Consolidating Loan Agreement - Carroll's Foods Inc., Carroll's Realty Inc. and Cape Fear Farm Credit ACA
CAPE FEAR FARM CREDIT, ACA
CONSOLIDATING LOAN AGREEMENT
BORROWER: Carroll's Foods, Inc. ("Foods"), LENDER: Cape Fear Farm Credit, ACA
and Carroll's Realty, Inc. ("Realty"), ("Lender"), an agricultural
each a North Carolina corporati n, and credit association
Carroll's Realty Partnership
("Partnership"), a North Carolina Post Office Box 558
general partnership, (collectively, Clinton, North Carolina 28329
"Borrowers," and each,
individually, "Borrower")
THIS CONSOLIDATING LOAN AGREEMENT (the "Consolidating Loan Agreement") is made
and entered into to be effective as of the 28th day of August, 1998, by and
among Lender, Borrowers and Guarantors as defined herein (Lender, Borrowers and
Guarantors, collectively, the "Parties").
FACTUAL BACKGROUND
Lender, Borrowers and one or more of Guarantors entered into a certain
Loan Agreement with an effective date of October 23, 1996 (the "Original Loan
Agreement") pursuant to which Lender agreed to make available to Borrowers up to
$65,000,000.00 under a revolving line of credit (the "RLOC") and up to
$40,000,000.00 under a non-revolving line of credit (the "NRLOC"). Subsequently,
the Original Loan Agreement has been amended by amendment agreements dated as of
April 14, 1997 and as of October 23, 1997.
Lender, Borrowers, and one or more of Guarantors entered into a certain
Revolving Credit Agreement with an effective date as of January 31, 1995 (the
"Stock Loan Agreement") pursuant to which Lender agreed to make available to
Borrowers up to $30,000,000.00 under a revolving line of credit (the "Stock
RLOC"). Subsequently, the Stock Loan Agreement has been amended by amendment
agreements dated as of October 26, 1995, as of April 24, 1996, as of July 31,
1996, as of October 23, 1996, as of April 14, 1997, and as of October 23, 1997.
Borrowers and Guarantors have requested, and Lender has consented (on
terms and conditions more particularly set forth hereinbelow): (i) to renew the
RLOC; (ii) to replace the NRLOC with an Evergreen Revolving Line of Credit in
the amount of up to $80,000,000.00; and (iii) to renew the Stock RLOC and
increase available borrowings thereunder up to $50,000,000.00. In connection
therewith, Borrowers, Guarantors and Lender have agreed to amend, restate, and
consolidate the Original Loan Agreement (as amended) and the Stock Loan
Agreement (as amended).
NOW, THEREFORE, in consideration of the above amendments and Lender's
making and continuing to make loans of $65,000,000.00, $80,000,000.00 and
$50,000,000.00 to Borrowers for the purposes set forth in Section 2.2, as
evidenced by the Notes (as defined below), Lender, Borrowers and Guarantors
enter into this Consolidating Loan Agreement and agree as follows:
1. DEFINITIONS. For the purposes hereof:
1.1. "Additional Pledged Shares" shall have the meaning assigned thereto in
the Pledge Agreement.
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1.2. "Business Day" means any day on which Lender is open for business.
1.3. "Carroll's Group" means Borrowers, Guarantors, Carroll's Foods of
Virginia, Inc., Carroll's Farms of Virginia, Inc., and Carroll's Foods of Utah,
Inc.
1.4. "Closing Date" means the date of this Consolidating Loan Agreement.
1.5. "Collateral" means all personal property, Real Estate Collateral, and
other interests securing the Loans as set forth in Section 5.1.
1.6. "Deeds of Trust" means those certain deeds of trust from Partnership to
Lender pledging the Real Estate Collateral and all improvements located thereon
to Lender as further described on Schedule 1.6 attached hereto and made a part
hereof, and as more particularly described in Section 5.1 hereof, as well as any
modifications of such Deeds of Trust.
1.7. "Eligible Accounts" means those accounts of Foods arising from the sale
of goods or services, which goods or services have actually been delivered or
rendered by Foods less those accounts (i) which remain unpaid more than sixty
(60) days after the invoice date thereof (unless otherwise agreed by Lender on a
case-by-case basis), (ii) are disputed or otherwise subject to any setoff,
credit allowance or adjustment by the account debtor, or (iii) are otherwise
unacceptable to Lender in its sole discretion.
1.8. "Eligible Inventory" means all goods of Foods, including, without
limitation, farm products (exclusive of crops), and livestock, being grown (by
or for the benefit of Foods) or held for sale or for processing or which are
being processed in Foods' ordinary course of business (including, but not
limited to, all turkeys, swine and all produce and progeny thereof, and all feed
and feed ingredients) and all products and proceeds from any and all thereof.
1.9. "Environmental Certificate" means that certificate to be delivered to
Lender in accordance with the terms of Section 2.3, substantially in the form of
Exhibit 1.9 attached hereto, stating that no change has occurred since the most
recent environmental hazards assessment furnished to Lender.
1.10. "Environmental Laws" means federal, state, or local environmental laws
or regulations, including but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. Sec. 9601 et seq.; the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. '1101 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et seq.; the
Hazardous Materials Transportation Act of 1974, 49 U.S.C. Sec. 1801 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. Sec. 1251 et seq.; the Clean Air
Act, 42 U.S.C. Sec. 4701 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Sec. 136 et seq.; the Safe Drinking Water Act, 42
U.S.C. Sec. 3001 et seq.; the Toxic Substances Control Act, 15 U.S.C. Sec. 2601
et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq.; and any
laws regulating the use of biological agents or substances, including medical or
infectious wastes, each as amended or supplemented, and any analogous future or
present federal, state, and local statutes, regulations, and ordinances
promulgated pursuant thereto which may be applicable.
1.11. "Event of Default" has the meaning set forth in Section 6.
1.12. "Evergreen RLOC" means that certain revolving line of credit in an
amount not to exceed Eighty Million and no/100 Dollars ($80,000,000.00).
1.13. "Evergreen RLOC Maturity Date" means August 28, 2000, unless extended
as provided in Section 2.1(e).
