normal operations, and are able to serve the function for which they are currently being used. Neither this Agreement nor any other Loan Document, nor any transaction contemplated under any such agreement, will affect any right, title or interest of the Company or such Subsidiary in and to any of such assets in a manner that would have or is reasonably likely to have a material adverse effect on the business, operations, condition (financial or otherwise), properties or prospect of the Company and its Subsidiaries, taken as a whole. At the time of the Closing and immediately after giving effect to the transactions contemplated hereby, (i) none of the Security Property will be subject to presently effective financing statements under the Uniform Commercial Code, except financing statements naming the Purchaser as secured party, financing statements in respect of liens which will be discharged prior to the Closing, and financing statements described on Exhibit K, and (ii) neither the Company nor any Subsidiary has signed any presently effective financing statement or any presently effective security agreement authorizing any secured party thereunder to file any such financing statement describing the Security Property.
4.19 Compliance with Other Instruments. Neither the Company nor any Subsidiary is in violation of any term of any agreement or instrument to which it is a party or by which it is bound, or of any applicable law, ordinance, rule or regulation of any governmental authority, or of any applicable order, judgment or decree of any court, arbitrator or governmental authority (including, without limitation, any such law, ordinance, rule, regulation, order, judgment or decree relating to environmental protection and pollution control, occupational health and safety standards and controls, consumer protection or equal employment practice requirements), or of any term of its charter or by-laws, the consequence of any of which violations could reasonably be expected to have a material adverse effect on the business, operations, condition (financial or otherwise), properties or prospects of the Company and its Subsidiaries, taken as a whole; and neither the execution, delivery and performance of this Agreement or any other Loan Document, nor the consummation of the other transactions contemplated hereby or thereby will result in any violation of or be in conflict with or constitute a default under any such term or result in the creation of (or impose any obligation on the Company or any Subsidiary to create) any Lien upon any of the properties of the Company or any Subsidiary pursuant to any such term.
4.20 Governmental Consents. Except for the recordings and filings of the Deed of Trust, the Mortgage and associated UCC Financing Statements, no consent, approval or authorization of, or declaration or filing with, any governmental authority on the part of the Company or any Subsidiary is required for the valid execution and delivery of this Agreement, or any other Loan Document, the valid offer, issue, sale and delivery of the Notes pursuant hereto or the assignment of, and the grant of a security interest in or mortgage on, the Security Property, in the manner and for the purpose contemplated by the Security Documents.
4.21 Permits, Patents, Trademarks, etc. (a) The Company and each Subsidiary has all permits and licenses for the operation of its business as presently conducted which are material to the business, operations, condition (financial or otherwise) or properties of the Company and its Subsidiaries, taken as a whole.
(b) At the time of the Closing, the Company and its Subsidiaries will own or possess (or will be licensed or otherwise have the full right to use) all patents, trademarks, service marks, trade names and copy rights, technology, know-how and processes, and all rights with respect to the foregoing, which are necessary for the operation of its business as presently conducted without any known material conflict with the rights of others. The consummation of the transactions contemplated hereby will not alter or impair in any material respect any of such rights of the Company. No product of the Company infringes in any material respect or, to the Company's knowledge, in any other respect on any patent, trademark, service mark, trade name, copyright, license or other right owned by any other Person; no claim or litigation is pending or (to the best knowledge of the Company) threatened against or affecting the Company or any Subsidiary contesting its right to sell or use any product or material. To the best knowledge of the Company, there is no material violation by any Person of any right of the Company or any Subsidiary with respect to any material patent, trademark, trade name or service mark owned by the Company or such Subsidiary.
4.22 Offer of Notes. Neither the Company nor any Person acting on its behalf has directly or indirectly offered the Notes or any part thereof or any similar securities for sale to, or solicited any
offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with anyone other than Purchaser. Neither the Company nor any Person acting on its behalf has taken or will take any action which would subject the issuance and sale of the Notes to the provisions of section 5 of the Securities Act of 1933, as amended, or to the provisions of any state securities law requiring registration of securities, notification of the issuance or sale thereof or confirmation of the availability of any exemption from such registration.
4.23 Status Under Certain Federal Statutes. The Company is not (a) a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, (b) a "public utility", as such term is defined in the Federal Power Act, as amended, or (c) an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. Neither the Company nor any Subsidiary is a "rail carrier", or a "person controlled by or affiliated with a rail carrier", within the meaning of Title 49, U.S.C., and the Company is not a "carrier" to which 49 U.S.C. Section 11301(b)(1) is applicable.
4.24 Compliance with ERISA. (a) No Plan and no trust created under
any Plan has been terminated, which termination resulted in any material
liability of the Company, any Subsidiary or any ERISA Affiliate which has not
been satisfied. All Employee Benefit Plans of the Company and all such plans
of its Subsidiaries have been operated and administered in compliance with
ERISA and the Code in all material respects. Neither the Company nor any of
its Subsidiaries has breached the fiduciary rules of ERISA in any material
respect or engaged in any transaction in connection with which any such entity
could be subjected to either a material civil penalty assessed pursuant to
Section 502(i) or 502(l) of ERISA or a material tax imposed by Section 4975 of
the Code. Full payment has been made of all amounts which the Company or any
of its Subsidiaries or any of their respective ERISA Affiliates is required
under the terms of each Employee Benefit Plan, ERISA, the Code or any
applicable contract or collective bargaining agreement to have paid as a
contribution to such Plan as of the date hereof. No accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists or has occurred with respect to any Plan. No
material liability to the PBGC, other than for premiums, has been or is
expected by the Company or any of its Subsidiaries or any of their respective
ERISA Affiliates to be incurred with respect to any Plan, and there has been no
Reportable Event which has not been waived and no event or condition exists
which presents a material risk of termination of any Plan by the PBGC.
(b) The aggregate fair market value of the assets of the Plans equals or exceeds the aggregate present value of all benefit liabilities under the Plans determined on a termination basis; with respect to any Plan the fair market value of the assets of which does not exceed the present value of all benefit liabilities thereunder (an "Underfunded Plan"), the amount by which the present value of benefit liabilities under each Underfunded Plan (determined on a termination basis) exceeds the fair market value of the assets of such Underfunded Plan is not more than $0.00; and the aggregate amount by which the present value of the benefit liabilities under all Underfunded Plans (determined on a termination basis) exceeds the fair market value of the assets of all such Underfunded Plans is not more than $0.00.
(c) No withdrawal liability in excess of $0.00 for which the Company, any Subsidiary or any of their respective ERISA Affiliates may be held liable has been incurred and remains unsatisfied, or is expected to be incurred by the Company or any of its Subsidiaries or any of their respective ERISA Affiliates with respect to all Multiemployer Plans and Multiple Employer Plans if a complete or partial withdrawal (within the meaning of Sections 4203 and 4205, respectively, of ERISA) from all Multiemployer Plans and Multiple Employer Plans by all such persons were to occur. Full payment has been made of all amounts which the Company or any of its Subsidiaries or any of their respective ERISA Affiliates is required under the terms of any Multiemployer Plan, ERISA, the Code or any collective bargaining agreement to have paid as a contribution to such Multiemployer Plan as of the date hereof.
(d) The execution, performance and delivery of this Agreement and the Loan Documents by any party thereto and the issuance and sale of the Notes hereunder and thereunder, and any actions by any Subsidiary of the Company related thereto, will not involve any non-exempt prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. The Company has delivered to each Purchaser, if requested, a complete and correct list of all employee benefit plans with respect to which the Company is a party in interest or with respect to which any of their securities are employer securities. As used in this subsection 5.20(d), the terms "employee benefit plans" and "party in interest" have the respective meanings specified in section 3 of ERISA, and the term "employer securities" has the meaning specified in section 407 (d) (1) of ERISA.
(e) The Company and its Subsidiaries have no obligations to provide medical and life insurance benefits to former or retired employees.
4.25 Disclosure. Neither (a) the Historical Financial statements,
(b) any statement made by or on behalf of the Company or any Affiliate in this
Agreement or the other Loan Documents, nor (c) any other document, certificate
or instrument delivered to Purchaser by or on behalf of the Company in
connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact known to the Company which materially adversely affects or in the
future may (so far as the Company can now reasonably foresee) materially
adversely affect the business, operations, condition (financial or otherwise),
properties or prospects of the Company which has not been set forth herein or
in the other documents, certificates and instruments delivered to Purchaser by
or on behalf of the Company specifically for use in connection with the
transactions contemplated hereby.
4.26 Compliance with Laws. Each of the Company and each Subsidiary is in compliance in all material respects with all laws, regulations and requirements applicable to its business and has obtained all authorizations, consents, approvals, orders, permits, licenses, exemptions from, and has accomplished all filings or registrations or qualifications with, any court or governmental department, public body or authority, commission, board, bureau, agency, or instrumentality, necessary for the transaction of its business, except where the failure so to be in compliance or to obtain or accomplish any of the matters referred to above would not materially adversely affect the business, operations, condition (financial or otherwise), properties or prospects of the Company and its Subsidiaries, taken as a whole.
4.27 Solvency. The Company is solvent and will continue to be solvent after giving effect to (i) the transactions contemplated by this Agreement and the Loan Documents; and (ii) the payment of all fees, costs and expenses payable by the Company on the Closing Date.
4.28 Compliance with Covenants. At the Closing and after giving effect to the transactions contemplated by this Agreement and the Loan Documents, the Company will be in compliance with the covenants contained in subsections 5.14, 5.15, 5.16, 5.17, 5.18 and 5.19 hereof.
4.29 Employee Controversies. There are no strikes, work stoppages or controversies pending or, to the Company's knowledge, threatened between the Company or any of its Subsidiaries and any of their employees, which are, in the aggregate, materially adverse to the financial condition, results of operations or business of the Company and its Subsidiaries, taken as a whole.
SECTION 5. Company's Covenants
Until payment in full of all of the Obligations:
5.01 Use of Loan Proceeds. The Company will use the proceeds of the Loan only for (a) the retirement of short-term debt of the Company in connection with the acquisition of the Ohio Security Property, and (b) the refinancing of John Hancock Loan #163392.
5.02 Annual Financials. The Company will furnish to the Purchaser as soon as available but in no event more than ninety (90) days after the end of each fiscal year financial statements of the Company on a Consolidated Basis prepared in accordance with generally accepted accounting principles, including balance sheet, statement of income and expense, statement of shareholder equity and statement of changes in financial position, fully certified by independent certified public accountants satisfactory to the Purchaser who are members of the American Institute of Certified Public Accountants. Such financial statements shall be accompanied by the accountants' statement that they are familiar with the financial covenants and provisions of this Agreement and the other Loan Documents and that no Event of Default exists hereunder or, if an Event of Default exists, specifying the nature and period of the Event of Default.
5.03 Interim Financials. The Company will furnish to the Purchaser as soon as available but in no event more than thirty (30) days after the end of each Accounting Period financial statements of the Company in the form of those required under the immediately preceding section of this Agreement prepared and certified by the chief financial officer of the Company. Once every fiscal quarter, such financial statements shall be accompanied by a certificate signed by the chief financial officer of the Company to the effect that no Event of Default exists hereunder or, if an Event of Default exists, specifying the Event of Default and the steps, if any, being taken to cure it.
5.04 Other Information. The Company will furnish to the Purchaser, promptly from time to time, such information concerning the operations, business, affairs, and financial condition of the Company as the Purchaser may reasonably request.
5.05 Books and Records. The Company will at all times (a) maintain complete and accurate books and records; (b) keep and maintain all books and records of the Company at the Company's principal place of business at 3320 Woodrow Wilson Drive, Jackson, Mississippi 39209; and (c) give the Purchaser at least thirty (30) days prior written notice before making a change in the Company's principal place of business or in the location of such books and records.
5.06 Litigation. The Company will promptly notify the Purchaser of
(a) any claims, actions, suits or litigation instituted, threatened or
reasonably anticipated against the Company which would materially and adversely
affect the condition (financial, business or otherwise) of the Company or the
Property, and (b) the entry of any judgment or Lien against the Company's
assets or properties in excess of $500,000.00.
5.07 Preservation of Properties. The Company will at all times (a) maintain its properties, whether owned or leased, in good operating condition, and from time to time will make all proper repairs, renewals, replacements, additions, and improvements thereto needed to maintain such properties in good operating condition, (b) comply with the provisions of all material leases to which it is a party or under which it occupies, uses or possesses property so as to prevent any loss or forfeiture thereof or thereunder, and (c) comply with all laws, rules, regulations, and orders applicable to the properties or any part thereof; provided, however, that nothing contained in this section shall require the making of any repair, renewal, replacement, addition, or improvement of or to a particular property or the continued maintenance of any property which would not be required in the exercise of sound business judgment.
5.08 Insurance. The Company will at all times maintain such insurance on the Security Property as is required by the insurance covenants contained in the Security Documents.
5.09 Taxes. Except to the extent that the validity or amount thereof is being contested in good faith, by appropriate proceedings and the amount thereof is adequately reserved, the Company will pay and discharge all Taxes prior to the date when any interest or penalty would accrue for the nonpayment thereof.
5.10 Maintain Existence. The Company will at all times maintain in full force and effect its corporate existence, rights, privileges, licenses, permits and franchises and qualify and remain qualified in all jurisdictions where qualification is required; provided, however, that the provisions of this subparagraph are subject to the terms of subparagraph 5.23 of the paragraph below captioned "Mergers, Consolidations".
5.11 Compliance with Laws. The Company will at all times comply with all applicable federal, state, and local laws, rules, and regulations, and orders of any court or other governmental authority having jurisdiction and which relate to the Security Property or the operations or business conducted thereon.
5.12 Reports to SEC and to Stockholders. The Company will furnish to the Purchaser, promptly upon the filing or making thereof, at least one (1) copy of (a) all financial statements, reports, notices, and proxy statements sent to stockholders, and (b) if the shares of the Company
should become publicly traded, all regular and other reports filed by Company or either of them with any securities and exchange or with the Securities and Exchange Commission.
5.13 Adverse Change. The Company shall promptly notify the Purchaser of any condition or event that constitutes, or with the lapse of time, the giving of notice, or both, would constitute an Event of Default, and promptly inform the Purchaser of any material adverse change in the condition (financial, business or otherwise) of the Company.
5.14 Current Ratio. The Company will at all times maintain a Current Ratio of not less than 1.25:1 determined quarterly on a Consolidated Basis.
5.15 Working Capital. The Company will at all times maintain Working Capital of at least $1 per laying hen determined quarterly on a Consolidated Basis.
5.16 Working Capital Plus Committed Revolving Credit. The Company will at all times maintain Working Capital plus Committed Revolving Credit of at least $2 per laying hen determined quarterly on a Consolidated Basis.
5.17 Net Tangible Asset Test. The Company will at all times maintain a ratio of Net Tangible Assets to Funded Debt of not less than (i) 1.80:1 for the Fiscal Year ending in 1994, (ii) 1.90:1 for the Fiscal Year ending in 1995, and (iii) 2.00:1 for the Fiscal Year ending in 1996, and each Fiscal Year thereafter, determined annually on a Consolidated Basis; provided, however, if the Company issues equity securities or Subordinated Debt is converted to equity, then the required ratio of Net Tangible Assets to Funded Debt shall automatically increase to 2.00:1 for the Fiscal Year ending in which the Company issues equity securities or Subordinated Debt is converted, as the case may be.
5.18 Tangible Net Worth. The Company will not at any time permit its Tangible Net Worth to be less than $38,000,000.00 plus (i) 50% of Net Income (provided that such amount shall not be less than zero) plus (ii) 100% of the proceeds from the issuance of equity securities plus (iii) 100% of the amount of Subordinated Debt converted to equity, determined semi-annually on a Consolidated Basis; provided, however, in no event shall the Tangible Net Worth of the Company decrease from the previous date of determination.
5.19 Cash Flow to Debt Service. The Company's ratio of Cash Flow to Debt Service averaged over twelve (12) rolling quarters shall be at all times at least 1.50:1 determined on a Consolidated Basis.
5.20 Investment in Security Property. The Company shall reinvest annually in capital improvements to or repair and maintenance of the Security Property no less than twenty-five percent (25.0%) (determined on a Consolidated Basis) of their annual depreciation as indicated on the financial reports and statements delivered to Purchaser in accordance with this Agreement.
5.21 Dividends. Without the prior written consent of the Purchaser, the Company shall not (i) declare or pay any dividend, (ii) make any distribution on any shares of any class of its own stock,
or (iii) redeem, retire, purchase or otherwise acquire for value any shares of any class of its own stock, if in any Fiscal Year the aggregate amount of such dividends and payments would exceed fifty percent (50%) of Net Income for such Fiscal Year.
5.22 Lease Obligations. The Company will not enter into (i) any leases of real or personal property whether as lessor or lessee or (ii) any sale and lease back arrangements of any kind whereby the Company's aggregate lease obligations for any fiscal year would exceed two and one-half of one percent (2.5%) of Net Tangible Assets determined upon a Consolidated Basis; provided, however, that leases of rolling stock shall be excluded for the purposes of the foregoing calculation.
5.23 Mergers, Consolidations. The Company will not be a party to any merger or consolidation with any other Person unless the Company shall be the surviving corporation and, following such merger or consolidation, the Company shall be in full compliance with all covenants, restrictions, representations and warranties contained in this Agreement and in the other Loan Documents, all determined on a Consolidated Basis. The Company shall, however, give the Purchaser written notice of any merger or consolidations permitted under this subparagraph within fifteen (15) days after the effective date thereof.
5.24 Transfer of Stock in Company. The shares of stock in the Company may be transferred subject, however, to the limitation that Fred Adams or members of his immediate family shall at all times own at least fifty-one percent (51%) of the voting rights in the Company.
5.25 Accounting. The Company will maintain, and will cause each Subsidiary to maintain, a system of accounting established and administered in accordance with GAAP, and will accrue, and will cause each Subsidiary to accrue, all such liabilities as shall be required by GAAP.
5.26 Other Information. The Company will deliver to Purchaser, so long as any Obligations are outstanding:
(a) (i) within ten days after it or any of its Subsidiaries knows or has reason to know that a Reportable Event has occurred with respect to any Plan (whether or not the requirement for notice of such Reportable Event has been waived by the PBGC), a certificate of a senior financial officer of the Company setting forth the details of such Reportable Event and stating the action, if any, that the Company or any ERISA Affiliate proposes to take with respect thereto; (ii) upon request made from time to time and promptly confirmed in writing, a copy of the most recent actuarial report and annual report completed with respect to any Plan of the Company or any of its Subsidiaries; (iii) within ten days after it or any of its Subsidiaries knows or has reason to know that any of the following has occurred with respect to any Plan: (A) any Plan has been terminated, (B) the Plan Sponsor intends to terminate any Plan or amend any Plan in a manner that would be treated as a termination under Section 4041(e) of ERISA, (C) a substantial cessation of operations within the meaning of section 4068(f) of ERISA has occurred under circumstances which could result in the treatment of the Company or any ERISA Affiliate as a substantial employer under a Multiple Employer Plan or the application of the provisions of section 4062, 4063 or 4064 of ERISA to the Company or any ERISA Affiliate, or (D) the PBGC has instituted or indicated its intention to institute proceedings under section 4042 of ERISA to terminate any Plan or proceedings to appoint a trustee to administer any Plan or Multiemployer
Plan, a certificate of a senior financial officer of the Company setting forth
the details thereof and stating the action, if any, that the Company or any
ERISA Affiliate proposes to take with respect thereto; (iv) within ten days
after it or any of its Subsidiaries knows or has reason to know that (A) any of
them has experienced or caused a complete withdrawal or partial withdrawal
(within the meaning of section 4203, 4205 or 4063 of ERISA) from any Plan or
Multiemployer Plan, (B) a Multiemployer Plan is in reorganization or is
insolvent pursuant to sections 4241 or 4245 of ERISA or intends to terminate
under section 4041A of ERISA, or (C) a Multi-employer Plan intends to
terminate, a certificate of a senior financial officer of the Company setting
forth the details thereof and stating the action, if any, that the Company or
any ERISA Affiliate proposes to take with respect thereto; (v) within ten days
after it or any of its Subsidiaries knows or has reason to know that a
"prohibited transaction" within the meaning of section 406 of ERISA with
respect to any Employee Benefit Plan has occurred, a certificate of a senior
financial officer of the Company or Subsidiary, as the case may be, setting
forth the details of such prohibited transaction and the Company's or
Subsidiary's proposed response thereto; and (vi) within ten days after it, any
of its Subsidiaries or any of their respective ERISA Affiliates has any reason
to know of any event or series of events or conditions the occurrence or
existence of which could reasonably be expected to result in (A) a material
liability to the Company or any ERISA Affiliate under Title IV of ERISA, (B)
the institution of a proceeding against the Company or any ERISA Affiliate to
enforce section 515 of ERISA, or (C) the imposition of a lien on any property
of the Company or any ERISA Affiliate pursuant to section 4068 of ERISA or
section 412(n) of the Code, a certificate of a senior financial officer of the
Company setting forth the details of such event or condition and the action, if
any; that the Company, Subsidiary or ERISA Affiliate proposes to take with
respect thereto; provided that each certificate delivered pursuant to this
Section shall be accompanied by a copy of any notice or report filed with,
given to or received from the PBGC, the Internal Revenue Service or the
Department of labor with respect to the event or condition that is the subject
of the certificate;
(b) promptly, and in any event within five Business Days of the occurrence of any of the following events, an Officer's Certificate describing such event: (i) the Company or any Subsidiary shall have filed any amendment to its charter documents or changed its jurisdiction of incorporation, or (ii) the Company shall have changed its corporate name or shall do business under any name other than Cal-Maine Foods, Inc., or (iii) the Company shall have changed its principal place of business or its chief executive offices, or (iv) the Company or any Subsidiary shall have become a party to any suit, action or proceeding which, if adversely determined, would have a materially adverse effect on the business, operations, condition (financial or otherwise), properties or prospects of the Company and its Subsidiaries, taken as a whole, or in which the uninsured portion of the projected settlement amount involved therein could equal $2,000,000.00 or more, or (v) the Company or any Subsidiary shall form or acquire any new Subsidiary, or (vi) any strike, walkout, work stoppage or other material employee disruption relating to any plant or facility owned or leased by the Company or any Subsidiary, or the expiration of any labor contract to which the Company or any Subsidiary is a party or by which it is bound (unless there exists a new labor contract in substitution therefor), or (vii) the Company or any Subsidiary shall have obtained knowledge that any of its insurance policies will be cancelled or not renewed and such cancellation or failure to renew could reasonably be expected to have a material adverse effect on the business, operations, condition (financial or otherwise), properties or prospects of the Company and its Subsidiaries, taken as a whole (unless there exists, or
the Company reasonably expects to obtain upon such policy's termination, a similar insurance policy in substitution therefor);
(c) promptly upon receipt thereof, copies of any notices to the Company or any Subsidiary from any federal or state administrative agency relating to any order, ruling, statute or other law or regulation which could reasonably be expected to have a materially adverse effect on the business, operations, condition (financial or otherwise), properties or prospects of the Company and its Subsidiaries, taken as a whole;
(d) promptly, and in any event within five Business Days after the Company shall become aware of the existence of an Event of Default, an Officer's Certificate specifying the nature and period of existence thereof and what action the Company or a Subsidiary, as the case may be, is taking or proposes to take with respect thereto;
(e) promptly following the Company's receipt thereof but in no event later than 10 Business Days after such receipt, copies of each environmental report, audit or survey of the Security Property then or previously owned by the Company or any Subsidiary prepared by the Company or by an environmental consulting firm or other Person, whether at the expense of the Company or of any previous owner of such Security Property;
(f) promptly after receiving (and in no event later than five days after receipt thereof) a written audit adjustment proposal, notice of deficiency, revenue agent's report or similar notice from the Internal Revenue Service asserting a material deficiency with respect to the Company or any of its Subsidiaries, a copy of any such written audit adjustment proposal, notice of deficiency, revenue agent's report or similar notice;
(g) promptly following the Company's receipt of a request by Purchaser therefor, any and all filing, recording, re-filing and rerecording of the Security Documents and/or financing statements and continuation statements with respect thereto as is necessary to protect and preserve the rights and interests of the Purchaser in and to the Security Property and the Liens on and in the Security Property created by the Security Documents; and
(h) with reasonable promptness, such other information and data with respect to the Company or any Subsidiary as from time to time may be reasonably requested.