1.14. "Evergreen RLOC Note" means the note of Borrowers dated as of August
28, 1998 in favor of Lender in the amount of the Evergreen RLOC (a true copy of
which is attached hereto and marked as Exhibit 1.14), as well as any promissory
note or notes issued by Borrowers in substitution, replacement, restatement,
extension, amendment or renewal of any such promissory note.
1.15. "Flood Hazard Certificate" means the completed standard flood hazard
determination form required by federal flood insurance statutes to evidence
Lender's determination of whether or not the Real
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Estate Collateral, or any part thereof, is located in an area having special
flood hazards as designated by the Director of the Federal Emergency Management
Agency ("FEMA").
1.16. "Forbearance Agreements" means those certain Forbearance Agreements
given by the Related Parties to Lender, (true copies of which are attached
hereto and marked as Exhibit 1.16 ) as the same may be amended from time to
time, and such other Forbearance Agreements as may be given, from time to time,
by Related Parties subsequent to the Closing Date.
1.17. "GAAP" means generally accepted accounting principles, as in effect
from time to time, consistently applied.
1.18. "Grower Contracts" means those certain contracts between Foods and
independent growers more particularly described on Exhibit 1.18 attached hereto.
1.19. "Guaranties" mean those certain unconditional guaranty agreements
executed by each Guarantor in favor of Lender.
1.20. "Guarantor" means, individually, Carroll's Processing, Inc., Carroll's
Capital, Inc., Carroll's Foods of the Midwest, Inc., Carroll's Foods of Mexico,
Inc., and Carroll's Foods of Brazil, LLC, collectively, the "Guarantors".
1.21. "Intercreditor Agreement" means that certain Intercreditor Agreement
between Lender, Rabobank, and NationsBank dated October 26, 1993, as such
agreement has been or may be amended and modified from time to time.
1.22. "Intercreditor Loans" means those certain loans from Rabobank and
NationsBank to Borrowers in the original principal amounts of $55,000,000.00
each, as evidenced by that certain loan agreement between Borrowers and Rabobank
dated as of June 15, 1993 as amended, and that certain loan agreement between
Borrowers and NationsBank dated as of March 6, 1998.
1.23. "Leverage Ratio" means a ratio of Borrowers' total liabilities
(including deferred taxes) to Tangible Net Worth.
1.24. "Loan Documents" means this Consolidating Loan Agreement, the Deeds of
Trust, the Pledge Agreement, Forbearance Agreements, and any and all notes,
security agreements, assignments, consents and all other documents, instruments,
certificates and agreements executed and/or delivered by Borrowers, or any third
party in favor of Lender in connection with the Loans or any Collateral.
1.25. "Loans" means the Operating RLOC, the Evergreen RLOC, and the Stock
Loan as described in Section 2.1.
1.26. "Marketing Contracts" means those certain marketing agreements entered
into between Foods and others more particularly described in Schedule 1.26
attached hereto.
1.27. "Market Value of Pledged Shares" means, on the relevant date, an
amount equal to the number of Pledged Shares and Additional Pledged Shares, if
any, multiplied by the closing price per share on the NASDAQ National Stock
Market for one share of common stock of Smithfield on the Business Day preceding
the relevant date.
1.28. "NationsBank" means NationsBank, N.A.
1.29. "Negative Pledge" means a pledge of each Borrower to refrain from
creating any lien, mortgage, or other encumbrance upon any of the Real Estate
Collateral, any other real property together with any and all improvements
situated thereon, or any equipment, machinery, furniture or fixtures of any
Borrower other than Permitted Liens.
1.30. "Notes" means the Operating RLOC Note, the Evergreen RLOC Note, and
the Stock Loan Note.
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1.31. "Notice Borrower" means Foods, or whomever else may be appointed by
Borrowers from time to time in its place upon written notice to Lender to serve
as the designated agent for Borrowers specifically to receive and provide any
notices required hereunder.
1.32. "Obligations" means all obligations and liabilities of any nature owed
to Lender, whether now or hereafter existing, arising out of or related to the
Loan Documents or any other financial transactions between Lender and Borrowers,
or any Borrower, including all future obligations and advances.
1.33. "Operating RLOC" means that certain revolving line of credit in an
amount not to exceed Sixty-five Million and no/100 Dollars ($65,000,000.000).
1.34. "Operating RLOC Borrowing Base" means the sum of eighty-five percent
(85%) of Borrowers' Eligible Accounts plus one hundred percent (100%) of
Processing Loans (up to $15,000,000.00) plus seventy percent (70%) of the lower
of the cost or market value of Borrowers' Eligible Inventory.
1.35. "Operating RLOC Borrowing Base Certificate" means that certificate to
be delivered to Lender in accordance with the terms of Section 4.1 (l),
substantially in the form of Exhibit 1.35 attached hereto.
1.36. "Operating RLOC Maturity Date" means August 28, 1999.
1.37. "Operating RLOC Note" means the note of Borrowers dated as of August
28, 1998 in favor of Lender in the amount of the Operating RLOC (a true copy of
which is attached hereto and marked as Exhibit 1.37) as well as any promissory
note or notes issued by Borrowers in substitution, replacement, restatement.
extension, amendment or renewal of any such promissory note.
1.38. "Permitted Liens" means those certain liens in existence as of the
Closing Date and approved by Lender as listed on Schedule 1.38 attached hereto.
1.39. "Pledge Agreement" means that certain Pledge and Security Agreement
given by Swine Investment to Lender.
1.40. "Pledged Shares" shall have the meaning assigned thereto in the Pledge
Agreement.
1.41. "Processing Loans" means those certain loans from Foods to Carroll's
Processing, Inc., as evidenced by one or more promissory notes, in form and
substance satisfactory to Lender, from Carroll's Processing, Inc. to Foods,
which promissory notes have been assigned to Lender as required in Section 5.1.
1.42. "Rabobank" means Cooperative Centrale Raiffeisen-Boerenleenbank B.A.,
Rabobank Nederland.
1.43. "Real Estate" has the meaning set forth in Section 3.8.
1.44. "Real Estate Collateral" means that certain real property owned by
Partnership in Duplin, Sampson, and Scotland Counties, North Carolina, pledged
to Lender by the Deeds of Trust.
1.45. "Related Parties" means all persons and entities that, at the relevant
time: (i) control or are controlled by Borrowers or Swine Investment and (ii)
are known to Borrowers or Swine Investment to own any shares of stock of
Smithfield including, but not limited to, those parties listed on Exhibit 1.45
hereto.
1.46. "Smithfield" means Smithfield Foods, Inc., a Delaware corporation.
1.47. "Stock Loan" means that certain revolving line of credit in an amount
not to exceed Fifty Million and No/100 Dollars ($50,000,000.00).
1.48. "Stock Loan Borrowing Base" means one-half (i.e. 50%) of the Market
Value of Pledged Shares.
1.49. "Stock Loan Collateral" means the collateral pledged to Lender
pursuant to the Pledge Agreement including, but not limited to, the Pledged
Shares and the Additional Pledged Shares, if any.
1.50. "Stock Loan Maturity Date" means August 28, 2000, unless extended as
provided in Section
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2.1(e).
1.51. "Stock Loan Note" means the note of Borrowers dated as of August 28,
1998 in favor of Lender in the amount of the Stock Loan (a true copy of which is
attached hereto and marked as Exhibit 1.51 ), as well as any promissory note or
notes issued by Borrowers in substitution, replacement, restatement, extension,
amendment or renewal of any such promissory note.
1.52. "Substances" has the meaning set forth in Section 3.8.
1.53. "Swine Investment" means Carroll's Swine Investment Partnership, a
Virginia general partnership.
1.54. "Tangible Net Worth" means (i) the aggregate amount of assets shown on
the balance sheets of the subject entities at any particular date (not including
capitalized interest, debt discount and expense, goodwill, patents, trademarks,
copyrights, franchises, licenses, and such other assets as are properly
classified "intangible assets" under GAAP), less (ii) liabilities of the subject
entities, all computed in accordance with GAAP.
1.55. "Working Capital" means current assets less current liabilities as
calculated in accordance with GAAP.
2. THE LOANS AND ADVANCES.
2.1. Loans. Lender hereby agrees to continue to make the Loans available to
Borrowers as follows:
(a) Operating RLOC - Subject to Borrowers' compliance with the terms
and conditions of this Consolidating Loan Agreement, Lender has made and shall
continue to make available to Borrowers loans, from the Closing Date through the
Operating RLOC Maturity Date, which loans, in accordance with the Operating RLOC
Note, may be advanced, repaid, and readvanced but which may not, when aggregated
at any one time outstanding, exceed the lesser of (i) $65,000,000.00 or (ii) the
Operating RLOC Borrowing Base, less [the sum of the principal amounts
outstanding under the Intercreditor Loans plus the aggregate amount of all
outstanding loans to Foods from its stockholders], as determined by the most
recent Operating RLOC Borrowing Base Certificate delivered to Lender in
accordance with Section 4.1(l). The obligation to repay the Operating RLOC shall
be evidenced by the Operating RLOC Note and shall have the repayment terms and
interest rates as set forth in the Operating RLOC Note. All amounts outstanding
under the Operating RLOC shall be due and payable on the Operating RLOC Maturity
Date.
(b) Evergreen RLOC - Subject to Borrowers' compliance with the terms
and conditions of this Consolidating Loan Agreement, Lender has made and shall
continue to make available to Borrowers loans, from the Closing Date through the
Evergreen RLOC Maturity Date, which loans, in accordance with the Evergreen RLOC
Note, may be advanced, repaid, and readvanced but which may not, when aggregated
at any one time outstanding, exceed $80,000,000.00. The obligation to repay the
Evergreen RLOC shall be evidenced by the Evergreen RLOC Note and shall have the
repayment terms and interest rates as set forth in the Evergreen RLOC Note. All
amounts outstanding under the Evergreen RLOC shall be due and payable on the
Evergreen RLOC Maturity Date, subject to extension by Lender pursuant to Section
2.1(e) . Advances under the Evergreen RLOC shall be in minimum increments of not
less than $3,000,000.00.
(c) Stock Loan. Subject to Borrower's compliance with the terms and
conditions of this Consolidating Loan Agreement, Lender has made and shall
continue to make available to Borrowers loans, from the Closing Date through the
Stock Loan Maturity Date, which loans, in accordance with the Stock Loan Note,
may be advanced, repaid, and readvanced but which may not, when aggregated at
any one time outstanding, exceed the lesser of (i)$50,000,000.00 or (ii) the
Stock Loan Borrowing Base. The obligation to repay the Stock Loan shall be
evidenced by the Stock Loan Note and shall have the repayment terms and interest
rates as set forth in the Stock Loan Note. All amounts outstanding under the
Stock Loan shall be due and payable on the Stock Loan Maturity Date, subject to
extension by Lender pursuant to Section 2.1(e).
(d) Notice and Manner of Borrowing - For advances under the Loans,
Borrowers shall give Lender notice of a request for an advance no later than
11:00 A.M. Clinton, North Carolina time (Eastern Standard Time) on the date for
which the advance is requested, specifying the date and amount thereof, the
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interest rate election, and if a fixed rate is elected, the Interest Period (as
defined in the Notes). Upon request of Lender, Borrowers shall provide Lender
with a certification as to the principal amount outstanding on the Intercreditor
Loans and any loans outstanding from shareholders as of the date of any advance.
Any such notice (including, without limitation, telephonic notice) which Lender
receives from the Notice Borrower shall be deemed given by Borrowers, unless
Borrowers, collectively notify Lender otherwise in writing. Any advances made by
Lender based on such notice, when wired to an account of Borrowers described in
any written wire transfer instructions delivered by Borrowers in connection
herewith, shall be a Loan for all purposes hereunder.