5.27 Inspection. (a) Purchaser or Purchaser's representatives or agents, shall have the right, upon reasonable notice to the Company and during normal business hours, to visit and inspect any of the properties of the Company and of its Subsidiaries, to examine the books of account and records of the Company and of its Subsidiaries, to make copies and extracts therefrom, to discuss the affairs, finances and accounts of the Company and of its Subsidiaries with, and to be advised as to the same by, its and their officers, employees, and independent public accountants and, subject to the prior written consent of the Company, not to be unreasonably withheld, its and their environmental consultants, all at such reasonable times and intervals as Purchaser may desire; provided, however, that (i) Purchaser will offer the Company the opportunity to be present at any such discussion and (ii) in each case Purchaser agrees to comply with all applicable health and safety regulations and that any
such inspections or discussions shall not be disruptive to the normal business activities of the Company or any Subsidiary, as the case may be. The Company agrees to pay all reasonable fees of its environmental consultants and accountants incurred by Purchaser in connection with Purchaser's exercise of rights pursuant to this Section and if an Event of Default shall have occurred and be continuing all out-of-pocket expenses incurred by Purchaser in connection with Purchaser's exercise of rights pursuant to this Section. The Company will, upon written request therefor, afford Purchaser the opportunity to obtain any information, to the extent the Company possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of any of the representations and warranties made by the Company hereunder.
5.28 Compliance with ERISA. The Company will not, and will not permit any ERISA Affiliate to:
(a) (i) engage in any transaction in connection with which the Company or any ERISA Affiliate could be subject to either a civil penalty assessed pursuant to section 502(i) of ERISA or a tax imposed by section 4975 of the Code, (ii) fail to make full payment when due of all amounts which would be deductible by the Company or any ERISA Affiliate and which, under the provisions of any Plan, applicable law or applicable contract or collective bargaining agreement, the Company or any ERISA Affiliate is required to pay as contributions thereto, or (iii) permit to exist any accumulated funding deficiency, whether or not waived, with respect to any Plan (other than a Multiemployer Plan or a Multiple Employer Plan), if, in the case of any of subdivision (i), (ii) or (iii) above, such penalty or tax, or the failure to make such payment, or the existence of such deficiency, as the case may be, could have a material adverse effect on the financial position of the Company; or
(b) permit the amount of unfunded benefit liabilities (within the meaning of section 4001(a) (18) of ERISA) under each Plan maintained at such time by the Company, any Subsidiary or any of their respective ERISA Affiliates (other than Multiemployer Plans or Multiple Employer Plans) to exceed $0.00 or permit the aggregate amount of such unfunded benefit liabilities to exceed $0.00.
5.29 Maintenance of Properties; Insurance. The Company will maintain or cause to be maintained in good repair, working order and condition all properties used or useful in, and deemed material to, the business of the Company and each Subsidiary and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof. The Company will maintain or cause to be maintained, with financially sound and reputable insurers, insurance with respect to its properties and business and the properties and business of each Subsidiary against loss or damage of the kinds customarily insured against by corporations of established reputation engaged in the same or similar business and similarly situated, of such types and in such amounts and with such deductibles and other self-insurance as are customarily carried under similar circumstances by such other corporations.
5.30 Survey. On or before December 15, 1993, the Company shall furnish the Purchaser a survey of the Ohio Security Property prepared, certified and sealed by a surveyor satisfactory to the Purchaser showing, among other things, the location of any existing improvements wholly within the boundary lines of the Security Property and showing setback lines or building lines, if any. The survey shall also show (a) the location of all easements and rights of way and all other exceptions described in the title insurance commitment heretofore submitted to the Purchaser (to the extent such
matters can be shown) and (b) the courses and distances to and names of the
nearest intersecting public streets or roads. The survey shall include a
certification as to the location of the Security Property within any special
flood, mudslide or erosion hazard area and shall contain such other
certifications as Purchaser may require. The surveyor shall also execute such
survey reports and certifications as the title insurance company may require in
order to delete the survey exception contained in the Purchaser's title
insurance policy with respect to the Ohio Security Property. In addition, the
Company shall furnish to the Purchaser on or before December 15, 1993, (a) if
requested by Purchaser, a duly recorded modification to the Ohio Mortgage which
changes the legal description to match the description shown on the survey,
which modification will be prepared by counsel to Purchaser at the expense of
the Company, and (b) an endorsement to Purchaser's title insurance policy which
(i) adds the modification agreement as an additional insured instrument, (ii)
updates the effective date of the title policy to the date of recording of the
modification, without any further exceptions to title unless Purchaser consents
in writing thereto, (iii) providing a full ALTA 3.1 zoning endorsement and a
full comprehensive endorsement to the policy with respect to the Ohio Security
Property, (iv) deleting the survey exception with respect to the Ohio Security
Property and (v) providing such other affirmative coverage with respect to
matters of survey as Purchaser may require.
5.31 Place of Payments. All payments on account of the Notes or other obligations in accordance with the provisions of this Agreement shall, until changed by Purchaser as hereinafter provided, be made by delivery of the Company's check or checks to:
John Hancock Mutual Life Insurance Company Agricultural Investment Department Service Center Suite 106, 1605 South State Street Champaign, Illinois 61820-7237
The place for or method of payment may be changed from time to time by Purchaser by written notice to the Company setting forth the new place or method of payment. The Purchaser expressly reserves the right to require that payments be made by bank wire transfer of immediately available funds to a destination designated by the Purchaser.
SECTION 6. Events of Default
The occurrence of any one or more of the following events (the "Events of Default") shall constitute an event of default hereunder:
6.01 Principal, Interest or Premium.Any default in the payment of the principal or interest or installments of principal and interest or premium on any Note when the same shall be due and payable.
6.02 Indebtedness. Any default being made in payment of any indebtedness secured by the Security Documents (other than specified in paragraph 6.01 above) as such indebtedness becomes due, or in the payment of the taxes, assessments or charges or insurance premiums as set forth in the Security Documents.
6.03 Waste. If Strip or Waste be committed on or with respect to the Security Property or improvements or other items constituting a part of the Security Property be removed from the Security
Property without the prior written consent of the Purchaser and shall not be cured within sixty (60) days after written notice from Purchaser.
6.04 Other Default. Any default being made in the performance or observance of any other terms, covenants or agreements of the Security Documents or of the Notes or of this Agreement or of any other document or instrument executed in connection therewith.
6.05 Foreclosure, Seizure, etc. The institution of any foreclosure proceeding or proceeding to exercise a power of sale or other similar proceeding or any attempted sale, seizure or other similar enforcement action by the holder of any deed of trust, mortgage, security agreement or other lien upon all or any part of the Security Property whether or not the deed of trust, mortgage, security agreement or other lien is prior to or subordinate to any of the Security Documents.
6.06 Receiver, Bankruptcy, etc. If by order of a court of competent jurisdiction a receiver or liquidator or trustee of the Company or the record owner for the time being of any part of the Security Property shall be appointed and shall not have been discharged within sixty (60) days, or if by decree of such court the Company or such owner shall be adjudicated bankrupt or insolvent and such decree shall continue to be undischarged and unstayed for thirty (30) days after the entry thereof, or if a petition to reorganize the Company or such owner pursuant to the Federal Bankruptcy Code or any other similar statute applicable to the Company or such owner as now or hereafter in effect shall be filed against the Company or such owner and shall not be dismissed within one hundred twenty (120) days after such filing, or the Company or such owner shall file a petition in voluntary bankruptcy under any provision of any bankruptcy law or shall consent to the filing of any bankruptcy or reorganization petition under any such law, or if (without limitation of the generality of the foregoing) the Company or such owner shall file a petition for an arrangement or to reorganize the Company or such owner pursuant to the Federal Bankruptcy Code or any other similar statute applicable to such owner, as now or hereafter in effect, or if the Company or such owner shall institute any proceeding for dissolution or liquidation, or shall make an assignment for the benefit of creditors, or shall admit in writing inability to pay his or its debts generally as they become due, or shall consent to the appointment of a receiver or trustee or liquidator of the Company or such owner.
6.07 Representations and Warranties. Any representation or warranty by the Company contained in this Agreement or otherwise made in connection with the loan evidenced by the Notes shall be false or erroneous in any material respect including, without limitation any warranty or representation made in the Commitment.
6.08 Hazardous Material. If at any time it shall be determined that
(1) any Hazardous Material shall be located upon or under the Security Property
which is not in full compliance with all applicable Environmental Laws, or (2)
the Security Property violates any applicable Environmental Laws, or (3) the
Company is in violation of any of the representations, warranties and
agreements contained in paragraph 32 of the Deed of Trust or in paragraph 32 of
the Mortgage.
SECTION 7. Rights and Remedies
If any one or more Events of Default shall occur, then in each and every such case, the Purchaser at its option may at any time thereafter exercise and/or enforce any or all of the following rights and remedies:
7.01 Acceleration. Declare without notice to the Company all of the Obligations to be immediately due and payable, whereupon the same shall become due and payable, together with accrued and unpaid interest thereon, without presentment, demand, protest, or notice, all of which the Company hereby waive.
7.02 Exercise of Rights and Remedies. Exercise any rights and remedies available to the Purchaser under this Agreement, the Notes, the Security Documents or the other Loan Documents, and under applicable laws.
7.03 Remedies, etc., Cumulative. Each right, power, and remedy of the Purchaser as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by the Purchaser of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by the Purchaser of any or all such other rights, powers, or remedies.
7.04 No Waiver, etc. No failure or delay by the Purchaser to insist upon the strict performance of any term, condition, covenant, or agreement of this Agreement or of any of the other Loan Documents, or to exercise any right, power, or remedy consequent upon a breach thereof, shall constitute a waiver of any such term, condition, covenant, or agreement or of any such breach, or preclude the Purchaser from exercising any such right, power, or remedy at any later time or times. By accepting payment after the due date of any amount payable under this Agreement or under the Notes or under any of the other Loan Documents, the Purchaser shall not be deemed to waive the right either to require prompt payment when due of all other amounts payable under this Agreement, the Notes, or any of the other Loan Documents, or to declare an Event of Default for failure to effect such prompt payment of any such other amount.
7.05 Accounts and Set Off. The Company hereby grants to the Purchaser, as security for the full and punctual payment and performance of the Obligations, a continuing lien on and security interest in all now or hereafter existing balances, credits, accounts, deposits (general or special, time or demand, provisional or final) and all other sums credited by, maintained with or due from the Purchaser or any affiliate of the Purchaser to the Company or subject to withdrawal by the Company; and regardless of the adequacy of any collateral or other means of obtaining repayment of the Obligations, the Purchaser may at any time and without notice to the Company set off the whole or any portion or portions of any or all such balances, credits, accounts, deposits and other sums against any and all of the Obligations.
SECTION 8. Miscellaneous
8.01 Expenses, etc. Whether or not the transactions contemplated hereby shall be consummated, the Company will pay all expenses incurred by Purchaser in connection with such transactions and in connection with any amendments or waivers (whether or not the same become effective) and in connection with the enforcement of any of Purchaser's rights under or in respect hereof or the Notes, including, without limitation: (a) the cost and expenses of preparing and reproducing this Agreement and the other Loan Documents, of furnishing all opinions by counsel for the Company (including any opinions requested by Purchaser's special counsel as to any legal matter arising hereunder) and all certificates on behalf of the Company; (b) the cost of delivering to your principal office, insured to your satisfaction, the Notes sold to you hereunder and any Notes delivered to you upon any substitution thereof pursuant hereto or thereto and of your delivering any Notes, insured to your satisfaction, upon any such substitution; (c) the reasonable fees, expenses and disbursements of Purchaser's special counsel in connection with such transactions and any such amendments or waivers; (d) the cost and expenses of obtaining a Private Placement Number for the Notes; (e) the reasonable out-of-pocket expenses incurred by Purchaser in connection with such transactions and any such amendments or waivers; and (f) costs and expenses, including attorneys' fees, incurred by Purchaser which shall hold any Notes in enforcing any rights under any Loan Documents or in responding to any subpoena or other legal process issued in connection with this Agreement, the other Loan Documents or the transactions contemplated hereby or thereby or by reason of Purchaser's having acquired any Note, including without limitation, costs and expenses incurred in any bankruptcy case. The Company also agree to pay the costs and expenses or other taxes, fees and charges incurred with respect to the recording, registering or filing of financing statements in respect of any Lien created by or to be maintained under any Security Document and compliance with all statutes and regulations as may be necessary or desirable in order to establish, protect, perfect and preserve any Lien created by or to be maintained under any Security Document and the rights of the holders of the Notes. The Company also will pay, and will save Purchaser and each holder of any Notes harmless from, all claims in respect of the fees, if any, of brokers and finders and any and all liabilities with respect to any taxes including interest and penalties) which may be payable in respect of the execution and delivery hereof, the issue of the Notes hereunder and any amendment or waiver under or in respect hereof or of the Notes.
8.02 Survival. All covenants, agreements, representations, and warranties made herein and in any other instruments or documents delivered pursuant hereto shall survive the execution and delivery of the Notes and shall continue in full force and effect so long as any of the Obligations are outstanding and unpaid.
8.03 Notices. All notices, demands, requests and other communications required under this Agreement or the Notes or the other Loan Documents shall be in writing and shall be deemed to have been properly given, if personally delivered, on the date of such delivery, or, if sent by Certified U.S. Mail, return receipt requested, on the third (3rd) business day following deposit in the U.S. mail, postage prepaid or if sent by overnight courier such as Federal Express, Airborne, Emery or similar reputable national courier with guaranteed overnight delivery, on the day following the date delivered to such overnight courier. All notices shall be addressed to the party to whom it is intended at its address set forth below:
Company: Cal-Maine Foods, Inc.
3320 Woodrow Wilson Drive
Jackson, Mississippi 39209
Attention: B. J. Raines
Purchaser: John Hancock Mutual Life Insurance Company
John Hancock Place
Post Office Box 111
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Agribusiness Investment Group - T57
with a copy to: John Hancock Mutual Life Insurance Company
Office Manager
2305 Cedar Springs Road
Suite 230
Dallas, Texas 75201
|
Any party may designate a change of address by written notice to the other, given at least ten (10) days before such change of address is to become effective.
8.04 Change, etc. Neither this Agreement nor any term, condition, representation, warranty, covenant, or agreement hereof may be changed, waived, discharged, or terminated orally but only by an instrument in writing by the party against whom such change, waiver, discharge, or termination is sought.
8.05 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina.
8.06 Terms Binding. All of the terms, conditions, stipulations, warranties, representations, and covenants of this Agreement shall apply to and be binding upon, and shall inure to the benefit of, the Company and the Purchaser and each of their respective heirs, personal representatives, successors, and assigns.
8.07 Gender, etc. Whenever used herein, the singular number shall include the plural, the plural the singular, and the use of the masculine, feminine, or neuter gender shall include all genders.
8.08 Headings. The section and subsection headings in this Agreement are for convenience only and shall not limit or otherwise affect any of the terms hereof.
8.09 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument.
8.10 Further Assurances and Corrective Instruments. The parties hereto agree that they will, from time to time, execute and deliver, or cause to be executed and delivered, such supplements hereto
and such further instruments as may reasonably be required for carrying out the intention of the parties to, or facilitating the performance of, this Agreement.
8.11 Estoppel Certificate. The Company will, upon not less than ten
(10) business days' request by the Purchaser or any other party to this
transaction, execute, acknowledge, and deliver to such person a statement in
writing, certifying (a) that this Agreement and the other Loan Documents are
unmodified and in full force and effect and the payments required thereunder to
be paid by the Company have been paid, and (b) the then unpaid principal
balance of the Notes; and stating whether or not to the knowledge of the signer
of such certificate any party to any of the Loan Documents is in default in the
performance of any covenant, agreement, or condition contained therein and, if
so, specifying each such default of which the signer may have knowledge, it
being intended that any such statement delivered pursuant to this section may
be relied upon by the Purchaser and the other parties to this transaction.
8.12 Illegality. If fulfillment of any provision hereof or any transaction related hereto or to the other Loan Documents, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity; and if any clause or provision herein contained operates or would prospectively operate to invalidate this Agreement or the other Loan Documents in whole or in part, then such clause or provision only shall be void, as though not herein contained, and the remainder of this Agreement and such other Loan Documents shall remain operative and in full force and effect; provided, however, that if any such provision pertains to the repayment of the Obligations, the occurrence of any such invalidity shall constitute an Event of Default hereunder.
8.13 Assignment. This Agreement and the other Loan Documents may not be assigned, in whole or in part, by the Company without the prior written consent of the Purchaser.
8.14 Statements. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto or in connection with the transactions contemplated hereby shall be deemed representations and warranties of the Company hereunder unless such certificate or instrument shall expressly state to the contrary.
8.15 Entire Agreement. This Agreement embodies the entire agreement and understanding between you and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof.
IN WITNESS WHEREOF, the Purchaser and the Company have each caused this Agreement to be executed under seal as of the day and year first above written.
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY,
a Massachusetts corporation
[Signatures Continued on Next Page]
CAL-MAINE FOODS, INC., a
Delaware corporation
ATTEST: By:
---------------------------------------
Chief Executive Officer
- --------------------------------
Secretary
- -----------------
[CORPORATE SEAL]
|
EXHIBIT A
Form of Note
EXHIBIT B
Opinion of Wells Moore Simmons & Neeld
EXHIBIT C
Opinion of Gaylord, Singleton, McNally, Strickland & Snyder
EXHIBIT D
Opinion of Ohio Local Counsel for the Company
EXHIBIT E
Opinion of Womble Carlyle Sandridge & Rice
EXHIBIT F
(Section 4.11)
Capitalization of the Company
Options
Convertible Stock
EXHIBIT G
(Section 4.12)
Subsidiaries
EXHIBIT H
(Section 4.13)
Liabilities
EXHIBIT I
(Section 4.14)
Changes, etc.
EXHIBIT J
(Section 4.16)
Funded Debt
Restrictions on Liabilities
EXHIBIT J-1
(Section 4.17)
Amount of Committed Revolving Credit
EXHIBIT K
(Section 4.18)
UCC Financing Statements
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
Agricultural Investment Department Agribusiness Investment Group Suite 230 2305 Cedar Springs Road [JOHN HANCOCK FINANCIAL SERVICES LOGO] Dallas, TX 75201 (214) 880-9044 WILLIAM H. HASSON Agribusiness Investment Officer NOVEMBER 30, 1994 Mr. Bobby Raines Cal-Maine Foods, Inc. P.O. Box 2960 Jackson, MS 39207 |
Dear Bobby:
We have approved your request for a temporary waiver of the cash flow to debt service covenant and your request for a permanent change of the cash flow to debt service ratio from 1.55 : 1 to 1.25 : 1.
The formula for this covenant will be adjusted as follows:
The numerator would be comprised of:
Rolling four quarters depreciation
Rolling four quarters interest
Rolling 12 quarters pre-tax income divided by three
The denominator would be comprised of:
Current portion of long-term debt
Rolling four quarters interest
As we indicated in our meeting, we are concerned about Cal-Maine's level of capital expenditures and the lack of material earnings, during the last three years. We ask that the Company consider reducing its level of capital expenditures until a recovery in earnings is fully underway.
We would like to have a follow-up meeting with you in April 1995 to get an update on the capital expenditure program as well as your financial position.
Bobby, if you have any questions, please give me a call.
Sincerely,
/s/ BILL HASSON Bill Hasson |
cc: Scott McFetridge
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
Agricultural Investment Department
Agribusiness Investment Group
Suite 230
2305 Cedar Springs Road
Dallas, TX 75201 [JOHN HANCOCK FINANCIAL SERVICES LOGO]
(214) 880-9044
WILLIAM H. HASSON
Agribusiness Investment Officer
July 25, 1995
Mr. Bobby Raines
Cal-Maine Foods, Inc.
P.O. Box 2960
Jackson, MS 39207
Dear Bobby:
We have approved your request for a loan modification. The net tangible assets to funded debt covenant shall be modified to reflect 1.80 to 1 for fiscal year 1995 and 1996, and 1.90 to 1 for fiscal year 1997 and thereafter. All additional covenants shall remain the same.
As a condition of this modification, capital expenditures for fiscal year 1996 shall be limited to the sum of fiscal year 1996 depreciation plus amortization.
Bobby, if you have any questions, please give me a call.
Sincerely,
/s/ BILL HASSON Bill Hasson |
cc: Scott McFetridge
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
Bond and Corporate
Finance Department [JOHN HANCOCK OLYMPIC WORLDWIDE SPONSOR LOGO]
John Hancock Place
Post Office Box 111
Boston, Massachusetts 02117
October 18, 1996
Cal-Maine Foods, Inc.
3320 Woodrow Wilson Drive
Jackson, Mississippi 39209
Attention: B.J. Raines
Re: Note Purchase Agreement dated as of November 10, 1993
Gentlemen:
Reference is made to that certain Note Purchase Agreement dated as of November 10, 1993 between John Hancock Mutual Life Insurance Company and Cal-Maine Foods, Inc., as amended by letter dated July 25, 1995 (the "Agreement"). Unless otherwise defined herein, capitalized terms shall have the meanings ascribed to them in the Agreement.
Section 5.21 of the Agreement is hereby deleted and replaced in its entirety as follows:
"5.21 Dividends. The Company shall not declare or pay any dividend if such payment would cause a violation of any other covenant herein."
Please confirm your agreement with the foregoing by signing this letter in the space indicated below.
Very truly yours,
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
AGREED:
CAL-MAINE FOODS, INC.
Title: VP/CFO
EXHIBIT 10.3
CAL-MAINE FOODS, INC.
LOAN AGREEMENT
Dated as of May 1, 1991
Adjustable Rate Secured Promissory Note Due May 1, 2000
TABLE OF CONTENTS
Page
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SECTION 1. LOAN; ISSUE OF NOTES; SECURITY; INTEREST
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1.1. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---- -------------
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
- ---------- ------------------------------
2.1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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2.2. No Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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2.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---- -----
2.4. Organization, Authority and Good Standing; Subsidiaries . . . . . . . . . . . . . . . . . . . . 4
---- -------------------------------------------------------
2.5. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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2.6. Leases and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---- ----------------
2.7. Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---- --------
2.8. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---- ----------
2.9. No Burdensome Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---- ------------------------
2.10. Compliance with Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----- ---------------------------------
2.11. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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2.12. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----- -----
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
----- ----------------
2.17. Hazardous Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----- ---------------
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
- ---------- ----------------------
3.1. Opinion of Company's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---- ----------------------------
3.2. Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---- --------
3.3. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---- -----------
3.4. Representations True; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---- --------------------------------
3.5. Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---- --------------------
3.6. Opinion of Purchaser's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---- ------------------------------
3.7. Environmental Audit Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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SECTION 4. REPRESENTATION OF PURCHASER
- ---------- ---------------------------
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 |
CAL-MAINE FOODS, INC.
LOAN AGREEMENT
May 1, 1991
Metropolitan Life Insurance Company
Agricultural Investments
8717 West 110th Street
Suite 700
Overland Park, Kansas 66210
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 & Hurst, 317 East Capitol Street, Suite 400, Jackson, Mississippi 39201, 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
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 Hinds and Simpson Counties, Mississippi, Candler and Bullock Counties, Georgia and Garza 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 Livingston 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
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
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 Fred Adams, 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 Fred Adams, 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
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
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
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
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 Hinds and Simpson Counties, Mississippi, Candler and Bullock Counties, Georgia, and Garza County, Texas, recordation of the Mortgage in the Office of the Recorder of Livingston 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 Hinds and Simpson Counties, Mississippi, Candler and Bullock Counties, Georgia, Garza County, Texas and Livingston 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
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:
3.1. Opinion of Company's Counsel. You shall have received on the Closing Date from Wells, Moore, Simmons, Stubblefield and Neeld, 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 & Hurst, 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
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
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
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
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
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
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 Fred Adams, 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.
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 3320 Woodrow Wilson Drive, Jackson, Mississippi 39207 (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.
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
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
(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
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
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
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
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
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,
(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
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,
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
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
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
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, Box 27-131, Kansas City, Missouri 64180-0001 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, P.O. Box 37,
2203 E. Empire Street, Bloomington, Illinois 61702-0037, Attention: Manager, or
if to the Company, mailed (by registered or certified mail) to Cal-Maine Foods,
Inc., P.O. Box 2960, 3320 Woodrow Wilson Drive, Jackson, Mississippi 39207,
Attention: B. J. Raines, 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
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
Its Chief Executive Officer
The foregoing agreement is
hereby accepted as of the
date first above written.