(e) Extension of Evergreen RLOC and Stock Loan - Lender shall
consider, in its sole discretion, extension of the term of the Evergreen RLOC
and/or the term of the Stock Loan, as the case may be, for successive periods of
twelve (12) months. Lender shall notify the Notice Borrower, in writing, not
later than twelve (12) months prior to the then applicable Evergreen RLOC
Maturity Date and the Stock Loan Maturity Date of its decision whether to renew
either or both loan facilities. In the event that Lender notifies the Notice
Borrower of its decision to renew either or both facilities, then the applicable
facility, and concomitantly, the applicable facility's maturity date, shall be
deemed automatically renewed for an additional twelve (12) month period.
(f) Borrowing Base Deficit - If Lender, at any time, shall determine
(i) that the aggregate amount of all advances under the Operating RLOC is
greater than the Operating RLOC Borrowing Base less [the sum of the principal
amounts outstanding under the Intercreditor Loans plus the aggregate amount of
all outstanding loans to Foods from its stockholders], or (ii) that the
aggregate outstanding amount of all advances under the Stock Loan is greater
than the Stock Loan Borrowing Base, it shall notify the Notice Borrower of such
deficit by telephone and Borrowers immediately shall make a payment to Lender
sufficient to reduce the outstanding amount under the applicable loan to comply
with Section 2.1(a) and/or Section 2.1(c), as the case may be, within
twenty-four (24) hours of receipt of the notice of the deficit or, if the next
day is not a Business Day, by 2:00 p.m. local time of the Lender on the Business
Day immediately following the notification.
2.2. Purposes. The proceeds of the Loans have been used and shall continue
to be used to provide working capital and capital for the construction and
permanent financing of construction projects of Borrowers, or any one or more of
them.
2.3. Conditions Precedent. Lender shall make advances to Borrowers under the
Loans in accordance with the terms hereof and the terms of the Notes. In no
event shall Lender be obligated to advance any sum to Borrowers until all
matters, documents, papers and certificates required hereunder have been
furnished to Lender's satisfaction or so long as any Event of Default has
occurred and is continuing. In addition to other matters set forth herein, the
following documents and matters shall be required to be executed, furnished, or
performed by Borrowers or Guarantors, as appropriate, at or before the Closing
Date:
(a) This Consolidating Loan Agreement, duly executed and delivered;
(b) The Notes, duly executed and delivered;
(c) The Collateral documents required under Section 5.1, duly executed
and delivered;
(d) Borrowing Resolutions, duly certified by the general partners or
corporate secretary or an assistant secretary of the respective
Borrower, as the case may be, in form and substance satisfactory
to Lender, authorizing the execution, delivery and performance of
all Loan Documents on behalf of each Borrower;
(e) Resolutions of each Guarantor, duly certified by the secretary or
an assistant secretary of the respective Guarantor, in form and
substance satisfactory to Lender, authorizing and approving the
execution of and performance of all covenants under the Guaranties
and this Consolidating Loan Agreement;
(f) Resolutions of Swine Investment, duly certified by the general
partners of Swine Investment, in form and substance satisfactory
to Lender, authorizing and approving the
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execution of and performance of all covenants pertaining to it
under the Pledge Agreement and under this Consolidating Loan
Agreement;
(g) Current certified Articles of Incorporation, Bylaws or Partnership
Agreements, as such may have been amended, and Certificates of
Existence for each entity comprising the Carroll's Group and for
Swine Investments, as appropriate;
(h) Certificate of Assumed Name for Partnership;
(i) Satisfactory evidence of each Borrower's, Guarantor's and Swine
Investment's qualification to do business in any applicable
foreign jurisdictions;
(j) The Guaranties, in form and substance satisfactory to Lender, duly
executed and delivered;
(k) Negative Pledges from each Borrower, in form and substance
satisfactory to Lender, duly executed and delivered;
(l) An opinion of each Borrower's, each Guarantor's and Swine
Investment's counsel opining, among other things, as to (i) each
such entity's corporate or partnership status, as the case may be,
due incorporation or formation, and due authorization and
execution of its respective Loan Documents; (ii) the
enforceability of the Loan Documents in accordance with the terms
thereof; and (iii) Lender's lien position under the Loan
Documents;
(m) Payment of all fees and closing costs required to be paid
hereunder and under the Loan Documents;
(n) The insurance policies required under Section 4.1(d);
(o) The flood insurance policies required Section 4.1(e);
(p) Evidence, satisfactory to Lender, of each Borrower's compliance
with all Environmental Laws, and permitting and licensing
requirements to which each Borrower, its respective operations or
properties may be subject;
(q) An initial Operating RLOC Borrowing Base Certificate, duly
executed and delivered;
(r) The Environmental Certificate, duly executed and delivered;
(s) Flood Hazard determination of the Real Estate Collateral and
delivery of the completed Flood Hazard Certificate, duly executed
and delivered by duly qualified appraisers;
(t) Copies of all Marketing Contracts and any other material contracts
of Borrowers, except that Grower Contracts shall not be furnished
unless requested by Lender;
(u) Fulfillment of all legal matters incident to the Loans in a manner
satisfactory to Lender's counsel; and
(v) Such other matters as Lender reasonably may require.
2.4. Lender Stock. As of the Closing Date, Borrowers owned stock in Lender
and shall continue to own such stock during the term of this Consolidating Loan
Agreement in an amount equal to $1,000.00. Such stock is at risk and is
retireable only at the discretion of Lender's board of directors and in
accordance with Lender's bylaws.
2.5 Fees, Costs, and Expenses. Borrowers shall pay on or before the Closing
Date any and all costs and expenses incurred by Lender in making the Loans
available to Borrowers including without limitation, any recording costs and
Lender's legal expenses and fees, regardless of whether the Loans close, unless
failure to close is the fault of Lender.
3. Representations and Warranties. To induce Lender to renew, extend and modify
the Loans, each Borrower and each Guarantor (as the context requires) reaffirms
that it is in compliance with the following representations and warranties, as
to that Borrower or Guarantor only, which shall survive the execution and
delivery of the Notes and other Loan Documents:
3.1. Good Standing. Each of Foods, Realty, and each Guarantor is duly
organized, validly existing and in good standing under the laws of the state of
its incorporation or organization, as applicable, and has the power and
authority to own its property and carry on its business in each jurisdiction in
which it does business. Partnership is a general partnership, duly organized,
validly existing, and in good standing under the laws of the State of North
Carolina and has the power and authority to own its property and to carry on its
business in each jurisdiction in which it does business.