METROPOLITAN LIFE INSURANCE COMPANY
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 Hinds and Simpson
Counties, Mississippi, Candler and Bullock Counties, Georgia and Garza 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 Livingston 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
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
Its Chief Executive Officer
LENDER:
METROPOLITAN LIFE INSURANCE COMPANY, a
New York corporation
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
manner affected by the foregoing First Amendment to Loan Agreement.
CAL-MAINE FARMS, INC., a Delaware corporation
CAL-MAINE EGG PRODUCTS, INC., a Delaware
corporation
Metropolitan Life Insurance Company
Agricultural Investments, Illinois Regional Office
2203 East Empire Street, PO Box 37, Bloomington, IL 61702-0037
Tel 309 662-1343 Fax 309 662-0632
[METLIFE LOGO]
Roger W. Truesdale
Regional Manager
A. Dan Nafziger
Assistant Manager
Greg G. Gallaway
Assistant Manager
|
Mr. Bobbie J. Raines, Chief Financial officer
CAL-MAINE FOODS, INC.
P.O. Box 2960
Jackson, MS 39207
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. Fred Adams, 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 Fred Adams, 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.
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: Bobby J. Raines
/s/ DAN NAFZIGER ------------------------------
Its:
-----------------------------
A. Dan Nafziger
Assistant Manager
Agribusiness Specialist
Illinois Regional Office Cal-Maine Partnership, Ltd.
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October 15, 1996 By:
------------------------------
Its:
-----------------------------
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aci
EXHIBIT 10.4
CAL-MAINE FOODS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
AMENDED AND RESTATED
EFFECTIVE
JANUARY 1, 1994
TABLE OF CONTENTS
SECTION PAGE NUMBER
- ------- -----------
1 DEFINITIONS 2
(a) Account
(b) Administrative Committee or Committee
(c) Administrator or Plan Administrator
(d) Annual Additions
(e) Board of Directors
(f) Break in Service
(g) Code
(h) Company
(i) Company Stock
(j) Compensation
(k) Disability
(l) Effective Date
(m) Employee
(n) Entry Date
(o) ERISA
(p) Family Member
(q) Fiduciary
(r) Fund
(s) Highly Compensated Employee
(t) Hour of Service
(u) Investment Category
(v) Investment Manager
(w) Limitation Year
(x) Member
(y) Normal Retirement Date
(z) Participating Company
(aa) Plan
(bb) Plan Year
(cc) Related Entity
(dd) Suspense Account
(ee) Trust Agreement
(ff) Trustee
(gg) Unallocated Stock Account
(hh) Valuation Date
(ii) Year of Service
2 ADMINISTRATION OF THE PLAN 14
(a) ERISA Reporting and Disclosure by
Administrator
(b) Committee
(c) Multiple Capacities
(d) Committee Powers
(e) Allocation of Fiduciary Responsibility
(f) Claims
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SECTION PAGE NUMBER
------- -----------
(g) Fiduciary Compensation
(h) Plan Expenses
(i) Fiduciary Insurance
(j) Indemnification
3 PARTICIPATION IN THE PLAN 18
(a) Initial Eligibility
(b) Ineligible Employees
(c) Measuring Service
(d) Commencement of Participation
(e) Termination and Requalification
(f) Termination of Membership
4 CONTRIBUTIONS 20
(a) Participating Company Contributions
(b) Maximum Contributions
(c) Allocations to Members
(d) Eligible Members
(e) Method of Allocation
(f) Company Stock Account
(g) Non-Stock Account
(h) Rollovers
(i) Rollover Account
(j) Voluntary Post-Tax Account
(k) Payroll Taxes
5 MAXIMUM CONTRIBUTIONS AND BENEFITS 24
(a) Defined Contribution Limitation
(b) Combined Limitation
(c) Combined Limitation Computation
(d) Definition of "Compensation" for Code Limitations
(e) Exceptions
6 ADMINISTRATION OF FUNDS 29
(a) Investment of Plan Assets
(b) Exempt Loans
(c) Diversification
(d) Voting Rights and Provisions
(e) Put Option
(f) First Right of Refusal
(g) Investment Categories
(h) Life Insurance
(i) Valuations
(j) Allocation of Gain or Loss
(k) Bookkeeping
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SECTION PAGE NUMBER
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7 BENEFICIARIES AND DEATH BENEFITS 36
(a) Designation of Beneficiary
(b) Beneficiary Priority List
8 BENEFITS FOR MEMBERS 37
(a) Retirement Benefit
(b) Death Benefit
(c) Disability Benefit
(d) Termination of Employment Benefit
(e) Recognition of Forfeitures
9 DISTRIBUTION OF BENEFITS 41
(a) Commencement
(b) Benefit Form
(c) Account Balances Less Than $3,500
(d) Definitions
(e) Withholding
10 IN-SERVICE DISTRIBUTIONS 45
(a) Voluntary Post-Tax Account
(b) Rollover Account
(c) Age 59 1/2
11 LOANS 46
(a) Committee Discretion
(b) Hardship
(c) Minimum Requirements
(d) Accounting
12 TITLE TO ASSETS 49
13 AMENDMENT AND TERMINATION 50
(a) Amendment
(b) Termination
(c) Conduct on Termination
14 LIMITATION OF RIGHTS 52
(a) Alienation
(b) Qualified Domestic Relations Order Exception
(c) Employment
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SECTION PAGE NUMBER
- ------- -----------
15 MERGERS, CONSOLIDATIONS OR TRANSFERS OF PLAN ASSETS 54
16 PARTICIPATION BY RELATED ENTITIES 55
(a) Commencement
(b) Termination
(c) Single Plan
(d) Delegation of Authority
(e) Disposition of Assets or Subsidiary
(f) Form of Distributions
17 TOP-HEAVY REQUIREMENTS 56
(a) General Rule
(b) Definitions
(c) Combined Benefit Limitation
(d) Vesting
(e) Minimum Contribution
18 MISCELLANEOUS 61
(a) Incapacity
(b) Reversions
(c) Employee Data
(d) Law Governing
(e) Pronouns
(f) Interpretation
APPENDIX A - TRA `86 COMPLIANCE EFFECTIVE DATES 64
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CAL-MAINE FOODS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Cal-Maine Foods, Inc., a corporation with principal offices in the State of Mississippi, established the Cal-Maine Foods, Inc. Employee Stock Ownership Plan to provide benefits to those of its Employees and the Employees of its affiliates who were eligible to participate as provided therein effective May 1, 1976. The Plan was amended and restated April 1, 1991 to comply with then current law.
Cal-Maine Foods, Inc. hereby again amends and completely restates the Plan effective January 1, 1994, to incorporate additional provisions of the Tax Reform Act of 1986, subsequent legislation and extensive Internal Revenue Service regulations. The amended and restated Plan is effective, subject to receipt of an Internal Revenue Service determination that the Plan as amended and restated meets all applicable requirements of Section 401(a) of the Code (as defined in subsection 1(g)), that employer contributions thereto remain deductible under Section 404 of the Code and that the fund maintained with respect thereto is tax exempt under Section 501(a) of the Code.
1. DEFINITIONS
(a) "ACCOUNT" shall mean on any date of determination the value of a Member's share of the Fund.
(i) "VOLUNTARY POST-TAX ACCOUNT" shall mean the portion of the Member's Account derived from the Member's voluntary nondeductible contributions under subsection 4(j) made prior to
April 1, 1991.
(ii) "ROLLOVER ACCOUNT" shall mean the portion of the Member's Account derived from amounts transferred to the Fund under subsection 4(h) prior to October 1, 1993.
(iii) "COMPANY STOCK ACCOUNT" shall mean the portion of the Member's Account derived from Participating Company contributions under subsection 4(a) which is invested in shares of Company Stock.
(iv) "NON-STOCK ACCOUNT" shall mean the portion of a Member's Account derived from Participating Company contributions under subsection 4(a) and any matching Participating Company contributions made prior to April 1, 1991 which is invested in investments other than shares of Company Stock.
(b) "ADMINISTRATIVE COMMITTEE" or "COMMITTEE" shall mean the individual or group of individuals designated pursuant to subsection 2(b) to control and manage the operation and administration of the Plan to the extent set forth herein.
(c) "ADMINISTRATOR" or "PLAN ADMINISTRATOR" shall mean the Company.
(d) "ANNUAL ADDITIONS" shall mean the sum for any
Limitation Year of (i) employer contributions, (ii) employee contributions,
(iii) forfeitures and (iv) amounts described in Sections 415(l)(1) and
419A(d)(2) of the Code, which are allocated to the account of a Member under the terms of a plan subject to Section 415 of the Code. "Annual Additions" shall include excess contributions as defined in Section 401(k)(8)(B) of the Code, excess aggregate contributions as defined in Section 401(m)(6)(B) of the Code and excess deferrals as described in Section 402(g) of the Code, regardless of whether such amounts are distributed or forfeited. "Annual Additions" shall not include contributions made under subsection 4(h).
(e) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company.
(f) "BREAK IN SERVICE" shall mean a consecutive twelve-month computation period specified in the Plan in which an Employee is credited with not more than 500 Hours of Service.
(g) "CODE" shall mean the Internal Revenue Code of 1986, and the same as may be amended from time to time.
(h) "COMPANY" shall mean Cal-Maine Foods, Inc., a Delaware corporation, with principal offices in the State of Mississippi.
(i) "COMPANY STOCK" shall mean shares of any class of capital stock issued by the Company (or by a corporation which is a member of the same controlled group of corporations which includes the company, as that term is defined in Code Section 409(1)(4)) which constitute "employee securities" under Section 4975(e)(8) of the code.
(j) "COMPENSATION" shall mean the total cash remuneration for services paid to an Employee, after the date the Employee becomes a participant under the Plan, by a Participating Company in a Plan Year plus any amounts allocated to an Employee's Salary Deferral Account in accordance with his election authorizing that amounts be withheld from his
remuneration and be credited thereto, and any contributions to a cafeteria plan under Code Section 125. In addition to other limitations which may be set forth in the Plan and notwithstanding any other contrary provision of the Plan, compensation taken into account under the Plan shall not exceed $200,000, adjusted for changes in the cost of living as provided in Section 415(d) of the Code. In determining the compensation of an Employee for purposes of this limitation, the rules of Section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the spouse of the Employee and any lineal descendants of the Employee who have not attained age 19 before the close of the year.
In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the annual Compensation of each Employee taken into account under the Plan shall not exceed the "OBRA `93 annual compensation limit." The OBRA `93 annual compensation limit is $150,000, as adjusted by the Commissioner for increases in the cost of living in accordance with section 401(a)(17)(B) of the Internal Revenue Code. The cost of living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined ("determination period") beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA `93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the limitation under section 401(a)(17) of the
Code shall mean the OBRA `93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in determining an employee's benefits accruing in the current Plan Year, the Compensation for that prior determination period is subject to the OBRA `93 annual compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the OBRA `93 annual compensation limit is $150,000.
(k) "DISABILITY" shall mean a medically determinable physical or mental impairment of a permanent nature which prevents a Member from performing his customary employment duties without endangering his health.
(l) "EFFECTIVE DATE" of this amendment and restatement shall mean January 1, 1994. The original Effective Date of this Plan shall mean May 1, 1976. The Plan was previously amended and restated January 1, 1985 and April 1, 1991.
(m) "EMPLOYEE" shall mean each and every person employed by a Participating Company or a Related Entity. The term "Employee" shall also include a person who is a "leased employee" with respect to the Company or Related Entity. No person who is a "leased employee" shall be eligible to participate in this Plan. "Leased employee" shall mean any person who is not an Employee but who provides services to the Company or Related Entity if:
(i) such services are provided pursuant to an agreement between the Company or Related Entity and any leasing organization;
(ii) such person has performed services for the Company or Related Entity (or for the Company or Related Entity and any related person within the meaning of Section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least one (1) year; and
(iii) the services are of a type historically performed by employees in the business field of the Company or Related Entity.
A "leased employee" shall be treated as an Employee of the
Company or Related Entity; however, contributions or benefits provided by the
leasing organization which are attributable to services performed for the
Company or Related Entity shall be treated as provided by the Company or
Related Entity. A "leased employee" shall not be treated as an Employee if
such "leased employee" is covered by a money purchase pension plan of the
leasing organization, and the number of leased employees does not constitute
more than twenty percent (20%) of the Company or Related Entity's Non-Highly
Compensated work force as defined by Section 414(n)(5)(C) of the Code. The
money purchase pension plan of the leasing organization must provide benefits
equal to or greater than: (1) a non-integrated employer contribution rate of
at least ten percent (10%) of compensation, (2) immediate participation, and
(3) full and immediate vesting.
(n) "ENTRY DATE" shall mean the first day of each Plan Year and the first day of the fourth, seventh and tenth months of the Plan Year.
(o) "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and the same as may be amended from time to time.
(p) "FAMILY MEMBER" as defined in Code Section 414(q)(6)(B) shall mean the spouse, lineal ascendants and descendants and the spouses of such lineal ascendants or descendants, of either a 5% owner of the Employer as defined in Section 416(i) of the Code, or one of the top ten paid Employees of the Employer.
(q) "FIDUCIARY" shall mean a person who, with respect to the Plan, (i) exercises any discretionary authority or discretionary control respecting management of the Plan or exercises any authority or control with respect to management or disposition of the Plan's assets, (ii) renders investment advice for a fee or other compensation, direct or indirect, with respect to any monies or other property of the Plan, or has any authority or responsibility to do so, or (iii) has any discretionary authority or discretionary responsibility in the administration of the Plan.
(r) "FUND" shall mean the assets of the Plan. All Investment Categories shall be part of the Fund.
(s) "HIGHLY COMPENSATED EMPLOYEE" includes Highly Compensated active Employees and Highly Compensated former Employees.
A Highly Compensated active Employee includes any Employee who performs service for the Employer during the determination year and who, during the look-back year:
(i) received Compensation from the Employer in excess of $99,000 (as adjusted pursuant to Section 415(d) of the Code);
(ii) received Compensation from the Employer in excess of $66,000 (as adjusted pursuant to Section 415(d) of the Code) and was a member of the top-paid group for such year; or
(iii) was an officer of the Employer and received Compensation during such year that is greater than 50 percent of the dollar limitation in effect under Section 415(b)(1)(A) of the Code.
The term Highly Compensated Employee also includes:
(i) Employees who are both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year" and the Employee is one of the 100 Employees who received the most Compensation from the Employer during the determination year; and
(ii) Employees who are 5 percent owners at any time during the look-back year or determination year.
If no officer has satisfied the Compensation requirement of (iii) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The look-back year shall be the twelve-month period immediately preceding the determination year. The Company may elect, however, to make the look-back year calculation for a determination year on the basis of the calendar year ending with or within the applicable determination year as provided for in applicable Regulations. Such election shall apply to all plans of the Company.
A Highly Compensated former Employee includes any Employee who separated from service (or was deemed to have separated) prior to the determination year, performs no service for the Employer during the determination year, and was a Highly Compensated active Employee for either the separation year or any determination year ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a Family Member of either a 5 percent owner who is an active or former Employee or a Highly Compensated Employee who is one of the 10 most Highly Compensated Employees ranked on the basis of Compensation paid by the Employer during such year, then the Family Member and the 5 percent owner or top-ten Highly Compensated Employee shall be aggregated. In such case, the Family Member and 5 percent owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving Compensation and plan contributions or benefits equal to the sum of such Compensation and contributions or benefits of the Family Member and 5 percent owner or top-ten Highly Compensated Employee.
The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the Compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder.
(t) "HOUR OF SERVICE"
(i) GENERAL RULE. "HOUR OF SERVICE" shall mean each hour (A) for which an Employee is directly or indirectly paid, or entitled to payment, by a Participating Company or a Related Entity for the performance of duties or (B) for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by a Participating Company or a Related Entity. These hours shall be credited to the Employee for the period or periods in which the duties were performed or to which the award or agreement pertains irrespective of when payment is made. The same hours shall not be credited under both (A) and (B) above.
(ii) PAID ABSENCES. An Employee shall also be credited with one Hour of Service for each hour for which the Employee is directly or indirectly paid, or entitled to payment, by a Participating Company or a Related Entity on account of a period during which no duties are performed due to vacation, holiday, illness, incapacity, disability, layoff, jury duty or authorized leave of absence for a period not exceeding one year for any reason in accordance with a uniform policy established by the Committee; provided, however, not more than 501 Hours of Service shall be credited to an Employee under this sentence on account of any single, continuous period during which the Employee performs no duties and provided, further, that no credit shall be given if payment (A) is made or due under a plan maintained solely for the purpose of complying with applicable workmen's compensation, unemployment compensation or disability insurance laws or (B) is made solely to reimburse an Employee for medical or medically related expenses incurred by the Employee.
(iii) MATERNITY/PATERNITY. An Employee shall also be credited with one Hour of Service for each hour that otherwise would normally have been credited to the Employee but during which such Employee is absent from work for any period (A) by reason of the Employee's pregnancy, (B) by reason of the birth of the Employee's child, (C) by reason of the placement of a child with such Employee in connection with an adoption of such child by the Employee or (D) for purposes of caring for a child for a period beginning immediately following birth or placement, provided that an Employee shall be credited with no more than 501 Hours of Service on account of any single continuous period of absence by reason of any such pregnancy, birth or placement and provided further that Hours of Service credited to an individual on account of such a period of absence
shall be credited only for the Break in Service computation period in which such absence begins if an Employee would otherwise fail to be credited with 501 or more Hours of Service in such period or, in any other case, in the immediately following computation period.
(iv) MILITARY. An Employee shall also be credited with one Hour of Service for each hour during which the Employee is absent on active duty in the military service of the United States under leave of absence granted by a Participating Company or a Related Entity or when required by law, provided he returns to employment with a Participating Company or a Related Entity within 90 days after his release from active duty or within such longer period during which his right to reemployment is protected by law.
(v) MISCELLANEOUS. For purposes of this subsection, the regulations issued by the Secretary of Labor at 29 CFR 2530.200b - 2(b) and (c) are incorporated by reference. Nothing herein shall be construed as denying an Employee credit for an "Hour of Service" if credit is required by separate federal law.
(vi) EQUIVALENCIES. If, for Plan purposes, an Employee's records are kept on other than an hourly basis as described above, the Committee, according to uniform rules applicable to a class of Employees may apply the following equivalencies for purposes of crediting Hours of Service:
Credit Granted to Individual if
Basis Upon Which Individual Earns One or More
Records are Maintained Hours of Service During Period
Shift Actual hours for full shift
Day 10 Hours of Service
Week 45 Hours of Service
Bi-weekly Payroll Period 90 Hours of Service
Semi-monthly Payroll Period 95 Hours of Service
Months of Employment 190 Hours of Service
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(u) "INVESTMENT CATEGORY" shall mean any separate investment fund which is made available under the terms of the Plan.
(v) "INVESTMENT MANAGER" shall mean any Fiduciary who;
(i) has the power to manage, acquire, or dispose of any asset of the Plan:
(ii) is:
(A) registered as an investment adviser under the Investment Advisers Act of 1940;
(B) a bank, as defined in that Act; or
(C) an insurance company qualified to perform services described in subsection 1(v)(i) above under the laws of more than one state; and
(iii) has acknowledged in writing that he is a Fiduciary with respect to the Plan.
(w) "LIMITATION YEAR" shall mean the consecutive twelve-month period commencing on January 1st and ending on December 31st.
(x) "MEMBER" shall mean each and every Employee of a Participating Company who satisfies the requirements for participation under Section 3 hereof or who has an Account held under the Plan.
(y) "NORMAL RETIREMENT DATE" shall mean the date on which a Member attains age 65.
(z) "PARTICIPATING COMPANY" shall mean any
Related Entity with respect to the Company which adopts this Plan pursuant to
Section 16. The term shall also include the Company, unless the context
otherwise requires.
(aa) "PLAN" shall mean Cal-Maine Foods, Inc. Employee Stock Ownership Plan as set forth herein as of the Effective Date and the same as may be amended from time to time.
(bb) "PLAN YEAR" shall mean the consecutive twelve-month period commencing on January 1st and ending on December 31st.
(cc) "RELATED ENTITY" shall mean (i) all
corporations which are members with a Participating Company in a controlled
group of corporations within the meaning of Section 1563(a) of the Code,
determined without regard to Sections 1563(a)(4) and (e)(3)(c) of the Code,
(ii) all trades or businesses (whether or not incorporated) which are under
common control with a Participating Company as determined by regulations
promulgated under Section 414(c) of the Code, (iii) all trades or businesses which are members of an affiliated service group with a Participating Company within the meaning of Section 414(m) of the Code and (iv) any other entity required to be aggregated with a Participating Company in accordance with regulations under Section 414(o) of the Code; provided, however, for purposes of Section 5, the definition shall be modified to substitute the phrase "more than 50%" for the phrase "at least 80%" each place it appears in Section 1563(a)(1) of the Code. Furthermore, for purposes of crediting Hours of Service for eligibility to participate and vesting, Service performed as a leased employee, within the meaning of Section 414(n) of the Code, of a Participating Company or a Related Entity shall be treated as Service performed for a Participating Company or a Related Entity. An entity is a Related Entity only during those periods in which it is included in a category described in this subsection.
(dd) "SUSPENSE ACCOUNT" shall mean the account used to reflect company stock acquired with loan proceeds pursuant to subsection 6(b) hereof.
(ee) "TRUST AGREEMENT" shall mean the agreement between the company and the Trustees under which the Fund is head.
(ff) "TRUSTEE" shall mean such person, persons or corporate fiduciary designated pursuant to subsection 6(a) to manage and control the Fund pursuant to the terms of the Plan and the Trust Agreement.
(gg) "UNALLOCATED STOCK ACCOUNT" shall mean the interim account used to reflect unleveraged Company Stock acquisitions by the Trust prior to the allocation of such stock to a Member's Company Stock Account.
(hh) "VALUATION DATE" shall mean the last business day of the Plan Year and the last business day of the sixth month in the Plan Year. If the Fund or any Investment Category is invested in a manner which permits daily valuation of the portion of a Member's Account held therein without incremental cost or the Committee otherwise directs, then the date of liquidation of a Member's investment therein for distribution or reinvestment shall also be a "Valuation Date".
(ii) "YEAR OF SERVICE" shall mean a consecutive twelve-month computation period specified in the Plan in which an Employee is credited with at least 1,000 Hours of Service, including such periods prior to the Effective Date.
2. ADMINISTRATION OF THE PLAN
(a) ERISA REPORTING AND DISCLOSURE BY ADMINISTRATOR. The Administrator shall file all reports and distribute to Members and beneficiaries reports and other information required under ERISA and the Code.
(b) COMMITTEE. The Company, through its Board of Directors, shall designate an Administrative Committee which shall have the authority to control and manage the operation and administration of the Plan. If the Committee consists of more than two members, it shall act by majority vote. The Committee may (i) delegate all or a portion of the responsibilities of controlling and managing the operation and administration of the Plan to one or more persons and (ii) appoint agents, investment advisers, counsel, or other representatives to render advice with regard to any of its responsibilities under the Plan. The Board of Directors may remove, with or without cause, the Committee or any Committee member. The Committee may remove, with or without cause, any delegate or adviser designated by it.
(c) MULTIPLE CAPACITIES. Any person may serve in more than one fiduciary capacity (including service both as Trustee and Committee member).
(d) COMMITTEE POWERS. The responsibility to control and manage the operation and administration of the Plan shall include, but shall not be limited to, the performance of the following acts:
(i) the filing of all reports required of the Plan, other than those which are the responsibility of the Administrator;
(ii) the distribution to Members and beneficiaries of all reports and other information required of the Plan, other than reports and information required to be distributed by the Administrator;
(iii) the keeping of complete records of the administration of the Plan;
(iv) the promulgation of rules and regulations for the administration of the Plan consistent with the terms and provisions of the Plan; and
(v) the interpretation of the Plan including the determination of any questions of fact arising under the Plan and the making of all decisions required by the Plan. The Committee's interpretation of the Plan and any actions and decisions taken in good
faith by the Committee based on its interpretation shall be final and conclusive. The Committee may correct any defect, or supply any omission, or reconcile any inconsistency in the Plan in such manner and to such extent as shall be expedient to carry the Plan into effect and shall be the sole judge of such expediency.