3.2. Authority and Compliance. Each Borrower and each Guarantor has full
power and authority to execute and deliver its respective Loan Documents and to
incur and perform the Obligations provided for in its respective Loan Documents,
all of which have been duly authorized by all proper and necessary action of its
appropriate governing body. No consent or approval of any public authority or
other third party is required
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as a condition to the validity of any of the Loan Documents, and each Borrower
and each Guarantor is in compliance with all laws and regulatory requirements to
which it is subject.
3.3. Binding Agreement. This Consolidating Loan Agreement and the other Loan
Documents executed by each Borrower, and each Guarantor, as appropriate,
constitute valid and legally binding obligations of each Borrower and each
Guarantor, enforceable in accordance with their terms.
3.4. Litigation. There is no proceeding involving any Borrower or any
Guarantor pending or, to the knowledge of any Borrower or Guarantor, threatened,
before any court or governmental authority, agency or arbitration authority,
except as disclosed to Lender in writing and acknowledged by Lender prior to the
date of this Loan Agreement.
3.5. No Conflicting Agreements. There is no charter, bylaw, operating
agreement, stock provision, partnership agreement or other document pertaining
to the organization, power, or authority of any Borrower or any Guarantor and no
provision of any existing agreement, mortgage, deed of trust, indenture or
contract binding on any Borrower or any Guarantor or affecting their properties,
which would conflict with or in any way prevent the execution, delivery, or
carrying out of the terms of this Loan Agreement and the other Loan Documents.
3.6. Ownership of Assets. Each Borrower and each Guarantor has good title to
its assets, and such assets are free and clear of all judgments, liens, and
encumbrances except Permitted Liens.
3.7. Taxes. All taxes and assessments due and payable by each Borrower and
each Guarantor have been paid or are being contested in good faith by
appropriate proceedings, and each Borrower and each Guarantor has filed all tax
returns which it is required to file.
3.8. Environmental Matters. Each Borrower and each Guarantor represents and
warrants to Lender, except as may be otherwise disclosed in writing to Lender,
that any real estate owned by it (the "Real Estate") never has been and is not
now being used in violation of Environmental Laws; that no proceedings have been
commenced against any Borrower or any Guarantor concerning any alleged
violations of any Environmental Laws on or related to the Real Estate, and no
Borrower or Guarantor has any reason to know of any; that the Real Estate is
free of any hazardous or toxic substance or waste, including but not limited to,
asbestos, PCBs, petroleum products, fertilizers, animal waste, and pesticides
("Substances") and is not being used for the storage, treatment or disposal of
any Substances, or if there are any Substances on the Real Estate, the
respective Borrower or Guarantor is maintaining them in accordance with all
applicable laws; that if any Borrower or Guarantor is transporting any
Substances, such transportation is being conducted in compliance with all
applicable laws; that each Borrower and Guarantor has all required permits for
the use and discharge of any Substances on the Real Estate, and all uses and
discharges on the Real Estate are being made in compliance with such permits;
that, in the event that any of the foregoing representations and warranties is
untrue or is qualified in any way, each Borrower and each Guarantor has made a
complete disclosure to Lender of all facts which might indicate an environmental
risk or the violation of any Environmental Laws on or related to the Real
Estate.
3.9. Compliance with Laws. To its best knowledge, after due inquiry, each
Borrower and each Guarantor is in compliance with all federal, state, and local
laws, regulations and governmental requirements applicable to it or to any of
its property (including, but not limited to, laws regulating wetlands), business
operations, employees, and transactions.
3.10. Accurate Financial Information. The financial information furnished to
Lender by the Carroll's Group is complete and accurate, and no member of the
Carroll's Group has any undisclosed direct or material contingent liabilities.
The financial information provided by each Borrower, as requested by Lender, in
connection with Borrowers' application to Lender for renewal and extension of
the Loans, remains substantially accurate and no material adverse change has
occurred in the financial condition of any of the reporting entities since such
information was furnished.
3.11. Solvency. (i) Each Borrower and each Guarantor is solvent; (ii) the
pledge of the Collateral to Lender as security for the Loans did not and will
not render any Borrower insolvent; (iii) each Borrower and each Guarantor has
made adequate provision for the payment of all of its creditors other than
Lender; and (iv) no Borrower or Guarantor has entered into this transaction to
provide preferential treatment to Lender or
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any other creditor of any Borrower or any Guarantor in anticipation of seeking
relief under federal or state bankruptcy or insolvency laws.
3.12. ERISA. No employee benefit plan established or maintained, or to which
contributions have been made, by any Borrower, Guarantor, or any parent,
subsidiary or affiliate thereof, which is subject to Part 3 of Subtitle 13 of
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), had an "accumulated funding deficiency" (as such term is defined in
Section 302 of ERISA) as of the last day of the most recent fiscal year of such
plan ended prior to the date hereof, or would have had such an accumulated
funding deficiency on such day if such year were the first year of such plan to
which such Part 3 applied; and no material liability to the Pension Benefit
Guaranty Corporation has been incurred with respect to any such plan by such
party.
To the best knowledge of each Borrower, after due inquiry, each such
employee benefit plan (if any exists) complies and will comply fully with all
applicable requirements of ERISA and of the Internal Revenue Code of 1986 as
amended ("Code") and with all applicable rulings and regulations issued under
the provisions of ERISA and the Code. This Consolidating Loan Agreement and the
consummation of the transactions contemplated herein will not involve any
prohibited transaction within the scope of ERISA or Section 4975 of the Code.
3.13. Ownership of Collateral. Each Borrower, as appropriate, represents and
warrants that it is the absolute owner of the Collateral, as its interests are
represented pursuant to any security agreements, financing statements, the Deeds
of Trust, assignments, and other security documents required under Section 5.1
hereof, and that the Collateral is owned free and clear of all liens,
encumbrances, and security interests of any kind except (i) Permitted Liens, and
(ii) those granted to Lender.
3.14. Related Parties. As of the date of this Loan Agreement, Exhibit 1.45
includes all persons and entities who are or who may be deemed to be Related
Parties.
4. COVENANTS OF BORROWERS AND GUARANTORS.
4.1. Affirmative Covenants. During the term of this Consolidating Loan
Agreement:
(a) Continuation of Preclosing Conditions, Representations and
Warranties. Each Borrower and each Guarantor, as appropriate, agrees that all
conditions precedent to the making, renewing and extending of the Loans shall
remain satisfied at all times during the term of this Consolidating Loan
Agreement, and that representations and warranties made by each Borrower and
each Guarantor in this Consolidating Loan Agreement and the other Loan Documents
shall be deemed to be made at all times during the term of this Consolidating
Loan Agreement.
(b) Maintenance. Each Borrower and each Guarantor shall maintain its
respective property in good condition and repair and make all necessary
replacements thereof and repairs thereto, and preserve and maintain all
licenses, trademarks, privileges, permits, franchises, certificates and the like
necessary for the operation of its respective business.
(c) Financial Statements. Borrowers shall furnish: (i) detailed fiscal
year-end audited financial statements of each entity comprising the Carroll's
Group except Realty and Carroll's Foods of Mexico, Inc. within one hundred fifty
(150) days after the close of each fiscal year, prepared by independent
certified public accountants who are satisfactory to Lender, together with an
opinion of such accountants in form and content acceptable to Lender; (ii)
internally-prepared, detailed combined and consolidated fiscal year-end
financial statements of the Carroll's Group within thirty (30) days after the
close of each fiscal year, certified by the chief financial officer of each
respective entity to be true, correct and complete; (iii) monthly
internally-prepared financial statements of each of the entities comprising the
Carroll's Group within thirty (30) days after the close of each month and
certified by the chief financial officer or general partners (as the case may
be) of the respective entity to be true, correct and complete; and (iv) such
other information respecting the financial condition and operations of each
entity comprising the Carroll's Group as Lender from time to time reasonably may
request. All financial statements shall be prepared in accordance with GAAP,
shall be in form and content satisfactory to Lender, and shall include, without
limitation, an income or cash flow statement, balance sheet, and list of
contingent liabilities and claims. In addition, Borrowers shall provide Lender,
as requested,
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but not less than quarterly as of the last day of each March, June, September
and December during the term of the Loans, (to be provided by the 25th day of
the following month) a certificate executed by an officer of each Borrower,
certifying (i) that there has occurred no Event of Default; (ii) that Borrowers
and Guarantors are in compliance with all provisions of this Consolidating Loan
Agreement and all Loan Documents; (iii) that Swine Investment is in compliance
with all provisions of the Pledge Agreement; (iv) as to the status of each
Borrower's, Guarantor's or Swine Investment's compliance ( with specific
references to each) with each affirmative and negative covenant and continuing
representation and warranty contained in this Consolidating Loan Agreement, the
Pledge Agreement and all other Loan Documents; and (v) such other information
regarding the financial condition and operations of Borrowers, Guarantors, Swine
Investment or matters relating to the Collateral as Lender from time to time
reasonably may request.
(d) Hazard/Casualty Insurance. Each Borrower shall maintain with
financially sound and reputable insurance companies insurance of the kinds,
covering the risks, and in the amounts usually carried by entities and
individuals engaged in businesses similar to that of the respective Borrower.
Such insurance shall include, but not be limited to, comprehensive
hazard/casualty insurance on buildings and contents including, but not limited
to, such coverage on the Collateral in amounts satisfactory to Lender. Each
Borrower will exhibit or deliver such policies of insurance to Lender and
provide appropriate clauses in the insurance policies indicating Lender's status
as co-insured as to the Collateral as its interest may appear. If any Borrower
is in default hereunder, Lender shall have the right to settle and compromise
any and all claims under any policy under which Lender is listed as co-insured,
and each Borrower hereby appoints Lender as its attorney-in-fact, with power to
demand, receive, and receipt for all monies payable thereunder, to execute in
the name of Borrower or Lender or both, any proof of loss, notice, draft, or
other instruments in connection with such policies or any loss thereunder and
generally to do and perform any and all acts as the appropriate Borrower, but
for this appointment, might or could perform. Unless otherwise agreed, Lender
shall be entitled to apply the proceeds of any such policies to satisfy the
indebtedness arising under the Loans. All insurance policies provided hereunder
shall be in an amount sufficient to avoid the application of any co-insurance
provisions and must include provisions for a minimum thirty (30) day advance
written notice of any intended policy cancellation or non-renewal. The insurance
required hereunder shall be in addition to, and not a replacement for, the
insurance required under any other Loan Documents.
(e) Flood Insurance. At any time during the term of the Evergreen
RLOC, should the Real Estate Collateral, or any part of it, become located in an
area designated by the Director of FEMA as a special flood hazard area,
Borrowers shall obtain and maintain federal flood insurance, to the extent such
insurance is required and is or becomes available, for the term(s) of the
Evergreen RLOC and for the full unpaid principal balance of the Evergreen RLOC
or the maximum limit of coverage that is available, whichever is less. Borrowers
will exhibit or deliver such policies to Lender and provide appropriate clauses
in the insurance policies indicating Lender's status as co-insured under the
policy as its interest may appear.
(f) Access to Collateral and Financial Information. Each member of the
Carroll's Group shall permit any representative or agent of Lender to examine
and audit any or all of its books and records, wherever located, upon request by
Lender, and Borrowers shall permit Lender to have access to all Collateral for
purposes of inspection and evaluation at reasonable times and after reasonable
notice to the respective Borrower.
(g) Purpose of Loans. Borrowers will use the proceeds of the Loans
only for the purpose represented to Lender in Section 2.2.