(e) ALLOCATION OF FIDUCIARY RESPONSIBILITY. The Board of Directors, by resolution at their meetings or by written consent or by any other process permitted under State law, the Administrator, the Committee, the Trustee and the Investment Manager (if any) possess certain specified powers, duties, responsibilities and obligations under the Plan and the Trust Agreement. It is intended under this Plan and the Trust Agreement that each be responsible solely for the proper exercise of its own functions and that each not be responsible for any act or failure to act of another, unless otherwise responsible as a breach of its fiduciary duty or for breach of duty by another Fiduciary under ERISA's rules of co-fiduciary responsibility. In general:
(i) the Board of Directors is responsible for appointing and removing the Committee and the Trustee and for amending or terminating the Plan and the Trust Agreement;
(ii) the Committee is responsible for administering the Plan, for adopting such rules and regulations as in the opinion of the Committee are necessary or advisable to implement and administer the Plan and to transact its business, and for providing a procedure for carrying out a funding policy and method consistent with the objectives of the Plan and the requirements of Title I of ERISA and the Code;
(iii) the Administrator is responsible for discharging the statutory duties of a plan administrator under ERISA and the Code;
(iv) the Trustee and the Investment Manager are responsible for the management and control of the respective portions of the Fund over which they have control to the extent provided in the Trust Agreement; and
(v) the Fiduciary appointing an Investment Manager is responsible for the appointment and retention of the Investment Manager.
(f) CLAIMS. If, pursuant to the rules, regulations or other interpretations of the Plan, the Committee denies the claim of a Member or beneficiary for benefits under the Plan, the Committee shall provide written notice, within 90 days after receipt of the claim, setting forth in a manner calculated to be understood by the claimant:
(i) the specific reasons for such denial;
(ii) the specific reference to the Plan provisions on which the denial is based;
(iii) a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is needed; and
(iv) an explanation of the Plan's claim review procedure and the time limitations of this subsection applicable thereto. A Member or beneficiary whose claim for benefits has been denied may request review by the Committee of the denied claim by notifying the Committee in writing within 60 days after receipt of the notification of claim denial. As part of said review procedure, the claimant or his authorized representative may review pertinent documents and submit issues and comments to the Committee in writing. The Committee shall render its decision to the claimant in writing in a manner calculated to be understood by the claimant not later than 60 days after receipt of the request for review, unless special circumstances require an extension of time, in which case decision shall be rendered as soon after the sixty-day period as possible, but not later than 120 days after receipt of the request for review. The decision on review shall state the specific reasons therefore and the specific Plan references on which it is based.
(g) FIDUCIARY COMPENSATION. A Committee member, delegate, or adviser who already receives full-time pay from the Company or a Related Entity shall serve without compensation for his services as such, but he shall be reimbursed pursuant to subsection 2(h) for any reasonable expenses incurred by him in the administration of the Plan. A Committee member, delegate, or adviser who is not already receiving full-time pay from the Company may be paid such reasonable compensation as shall be agreed upon.
(h) PLAN EXPENSES. All expenses of administration of the Plan may be paid by the Company. If the Company does not pay such expenses, then they shall be paid out of the Fund.
(i) FIDUCIARY INSURANCE. If the Committee so directs, the Plan shall purchase insurance to cover the Plan from liability or loss occurring by reason of the act or omission of a Fiduciary provided such insurance permits recourse by the insurer against the Fiduciary in the case of a breach of duty by such Fiduciary.
(j) INDEMNIFICATION. The Company shall indemnify and hold harmless to the maximum extent permitted by its by-laws each Fiduciary who is an Employee or who is an officer or director of any Participating Company or any Related Entity from any claim, damage, loss or expense, including litigation expenses and attorneys' fees, resulting from such person's service as a Fiduciary of the Plan provided the claim, damage, loss or expense does not result from the Fiduciary's gross negligence or intentional misconduct.
3. PARTICIPATION IN THE PLAN
(a) INITIAL ELIGIBILITY. Each and every Employee of a Participating Company, participating in this Plan on December 31, 1993, shall continue to Participate under the terms of this Plan as amended and restated effective January 1, 1994. Each and every other Employee of a Participating Company not excluded under subsection 3(b) shall be eligible and shall qualify to participate in the Plan on the Entry Date next following both attainment by such Employee of age twenty-one (21) and completion by such Employee of one (1) year of Service, provided he is then employed by a Participating Company.
(b) INELIGIBLE EMPLOYEES
(i) COLLECTIVE BARGAINING AGREEMENT. No Employee whose terms and conditions of employment are determined by a collective bargaining agreement between employee representatives and a Participating Company shall be eligible or qualify for participation unless such collective bargaining agreement provides to the contrary, in which case such Employee shall be eligible or shall qualify for participation upon compliance with such provisions for eligibility or participation as such agreement shall provide; except that no Employee who has selected, or in the future selects, a union shall become ineligible during the period between his selection of the union and the execution of the first collective bargaining agreement which covers him.
(ii) CERTAIN RELATED ENTITIES. No Employee of a Related Entity which is not a Participating Company shall be eligible or qualify for participation.
(c) MEASURING SERVICE. For purposes of measuring service to satisfy the eligibility provisions of subsection 3(a), the Year of Service computation period shall begin with the date on which the Employee first is credited with an Hour of Service and with each subsequent anniversary thereof; provided, however, if an Employee suffers Breaks in Service with respect to five consecutive computation periods prior to satisfying the length of service requirement of subsection 3(a), such Employee shall not be credited with pre-Break in Service Years of Service and the eligibility computation period with respect to such Employee shall commence thereafter on the date on which the Employee first again is credited with an Hour of Service and with each subsequent anniversary thereof.
(d) COMMENCEMENT OF PARTICIPATION. An Employee who satisfies all the requirements for eligibility under subsection 3(a) and who is not excluded under subsection 3(b) shall become a Member on the Entry Date on which he first became eligible to share in Participating Company contributions for the Plan Year in which the Entry Date occurs.
(e) TERMINATION AND REQUALIFICATION. An Employee who has satisfied the service requirement of subsection 3(a) applicable to him and who subsequently becomes ineligible for any reason shall requalify for participation on the date on which he is next credited with an Hour of Service in an eligible job classification or, if later, on the Entry Date after which he satisfies the age requirement.
(f) TERMINATION OF MEMBERSHIP. An Employee who becomes a Member shall remain a Member as long as he has an Account held under the Plan.
4. CONTRIBUTIONS
(a) PARTICIPATING COMPANY CONTRIBUTIONS. For each Plan Year the Participating Companies may contribute cash or shares of Company Stock, or both, in such amounts as the Board of Directors, in its absolute discretion, shall determine. The Participating Companies shall pay over to the Trustees all contributions, in one or more installments, not later than the due date (including extensions thereof) for filing the federal income tax returns for the taxable year ended coincident with or next following the last day of the Plan Year for which such contributions are made. Any contribution made in cash shall, in the sole discretion of the Board of Directors, be (i) used to purchase available company Stock or (ii) allocated to Member's Non-Stock Accounts' provided, however, that to the extent required, any cash contributions shall be used to repay any portion of a loan under subsection 6(b).
(b) MAXIMUM CONTRIBUTIONS. The aggregate amount of
contributions made by Participating Companies shall not exceed fifteen percent
(15%) of the aggregate compensation (as defined in Section 415(c)(3) of the
Internal Revenue Code) of all Members during the Plan Year, except as provided
in this subsection 4(b). For any Plan Year with respect to which Participating
Company contributions are applied to repay any portion of a loan made to the
Plan under subsection 6(b), the total amount of Participating Company
contributions used to repay principal on all such loans shall not exceed
twenty-five percent (25%) of such aggregate Member compensation for the Plan
Year. The Participating Companies may contribute any amount in excess of the
maximum for the Plan Year, without limitation, for the specific purpose of
paying interest on such loans. Furthermore, the contributions made by the
Participating Companies to this plan, when combined with any other qualified
plans, shall not exceed the maximum allowable deductions permitted under
Section 404 of the Internal Revenue Code.
(c) ALLOCATIONS TO MEMBERS. The following allocations shall be made to eligible Members' Accounts:
(i) As of the end of each month, any Participating Company contributions made as a flat percentage of Members' compensation for such period.
(ii) As of each semi-annual Valuation Date, any additional Participating Company contribution (not included under subsection 4(c)(i)
above) and/or forfeitures applied to reduce such contributions for such semi-annual period.
(iii) As of each semi-annual Valuation Date, any shares and fractional shares of Company Stock purchased by the Trust with cash contributions or released from the Suspense Account pursuant to subsection 6(b) during such semi-annual period.
(iv) As of the Valuation Date coincident with the last business day of the Plan Year, any forfeitures attributable to Members who terminated during the Plan Year.
(d) ELIGIBLE MEMBERS. The following Members shall be entitled to share in any allocations during a Plan Year:
(i) Members who retired during the Plan Year pursuant to subsection 8(a);
(ii) Members who died during the Plan Year;
(iii) Members who terminated employment due to Disability during the Plan Year;
(iv) Members who were employed by a Participating Company during the month for which any monthly allocation is made shall share in any such monthly allocation; and
(v) Members who were employed by a Participating Company on the Valuation Date on which any allocation is made shall share in such allocation.
(e) METHOD OF ALLOCATION. Any monthly allocation of Participating company contributions shall be allocated among Members' eligible to share therein as a flat percentage of the Member's compensation for such period. Any allocation made as of a semi-annual Valuation Date shall be allocated among Members eligible to share therein in the ratio which the Compensation of each eligible Member for the semi-annual period bears to the Compensation all such eligible members for the semi-annual period.
(f) COMPANY STOCK ACCOUNT. The allocations of shares and
fractional shares of Company Stock made to a Member constitute the Member's
Company Stock Account. A Member shall have a nonforfeitable interest in the
Company Stock Account portion of his Account to the extent provided under
Section 8.
(g) NON-STOCK ACCOUNT. The allocations of cash made to a member, as adjusted for investment gain or loss and income or expense, constitute the Member's Non-Stock Account. A Member shall have a nonforfeitable interest in the Non-Stock Account portion of his Account to the extent provided under Section 8.
(h) ROLLOVERS. Prior to September 26, 1993 and subject to uniform rules, any Employee as defined in subsection 1(l) may, subject to the Committee's approval, transfer to the Plan all or a portion of an eligible rollover distribution from an eligible retirement plan. Such rollover contributions, if approved, shall be credited to the Employee's Rollover Account.
The terms "eligible rollover distribution" and "eligible retirement plan" shall have the meanings described in 9(b)(iii) of the Plan, except that, for purposes of this subsection 4(h), an individual retirement account described in Section 408(a) of the Code which holds an eligible rollover distribution made to a surviving spouse shall not be considered an eligible retirement plan.
The Committee shall develop such procedures, and may require such information from an Employee desiring to make such a transfer, as it deems necessary or desirable to determine that the proposed transfer will meet the requirements of this Section.
Any Employee who has not met the eligibility requirements of Section 3(a) but who has made Rollover Contributions into the Plan shall be considered a Participant for purposes of Sections 6, 7, 8, 10, 11, 13, 14, 15 and 18 of the Plan.
Notwithstanding anything herein to the contrary, this Plan shall not accept any Rollover Contributions after September 27, 1993 or any direct or indirect transfer (in a transfer after December 31, 1984) from a defined benefit plan, money purchase plan (including a target benefit plan), stock bonus or profit sharing plan which would otherwise have provided for a life annuity form of payment to the Participant.
(i) ROLLOVER ACCOUNT. Any contribution under subsection
4(h), as adjusted for investment gain or loss and income or expense, shall
constitute the Member's Rollover Account. A Member shall at all times have a
nonforfeitable interest in the Rollover Account portion of his Account.
(j) VOLUNTARY POST-TAX ACCOUNT. Any contributions made to the Plan by a Member prior to April 1, 1991 from his Compensation received net of Federal Income Tax (after-tax contributions), as adjusted for investment gain or loss and income or expense, shall constitute the Member's Voluntary Post-Tax Account. A Member shall at all times have a nonforfeitable interest in the Voluntary After-Tax Account portion of his Account. No after-tax contributions shall be permitted under this Plan after March 31, 1991.
(k) PAYROLL TAXES. The Participating Companies shall withhold from the Compensation of the Members and remit to the appropriate government agencies such payroll taxes and income tax withholding as the Company determines is or may be necessary under applicable statutes or ordinances and the regulations and rulings thereunder.
5. MAXIMUM CONTRIBUTIONS AND BENEFITS
(a) DEFINED CONTRIBUTION LIMITATION. If the allocation of Participating Companies in accordance with Section 4 will result in an allocation of more than one-third of the total contributions for a Plan Year to the Highly Compensated Employees, then the allocation shall be adjusted so that such excess will not occur.
In the event that after the adjustment, if any, is made, the amount allocable to a Member from contributions to the Fund in respect of any Plan Year would cause the Annual Additions allocated to any Member under this Plan plus the Annual Additions allocated to such Member under any other plan maintained by a Participating Company or a Related Entity to exceed for any Limitation Year the lesser of (i) $30,000 (or, if greater, one-fourth of the dollar limitation in effect under subsection 415(b)(1)(A) of the Code for such Limitation Year) or (ii) 25% of such Member's compensation (as defined in subsection 5(d)) for such Limitation Year, then such amount allocable to such Member shall be reduced by the amount of such excess to determine the actual amount of the contribution allocable to such Member in respect of such Plan Year. The excess amount shall be allocated to the other Members in proportion to their Compensation for the Plan Year until their Annual Additions reach the above limits. Any excess amount remaining shall be held unallocated in a suspense account and shall be allocated among all eligible Members in the next Limitation Year (and succeeding Limitation Years as necessary).
If a short limitation year is created because of an amendment changing the Limitation Year to a different consecutive 12-month period, the defined contribution dollar limitation will be prorated based on the number of months in the short Limitation Year.
(b) COMBINED LIMITATION. In addition to the limitation of subsection 5(a), if a Participating Company or a Related Entity maintains or maintained a defined benefit plan and the amount allocable to a Member with respect to any Plan Year would cause the aggregate amount allocated to any Member under all defined contribution plans maintained by all Participating Companies or Related Entities to exceed the maximum allocation as determined in subsection 5(c), then such amount allocable to such Member shall be reduced by the amount of such excess to determine the actual amount of the contribution allocable to such Member for such Plan
Year. The excess amount with respect to any Member shall be held in accordance with subsection 5(a). Notwithstanding the foregoing, to the extent administratively feasible, the combined limitation shall be applied to the Member's benefit payable from the defined benefit plan prior to reduction of the Member's Annual Additions under this Plan.
(c) COMBINED LIMITATION COMPUTATION. (i) The maximum allocation is the amount of Annual Additions which may be allocated to a Member's benefit without permitting the sum of the defined benefit plan fraction (as hereinafter defined) and the defined contribution plan fraction (as hereinafter defined) to exceed 1.0 for any Limitation Year. The defined benefit plan fraction applicable to a Member for any Limitation Year is a fraction, the numerator of which is the projected annual benefit of the Member under the plan determined as of the close of the Limitation Year and the denominator of which is the lesser of (1) the product of 1.25 multiplied by the maximum then permitted dollar amount of straight life annuity payable under the defined benefit plan maximum benefit provisions of the Code as a benefit commencing at the Member's social security retirement age or (2) the product of 1.4 multiplied by the maximum permitted amount of straight life annuity, based on the Member's compensation, payable under the defined benefit plan maximum benefit provisions of the Code as a benefit commencing at the Member's social security retirement age. For purposes of this subsection 5(c), a Member's projected annual benefit is equal to the annual benefit, expressed in the form of a straight life annuity, to which the Member would be entitled under the terms of the defined benefit plan based on the assumptions that (1) the Member will continue employment until reaching his social security retirement age (or current age, if later) at a rate of compensation equal to that for the Limitation Year under consideration and (2) all other relevant factors used to determine benefits under the plan for the Limitation Year under consideration will remain constant for future Limitation Years. The defined contribution plan fraction applicable to a Member for any Limitation Year is a fraction, the numerator of which is the sum of the Annual Additions for all Limitation Years allocated to the Member as of the close of the Limitation Year and the denominator of which is the sum of the lesser, separately determined for each Limitation Year of the Member's employment with a Participating Company or Related Entity, of
(1) the product of 1.25 multiplied by the maximum dollar amount of Annual Additions which could have been allocated to the Member under the Code for such Limitation Year or (2) the product of 1.4 multiplied by the maximum amount, based on the Member's compensation, of Annual Additions which could have been allocated to the Member for such Limitation Year.
(ii) TRANSITIONAL RULE. Notwithstanding the above, if the Employee was a Member as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by the Participating Companies which were in existence on May 6, 1986, the denominator of the defined benefit fraction used in computing the combined limitation pursuant to 5(c)(i) hereof will not be less than 125 percent of the sum of the annual benefits under such plans which the Member had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any changes in the terms and conditions of the plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 for all Limitation Years beginning before January 1, 1987.
Furthermore, in computing the defined contribution plan fraction pursuant to 5(c)(i) hereof, if the Employee was a Member as of the end of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Participating Companies which were in existence on May 6, 1986, the numerator of the defined contribution fraction will be adjusted if the sum of this fraction and the defined benefit fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the fractions over 1.0 times (2) the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the plan made after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987.
(d) DEFINITION OF "COMPENSATION" FOR CODE LIMITATIONS. For purposes of the limitations on the allocation of Annual Additions to a
Member and maximum benefits under a defined benefit plan as provided for in this Section 5, "compensation" for a Limitation Year shall mean the sum of (i) amounts paid by a Participating Company or a Related Entity to the Member with respect to personal services rendered by the Member, (ii) earned income of a self-employed person with respect to a Participating Company or a Related Entity, (iii) amounts received by the Member (A) through accident or health insurance or under an accident or health plan maintained or contributed to by a Participating Company or a Related Entity and which are includable in the gross income of the Member, (B) through a plan contributed to by a Participating Company or a Related Entity providing payments in lieu of wages on account of a Member's permanent and total disability, or (C) as a moving expense allowance paid by a Participating Company or a Related Entity and which are not deductible by the Member for federal income tax purposes; (iv) the value of a non-statutory stock option granted by a Participating Company or a Related Entity to the Member to the extent included in the Member's gross income for the taxable year in which it was granted; and (v) the value of property transferred by a Participating Company or a Related Entity to the Member which is includable in the Member's gross income due to an election by the Member under Section 83(b) of the Code. Compensation shall not include (i) contributions made by a Participating Company or Related Entity to a deferred compensation plan which, without regard to Section 415 of the Code, are not includable in the Member's gross income for the taxable year in which contributed; (ii) Participating Company or Related Entity contributions made on behalf of a Member to a simplified employee pension plan to the extent they are deductible by the Member under Section 219(b)(7) of the Code; (iii) distributions from a deferred compensation plan (except from an unfunded non-qualified plan when includable in gross income); (iv) amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by a Member either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (v) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified or incentive stock option; and (vi) other amounts which receive special tax benefits, such as premiums for group term life insurance (to the extent excludable from gross income) or Participating Company or Related Entity contributions towards the
purchase of an annuity contract described in Section 403(b) of the Code.
(e) EXCEPTIONS. The above limitation on Annual Additions, after adjustment that may be required by the first paragraph of subsection 5(a) is made, shall not apply to:
(i) Any reallocation of forfeitures of Company Stock which was acquired with the proceeds of a loan made to the Plan pursuant to subsection 6(b).
(ii) Participating Company contributions that are deductible as interest payments on a loan under Section 404(2)(9)(B) of the Code and charged against a Member's Account.
6. ADMINISTRATION OF FUNDS
(a) INVESTMENT OF PLAN ASSETS. The management and control of the assets of the Plan shall be vested in the Trustee designated from time to time by the Company through its Board of Directors, or the Trustee, may appoint one or more Investment Managers to manage, acquire or dispose of any assets of the Plan.
Participating Company contributions shall be invested primarily in Company Stock. Shares of Company Stock may be purchased from the Participating Companies or other shareholders. All purchases and sales of Company Stock shall be made at the direction of the Committee. The Trustee may hold up to 100% of Fund assets derived from Participating Company contributions in Company Stock. The Trustee, at the direction of the Committee, may also invest a portion of the Plan assets in cash, cash equivalents, certificates of deposit, money market funds, guaranteed investment contracts, life insurance, short term securities, bonds and other investments desirable for the Trust. Funds derived from any matching company contributions made by Participating Companies or rollover contributions or after-tax contributions by Members shall not be invested in Company Stock.
(b) EXEMPT LOANS.
(i) The Committee may direct the Trustee to incur a loan on behalf of the Trust in a manner and under conditions which will cause the loan to be an "exempt loan" within the meaning of Section 4975(d)(2) of the Code and regulations thereunder. A loan shall be used primarily for the benefit of Members and their beneficiaries. The proceeds of each such loan shall be used, within a reasonable time after the loan is obtained, only to purchase Company Stock, to repay the loan or to repay any prior loan. Any such loan shall provide for a reasonable rate of interest, an ascertainable period of maturity and shall be without recourse against the Plan. Any such loan and shares of such stock that were used as collateral on a prior loan which was repaid with the proceeds of the loan and shares of such stock that were used as collateral on a prior loan which was repaid with the proceeds of the current loan. Such stock pledges as collateral shall be placed in a Suspense Account and released pursuant to part (ii) below as the loan is repaid. Company Stock released from the Suspense Account shall be allocated in the manner described in Section 4. No person entitled to
payment under a loan made pursuant to this subsection shall have recourse against any Fund assets other than the stock used as collateral for the loan, Participating Company contributions of cash that are available to meet obligations under the loan and earnings attributable to such collateral and the investment of such contributions. Participating Company contributions made with respect to any Plan Year during which the loan remains unpaid, and earnings on such contributions, shall be deemed available to meet obligations under the loan, unless otherwise provided by the Company at the time such contributions are made.
(ii) Any pledge of stock as collateral under this subsection shall provide for the release of shares so pledged upon the payment of any portion of the loan. Shares so pledged shall be released in the proportion that the principal and interest paid on the loan for the Plan Year bears to the aggregate principal and interest paid for the current Plan Year and each Plan Year thereafter, as provided in Treasury Regulation 54.4975-7(b)(8).
(iii) Payments of principal and interest on any loan under this Section shall be made by the Trustee at the direction of the Committee solely from: (A) Participating Company contributions available to meet obligations under the loan, (B) earnings from the investment of such contributions, (C) earnings attributable to stock pledged as collateral for the loan, (D) other dividends on stock to the extent permitted by law, (E) the proceeds of a subsequent loan made to repay the loan, and (F) the proceeds of the sale of any stock pledges as collateral for the loan. The contributions and earnings available to pay the loan must be accounted for separately by the Committee until the loan is repaid.
(iv) Subject to the limitations of Section 5 on annual additions to a Member's Account, assets released from a Suspense Account by reason of payment made on a loan shall be allocated as soon as administratively feasible upon such payment to the accounts of all Members who then would be entitled to an allocation of contributions if such payment had been made on the last day of the Plan Year.
(c) DIVERSIFICATION. Any Member who has attained age 55 and completed 10 years of participation under the Plan, excluding participation prior to September 1, 1989, shall have the right to make an election to direct the Trustee as to the investment of his shares of Company Stock
acquired by or contributed to the Plan after December 31, 1986. Such a Member
may elect within 90 days after the close of each Plan Year in the qualified
election period (as defined below) to direct the Trustee as to the investment
of at least 25% of his Company Stock Account, less any amount to which a prior
election applies. In the case of the last year to which an election applies,
50% shall be substituted for 25%. The Plan shall meet the requirements of
Section 401(a)(28) by:
(i) distributing the portion of such Company Stock Account covered by the election to the Member within the 90 day period after the election is made or;
(ii) at the discretion of the Committee, offer at least three alternate Investment Categories to each Member making such election and, within 90 days after the period during which the election may be made, invest the portion of the Members Company Stock Account accordingly. A Member electing to reinvest a portion of his Company Stock Account in alternative Investment Categories will be prohibited from receiving a distribution of the reinvested portion in the form of Company Stock.
Distributions made in accordance with subsection (c)(i) above may be subject to a Member's Put Option, as applicable.
For purposes of this subsection, the "qualified election period" is the six-plan-year period beginning with the Plan Year after the first Plan Year beginning after 1986 in which the Employee has attained age 55 and completed at least 10 years of participating in the Plan, excluding participation prior to September 1, 1989.