(h) Material Adverse Changes. Each Borrower and each Guarantor shall
provide notice to Lender, as soon as possible, and in any event within five (5)
Business Days after any Borrower or any Guarantor becomes aware of the
occurrence of a material adverse change in its business, properties, operations,
or condition (financial or other), including notice of (i) any default occurring
with respect to any Borrower's or any Guarantor's obligations owed to any other
creditor, (ii) acceleration of any part of or demand for payment in full of any
outstanding obligation earlier than the scheduled date, or (iii) intent by any
person, firm, corporation or other entity to whom or which any Borrower or any
Guarantor is indebted to declare any debt due or determine that any provision of
any agreement between such party and the respective Borrower or Guarantor has
been violated. Such notice shall contain a statement setting forth details of
such material adverse change and the action that is proposed in response
thereto.
(i) Notice of Litigation. Each Borrower and each Guarantor shall
notify Lender promptly in the
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event that any legal action is filed or threatened against that Borrower or
Guarantor; provided however, such notice shall not be required with respect to
any matters which, if determined adversely to the respective Borrower or
Guarantor, would result in judgment liability of less than $100,000.00 when
aggregated with other then-pending litigation.
(j) Notice of Default. Each Borrower and each Guarantor shall notify
Lender immediately, by telephone followed by written notice, upon the occurrence
of any Event of Default or circumstances which, if uncured or with the lapse of
time, would create an Event of Default.
(k) Material Contracts. Upon request of Lender, Borrowers shall
provide Lender with copies of all material contracts entered into from time to
time by any member of the Carroll's Group.
(l) Borrowing Base Certificates. Borrowers shall provide to Lender, no
later than the fifteenth (15th) day of each month during the terms of the
Operating RLOC, or from time to time as requested by Lender, an Operating RLOC
Borrowing Base Certificate, calculated as of the last day of the immediately
preceding month.
(m) Registration Rights Affecting Pledged Shares. Promptly upon
request of Lender, Borrowers shall cause Swine Investment to execute and deliver
to Lender an absolute assignment of all rights of Swine Investment under that
certain Subscription Agreement dated September 3, 1992, between Smithfield and
Carroll's Foods, Inc., as amended effective as of January 31, 1995 ( the
"Subscription Agreement"). Borrowers agree to pay all costs associated with any
registration of the shares not otherwise paid by Smithfield, and to take any
action reasonably within their control to facilitate the registration of the
Pledged Shares and Additional Pledged Shares, if any, and liquidation thereof
upon the occurrence of an Event of Default, or a default in the terms of the
Pledge Agreement, or any other agreement executed in connection with this
Consolidating Loan Agreement.
(n) Subsequent Opinion of Borrowers' Counsel. Promptly, upon Lender's
request, in connection with the occurrence of an Event of Default or a default
under the terms of the Pledge Agreement, Borrowers shall furnish Lender, at
Borrowers' expense, such opinions of counsel as shall be deemed necessary or
appropriate by Lender or by Lender's counsel to facilitate or permit the
transfer of any restricted or other shares of stock included in the Collateral
and pay all costs associated with the transfer and/or registration of such
shares.
(o) Additional Disclosure and Agreements Affecting Stock Loan
Collateral. So long as any amounts are outstanding under the Stock
Loan, Borrowers shall:
(i) At all times make full disclosure to Lender of any
agreements, verbal or written, (and in the case of written
agreements, provide Lender with copies thereof), and all
other matters affecting Swine Investment, Smithfield and/or
the Stock Loan Collateral as such matters pertain to the
Stock Loan Collateral;
(ii) Furnish Lender promptly, not to exceed ten (10) days from
the filing date thereof, copies of all 10K, 10Q, 8K and/or
other filings of Smithfield which are filed with the
Securities and Exchange Commission under the Securities Act
of 1933 or the Securities Exchange Act of 1934;
(iii) Furnish Lender, promptly upon request, information regarding
any Related Parties;
(iv) Disclose promptly to Lender, upon any Borrower's knowledge
thereof, the identity of such persons or entities who are or
become Related Parties, other than those identified in
Exhibit 1.45 attached hereto, and cause such persons or
entities promptly to execute and deliver to Lender
Forbearance Agreements; and
(v) Take other actions in the control of Borrowers or Swine
Investment or execute or cause to be executed such other
documents or certificates as reasonably shall be deemed
necessary or appropriate by Lender to facilitate the
liquidation of the Stock Loan Collateral.
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4.2. Negative Covenants. During the term of this Consolidating Loan
Agreement, unless prior written consent of Lender is obtained:
(a) Reorganization. No Borrower or Guarantor shall enter into any
reorganization or consolidation, or make any substantial change in the basic
type of business now conducted by it.
(b) Name Change. No Borrower or Guarantor shall change its name or any
name in which it does business, or move its principal place of business or chief
executive office, without giving written notice thereof to Lender at least
thirty (30) days prior thereto.
(c) Merger, Sale of Assets. No Borrower or Guarantor shall enter into
any merger or consolidation or sell, lease, transfer or dispose of all or
substantially all of its assets, except in the ordinary course of business, or
take any action that would make it impossible for it to carry out its business
as now conducted.
(d) Judgments, etc. No Borrower or Guarantor shall allow any number of
judgments for the payment of money or the entry of any lien in excess of the
aggregate sum of $100,000.00, excluding amounts with respect to which an
insurance carrier admits full coverage (except for applicable deductibles), to
remain unsatisfied against it for a period of thirty (30) consecutive days,
unless execution thereof is stayed.
(e) Sale of Collateral. No Borrower shall sell, transfer, lease,
pledge, abandon or otherwise dispose of any of the Collateral, or any interest
therein, except in the ordinary course of business.
(f) Extension of Loans; Guaranties. No Borrower shall make any loans,
advances, extensions of credit to, or permit to be outstanding loans or advances
by or on behalf of Borrowers or become a guarantor, endorser, or surety for, any
person, firm, corporation or any other entity, including officers, employees,
shareholders, directors, or other executives of any Borrower, except for (i)
loans from Foods to Carroll's Processing, Inc., the proceeds of which may not be
reloaned to any entity except Carolina Turkeys, such loans being evidenced by
certain promissory notes which shall be in form and substance satisfactory to
Lender, in its sole discretion; (ii) loans from Foods to or for the benefit of
Carolina Turkeys on reasonable commercial terms approved by Lender in advance or
as required by the terms of the Carolina Turkeys partnership agreement dated
March 1, 1985, (iii) loans or advances from Foods to any or all of Jeffrey S.