(d) VOTING RIGHTS AND PROVISIONS
(i) VOTING RIGHTS. Each member (or, in the event of his death, his beneficiary) shall have the right to direct the Committee or Trustee as to the manner in which whole and partial shares of Company Stock allocated to his Company Stock Account as of the record date are to be voted on each matter brought before an annual or special shareholders' meeting. Before each such meeting of shareholders, the Committee or Trustee shall furnish to each Member (or beneficiary) a copy of the proxy solicitation material, together with a form requesting directions on how such shares of Company Stock allocated to such Member's Account shall be voted on each such matter. Upon timely receipt of such directions, the
Committee shall instruct the Trustee on how the Trustee shall, on each such matter, vote as directed the number of shares (including fractional shares) of Company Stock allocated to such Member's Company Stock Account, and the Committee or Trustee shall have no discretion in such matter. The directions received by the Committee or Trustee from Members shall be held in confidence and shall not be divulged or released to any person, including officers or employees of any Company. The Trustee shall vote allocated shares for which it has not received direction and unallocated shares of Company Stock in the same proportion as directed shares are voted, and shall have no discretion in such matter.
(ii) TENDER OR EXCHANGE. If a tender or exchange offer is commenced for Company Stock:
(A) The Committee or Trustee shall distribute in a timely manner to each Member (or beneficiary) such information as is distributed to holders of Stock in connection with the tender or exchange offer.
(B) All Company Stock held by the Trustee in Members' Company Stock Account shall be tendered or not tendered by the Trustee in accordance with directions it receives from Members (or beneficiaries). Each Member (or beneficiary) shall be entitled to direct the Committee or Trustee with respect to the tender of such Company Stock allocated to his Account. The instructions received by the Committee or Trustee from Members (or beneficiaries) shall be held by the Committee or Trustee in confidence and shall not be divulged or released to any person, including officers or employees of any company.
(C) The Trustee shall not tender Company Stock allocated to Members' Company Stock Account with respect to which directions by Members (or beneficiaries) are not received or Company Stock held by the Trustee that is not allocated to Members' Company Stock Account.
(iii) NO RECOMMENDATIONS. The Committee or Trustee shall make no recommendations regarding the manner of exercising any rights under this subsection 6(d), including whether or not such rights should be exercised, other than information released to all shareholders pursuant to a Company-sponsored proxy statement.
(e) PUT OPTION. All distributions shall first be made in cash to the extent available, then in Company Stock, if readily tradeable, unless the Member requests otherwise. If the Company Stock is to be distributed and is or becomes not readily tradable on an established market, then any Member who is otherwise entitled to a distribution from the Plan, shall have the right (hereinafter referred to as "Put Option" to require that the Trustee or Company repurchase any Company Stock under the valuation as determined below. The Put Option shall only be exercisable during the 60 day period, then it can be exercised for an additional period of 60 days in the following Plan Year. This Put Option shall be nonterminable within the meaning of Internal Revenue Service Regulation 54.4975(11)(a)(ii).
The amount paid for Company Stock under the Put Option shall be paid substantially equal periodic payments (not less frequently than annually) over a period beginning not later than 30 days after the exercise of the Put Option and not exceeding 5 years. There shall be adequate security provided and reasonable interest paid on the unpaid balance due under this paragraph.
If the Company Stock is or becomes not readily tradable on an established securities market, then any valuation required (as referenced above) under this Plan will be conducted by an independent appraiser as defined in Section 401(a)(28) of the Code.
Notwithstanding any other provision in the Plan to the contrary, if the bylaws and charter of the Company restrict ownership of company securities to current employees pursuant to Code Section 409(h), there will be no distribution of Company Stock.
(f) FIRST RIGHT OF REFUSAL. Any Member or Beneficiary who receives a distribution of Company Stock and who desires to sell all or any part of said Company Stock (whether or not at a time when said Company Stock is not readily tradable), shall first offer such shares for sale to the Trustee, and, if the Trustee, at the Committee's direction, shall not exercise said right of first refusal, then to the Company, at the greater of the price offered by a bonafide prospective purchaser or the fair market value of the Company Stock as of the end of the Plan Year coincident with or immediately preceding the date of notice to the Committee, Trustee or Company. If the Trustee or Company fail to purchase all such shares within
fourteen (14) days after written notice from the selling Member or Beneficiary,
the Trustee's and Company's rights to such stock shall end as of said fourteen
(14) days.
(g) INVESTMENT CATEGORIES. Pursuant to the requirements of subsection 6(c), the Committee may establish at least three (3) alternate Investment Categories and may, at anytime, add to or delete from such Investment Categories. If applicable, any Member electing to reinvest a portion of his Company Stock Account, in accordance with subsection 6(c) and uniform rules of general application established by the Committee, shall have the right to designate the Investment Category or Categories in which the Trustee is to invest such portion. Such reinvested portion shall be maintained as a directed investment portion of his Non-Stock Account.
(h) LIFE INSURANCE. No portion of interest of any Member may be applied to the purchase of any policy of insurance relating to any other Member; and no policy premium may be less than the premium rate for an ordinary life insurance policy. The Committee may direct that the interest of each Member shall be invested proportionately with the interests of all Members in any such policy of insurance or other earmarked investment.
(i) The proceeds from any "key man" insurance policies upon the life of any officer or employee of a Participating Company shall inure solely to the benefit of the then Members under the Plan.
(ii) Ordinary policies of life insurance purchased on the lives of Members shall be paid out of each Members cash allocations. No more than forty-nine and nine-tenths percent (49.9%) of a Member's Participating Company contributions may be applied to the payment of premiums for ordinary life insurance on such Member's life. The proceeds of such insurance shall be credited to the Member's Non-Stock Account and distributed to the Beneficiary thereof. All policies of ordinary life insurance so purchased for the account of a Member shall be distributed at or before retirement to such Member.
All policies of insurance purchased by the Trustee shall be issued by a legal reserve life insurance company authorized to do business in the State of Mississippi.
(i) VALUATIONS. The Fund and each Investment Category shall be valued by the Trustee at fair market value as of each Valuation Date.
(j) ALLOCATION OF GAIN OR LOSS. Any increase or decrease in the market value of the Fund, including any Investment Category of the Fund, since the preceding Valuation Date and all income earned, expenses incurred and realized profits and losses, shall be determined in accordance with accounting methods uniformly and consistently applied and shall be added to or deducted from the Account of each Member based on the portion of a Member's Account in the Fund and Investment Category, if any, at the prior Valuation Date in accordance with non-discriminatory procedures and rules adopted by the Committee. Before reallocation, the Accounts of the Members shall be reduced by any payments made therefrom in the period. At the Committee's discretion uniformly applied, administrative expenses directly connected or associated with a particular Member's Account may be charged to the Account. Notwithstanding the foregoing, allocation shall not be required to the extent the Fund, or any Investment Category thereof, is administered in a manner which permits separate valuation of each Member's interest therein without separate incremental cost to the Plan or the Committee otherwise provides for separate valuation.
(k) BOOKKEEPING. The Committee shall direct that separate bookkeeping accounts be maintained to reflect each Member's Company Stock Account, Non-Stock Account, Rollover Account and Voluntary Post Tax Account.
7. BENEFICIARIES AND DEATH BENEFITS
(a) DESIGNATION OF BENEFICIARY. Each Member shall have the right to designate one or more beneficiaries and contingent beneficiaries to receive any benefit to which such Member may be entitled hereunder in the event of the death of the Member prior to the distribution of such benefit by filing a written designation with the Committee on the form prescribed by the Committee. Such Member may thereafter designate a different beneficiary at any time by filing a new written designation with the Committee. Notwithstanding the foregoing, if a married Member designates a beneficiary other than his spouse, such designation or subsequent changes shall not be valid unless the spouse consented in writing witnessed by a notary public or a member of the Committee in a manner prescribed by the Committee. A spouse's consent given in accordance with the Committee's rules shall be irrevocable by the spouse with respect to the beneficiary then designated by the Member unless the Member makes a new beneficiary designation. Any written designation shall become effective only upon its receipt by the Committee. If the beneficiary designated pursuant to this subsection should die on or before the commencement of distribution of benefits and the Member fails to make a new designation, then his beneficiary shall be determined pursuant to subsection 7(b).
(b) BENEFICIARY PRIORITY LIST. If (i) a Member omits or fails to designate a beneficiary, (ii) no designated beneficiary survives the Member or (iii) the Committee determines that the Member's beneficiary designation is invalid for any reason, then the death benefits shall be paid to the Member's surviving spouse, or if the Member is not survived by his spouse, then to the Member's estate.
8. BENEFITS FOR MEMBERS
The following are the only post employment benefits provided by the Plan:
(a) RETIREMENT BENEFIT
(i) VALUATION. Each Member shall be entitled to a retirement benefit equal to 100% of the Member's Account as of the Valuation Date coincident with or next following his retirement on or after his Early Retirement or Normal Retirement Date.
(ii) EARLY RETIREMENT. shall mean the first day of the month coinciding with or following the date on which a Member or former Member both attains age 62 and completes 7 years of participation.
(iii) LATE RETIREMENT. A Member who continues employment beyond his Normal Retirement Date shall continue to participate in the Plan. His Account shall become nonforfeitable upon his attaining his Normal Retirement Date.
(b) DEATH BENEFIT
(i) VALUATION. In the event of the in-service death of a Member before actual retirement or termination, 100% of the Member's Account on the Valuation Date coincident with or next following his death shall constitute his death benefit and shall be distributed pursuant to Sections 7 and 9 (A) to his designated beneficiary or (B) if no designation of beneficiary is then in effect, to the beneficiary determined pursuant to subsection 7(b).
(ii) SURVIVOR BENEFITS. In the event of the post-employment death of a retired or terminated Member before distribution of his vested Account balance has been made to him, his Account shall constitute a death benefit and shall be distributed (A) to his designated beneficiary or (B) if no designation of beneficiary is then in effect, to the beneficiary determined pursuant to subsection 7(b).
(c) DISABILITY BENEFIT. In the event a Member suffers a Disability before actual retirement, 100% of the Member's Account on the Valuation Date coincident with or next following his Disability shall constitute his Disability benefit, provided said Member severs from service with a Participating Company due to his Disability.
(d) TERMINATION OF EMPLOYMENT BENEFIT
(i) VALUATION. In the event a Member terminates employment with all Participating Companies and all Related Entities other than by reason of retirement on or after his Normal Retirement or Early Retirement Date, Disability or in-service death, the Member shall be entitled to receive a benefit equal to 100% of his Rollover Account and Voluntary Post-Tax Account and the nonforfeitable portion (as determined under the vesting schedule at subsection 8(d)(ii)) of his Company Stock Account and Non-Stock Account on the Valuation Date coincident with or last preceding distribution.
(ii) VESTING SCHEDULE. The nonforfeitable portion of a Member's Company Stock Account and Non-Stock Account is as follows:
NONFORFEITABLE
YEARS OF SERVICE PERCENTAGE
---------------- --------------
Less than 3 years 0%
3 years but less than 4 years 20%
4 years but less than 5 years 40%
5 years but less than 6 years 60%
6 years but less than 7 years 80%
7 years or more 100%
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(iii) COMPUTATION PERIOD. For purposes of subsection 8(d), the computation period for determining a Year of Service or a Break in Service shall be the Plan Year.
(iv) CREDITING SERVICE. For purposes of subsection 8(d), a Member shall receive credit for all Years of Service, including Years of Service prior to the Effective Date, except as follows:
(A) If a Member has a Break in Service in five consecutive Plan Years, then Years of Service after such consecutive Breaks in Service shall not be taken into account for purposes of determining the nonforfeitable percentage of the Member's Employer Contribution Account which accrued prior thereto.
(B) If a Member who has no nonforfeitable rights has a Break in Service for the greater of (1) five or more consecutive Plan Years or (2) the accumulated Service of the Member prior to the Break in Service, then Years of Service prior to such consecutive Breaks in Service shall not be taken into account for the purpose of determining the nonforfeitable
percentage of the Member's Employer Contribution Account which accrues thereafter.
(C) CASHOUTS. If distribution is made to a Member on account of termination of employment prior to the date on which the Member has a Break in Service for five consecutive Plan Years and the Member returns to employment covered by the Plan, the Member's Account shall subsequently be determined without regard to the portion thereof derived from predistribution employment provided the Member (1) received distribution of the entire present value of the nonforfeitable portion of his Account at the time of distribution, (2) the amount of the distribution did not exceed $3,500 or the Member (with spousal consent, if applicable) voluntarily elected to receive the distribution, and (3) the Member upon return to employment covered by the Plan does not repay the full amount of the distribution before the earlier of suffering five consecutive one year Breaks in Service, or at the close of the first period of five consecutive one year Breaks in Service commencing after the withdrawal. If timely repayment is made, the Member's Account shall equal the sum of the repayment and the forfeitable portion of the Member's Account on the date of distribution, unadjusted by gains or losses subsequent to the distribution. Restoration required due to Fund losses shall be made, to the extent necessary, first from forfeitures in the Plan Year of repayment and second from Participating Company contributions.
(v) CHANGE IN VESTING SCHEDULE. If the Plan's vesting schedule is amended, or the Plan is amended in any way that directly or indirectly affects the computation of the Member's nonforfeitable percentage or if the Plan is deemed amended by an automatic change to or from a top-heavy vesting schedule, each Member with at least 3 Years of Service with the Participating Company may elect, within a reasonable period after the adoption of the amendment or change, to have the nonforfeitable percentage computed under the Plan without regard to such amendment or change. For Members who do not have at least 1 Hour of Service in any Plan Year beginning after December 31, 1988, the preceding sentence shall be applied by substituting "5 Years of Service" for "3 Years of Service" where such language appears.
The period during which the election may be made shall commence
with the date the amendment is adopted or deemed to be made and shall end on the latest of:
(1) 60 days after the amendment is adopted;
(2) 60 days after amendment becomes effective; or
(3) 60 days after Member is issued written notice of the amendment by the Participating Company.
(e) RECOGNITION OF FORFEITURES. The nonvested portion of the Employer Contribution Account of a Member (i) who separates from service with no vested interest in his Employer Contribution Account or (ii) who receives a distribution prior to suffering his fifth consecutive Break in Service shall be forfeited on the date of (i) separation or (ii) distribution, as the case may be, subject to the right to restoration. The nonvested portion of the Employer Contribution Account of any other Member shall be forfeited on the last day of the Plan Year in which the Member suffers his fifth consecutive Break in Service. Forfeitures shall first be applied for the restoration of forfeitures, as required by subsection 8(d)(iv)(C), and then increase discretionary Participating Company contributions made as of the end of each Plan Year. Notwithstanding the above, forfeitures attributable to separations which occurred prior to January 1, 1994 shall be used to offset the semi-annual discretionary Participating Company contributions until exhausted.
9. DISTRIBUTION OF BENEFITS
(a) COMMENCEMENT. The payment of benefits shall commence as soon after the Valuation Date following the Member's termination of employment as is administratively feasible, except as provided below.
(i) TERMINATION OF EMPLOYMENT BENEFITS. If the nonforfeitable portion of the Member's Account exceeds or ever exceeded $3,500 and is not "immediately distributable", distributions of benefits payable under subsection 8(d) shall not commence unless the Member consents to such distribution in writing. The Committee shall notify the Member of his right to defer said distribution, subject to the limitations and provisions of subsection 9(a)(ii) below.
If the Member does not consent to distribution, his Account shall be retained in the Fund until such later date as the member requests distribution. If the Member does not request distribution prior to his Normal Retirement Date or death, distribution shall commence as soon after the Valuation Date next following the first to occur of the Member's Normal Retirement Date or death (provided the Committee receives notice of the Member's death), as is administratively feasible.
(ii) DEFERRAL LIMITATION. In no event other than with the written consent of the Member shall the payment of benefits commence later than the sixtieth day after the close of the Plan Year in which the latest of the following occurs:
(A) the Member's Normal Retirement Date;
(B) the Member's separation from service; or
(C) the tenth anniversary of the year in which the Member commenced participation in the Plan.
Provided, however, distribution of benefits must commence on or before the April 1st of the calendar year following the calendar year in which the Member attains age 70 1/2.
(iii) DEATH BENEFIT DEFERRAL LIMITATION. The payment of death benefits under the Plan shall commence as soon after the Valuation Date following the Member's death as is administratively feasible or as the Member's beneficiary elects, subject to the limitations and provisions of subsection 9(b)(ii).
(b) BENEFIT FORMS.
(i) NON-COMPANY STOCK ACCOUNT. If the member elects, the
payment of all benefits, other than the Company Stock Account, shall be distributed in one lump sum or in a series of substantially equal annual or more frequent installments over a period not to exceed the life expectancy of the Member or, if married, the joint life expectancy of the Member and his or her spouse, as selected by the Member. Notwithstanding the foregoing, all Members' Accounts shall continue to be adjusted under subsection 6(j) through the Valuation Date coincident with or late preceding distribution.
(ii) COMPANY STOCK ACCOUNT. If the member elects, the payment of benefits from the Company Stock Account shall commence not later than one (1) year after the close of the Plan Year:
(A) in which the Member separates from service by reason of attainment of Normal Retirement Date, Disability or death, or
(B) which is the fifth (5th) Plan Year in which the Member otherwise separates from service, except that this subsection shall not apply if the Member is reemployed by a Participating Company before distribution is required to commence under this subsection.
(iii) EXCEPTION. Subsection 9(b)(ii) shall not apply to any shares of Company Stock acquired with the proceeds of an Exempt Loan until the close of the Plan Year in which such Exempt Loan is repaid in full.
(iv) PAYMENT OF BENEFITS. Unless the Member elects otherwise, the payment of benefits under subsection 9(b)(ii) shall be in substantially equal installments (not less frequently than annually) over a period not longer then the greater of:
(A) Five (5) years; or
(B) in the case of a Member with a
Company Stock Account balance in excess of $500,000, five (5) years plus one
(1) additional year (but not more than five (5) additional years) for each
$100,000 or fraction thereof by which such balance exceeds $500,000.
(v) COST OF LIVING ADJUSTMENT. The dollar amounts set forth in subsection 9(b)(iv)(B) shall be adjusted pursuant to Sections 409(o)(2) and 415(d) of the Code ($660,00 and $132,000, respectively, for 1994).
(vi) MINIMUM DISTRIBUTIONS. No annual installment payable under subsection 9(b)(iv) shall be in an amount less than the greater of:
(A) ten thousand dollars ($10,000); or
(B) if the principal sum exceed one million dollars ($1,000,000), ten percent (10%) of the principal sum.
In the event an annual installment hereunder would be
less than ten thousand dollars ($10,000), such remaining balance shall be paid
in minimum quarterly payments of two thousand five hundred dollars ($2,500)
until exhausted. The initial such quarterly payment shall be made with sixty
(60) days after the date the value is determined and each succeeding January
15th, April 15th, July 15th and October 15th, thereafter.
Furthermore, in no event shall the distribution period exceed the period permitted under Section 401(a)(9) of the Code.
Shares of Company Stock previously allocated to a Member's Company Stock Account shall remain credited to such Account until such time as an installment is payable under this subsection 9(b).
(vii) IRC 401(A)(31) COMPLIANCE.
(A) GENERAL RULE. This subsection applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this subsection, a distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
(B) DEFINITIONS.
1. ELIGIBLE ROLLOVER DISTRIBUTION. An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities).
2. ELIGIBLE RETIREMENT PLAN. An eligible retirement plan is an individual retirement account described in section
408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity.
3. DISTRIBUTEE. A distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse.
4. DIRECT ROLLOVER. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.
(c) ACCOUNT BALANCES LESS THAN $3,500. If a terminated Member's vested Account balance does not exceed (nor ever exceeded) $3,500 on the Valuation Date coincident with or next following his termination, said Member's Account may be immediately distributed without his consent.
(d) DEFINITIONS. The following definitions shall apply to Section 7 and 9 hereof:
(i) "Immediately distributable benefit" shall mean the vested Account balance which could be distributed to a Member (or surviving spouse) before said Member attains (or would have attained if not deceased) the later of Normal Retirement Age or age 62.
(ii) "Spouse" (surviving spouse) shall mean the spouse or surviving spouse of the Member, provided that a former spouse will not be treated as the spouse or surviving spouse if the Member re-marries within 1 year of the annuity starting date, and remains married for the 1 year period ending on the date of death.
(g) WITHHOLDING. All distributions under the plan are subject to federal, state and local withholding as required by applicable law as in effect from time to time.
10. IN-SERVICE DISTRIBUTIONS
(a) VOLUNTARY POST-TAX ACCOUNT. A Member shall have the right to withdraw all or a portion of his Voluntary Post-Tax Account, as of the Valuation Date next following the Member's timely delivery of a request for withdrawal to the Committee. No more than one such distribution shall be made to any Member in any twenty-four (24) month period.
(b) ROLLOVER ACCOUNT. A Member shall have the right to withdraw all or a portion of his Rollover Account, as of the Valuation Date next following the Member's timely delivery of a request for withdrawal to the Committee.
(c) AGE 59 1/2. A Member who has attained age 59 1/2 shall have the right to withdraw all or a portion of his vested Account balance as of the Valuation Date next following the Members timely delivery of a request for withdrawal to the Committee.
11. LOANS
(a) COMMITTEE DISCRETION. If a Member experiences a financial hardship the Committee, in its discretion, shall have the right to direct that a bonafide loan be made from a Member's vested Account balance to any Member who requests the same. For purposes of this Section 11, the term "Member" shall also include beneficiaries and terminated employees with deferred vested account balances who are "parties in interest" as defined in Section 3 of ERISA. All such loans shall be subject to the requirements of this Section and such other rules which the Committee shall from time to time prescribe. Eligibility for and the rules with respect to loans shall be uniformly applied to all Members. Nothing in this Section shall require the Committee to make loans available to Members.
(b) HARDSHIP. A loan shall be made on account of hardship only if the loan is made on account of an immediate and heavy financial need of the Member. A loan shall be deemed to be made on account of an immediate and heavy financial need of the Member if the loan is on account of:
(i) medical expenses described in
Section 213(d) of the Code incurred or necessary to obtain medical care by the
Member, the Member's spouse or any dependent of the Member (as defined in
Section 152 of the Code);
(ii) purchase (excluding mortgage payments) of a principal residence for the Member;
(iii) payment of tuition for the next 12 months of post-secondary education for the Member, the Member's spouse, child or any dependent of the Member (as defined in Section 152 of the Code); or
(iv) the need to prevent the eviction of the Member from his principal residence or foreclosure on the mortgage of the Member's principal residence.
Further, the Committee, according to uniform rules, may find that an immediate and heavy financial need exists in other circumstances where it concludes that the elimination of the need is necessary to preserve the health or well-being of the Member, his spouse or a dependent of the Member as defined in Section 152 of the Code.
(c) MINIMUM REQUIREMENTS. To the extent the Committee authorizes loans to Members, such loans shall be subject to the following rules:
(i) PRINCIPAL AMOUNT. The principal amount of the loan to a Member shall be subject to a minimum of one thousand dollars ($1,000) and it may not exceed, when added to the outstanding balance of all other loans to the Member from the Plan, the lesser of (A) $50,000, reduced by the excess of the highest outstanding balance of loans to the Member from the Plan during the one-year period ending on the day before the date on which such loan was made over the outstanding balance of loans to the Member from the Plan on the date on which such loan is so made or (B) 50% of the Member's nonforfeitable Account on the Valuation Date last preceding the date on which the loan is made.
(ii) MAXIMUM TERM. Generally, the term of the loan may not exceed five years. However, if the Member demonstrates that the purpose of a loan is to acquire a principal residence for the Member, then the maximum term shall be fifteen years.
(iii) INTEREST RATE. The interest rate shall be determined by the Committee from time to time at a rate equivalent to that charged by major financial institutions in the community for comparable loans at the time the loan is made.
(iv) REPAYMENT. The loan shall be repaid over its term in level installment payments made at least quarterly. If the Member is an active employee, the payments shall correspond to the Member's payroll period. As a condition precedent to approval of the loan, the Member shall be required to authorize payroll withholding in the amount of each installment. Prepayment of the entire outstanding balance of a loan maybe made at any time.
(v) COLLATERAL. The loan shall be secured by the Member's Account to the extent of the principal amount of the loan plus accrued interest. No more than 50% of the Member's vested Account balance may be used to secure a loan. The Committee, according to a uniform rule, may require a Member to post additional collateral to secure a loan.
(vi) DISTRIBUTION OF ACCOUNT. If the nonforfeitable portion of a Member's Account is to be distributed prior to the Member's payment of all principal and accrued interest due on any loan to such
Member, the distribution shall include as an offset the amount of unpaid principal and interest due on the loan.
(vii) NOTES. All loans shall be evidenced by a note containing such terms and conditions as the Committee shall require.
(viii) MULTIPLE LOANS. A Member shall be permitted only one outstanding loan at any time.
(d) ACCOUNTING. The principal amount of any loan shall be treated as a separate earmarked investment of the borrowing Member. All payments of principal and interest with respect to such loan shall be credited to a separate account for the borrowing Member until redeposited into the Fund in accordance with the Member's election.
12. TITLE TO ASSETS.
No person or entity shall have any legal or equitable right or interest in the contributions made by any Participating Company, or otherwise received into the Fund, or in any assets of the Fund, except as expressly provided in the Plan.
13. AMENDMENT AND TERMINATION
(a) AMENDMENT. In accordance with the provisions of subsection 2(e)(i) hereof, the provisions of this Plan may be amended by the Company from time to time and at any time in whole or in part, provided that no amendment shall be effective unless the Plan as so amended shall be for the exclusive benefit of the Members and their beneficiaries. No amendment to the Plan shall be effective to the extent that it has the effect of decreasing a Member's Account balance or eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment. Furthermore, if the vesting schedule of the Plan is amended, in the case of an Employee who is a Member as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such Employee's right to his Account balance will not be less than his percentage computed under the plan without regard to such amendment.
(b) TERMINATION. While it is the Company's intention to continue the Plan in operation indefinitely, the right is, nevertheless, expressly reserved to terminate the Plan in whole or in part or discontinue contributions in the event of unforeseen conditions. Any such termination, partial termination or discontinuance of contributions shall be effected only upon condition that such action is taken as shall render it impossible for any part of the corpus of the Fund or the income therefrom to be used for, or diverted to, purposes other than the exclusive benefit of the Members and their beneficiaries.
(c) CONDUCT ON TERMINATION. If the Plan is to be terminated at any time without establishment of a successor plan, the Company shall give written notice to the Trustee which shall thereupon revalue the assets of the Fund and the accounts of the Members as of the date of termination, partial termination or discontinuance of contributions and, after discharging and satisfying any obligations of the Plan, shall allocate all unallocated assets to the Accounts of the Members at the date of termination, partial termination or discontinuance of contributions as provided for in Section 6. Upon termination, partial termination or discontinuance of contributions the Accounts of Members affected thereby shall be nonforfeitable. The Committee, in its sole discretion, shall instruct the Trustee either (i) to pay over to each affected Member his
Account or (ii) to continue to control and manage the Fund for the benefit of the Members to whom distributions will be made in later periods at the time provided in Section 8 and in the manner provided in Section 9.
For purposes of this paragraph, "successor plan" shall be as defined in Code section 1.401(k) - 1(d)(3).
14. LIMITATION OF RIGHTS
(a) ALIENATION. None of the payments, benefits or rights of any Member shall be subject to any claim of any creditor of such Member and, in particular, to the fullest extent permitted by law, shall be free from attachment, garnishment, trustee's process, or any other legal or equitable process available to any creditor of such Member. No Member shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments which he may expect to receive, contingently or otherwise, under this Plan, except the right to designate a beneficiary or beneficiaries as herein above provided. For purposes of this subsection, neither a loan made to a Member nor the pledging of the Member's Account as security therefor, both pursuant to Section 11, shall be treated as an assignment or alienation unless such loan is subject to the tax imposed by Section 4975 of the Code.
(b) QUALIFIED DOMESTIC RELATIONS ORDER EXCEPTION. Subsection l4(a) shall not apply to the creation, assignment or recognition of a right to any benefit payable with respect to a Member under a qualified domestic relations order within the meaning of Section 414(p) of the Code.
In the case of any payment before a Member has separated from service, such an order may require that payment of benefits be made to an Alternate Payee prior to the date on which the Member is entitled to a distribution under the Plan, regardless of whether the Member has attained the earliest retirement age under Section 414(p)(4) of the Code. However, if the present value of the amount awarded to the Alternate Payee by the qualified domestic relations order is greater than three thousand five hundred dollars ($3,500), the Alternate Payee must consent in writing before an immediate distribution may be made.
Payment made pursuant to this subsection may be made to the Alternate Payee:
(1) as if the Member had retired on the date on which payments are to begin, based on the Account balances actually credited, and not considering any Participating Company subsidy for early retirement, and
(2) in any form in which such benefits may be paid under the Plan to the Member (other than in the form of a joint and survivor annuity with respect to the Alternate Payee and such Payee's subsequent spouse).
For purposes of this subsection, "Alternate Payee" shall mean the spouse, former spouse, child or other dependent of a Member who is recognized by a Qualified Domestic Relations Order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to a Member.
(c) EMPLOYMENT. Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefit shall be construed as giving any Member or Employee, or any person whomsoever, any legal or equitable right against any Participating Company, the Trustee or the Committee, unless such right shall be specifically provided for in the Trust Agreement or the Plan or conferred by affirmative action of the Committee or the Company in accordance with the terms and provisions of the Plan or as giving any Member or Employee the right to be retained in the employ of any Participating Company. All Members and other Employees shall remain subject to discharge to the same extent as if the Plan had never been adopted.
15. MERGERS, CONSOLIDATIONS OR TRANSFERS OF PLAN ASSETS
In the case of any Plan merger or Plan consolidation with, or transfer of assets or liabilities of the Plan to, any other qualified retirement plan, each Member in the Plan must be entitled to receive a benefit immediately after the merger, consolidation, or transfer (if the Plan were then to terminate) which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation, or transfer (if the Plan had been terminated).
16. PARTICIPATION BY RELATED ENTITIES
(a) COMMENCEMENT. Any entity which is a Related Entity with respect to the Company may, with the permission of the Board of Directors, elect to adopt this Plan and the accompanying Trust Agreement.
(b) TERMINATION. The Company may, by action of the Board of Directors, determine at any time that any such Participating Company shall withdraw and establish a separate plan and fund. The withdrawal shall be effected by a duly executed instrument delivered to the Trustee instructing it to segregate the assets of the Fund allocable to the Employees of such Participating Company and pay them over to the separate fund.
(c) SINGLE PLAN. The Plan shall at all times be administered and interpreted as a single plan for the benefit of the Employees of all Participating Companies.
(d) DELEGATION OF AUTHORITY. Each Participating Company, by adopting the Plan, acknowledges that the Company has all the rights and duties thereof under the Plan and the Trust Agreement, including the right to amend the same.
(e) DISPOSITION OF ASSETS OR SUBSIDIARY. Distributions may be made in connection with the Company's disposition of assets or a subsidiary to those Members who continue in employment with the purchaser of the assets or with the subsidiary, provided that the purchaser or the subsidiary does not maintain the Plan after the disposition.
(f) FORM OF DISTRIBUTIONS. All distributions made pursuant to
this Section 16 shall be lump sum distributions as defined in Code section
402(d)(4), without regard to subparagraphs (A)(i) through (iv), (B), and (F) of
said Code section.
17. TOP-HEAVY REQUIREMENTS
(a) GENERAL RULE. For any Plan Year in which the Plan is a top-heavy plan or included in a top-heavy group as determined under this Section, the special requirements of this Section shall apply. The Plan shall be a top-heavy plan (if it is not included in an "aggregation group") or a plan included in a top-heavy group (if it is included in an "aggregation group") with respect to any Plan Year if the sum as of the "determination date" of the "cumulative accounts" of "key employees" for the Plan Year exceeds 60% of a similar sum determined for all "employees", excluding "employees" who were "key employees" in prior Plan Years only.
(b) DEFINITIONS. For purposes of this Section, the following
definitions shall apply to be interpreted in accordance with the provisions of
Section 416 of the Code and the regulations thereunder.
(i) "AGGREGATION GROUP" shall mean the plans of each Participating Company or a Related Entity included below:
(A) each such plan in which a "key employee" is a participant;
(B) each other such plan which enables any plan in subsection (A) above to meet the requirements of Section 401(a)(4) or 410 of the Code;
(C) each other plan not required to be included in the "aggregation group" which the Company elects to include in the "aggregation group" in accordance with the "permissive aggregation group" rules of the Code if such group would continue to meet the requirements of Sections 401(a)(4) and 410 of the Code with such plan being taken into account; and
(D) each terminated plan of the Company that was maintained within the last five (5) years ending on the "determination date".
(ii) "CUMULATIVE ACCOUNT" for any "employee" shall mean the sum of the amount of his accounts under this Plan plus all defined contribution plans included in the "aggregation group" (if any) as of the most recent valuation date for each such plan within a twelve-month period ending on the "determination date", increased by any contributions due after such valuation date and before the "determination date" plus the present value of his accrued benefit under all defined benefit pension plans included in the "aggregation group" (if any) as of the "determination
date". For a defined benefit plan, the present value of the accrued benefit as of any particular determination date shall be the amount determined under (A) the method, if any, that uniformly applies for accrual purposes under all plans maintained by the Participating Companies and all Related Entities, or (B) if there is no such method, as if such benefit accrued not more rapidly than under the slowest accrual rate permitted under the fractional accrual rule of Section 411(b)(1)(C) of the Code, as of the most recent valuation date for the defined benefit plan, under actuarial equivalent factors specified therein, which is within a twelve-month period ending on the determination date. For this purpose, the valuation date shall be the date for computing plan costs for purposes of determining the minimum funding requirement under Section 412 of the Code. "Cumulative accounts" of "employees" who have not performed an Hour of Service for any Participating Company or Related Entity for the five-year period ending on the "determination date" shall be disregarded. An "employee's" "cumulative account" shall be increased by the aggregate distributions during the five-year period ending on the "determination date" made with respect to him under any plan in the "aggregation group". Rollovers and direct plan-to-plan transfers to this Plan or to a plan in the "aggregation group" shall be included in the "employee's" "cumulative account" unless the transfer is initiated by the "employee" and made from a plan maintained by an employer which is not a Participating Company or Related Entity.
(iii) "DETERMINATION DATE" shall mean with respect to any Plan Year the last day of the preceding Plan Year; however, for the first Plan Year the term shall mean the last day of such Plan Year.
(iv) "EMPLOYEE" shall mean any person (including a beneficiary thereof) who has or had an Account held under this Plan or a plan in the "aggregation group" including this Plan at any time during the Plan Year or any of the four preceding Plan Years. Any "employee" other than a "key-employee" described in subsection 17(b)(v) shall be considered a "non-key employee" for purposes of this Section 17.
(v) "KEY EMPLOYEE" shall mean any "employee" or former "employee" (including a beneficiary thereof) who is, at any time during the Plan Year, or was, during any one of the four preceding Plan Years any one or more of the following:
(A) an officer of a Participating Company or a Related Entity whose annual compensation (as defined in subsection 17(b)(vi)) exceeds 50% of the dollar limitation in effect under Section 415(b)(1)(A) of the Code, unless 50 other such officers (or, if lesser, a number of such officers equal to the greater of three or 10% of the "employees") have higher annual compensation;
(B) one of the ten persons employed by a Participating Company or Related Entity having annual compensation (as defined below) greater than the limitation in effect under Section 415(c)(1)(A) of the Code, and owning (or considered as owning within the meaning of Section 318 of the Code) more than 1/2% interest as well as one of the largest interests in all Participating Companies or Related Entities. For purposes of this subsection (B), if two "employees" have the same interest, the one with the greater compensation shall be treated as owning the larger interest;
(C) any person owning (or considered as owning within the meaning of Section 318 of the Code) more than 5% of the outstanding stock of a Participating Company or a Related Entity or stock possessing more than 5% of the total combined voting power of such stock;
(D) a person who would be described in subsection (C) above if 1% were substituted for 5% each place the same appears in subsection (C) above, and who has annual compensation of more than $150,000.
For purposes of determining ownership under this subsection, Section 318(a)(2)(C) of the Code shall be applied by substituting 5% for 50%.
(vi) "COMPENSATION" For purposes of this Section 17, "compensation" shall mean compensation as defined in Section 415(c)(3) of the Code, but including amounts contributed by the employer pursuant to a salary reduction agreement which are excludible from the Employee's gross income under Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of the Code.
(c) COMBINED BENEFIT LIMITATION. For purposes of
the calculation of the combined limitation of subsection 5(c), "1.0" shall be
substituted for "1.25" each place the same appears in that subsection if either
(i) the "cumulative accounts" of "key employees" exceeds 90% of the aggregate
for all "employees" or (ii) the Participating Companies'
contribution allocated to Members who are not "key employees" does not at least equal 4% of compensation (as defined in subsection 5(d)) or the minimum defined benefit under a defined benefit plan does not meet the requirement of Section 416(h)(2)(A)(ii) of the Code.
(d) VESTING. The schedule set forth below shall be substituted for the schedule contained in subsection 8(d)(ii) to the extent it provides for more rapid vesting.
NONFORFEITABLE
YEARS OF SERVICE PERCENTAGE
---------------- --------------
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
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The schedule above shall apply to all benefits accrued as of the date the schedule becomes effective and all benefits accrued for Plan Years thereafter to which this Section applies. If the Plan ceases to be top-heavy, no benefit which became nonforfeitable under the schedule above shall become forfeitable. For Members with three Years of Service or more, the schedule shall continue to apply to future accruals to the extent it provides for more rapid vesting.
(e) MINIMUM CONTRIBUTION. Minimum Participating Company contributions and forfeitures for a Member who is not a "key employee" shall be required in an amount equal to the lesser of 3% of compensation (as defined in subsection 17(b)(vi) herein) or the highest percentage of Participating Company contributions and forfeitures expressed as a percentage of the first $200,000 (or an increased amount permitted under a cost of living adjustment), contributed for any "key employee" under Section 4. (Effective for Plan Years beginning after December 31, 1993,
the $200,000 limitation shall be reduced to $150,000 or any indexed amount
pursuant to Code section 401(a)(17).) If the highest rate allocated to a "key
employee" for a year in which the plan is top heavy is less than 3%, amounts
attributable to a salary reduction shall be included in determining
contributions made on behalf of "key employees." For purposes of this
subsection, employer social security contributions shall be disregarded. Each
"non-key employee" of a Participating Company who has not separated from
service at the end of the Plan Year and who has satisfied the eligibility
requirements of subsection 3(a) shall receive any minimum contribution provided
under this Section 17 without regard to (i) whether he is credited with 1,000
Hours of Service in the Plan Year (ii) earnings level for the Plan Year or
(iii) whether he elects to make contributions under subsection 4(a). If an
"employee" participates in both a defined benefit plan and a defined
contribution plan, the minimum benefit shall be provided under the defined
benefit plan. If an "employee" participates in another defined contribution
plan, the minimum benefit shall be provided under the other defined
contribution plan.
18. MISCELLANEOUS
(a) INCAPACITY. If the Committee determines that a person entitled to receive any benefit payment is under a legal disability or is incapacitated in any way so as to be unable to manage his financial affairs, the Committee may make payments to such person for his benefit, or apply the payments for the benefit of such person in such manner as the Committee considers advisable. Any payment of a benefit in accordance with the provisions of this subsection shall be a complete discharge of any liability to make such payment.
(b) REVERSIONS. In no event, except as provided herein, shall the Trustee return to a Participating Company any amount contributed by it to the Plan.
(i) MISTAKE OF FACT. In the case of a contribution made by a good faith mistake of fact, the Trustee shall return the erroneous portion of the contribution, without increase for investment earnings, but with decrease for investment losses, if any, within one year after payment of the contribution to the Fund.
(ii) DEDUCTIBILITY. To the extent deduction of any contribution determined by the Company in good faith to be deductible is disallowed, the Trustee, at the option of the Company, shall return that portion of the contribution, without increase for investment earnings but with decrease for investment losses, if any, for which deduction has been disallowed within one year after the disallowance of the deduction.
(iii) INITIAL QUALIFICATION. In the event there is a determination that the Plan does not initially satisfy all applicable requirements of Section 401 of the Code, all contributions made by a Participating Company incident to that initial qualification shall be
returned to the Participating Company by the Trustee within one year after the date on which the initial qualification is denied, but only if the Company submitted an application for such initial determination by the due date of the Company's income tax return for the taxable year in which the Plan was adopted, or such later date as the Secretary may prescribe.
(iv) LIMITATION. No return of contribution shall be made under this subsection which adversely affects the Plan's qualified status under regulations, rulings or other published positions of the Internal Revenue Service or reduces a Member's Account below the amount it would have been had such contribution not been made.
This subsection shall not preclude refunds made in accordance with subsections 4(b)(i), 4(d)(iii) and 4(g)(ii).
(c) EMPLOYEE DATA. The Committee or the Trustee may require that each Employee provide such data as it deems necessary upon his becoming a Member in the Plan. Each Employee, upon becoming a Member, shall be deemed to have approved of and to have acquiesced in each and every provision of the Plan for himself, his personal representatives, distributees, legatees, assigns, and beneficiaries.
(d) LAW GOVERNING. This Plan shall be construed, administered and applied in a manner consistent with the laws of the State of Mississippi.
(e) PRONOUNS. The use of the masculine pronoun shall be extended to include the feminine gender wherever appropriate.
(f) INTERPRETATION. The Plan is an Employee Stock Ownership plan including a qualified, tax exempt trust under Sections 401(a) and 501(a) of the Code. The Plan shall be interpreted in a manner consistent with its
satisfaction of all requirements of the Code applicable to such a plan.
IN WITNESS WHEREOF, and as evidence of the adoption of this Plan by the Company, it has caused the same to be signed by its officers thereunto duly authorized, and its corporate seal to be affixed thereto, this 30th day of December, l994.
Attest: CAL-MAINE FOODS, INC. /s/ [SIG] By /s/ [SIG] - -------------------------- ------------------------------- Secretary Name: |
Title:
[Corporate Seal]
APPENDIX A - TRA `86 COMPLIANCE EFFECTIVE DATES
The following Plan provisions have the Effective Dates listed below in compliance with Sections 401 and 403(a) of the Internal Revenue Code, as amended by the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1986, the Omnibus Budget Reconciliation Act of 1987, the Technical and Miscellaneous Revenue Act of 1988, the Omnibus Budget Reconciliation Act of 1989, the Omnibus Budget Reconciliation Act of 1993 and pertaining to the status of any related trusts under Section 501(a):
PLAN SECTION PROVISION EFFECTIVE DATE
- ------------ --------- --------------
1(i) Inclusion of 401(k) contributions in First day of 1987 Plan
definition of "compensation" for all Year
Plan Sections
1(i) Compensation limited to $200,000 for First day of 1989 Plan
benefit accrual and contribution Year and first day of
allocation (with COLA adjustments); 1994 Plan Year,
Compensation limited to $150,000 (with respectively.
COLA adjustments)
1(l) Definition of "leased employee" and its January 1, 1987
inclusion in the definition of "Employee"
1(o) Aggregation of Family Members with First day of 1987 Plan
Highly Compensated Employees Year
|
PLAN SECTION PROVISION EFFECTIVE DATE
- ------------ --------- --------------
1(r) Definition of "Highly Compensated First day of 1987 Plan
Employee" Year
3(a) 1 year maximum waiting period for First day of 1989 Plan
eligibility Year
5 Definition of "Annual Additions" First day of 1987 Plan
Year
9(a)(ii) Date of commencement for Required January 1, 1989
Minimum Distributions
11 Rules for qualified plan loans First day of 1989 Plan
Year
11(b)(iv) Loan repayment provisions Loans made, renewed,
renegotiated, modified or
extended on or after
January 1, 1987
17(b)(i)(D)(ii) Fractional accrual rule for First day of 1987 Plan
determination of Top Heavy Year
status
|
AMENDMENT TO
CAL-MAINE FOODS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
THIS AMENDMENT is made on this the 15th day of May, 1996, by CAL-MAINE FOODS, INC. (herein referred to as the "Employer").
W I T N E S S E T H :
WHEREAS, the Employer deems it advisable and desirable to
amend the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN.
NOW, THEREFORE, the CAL-MAINE FOODS, INC. EMPLOYEE STOCK
OWNERSHIP PLAN is hereby amended as follows:
I.
Section 6 is hereby amended by the addition of the following as Section 6(l):
(l) Except as otherwise provided in this
Section 6, no Company Stock acquired with the
proceeds of an exempt loan may be subject to a put,
call, buy-sell or similar arrangement while held by
or when distributed from the Plan.
II.
Section 8(e) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the insertion of the following as the second sentence of that Section:
Company Stock acquired with the proceeds of an exempt loan allocated to a Member's Company Stock Account shall be forfeited only after the Member's Non-Stock Account has been depleted and all other shares of Company Stock in the Member's Company Stock Account have been forfeited.
III.
Except for this Amendment, the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN shall remain unchanged.
IV.
This Amendment shall be effective January 1, 1994.
IN WITNESS WHEREOF, this Amendment was signed on the day and year first written above.
CAL-MAINE FOODS, INC.
EMPLOYER
AMENDMENT TO
CAL-MAINE FOODS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
THIS AMENDMENT is made on this the 24th day of September, 1996, by CAL-MAINE FOODS, INC. (herein referred to as the "Company").
WITNESSETH:
WHEREAS, the Company deems it advisable and desirable to amend the
CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN.
NOW THEREFORE, the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP
PLAN is hereby amended as follows:
I.
Section 1(ii) of the CAL-MAINE FOODS INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the addition of the following:
An employee of an entity that becomes a Related Entity to the Employer shall receive credit for Years of Service with such entity prior to its becoming a Related Entity for purposes of eligibility, but not for vesting.
II.
Section 3(c) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of Section 3(c) and the substitution of the following as Section 3(c):
(c) MEASURING SERVICE. For purposes of measuring service
to satisfy the eligibility provisions of subsection 3(a), the
Year of Service computation period shall begin with the date
on which the Employee first is credited with an Hour of
Service. If the Employee does not work 1,000 Hours of Service
during his initial twelve months of service with the Employer,
but is still employed by the Employer, such Employee shall
next commence the 1,000 Hours of Service eligibility
requirement for participation in the Plan during the Plan Year
next commencing after the date of his employment, and each
Plan Year subsequent thereto, until he meets the 1,000 Hours
of Service eligibility requirement for participation in the
Plan. However, if an Employee suffers Breaks in Service with
respect to five consecutive computation periods prior to
satisfying the length in service requirement of subsection
3(a), such Employee shall not be credited with pre-Break in
Service Years of Service and the eligibility computation
period with respect to such Employee shall commence thereafter
on the date on which the employee first again is credited with
an Hour of Service and with each subsequent Plan Year
thereafter.
III.
Section 3(e) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of Section 3(e) and the substitution of the following as Section 3(e):
(e) TERMINATION AND REQUALIFICATION. An Employee who has satisfied the service requirement of subsection 3(a) applicable to him and who subsequently becomes ineligible for any reason and later resumes employment with the Employer following a one year Break in Service shall be treated as a new Employee and shall not be entitled to have the Years of Service he completed prior to the one year Beak in Service aggregated with
his Years of Service subsequent to resumption of employment unless:
(1) At the time of his one year Break in Service he had a vested interest in a benefit hereunder provided by Employer contributions;
(2) The Employee resumes employment before his one year Breaks in Service equal or exceed five consecutive years;
(3) He resumes employment before his consecutive one year Breaks in Service equal or exceed his Years of Service completed prior to a separation from service.
If the employee satisfies either (1), (2), or (3) of the preceding sentence, his Years of Service will be aggregated with Years of Service subsequent to resumption of employment.
IV.
Section 4(c) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of that subsection and the substitution of the following as Section 4(c):
(c) ALLOCATIONS TO MEMBERS. The following allocations shall be made to eligible Members' Accounts:
(i) As of each semi-annual Valuation Date, any Participating Company contribution and/or forfeiture applied to reduce such contributions for such semi-annual period.
(ii) As of each semi-annual Valuation Date, any shares and fractional shares of Company Stock purchased by the Trust with cash contributions or released from the Suspense Account pursuant to subsection 6(b) during such semi-annual period.
V.
Section 4(d) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP
PLAN is hereby amended by the deletion of the current subsection (iv) of that
Section the renumbering of the current subsection (v) of that Section as
Section 4(d)(iv).
VI.
Section 4(e) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of the first sentence of that section.
VII.
Section 6(a) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of the last sentence of the second paragraph of that section.
VIII.
Section 6(c) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of the first sentence of that section and the substitution of the following:
Any Member who has attained age fifty-five (55) and completed ten (10) years of participation under the Plan, shall have the right to make an election to direct the Trustee as to the investment of his shares of Company stock acquired by or contributed to the Plan after December 31, 1996.
IX.
Section 6(c) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of the last sentence of that section in its entirety and the substitution of the following:
For purposes of this subsection the "qualified election period" is the six-plan-year period beginning with the Plan Year after the first Plan Year beginning after 1986 in which the employee has attained age 55 and completed at least ten years of participation in the Plan.
X.
Section 6(f) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of that section in its entirety and the substitution of the following as Section 6(f):
(f) FIRST RIGHT OF REFUSAL. Any Member or Beneficiary who receives a distribution of Company Stock and who desires to sell all or any part of said Company Stock (whether or not at a time when said Company Stock is not readily tradable), shall first offer such shares for sale to the Company, and, if the Company, shall not exercise said right of first refusal then to the Trustee, at the greater of the price offered by a bona fide prospective purchaser with a fair market value of the Company Stock as of the end of the Plan Year coincident with or immediately proceeding the date of notice to the Company or Trustee. If the Company or Trustee failed to purchase all such shares within fourteen (14) days after written notice from the selling member or beneficiary, the Company's and Trustee's rights to such stock shall end as of said fourteen (14) days.
XI.
Section 9(b)(iv) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of that section in its entirety and the substitution of the following as Section 9(b)(iv):
(i) PAYMENT OF BENEFITS. Unless the member elects in writing a longer distribution period, the payment of benefits under subsection 9(b)(ii) shall be in substantially equal installments (not
less frequently than annually) over a period not longer than the greater of:
(A) five years; or
(B) in the case of a Member with a Company Stock account balance in excess of $500,000, five years plus one additional year (but no more than five additional years) for each $100,000 or fraction thereof by which such balance exceeds $500,000.
XII.
Section 10(c) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the addition of the following:
Notwithstanding the above, a Member who has attained age 59 1/2 shall not have the right to withdraw any portion of his account balance that accrues after December 31, 1996, pursuant to the provisions of this Section. The Administrative Committee shall be charged with keeping all records necessary to determine the accrued benefit of all Members as of December 31, 1996, in order that the amount that can be withdrawn after attaining age 59 1/2 can be determined.
XIII.
Section 11 (d) of the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN is hereby amended by the deletion of that subsection in its entirety and the substitution of the following as Section 11 (d):
(d) ACCOUNTING. Any loan to a Member and all earnings or losses on such loan shall be treated as a general asset of the Fund.
This Amendment shall be effective January 1, 1989.
XIV.
Except for this Amendment, the CAL-MAINE FOODS, INC. EMPLOYEE STOCK OWNERSHIP PLAN shall remain unchanged.
XV.
Unless otherwise stated in this Amendment, the Amendment shall be effective January 1, 1996.
IN WITNESS OF, this Amendment was signed on the day and year first written above.
CAL-MAINE FOODS, INC.
EXHIBIT 10.5
CAL-MAINE FOODS, INC.
AMENDED AND RESTATED 1993 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN: The purposes of this Plan are:
* to attract and retain competent executives with outstanding ability for positions of substantial responsibility;
* to provide additional incentive to corporate officers, key employees, and members of the corporate Board of Directors, and;
* to promote the success of the Corporation's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Board at the time of grant.
2. DEFINITIONS: As used herein, the following definitions shall apply:
(a) "Administrator" means the Board in accordance with
Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the administration of stock option plans under U.S. state corporate laws. U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where options are, or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Common Stock" means the Common Stock of the Corporation.
(f) "Corporation" means CAL-MAINE FOODS, INC.
(g) "Director" means a member of the Board.
(h) "Employee" means any key employee, including, without limitation, Officers employed by the Corporation or any Parent or Subsidiary of the Corporation. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Corporation or (ii) transfers between locations of the Corporation or between the Corporation, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Corporation is not so guaranteed, on the 181st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of the director's fee by the Corporation shall be sufficient to constitute "employment" by the Corporation. An employee may serve as a Director of the Company and maintain his status as an employee.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market or The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.
(l) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(m) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option.
(n) "Notice of Grant" means a written or electronic notice evidencing certain terms and conditions of an individual Option grant. The Notice of Grant is part of the Option Agreement.
(o) "Officer" means a person who is an officer of the Corporation within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(p) "Option" means a stock option granted pursuant to the Plan.
(q) "Option Agreement" means an agreement between the Corporation and an Optionee evidencing the terms and conditions of an individual option grant. The Option Agreement is subject to the terms and conditions of the Plan.
(r) "Optioned Stock" means the Common Stock subject to an Option.
(s) "Optionee" means the holder of an outstanding Option granted under the Plan.
(t) "Parent" means a "parent corporation", whether now or hereinafter existing, as defined in Section 424(e) of the Code.
(u) "Plan" means this 1993 Stock Option Plan, as amended.
(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.
(w) "Service Provider" means an Officer, Key Employee or non-employee member of the Board.
(x) "Share" means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan.
(y) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN: Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of shares which may be optioned and sold under the Plan is 800,000 Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to a method of payment under
Section 9(c), the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued
under the Plan shall not be returned to the Plan and shall not become available
for future distribution under the Plan.
4. ADMINISTRATION OF THE PLAN:
(a) PROCEDURE:
(i) RULE 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3.
(ii) ADMINISTRATION: The Plan shall be administered by the Board.
(b) POWERS OF THE ADMINISTRATOR: Subject to the provisions of the Plan the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be covered by each Option granted hereunder;
(iv) to approve forms of Option Agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;
(vi) to construe and interpret the terms of the Plan and Options granted pursuant to the Plan;
(vii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;
(viii) to modify or amend each Option (subject to Section 14(c) of the Plan), including the discretionary authority to extend the post termination exercisability period of Options longer than is otherwise provided for in the Plan;
(ix) to allow Optionees to satisfy withholding tax obligations by electing to have the Corporation withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;
(x) to authorize any person to execute on behalf of the Corporation any instrument required to effect the grant of an Option previously granted by the Administrator;
(xi) to make all other determinations deemed necessary or advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION: The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees and any other holders of Options.
5. ELIGIBILITY: Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be granted only to Service Providers who are Employees.
6. LIMITATIONS:
(a) Each Option shall be designated in the attended Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Corporation and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the option with respect to such shares is granted.
(b) Neither the Plan nor any Option shall confer upon an Optionee any right with respect to continuing the Optionee's relationship as an Officer, an Employee or a Director of the Corporation, nor shall they interfere in any way with the Optionee's right or the Corporation's right to terminate such relationship at any time, with or without cause.
7. TERM OF PLAN: Subject to Section 18 of the Plan, the Plan became effective on May 25, 1993. It shall continue in effect for a term of ten (10) years from such date, unless terminated earlier under Section 14 of the Plan.
8. TERM OF OPTION: The term of each Option shall be stated in the Option Agreement. In the case of an Incentive Stock Option, the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Option Agreement. Moreover, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns Stock representing more than ten percent (10%) of the voting power of all classes of stock of the Corporation or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.
9. OPTION EXERCISE PRICE AND CONSIDERATION:
(a) EXERCISE PRICE: The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Corporation or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Administrator, but shall be no less than 100% of the Fair Market Value per Share on the date of grant.
(b) WAITING PERIOD AND EXERCISE DATES: At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised.
(c) FORM OF CONSIDERATION: The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) previously acquired Shares having an aggregate fair market value on the date of exercise (determined in accordance with Section 2(m) equal to the aggregate exercise price of all options being exercised;
(iv) in the case of nonstatutory stock option, other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;
(v) Shares as to which this Option is then being exercised, in which case the Corporation is to retain so many shares that would otherwise have been delivered by the Corporation upon that exercise of this Option as equals the number of shares that would have been surrendered to the Corporation if the purchase price had been paid with previously issued stock; or
(vi) any combination of the foregoing methods of payment; or
(vii) such other consideration and method of payment for the issuance of Shares
to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION:
(a) PROCEDURE FOR EXERCISE; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Corporation has received: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Corporation or of a duly authorized transfer agent of the Corporation), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Corporation shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for exercise under the Option, meaning by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER:
If an Optionee ceases to be a Service Provider, other than upon the Optionee's
death, the Optionee may exercise his or her Option within such period of time
as is specified in the Option Agreement to the extent that the Option is vested
on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
ninety (90) days following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(c) DEATH OF OPTIONEE: If an Optionee dies while a Service Provider or within ninety (90) days of ceasing to be a Service Provider, the Option may be exercised within six (6) months after the death of Optionee, by the Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date Optionee ceased to be a Service Provider. If, at the time Optionee ceased to be a Service Provider, the Optionee is not vested as to his or her entire Option, the shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may be exercised by the executor or administrator of the Optionee's estate or, if none, by the person(s) entitled to exercise the Option under the Optionee's will or laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.
(d) BUYOUT PROVISIONS: The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.
11. NON-TRANSFERABILITY OF OPTIONS: Unless determined otherwise by the Administrator, an Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed or in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option transferable, such Option shall contain such additional terms and conditions as the Administrator deems appropriate.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET SALE:
(a) CHANGES IN CAPITALIZATION: Subject to any required action by the shareholders of the Corporation, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Corporation; provided, however, that conversion of any convertible securities of the Corporation shall not be deemed to have been "effected without receipt of consideration". Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Corporation of Shares of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION: In the event of the proposed dissolution or liquidation of the Corporation, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may
provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.
(c) MERGER OR ASSET SALE: In the event of a merger of the Corporation with or into another corporation, or the sale of substantially all of the assets of the Corporation, each outstanding Option shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.
13. DATE OF GRANT: The date of grant of an Option shall be, for all purposes, the date of which the Administrator make the determination granting such Option, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN:
(a) AMENDMENT AND TERMINATION: The Board may at any time amend, alter, suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL: The Corporation shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION: No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Corporation. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to options granted under the Plan prior to the date of such termination.
15. CONDITIONS UPON ISSUANCE OF SHARES:
(a) LEGAL COMPLIANCE: Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Corporation with respect to such compliance.
(b) INVESTMENT REPRESENTATIONS: As a condition to the exercise of an Option, the Corporation may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Corporation, such a representation is required.
16. INABILITY TO OBTAIN AUTHORITY: The inability of the Corporation to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Corporation's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Corporation of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
17. RESERVATION OF SHARES: The Corporation, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
18. SHAREHOLDER APPROVAL: This Amended and Restated Plan shall be subject to approval by the shareholders of the Corporation within twelve (12) months after the date of the adoption of this Amendment. Such shareholder approval shall be obtained in the manner and to the degree required under Applicable Laws.
EXHIBIT 10.6
WAGE CONTINUATION PLAN
Cal-Maine Foods, Inc, a Delaware corporation, (hereinafter referred to as "the Corporation"), has established under the date of January 1, 1986, by appropriate resolution of its Board of Directors, a Wage Continuation Plan, (hereinafter referred to as "the Plan"), for the benefit of R. K. Looper and B. J. Raines, (hereinafter collectively referred to as "the Participants" and individually referred to as "the Participant.")
WHEREAS, the services of the Participants their experience and knowledge of the affairs of the Corporation, and their reputation and contacts in the agricultural community are extremely valuable to the Corporation; and
WHEREAS, each Participant not only devotes his full time to the Corporation and is a key person to its success but also, as a professional employee, has duties and responsibilities that constitute a unique and vital role in the well-being of the business; and
WHEREAS, it is the desire of the Corporation to relieve the minds of the Participants of the burdens and worries involved in the diminution of income at the time of normal retirement in order that their minds may be free to concentrate on their work for the Corporation; and
WHEREAS, the Corporation desires the Participants to remain in its service and wishes to receive the benefit of their knowledge, experience, reputation and contacts, and
WHEREAS, to retain the Participants' services, the Corporation is willing to implement, in addition to their ordinary compensation, an incentive compensation continuation plan;
NOW, THEREFORE, to accomplish the foregoing desires, the Corporation hereby establishes the following Wage Continuation Plan:
ARTICLE I
EMPLOYEES COVERED BY THE PLAN
1.01 Employees covered by this Plan shall include R. K.
Looper and B. J. Raines.
1.02 An employee shall be deemed employed on a full-time
|
basis for the purposes of this
Plan if he customarily works, or is expected to work, at least nine (9) months in each year and at least thirty (30) hours in each week.
ARTICLE II
BENEFITS TO PARTICIPANTS
2.01 The Corporation agrees to pay to the Participants the sum of Fifty Thousand Dollars ($50,000) per year, to be paid on a monthly basis for up to a maximum of ten (10) years following the sixty-fifth (65th) birthday of a Participant, or a portion of such ten (10) year period computed as follows:
(a) For the purposes of this Plan, the period of time between January 1, 1986, and the sixty-fifth (65th) birthday of each Participant is designated "the Employment Period."
(b) For each ten percent (10%), or fraction thereof, of the Employment Period during which a Participant is a full-time employee of the Corporation, the Corporation agrees to pay the Participant one (1) full year of deferred compensation in the amount of Fifty Thousand Dollars ($50,000) per year, payable monthly.
(c) In the event of the death of a Participant prior to the time the Participant has received all deferred compensation to which the Participant is entitled under the terms of this Plan, the remaining amount due the Participant, but unpaid at the time of his death, shall be paid to the Participant's estate at the same rate and in the same manner as such sums would have been paid to the Participant had he lived until all payments due hereunder had been made.
ARTICLE III
FUNDING OF PLAN
3.01 The Corporation agrees that its obligation to pay the Participants under the terms hereof shall, be funded by a combination of purchase of insurance and payments from general working capital or other assets of the Corporation.
3.02 The Corporation presently has contracts of insurance with John Hancock Mutual Life Insurance Company on the lives of R. K. Looper and B. J. Raines, each in the amount of Five Hundred Thousand Dollars ($500,000). It is the intent of the parties that at such time as the Participants are entitled to receive benefits under the terms of this Plan, cash values available under the terms of the before described policies of insurance, or any
other policies which may have replaced such policies, will be utilized to partially fund such benefits.
ARTICLE IV
DISABILITY OF PARTICIPANTS
4.01 In the event a Participant shall become totally and permanently disabled during the Employment Period and as a result of such disability is unable to perform his duties as an employee of the Corporation, the employee shall continue to accrue benefits hereunder for a maximum period of twelve (12) months as if he were a full-time employee, whether such period of disability is continuous or involves two (2) or more shorter periods.
ARTICLE V
PAYMENT OF BENEFITS
5.01 The Participants will achieve age sixty-five (65) on the following dates:
R. K. Looper: November 14, 1991
B. J. Raines: October 16, 1997.
5.02 Without further notice or demand, the Corporation shall pay to the Participants the benefits to which the Participants are entitled under the terms hereof commencing on the date specified below for each Participant:
R. K. Looper: December 1, 1991
B. J. Raines: November 1, 1997
5.03 All payments made hereunder shall be subject to such withholding as may be required to comply with the applicable federal or state laws and regulations.
ARTICLE VI
TERMS OF EMPLOYMENT,
6.01 Nothing contained herein shall obligate, nor shall any term or condition herein be construed to obligate, the Corporation to continue the employment of either Participant for any specified period. The right is expressly reserved to the Corporation to terminate the employment of the Participants in accordance with the normal procedures as may be from time to time established by the Corporation. In the event the employment of a Participant is terminated, either by action of the Corporation or by the resignation or other removal of the
Participant, the Participant shall be entitled to receive, at the times and in accordance with the terms hereinbefore set forth, such benefits hereunder as may have been earned up to the time of such termination of employment.
ARTICLE VII
EFFECTIVE DATE
7.01 The effective date of this Plan is January 1, 1986.
ARTICLE VIII
NON-ASSIGNABILITY
8.01 This Plan and the rights, interests and benefits receivable hereunder from the general assets of the Corporation shall not be assigned, transferred, pledged, sold, conveyed or encumbered in any way by the Participants and shall not be subject to execution, attachment or similar process. Any attempted sale, conveyance, transfer, assignment, pledge or encumbrance of this Plan or of such rights, interests and benefits, contrary to the foregoing provisions, or the levy of any attachment of similar process thereupon, shall be null and void and without effect.
ARTICLE IX
NAMED FIDUCIARY AND PLAN ADMINISTRATOR
9.01 The Chief Executive Officer of the Corporation is hereby designated as the named fiduciary of this Plan, in accordance with ERISA, and shall serve in such capacity until resignation or removal by the Board of Directors and appointment of a successor by duly adopted resolution of the Board of Directors.
9.02 The named fiduciary shall have the authority to control and manage the operation and administration of this Plan. However, the named fiduciary may allocate his responsibilities for the operation and administration of this Plan, including the designation of persons who are not named fiduciaries to carry out fiduciary responsibilities.
9.03 The named fiduciary is hereby designated as the plan administrator of this Plan.
ARTICLE X
COMMUNICATION
10.01 A copy of this Plan shall be given to each Participant.
IN WITNESS WHEREOF, the Corporation has caused this Plan to be executed in its corporate name and by its corporate officers thereunto duly authorized as of the day and year first above written.
CAL-MAINE FOODS, INC.
BY:/s/ Fred Adams, Jr. ------------------------- FRED ADAMS, JR. CHIEF EXECUTIVE OFFICER |
CONSENT OF DIRECTORS
The undersigned Directors of Cal-Maine Foods, Inc., a Delaware corporation, being all of the members of the Executive Committee of said corporation, acting by written consent in lieu of a special called meeting of the Board of Directors of said corporation, pursuant to the provisions and requirements of Section 141(f) of the General Corporation Law of the State of Delaware, do hereby adopt the following resolution, to-wit:
BE IT RESOLVED that the Wage Continuation Plan, a copy of which is annexed to this resolution, and which becomes part hereof, shall be and the same is hereby adopted.
BE IT FURTHER RESOLVED that the proper and necessary officers of the corporation be and they are hereby authorized, empowered and directed to do and perform any and all acts and deeds necessary to enact and carry out the Plan on behalf of the corporation.
BE IT FURTHER RESOLVED that in carrying out their direction hereunder, the officers of the corporation shall be and are hereby directed to conform to the applicable retirement requirements of the Internal Revenue Code as such may be amended from time to time.
BE IT FURTHER RESOLVED that the corporation will indemnify and hold harmless any employee or director of the corporation who serves as a named fiduciary of the Plan and any other of its employees and directors serving the Plan, in a fiduciary capacity from any and all claims and liabilities, including the cost of defending such claims or liabilities arising out of the performance of his fiduciary duties to the maximum extent permitted by law and may keep and maintain liability insurance in force for the protection of such fiduciaries and the Plan, which insurance shall include a waiver by the insurer of its subrogation rights with respect to claims against fiduciaries.
IN WITNESS WHEREOF, the undersigned have executed this consent and adopted the above and foregoing resolution on this the 2nd day of May, 1986, with such Plan effective as of January 1, 1986.
/s/ R. K. Looper ---------------------------- R. K. LOOPER /s/ B. J. Raines ---------------------------- B. J. RAINES |
The undersigned, acting individually in his capacity as the majority shareholder of Cal-Maine Foods, Inc., a Delaware corporation, does hereby specifically consent to and approve the adoption of the above resolution and acknowledges that he has reviewed and approves the Wage Continuation Plan which is the subject of such resolution.
/s/ Fred Adams, Jr. ---------------------------- FRED ADAMS, JR. CHIEF EXECUTIVE OFFICER |
EXHIBIT 10.7
WAGE CONTINUATION PLAN
Cal-Maine Foods, Inc., a Delaware corporation, (hereinafter referred to as "the Corporation"), has established under the date of July 1, 1986, by appropriate resolution of its Board of Directors, a Wage Continuation Plan, (hereinafter referred to as "the Plan"), for the benefit of Jack Self, (hereinafter referred to as "the Participant").
WHEREAS, the services of the Participant, his experience and knowledge of feed production, and his reputation and contacts in the agricultural community are extremely valuable to the Corporation; and
WHEREAS, he not only devotes his full time to the Corporation and is a key person to its success but also, as a professional employee, has duties and responsibilities that constitute a unique and vital role in the well-being of the business; and
WHEREAS, it is the desire of the Corporation to relieve the mind of the Participant of the burdens and worries involved in the diminution of income at the time of normal retirement in order that his mind may be free to concentrate on his work for the Corporation; and
WHEREAS, the Corporation desires the Participant to remain in its service and wishes to receive the benefit of his knowledge, experience, reputation and contacts, and
WHEREAS, to retain the Participant's services, the Corporation is willing to implement, in addition to their ordinary compensation, an incentive compensation continuation plan;
NOW, THEREFORE, to accomplish the foregoing desires, the Corporation hereby establishes the following Wage Continuation Plan:
ARTICLE I
EMPLOYEES COVERED BY THE PLAN
1.01 Employees covered by this Plan shall include Jack Self.
1.02 An employee shall be deemed employed on a full-time basis for the purposes of this Plan if he customarily works, or is expected to work, at least nine (9) months in each year and at least thirty (30) hours in each week.
ARTICLE II
BENEFITS TO PARTICIPANT
2.01 The Corporation agrees to pay to the participant the sum of Twenty Thousand Dollars ($20,000) per year, to be paid on a monthly basis for up to a maximum of ten (10) years following the sixty-fifth (65th) birthday of a Participant, or a portion of such ten (10) year period computed as follows:
(a) For the purposes of this Plan, the period of time between July 1, 1986, and sixty-fifth (65th) birthday of the Participant is designated "the Employment Period."
(b) For each ten percent (10%), or fraction thereof, of the Employment Period during which a Participant is a fulltime employee of the Corporation, the Corporation agrees to pay the Participant one (1) full year of deferred compensation in the amount of Twenty-Thousand Dollars ($20,000) per year, payable monthly.
(c) In the event of the death of a Participant prior to the time the Participant has received all deferred compensation to which the Participant is entitled under the terms of this Plan, the remaining amount due the Participant, but unpaid at the time of his death, shall be
paid to the Participant's estate at the same rate and in the same manner as such sums would have been paid to the participant had he lived until all payments due hereunder had been made.
ARTICLE III
FUNDING OF PLAN
3.01 The Corporation agrees that its obligation to pay the Participant under the terms hereof shall be funded by a combination of purchase of insurance and payments from general working capital or other assets of the Corporation.
3.02 The Corporation presently has a contract of insurance with John Hancock Mutual Life Insurance Company on the life of Jack Self, in the amount of Two Hundred Thousand Dollars ($200,000). It is the intent of the parties that at such time as the Participant is entitled to receive benefits under the terms of this Plan, cash values available under the terms of the before described policy of insurance, or any other policy or policies which may have replaced such policy, will be utilized to partially fund such benefits.
ARTICLE IV
DISABILITY OF PARTICIPANT
4.01 In the event a Participant shall become totally and permanently disabled during the Employment Period and as a result of such disability is unable to perform his duties as an employee of the Corporation, the employee shall continue to accrue benefits hereunder for a maximum period of twelve (12) months as if he were a full-time employee whether such period of disability is continuous or involves two (2) or more shorter periods.
ARTICLE V
PAYMENT OF BENEFITS
5.01 The Participant will achieve age sixty-five (65) on the following date:
Jack Self: August 23, 1994
5.02 Without further notice or demand, the Corporation shall pay to the Participant the benefits to which the Participant is entitled under the terms hereof commencing on the date specified below for the Participant:
Jack Self: September 1, 1994
5.03 All payments made hereunder shall be subject to such with holding as may be required to comply with the applicable federal or state laws and regulations.
ARTICLE VI
TERMS OF EMPLOYMENT
6.01 Nothing contained herein shall obligate, nor shall any term or condition herein be construed to obligate, the Corporation to continue the employment of the Participant for any specified period. The right is expressly reserved to the Corporation to terminate the employment of the Participant in accordance with the normal procedures as may be from time to time established by the Corporation. In the event the employment of the Participant is terminated, either by action of the Corporation or by the resignation or other removal of the Participant, the Participant shall be entitled to receive, at the times and in accordance with the terms hereinbefore set forth, such benefits hereunder as may have been earned up to the time of such termination of employment.
ARTICLE VII
EFFECTIVE DATE
7.01 The effective date of this Plan is July 1, 1986.
ARTICLE VIII
NON-ASSIGNABILITY
8.01 This Plan and the rights, interests and benefits receivable hereunder from the general assets of the Corporation shall not be assigned, transferred, pledged, sold, conveyed or encumbered in any way by the Participant and shall not be subject to execution, attachment or similar process. Any attempted sale, conveyance, transfer, assignment, pledge or encumbrance of this Plan or of such rights, interests and benefits, contrary to the foregoing provisions or the levy of any attachment of similar process thereupon, shall be null and void and without effect.
ARTICLE IX
NAMED FIDUCIARY AND PLAN ADMINISTRATOR
9.01 The Chief Executive Officer of the Corporation is hereby designated as the named fiduciary of this Plan, in accordance with ERISA, and shall serve in such capacity until resignation or removal by the Board of Directors and appointment of a successor by duly adopted resolution of the Board of Directors.
9.02 The named fiduciary shall have the authority to control and manage the operation and administration of this Plan. However, the named fiduciary may allocate his responsibilities for the operation and administration of this Plan, including the designation of persons who are not named fiduciaries to carry out fiduciary responsibilities.
9.03 The named fiduciary is hereby designated as the plan administrator of this Plan.
ARTICLE X
COMMUNICATION
10.01 A copy of this Plan shall be given to each Participant.
IN WITNESS WHEREOF, the Corporation has caused this Plan to be executed in its corporate name and by its corporate officers thereunto duly authorized as of the day and year first above written.
CAL-MAINE FOODS, INC.
Chief Executive Officer
CONSENT OF DIRECTORS
The undersigned Directors of Cal-Maine Foods, Inc., a Delaware corporation, being all of the members of the Executive Committee of said corporation, acting by written consent in lieu of a special called meeting of the Board of Directors of said corporation, pursuant to the provisions and requirements of Section 141(f) of the General Corporation Law of the State of Delaware, do hereby adopt the following resolution, to-wit:
BE IT RESOLVED that the Wage Continuation Plan for Jack Self, a copy of which is annexed to this resolution, and which becomes part hereof, shall be and the same is hereby adopted.
BE IT FURTHER RESOLVED that the proper and necessary officers of the corporation be and they are hereby authorized, empowered and directed to do and perform any and all acts and deeds necessary to enact and carry out the Plan on behalf of the corporation.
BE IT FURTHER RESOLVED that in carrying out their direction hereunder, the officers of the corporation shall be and are hereby directed to conform to the applicable retirement requirements of the Internal Revenue Code as such may be amended from time to time.
BE IT FURTHER RESOLVED that the corporation will indemnify and hold harmless any employee or director of the corporation who serves as a named fiduciary of the Plan and any other of its employees and directors serving the Plan in a fiduciary capacity from any and all claims and liabilities, including the cost of defending such claims or liabilities, arising out of the performance of his fiduciary duties to the maximum extent permitted by law and may keep and maintain liability insurance in force for the protection of such fiduciaries and the Plan, which insurance shall include a waiver by the insurer of its subrogation rights with respect to claims against fiduciaries.
IN WITNESS WHEREOF, the undersigned have executed this consent and adopted the above and foregoing resolution on this the ___ day of __________________, 1986, with such Plan effective as of July 1, 1986.
The undersigned, acting individually in his capacity as the majority shareholder of Cal-Maine Foods, Inc., a Delaware corporation, does hereby specifically consent to and
approve the adoption of the above resolution and acknowledges that he has reviewed and approves the Wage Continuation Plan which is the subject of such resolution.
[CAL-MAINE FOODS, INC. LETTERHEAD]
FRED ADAMS, JR.
Chief Executive Officer
Mr. Jack Self
Cal-Maine Foods, Inc.
P. O. Box 2960
Jackson, Mississippi 39207
Re: Amendment to Wage Continuation Plan of July 1, 1986
Dear Jack:
This letter will serve to amend the Wage Continuation Plan of July 1, 1986, between you and Cal-Maine Foods, Inc.
It is agreed that you will continue employment beyond your 65th birthday. It is further agreed that Cal-Maine will not begin making the $20,000 per year wage continutation payments, as set out in the Wage Continuation Plan, until the date of your retirement.
During your additional period of employment, you will earn one additional year of wage continuation credit for each additional year of employment. Each additional year will be added to the ten (10) years you have earned as of August 31, 1994.
Payments made under this amendment shall be paid in monthly installments totalling $20,000 per year and shall continue to you or your estate until all payments due have been paid in full.
Sincerly,
/s/ FRED ADAMS, JR. Fred Adams FA:dlm |
/s/ JACK SELF ------------------------- Jack Self |
EXHIBIT 10.8
WAGE CONTINUATION PLAN
Cal-Maine Foods, Inc., a Delaware corporation, (hereinafter referred to as "the Corporation"), has established under the date of April 15, 1988, by appropriate resolution of its Board of Directors, a Wage Continuation Plan, (hereinafter referred to as "the Plan"), for the benefit of Joe Wyatt, (hereinafter referred to as "the Participant").
WHEREAS, the services of the Participant, his experience and knowledge of feed production, and his reputation and contacts in the agricultural community are extremely valuable to the Corporation; and
WHEREAS, he not only devotes his full time to the Corporation and is a key person to its success but also, as a professional employee, has duties and responsibilities that constitute a unique and vital role in the well-being of the business; and
WHEREAS, it is the desire of the Corporation to relieve the mind of the Participant of the burdens and worries involved in the diminution of income at the time of normal retirement in order that his mind may be free to concentrate on his work for the Corporation; and
WHEREAS, the Corporation desires the Participant to remain in its service and wishes to receive the benefit of his knowledge, experience, reputation and contacts, and
WHEREAS, to retain the Participant's services, the Corporation is willing to implement, in addition to their ordinary compensation, an incentive compensation continuation plan;
NOW, THEREFORE, to accomplish the foregoing desires, the Corporation hereby establishes the following Wage Continuation Plan:
ARTICLE I
EMPLOYEES COVERED BY THE PLAN
1.01 Employees covered by this Plan shall include Joe Wyatt.
1.02 An employee shall be deemed employed on a full-time basis for the purposes of this Plan if he customarily works, or is expected to work, at least nine (9) months in each year and at least thirty (30) hours in each week.
ARTICLE II
BENEFITS TO PARTICIPANT
2.01 The Corporation agrees to pay to the participant the sum of Twenty Thousand Dollars ($20,000) per year, to be paid on a monthly basis for up to a maximum of ten (10) years following the sixty-fifth (65th) birthday of a Participant, or a portion of such ten (10) year period computed as follows:
(a) For the purposes of this Plan, the period of time between April 15, 1988, and sixty-fifth (65th) birthday of the Participant is designated "the Employment Period."
(b) For each ten percent (10%), or fraction thereof, of the Employment Period during which a Participant is a fulltime employee of the Corporation, the Corporation agrees to pay the Participant one (1) full year of deferred compensation in the amount of Twenty-Thousand Dollars ($20,000) per year, payable monthly.
(c) In the event of the death of a Participant prior to the time the Participant has received all deferred compensation to which the Participant is entitled under the terms of this Plan, the remaining amount due the Participant, but unpaid at the time of his death, shall be
paid to the Participant's estate at the same rate and in the same manner as such sums would have been paid to the participant had he lived until all payments due hereunder had been made.
ARTICLE III
FUNDING OF PLAN
3.01 The Corporation agrees that its obligation to pay the Participant under the terms hereof shall be funded by a combination of purchase of insurance and payments from general working capital or other assets of the Corporation.
3.02 The Corporation presently has a contract of insurance with John Hancock Mutual Life Insurance Company on the life of Joe Wyatt, in the amount of Two Hundred Thousand Dollars ($200,000). It is the intent of the parties that at such time as the Participant is entitled to receive benefits under the terms of this Plan, cash values available under the terms of the before described policy of insurance, or any other policy or policies which may have replaced such policy, will be utilized to partially fund such benefits.
ARTICLE IV
DISABILITY OF PARTICIPANT
4.01 In the event a Participant shall become totally and permanently disabled during the Employment Period and as a result of such disability is unable to perform his duties as an employee of the Corporation, the employee shall continue to accrue benefits hereunder for a maximum period of twelve (12) months as if he were a full-time employee whether such period of disability is continuous or involves two (2) or more shorter periods.
ARTICLE V
PAYMENT OF BENEFITS
5.01 The Participant will achieve age sixty-five (65) on the following date:
Joe Wyatt: August 4, 2004
5.02 Without further notice or demand, the Corporation shall pay to the Participant the benefits to which the Participant is entitled under the terms hereof commencing on the date specified below for the Participant:
Joe Wyatt: September 1, 2004
5.03 All payments made hereunder shall be subject to such with holding as may be required to comply with the applicable federal or state laws and regulations.
ARTICLE VI
TERMS OF EMPLOYMENT
6.01 Nothing contained herein shall obligate, nor shall any term or condition herein be construed to obligate, the Corporation to continue the employment of the Participant for any specified period. The right is expressly reserved to the Corporation to terminate the employment of the Participant in accordance with the normal procedures as may be from time to time established by the Corporation. In the event the employment of the Participant is terminated, either by action of the Corporation or by the resignation or other removal of the Participant, the Participant shall be entitled to receive, at the times and in accordance with the terms hereinbefore set forth, such benefits hereunder as may have been earned up to the time of such termination of employment.
ARTICLE VII
EFFECTIVE DATE
7.01 The effective date of this Plan is April 15, 1988.
ARTICLE VIII
NON-ASSIGNABILITY
8.01 This Plan and the rights, interests and benefits receivable hereunder from the general assets of the Corporation shall not be assigned, transferred, pledged, sold, conveyed or encumbered in any way by the Participant and shall not be subject to execution, attachment or similar process. Any attempted sale, conveyance, transfer, assignment, pledge or encumbrance of this Plan or of such rights, interests and benefits, contrary to the foregoing provisions or the levy of any attachment of similar process thereupon, shall be null and void and without effect.
ARTICLE IX
NAMED FIDUCIARY AND PLAN ADMINISTRATOR
9.01 The Chief Executive Officer of the Corporation is hereby designated as the named fiduciary of this Plan, in accordance with ERISA, and shall serve in such capacity until resignation or removal by the Board of Directors and appointment of a successor by duly adopted resolution of the Board of Directors.
9.02 The named fiduciary shall have the authority to control and manage the operation and administration of this Plan. However, the named fiduciary may allocate his responsibilities for the operation and administration of this Plan, including the designation of persons who are not named fiduciaries to carry out fiduciary responsibilities.
9.03 The named fiduciary is hereby designated as the plan administrator of this Plan.
ARTICLE X
COMMUNICATION
10.01 A copy of this Plan shall be given to each Participant.
IN WITNESS WHEREOF, the Corporation has caused this Plan to be executed in its corporate name and by its corporate officers thereunto duly authorized as of the day and year first above written.
CAL-MAINE FOODS, INC.
Chief Executive Officer
CONSENT OF DIRECTORS
The undersigned Directors of Cal-Maine Foods, Inc., a Delaware corporation, being all of the members of the Executive Committee of said corporation, acting by written consent in lieu of a special called meeting of the Board of Directors of said corporation, pursuant to the provisions and requirements of Section 141(f) of the General Corporation Law of the State of Delaware, do hereby adopt the following resolution, to-wit:
BE IT RESOLVED that the Wage Continuation Plan for Joe Wyatt, a copy of which is annexed to this resolution, and which becomes part hereof,
shall be and the same is hereby adopted.
BE IT FURTHER RESOLVED that the proper and necessary officers of the corporation be and they are hereby authorized, empowered and directed to do and perform any and all acts and deeds necessary to enact and carry out the Plan on behalf of the corporation.
BE IT FURTHER RESOLVED that in carrying out their direction hereunder, the officers of the corporation shall be and are hereby directed to conform to the applicable retirement requirements of the Internal Revenue Code as such may be amended from time to time.
BE IT FURTHER RESOLVED that the corporation will indemnify and hold harmless any employee or director of the corporation who serves as a named fiduciary of the Plan and any other of its employees and directors serving the Plan in a fiduciary capacity from any and all claims and liabilities, including the cost of defending such claims or liabilities, arising out of the performance of his fiduciary duties to the maximum extent permitted by law and may keep and maintain liability insurance in force for the protection of such fiduciaries and the Plan, which insurance shall include a waiver by the insurer of its subrogation rights with respect to claims against fiduciaries.
IN WITNESS WHEREOF, the undersigned have executed this consent and adopted the above and foregoing resolution on this the ________ day of __________________, 1988, with such Plan effective as of April 15, 1988.
The undersigned, acting individually in his capacity as the majority shareholder of
Cal-Maine Foods, Inc., a Delaware corporation, does hereby specifically consent to and approve the adoption of the above resolution and acknowledges that he has reviewed and approves the Wage Continuation Plan which is the subject of such resolution.
EXHIBIT 10.9
REDEMPTION AGREEMENT
WHEREAS, as a result of the bankruptcy of Eaglespeed Oil & Lube, Inc., a New Jersey corporation ("EAGLESPEED"), Fred R. Adams, Jr. ("ADAMS") has been called upon to discharge his guaranty of the indebtedness of Eaglespeed to National Westminster Bank NJ ("BANK"); and
WHEREAS, Adams and Boyce F. Overstreet ("OVERSTREET"), in order to discharge their guaranty obligations to the Bank, have executed and delivered to the Bank their Renewal Term Loan Promissory Note in the principal amount of $720,064.41 (the "LOAN"); and
WHEREAS, in connection with the Loan, Adams is required to pledge as collateral for the Loan due the Bank by Adams and Overstreet certain shares of Cal-Maine Foods, Inc. ("CAL-MAINE"), a Delaware corporation, owned personally by Adams, and Bank is requiring a procedure whereby Bank will be assured of a purchaser of such stock in the event Adams and other guarantors of Eaglespeed default in the payment of their Loan due the Bank.
NOW, THEREFORE, Cal-Maine and Adams, intending to be legally bound hereby, agree as follows:
1. Cal-Maine acknowledges and consents to the pledge by Adams of 162 shares of the common stock (par value $1.00) of Cal-Maine to Bank which stock shall serve as collateral to secure the payment of the indebtedness owing to the Bank on the Loan.
2. Cal-Maine agrees that in the event of default as defined in paragraph 10 of the Loan Agreement dated March 4, 1994 by and among Bank, Overstreet and Adams and all collateral loan documents executed thereunder, including but not limited to the Renewal Term Loan Promissory Note ("Loan Documents") in the payment to Bank of the Loan, Cal-Maine or its designee agrees to purchase from Adams the shares of common stock of Cal-Maine which, at the time of such default, are pledged by Adams to Bank.
3. The purchase price to be paid by Cal-Maine to Adams pursuant to paragraph 2 aforesaid, shall be the per share book value of such stock computed by dividing (A) the issued and outstanding shares of Cal-Maine common stock less shares held in the treasury of Cal-Maine into (B) the net stockholders' equity computed in accordance with generally accepted accounting principles, consistently applied, as of the last day of the immediately preceding fiscal year of Cal-Maine as reflected in the audited financial statements of Cal-Maine prepared in the ordinary course of Cal-Maine's business. In this connection, Cal-
Maine agrees to provide to the Bank annually no later than one-hundred twenty
(120) days after the close of each of its fiscal years, a copy of its financial
statements audited and certified by a certified public accountant and including
but not limited to a balance sheet, statement of income and statement of cash
flows for the year then ended.
4. Cal-Maine's obligation to purchase the stock, as herein set forth, shall be contingent upon Bank notifying Adams and -Cal-Maine in writing of default under the terms of the Loan as evidenced by the Loan Documents including but not limited to the Renewal Term Loan Promissory Note in favor of Bank in the original principal amount of $720,064.41 and dated the 4th day of March, 1994, a copy of which shall have been sent to Cal-Maine by Bank, or as evidenced by the Extended Renewal Term Loan Promissory Note if the term of the Loan is extended on March 4, 1997 by the Bank, a copy of which shall have been sent to Cal-Maine by the Bank.
5. Upon compliance with paragraph 6 hereof, Cal-Maine expressly consents to the assignment by Adams of this Agreement, and Cal-Maine's obligation to purchase the shares of common stock of Cal-Maine expressed herein, to Bank as has been requested by Bank.
6. The parties hereto recognize and confirm that, under certain loan agreements or other financing transactions, Cal-Maine is restricted in its ability to redeem or otherwise acquire shares of its own stock. Therefore, it is expressly understood and agreed that except as provided in paragraph 7 below, under no circumstances shall Cal-Maine be required to redeem, or otherwise acquire shares of its common stock under the terms hereof in an amount exceeding $300,000 in any one fiscal year of Cal-Maine and to the extent otherwise permitted under the laws of the State of Delaware. Any assignee of this Agreement, or the benefits resulting haywire, shall, as a condition of such assignment, expressly agree to the limitation on Cal-Maine's obligation to redeem as set forth in this paragraph 6.
7. During the term of the Loan due the Bank by Adams, Cal-Maine agrees that if any shares of Cal-Maine common stock owned by Adams are sold by Adams other than to members of the Adams family (as "family" is defined in Section 447 of the Internal Revenue Code)in an amount in excess of Five Hundred Thousand ($500,000.00) Dollars in any fiscal year of Cal-Maine (excluding any sales the proceeds of which are used by Adams to make payments to Bank), Cal-Maine shall, upon written request by the Bank, redeem from Bank the percentage of the Collateral held by the Bank computed by multiplying the number of shares held by the Bank by a fraction, the numerator of which is the number of shares then sold, transferred, redeemed or otherwise disposed of by Adams, and the denominator of which is the total number of shares of Cal-Maine common stock owned by Adams immediately prior to such sale.
8. Nothing contained herein shall be construed or interpreted in any manner as constituting a guaranty by Cal-Maine of the obligations of Overstreet or Adams which underlie the pledge of the stock of Cal-Maine by Adams as hereinbefore described and nothing herein contained shall be in any manner construed as agreement by Cal-Maine to pay such indebtedness or any costs relating thereto, it being expressly agreed that the sole obligation of Cal-Maine pursuant to this Agreement shall be to redeem the shares of its common stock pledged by Adams to Bank under the terms and conditions expressly set forth herein.
9. Notice to Adams shall be sent to:
Fred R. Adams, Jr.
3320 W. Woodrow Wilson Avenue
Jackson, Mississippi 39209
Notice to Cal-Maine shall be sent to:
Cal-Maine Foods, Inc.
Attn: -B. J. Raines, Vice President
3320 W. Woodrow Wilson Avenue
Jackson, Mississippi 39209
With a copy to:
James Neeld III
Wells, Moore, Simmons & Neeld
1300 Deposit Guaranty Plaza
210 East Capital Street
Jackson, Mississippi 39215
10. In the event that, during the term of the Loan and until the Loan is paid in full, any share dividend, recapitalization, reclassification, readjustment, issuance and/or sale of additional classes or series of capital stock or securities, or other change is declared or made in the capital structure of Cal-Maine, all new, substituted and additional shares, or other securities, issued in Adams' name with respect to the Cal-Maine shares pledged by Adams to the Bank by reason of any such change, shall be delivered by Cal-Maine directly to the Bank under the terms of the Stock Pledge/Hypothecation and Security Agreement between Adams and the Bank, in the same manner as the Cal-Maine shares originally pledged thereunder by Adams. The parties agree that this paragraph is intended to prevent the dilution of the shares of Cal-Maine pledged by Adams to the Bank. In the event of an occurrence as provided herein, Adams shall be permitted to make an additional written
request (in addition to the written request set forth in paragraph 4(c)(ii) of the Pledge/Hypothecation and Security Agreement (the "Pledge Agreement") between Adams and the Bank for the re-assignment and re-transfer ff necessary of the number of whole shares (but not fractional shares) of the Collateral representing the value of the Collateral exceeding one hundred twenty (120%) percent of the obligations then due the Bank as provided in paragraphs 4(c)(i)(ii) and (iii) of the Pledge Agreement.
11. This Redemption Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their heirs, "executors, administrators, successors and assigns.
IN WITNESS WHEREOF, Adams and Cal-Maine have executed this Agreement effective as of the 7th day of March, 1994.
/s/ Fred R. Adams, Jr.
- ----------------------- ---------------------------------------
Witness Fred R. Adams, Jr.
|
CAL-MAINE FOODS, INC.
By:/s/ Fred R. Adams, Jr. --------------------------------------------- Fred R. Adams, Jr., Chief Executive Officer |
(Corporate Seal)
Attest:
/s/ Charles F. Collins ---------------------------------------- Charles F. Collins, Assistant Secretary |
EXHIBIT 11
Statement Regarding Computation of Earnings Per Share
(in thousands, except per share amounts)
Year Ended 13 Weeks End
--------------------------------------------- -----------------------
May 28, 1994 June 3, 1995 June 1, 1996 Sept. 2, Aug. 31,
1995 1996
Net income (loss) $ 224 ($ 8,685) $10,925 ($ 1,635) $ 1,097
======= ========= ======= ========= =======
Weighted average common 11,760 11,700 11,584 11,647 10,309
shares outstanding*
Weighted average Class --- --- --- --- 1,200
A common shares
outstanding*
Options vested** --- --- --- --- ---
------- -------- -------- -------- --------
11,760 11,700 11,584 11,647 11,509
======= ======== ======== ======== ========
Net income (loss) per
common stock $.02 ($.74) $.94 ($.14) $.10
|
* Reflects 1,200 for one stock split. ** Effects of vested options outstanding are less than 3% of earnings per
share.
EXHIBIT 21
SUBSIDIARIES OF CAL-MAINE FOODS, INC.
PERCENTAGE OF
OUTSTANDING STOCK
PLACE OF OR OWNERSHIP
INCORPORATION INTEREST HELD
NAME OF SUBSIDIARY OR ORGANIZATION BY REGISTRANT
------------------ --------------- -------------
Cal-Maine Eggs Products, Inc. Delaware 100%
Cal-Maine Farms, Inc. Delaware 100%
Sunbelt Freight, Inc. Mississippi 100%
Cal-Maine Partnership, Ltd. Texas (1)
CMF of Kansas, LLC Delaware (2)
|
(1) Limited partnership in which Cal-Maine Foods, Inc. has a 1% General Partner interest and Cal-Maine Farms, Inc. has a 99% Limited Partner interest.
(2) Limited liability company of which Cal-Maine Foods, Inc. and Cal-Maine
Farms, Inc. are members and have 99% and 1% interests, respectively.
EXHIBIT 24.2
ATTORNEYS' CONSENT
We consent to the reference to our name under the caption "Legal Matters" in the Prospectus constituting part of this Registration Statement.
Freedman, Levy, Kroll & Simonds
Washington, D.C.
October 24, 1996
EXHIBIT 24.3
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated July 22, 1996 (except Note 12, as to which the date is October 3, 1996) in the Registration Statement (Form S-1 No. 333- ) and the related Prospectus of Cal-Maine Foods, Inc. for the registration of 2,875,000 shares of its common stock and 250,000 shares of its Representative's warrants.
Our audits also included the financial statement schedule of Cal-Maine Foods, Inc. listed in Item 16(b). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
October 24, 1996
| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS | 3 MOS |
| FISCAL YEAR END | JUN 01 1996 | MAY 31 1997 |
| PERIOD END | JUN 01 1996 | AUG 31 1996 |
| CASH | 3,959 | 4,688 |
| SECURITIES | 0 | 0 |
| RECEIVABLES | 13,387 | 13,550 |
| ALLOWANCES | 31 | 109 |
| INVENTORY | 40,969 | 40,684 |
| CURRENT ASSETS | 60,448 | 61,445 |
| PP&E | 140,137 | 141,758 |
| DEPRECIATION | 57,711 | 59,917 |
| TOTAL ASSETS | 149,991 | 150,351 |
| CURRENT LIABILITIES | 33,706 | 33,216 |
| BONDS | 59,169 | 58,490 |
| PREFERRED MANDATORY | 0 | 0 |
| PREFERRED | 0 | 0 |
| COMMON | 14 | 170 |
| OTHER SE | 47,886 | 48,806 |
| TOTAL LIABILITY AND EQUITY | 149,991 | 150,351 |
| SALES | 282,844 | 65,563 |
| TOTAL REVENUES | 282,844 | 65,563 |
| CGS | 230,850 | 55,712 |
| TOTAL COSTS | 230,850 | 55,712 |
| OTHER EXPENSES | 190 | 0 |
| LOSS PROVISION | 0 | 0 |
| INTEREST EXPENSE | 5,487 | 1,116 |
| INCOME PRETAX | 17,385 | 1,794 |
| INCOME TAX | 6,460 | 697 |
| INCOME CONTINUING | 10,925 | 1,097 |
| DISCONTINUED | 0 | 0 |
| EXTRAORDINARY | 0 | 0 |
| CHANGES | 0 | 0 |
| NET INCOME | 10,925 | 1,097 |
| EPS PRIMARY | 0.94 | 0.10 |
| EPS DILUTED | 0.94 | 0.10 |