Matthews, Carroll M. Arthur, James O. Matthews or any of the stockholders of
Foods in an aggregate amount not exceeding at any time $22,500,000.00; (iv)
loans from Foods to any member of the Carroll's Group or any stockholder of
Foods on reasonable commercial terms approved by Lender in advance; (v) loans or
advances from Foods to Carroll's Capital, Inc. in an amount not to exceed an
aggregate of $85,000,000.00; (vi) short-term loans or guaranties to the
employees (excluding stockholders) or contract growers of Foods in an amount not
to exceed an aggregate of $1,000,000.00; and (vii) that certain guaranty of
Foods to NationsBank of twenty percent (20%) of that certain $6,000,000.00 line
of credit facility established by NationsBank for Ag Pro Vision, Inc., provided
that such guaranty shall not exceed $1,200,000.00.
(g) Distributions, Dividends, etc. No Borrower shall declare or pay
any dividends, or distributions, or purchase, redeem, retire or otherwise
acquire for value any Borrower's capital stock now or hereafter outstanding; or
make any distribution of assets to any Borrower's stockholders as such, whether
in cash, assets, or in obligations of such Borrower; or allocate or otherwise
set apart any sum for the payment of any dividend or distribution on, or for the
purchase, redemption, or retirement of any shares of any Borrower's capital
stock; or make any other distribution by reduction of capital, or otherwise, in
respect of any shares of its capital stock; or permit any member of the
Carroll's Group to purchase or otherwise acquire for value any stock of any
Borrower or other member of the Carroll's Group; except so long as each and
every Borrower and each and every Guarantor is in compliance with all covenants
and other terms and conditions of the Loans, distributions may be made by Foods
to Jeffrey S. Matthews, Carroll M. Arthur, and James O. Matthews, in the form of
salary, dividends, and/or bonuses, provided, however, that the annual aggregate
amount of such distributions to such stockholders shall not exceed the greater
of (i) fifty percent (50%) of the net earnings for such year of Foods before the
making of such distributions to such stockholders, or (ii) $2,000,000.00 per
individual stockholder.
(h) Additional Borrowings. No Borrower shall incur direct,
conditional, or contingent liability or indebtedness for borrowed money other
than with Lender, unless such indebtedness has been approved by Lender in
writing in advance and is subject to a written subordination agreement
subordinating such
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indebtedness to the Loans, in a form satisfactory to Lender in its sole
discretion except for (i) Borrowers' respective debts to Rabobank and
NationsBank, as approved by Lender; (ii) purchase money indebtedness (including
capitalized leases) for equipment or real estate, provided that the aggregate
outstanding principal balance of all such loans and capitalized leases at no
time exceeds $750,000.00 in excess of such loans and capitalized leases
outstanding as of the Closing Date and each such loan has an initial maturity of
not greater than three (3) years; (iii) debt not to exceed in the aggregate
$2,000,000.00 incurred pursuant to an overdraft facility to be extended to Foods
by a depository institution with assets in excess of $100,000,000.00; and (iv)
debt owed by Foods to its stockholders, provided that: (A) all loans from
stockholders to Foods have been or will be made on an unsecured basis, (B) all
loans from stockholders to Foods have been or will be reflected as debt on the
financial statements of Foods, and (C) this exception applies only with respect
to stockholders of record as of the Closing Date.
For the purposes of this Section, the sale or assignment of accounts
receivable or notes receivable shall constitute incurring indebtedness for
borrowed money, and the execution of any letter of credit or similar agreement
shall constitute the incurrence of a contingent liability.
(i) Pledge, Transfer, or Encumbrance of Assets. No Borrower shall
pledge, transfer (except in the ordinary course of business), encumber, assign,
grant a security interest in, or convey any of Borrowers' assets, whether now or
hereafter owned; provided, however, that Borrowers may pledge, transfer or
otherwise encumber their assets as security for (i) Borrowers' debt to Lender,
(ii) Borrowers' debts to Rabobank and NationsBank, as approved by Lender; (iii)
purchase money indebtedness (including capitalized leases) for equipment or real
estate, provided that the aggregate outstanding principal balance(s) of all such
loans and capitalized leases at no time exceeds $750,000.00 in excess of such
loans and capitalized leases outstanding as of the Closing Date and each such
loan has an initial maturity of not greater than three (3) years, and (iv) debt
not to exceed in the aggregate $2,000,000.00 incurred pursuant to an overdraft
facility to be extended to Foods by a depository institution with assets in
excess of $100,000,000.00.
(j) Alteration of Intercreditor Loans. No Borrower shall amend,
modify, supplement, effect a release or discharge under or in any way alter any
loan documentation related to the Intercreditor Loans in the absence of ten (10)
days prior written notice thereof to Lender, which notice shall include final
drafts of the proposed amendment, modification, alteration, supplement, release
or discharge.
(k) Alteration of Material Contracts. No Borrower or Guarantor shall
amend, modify, extend, renew, or in any way alter (or allow to be amended,
modified, or in any way altered) any material contract of Borrowers or any other
member of the Carroll's Group.
4.3. Financial Covenants. At all times during the term of this Consolidating
Loan Agreement, unless prior written consent of Lender is obtained:
(a)Borrowers will maintain, on a combined basis:
(i) Working Capital. Working Capital of not less than
$20,000,000.00.
(ii) Tangible Net Worth. A Tangible Net Worth equal to at least
$157,006,140.00 plus fifty percent (50%) of Borrowers' net income (but not net
losses) for each fiscal year of Borrowers, commencing with the fiscal year
ending December 31, 1998.
(iii) Leverage Ratio. A Leverage Ratio of not more than 1.35 to
1.0 except during the months of December and January of each year when the
Leverage Ratio shall not exceed 1.50 to 1.0.
(b) The Carroll's Group, on a combined basis, will maintain a Tangible
Net Worth equal to at least $157,006,140.00 plus fifty percent (50%) of
Borrowers' net income (but not net losses) for each fiscal year of Borrowers,
commencing with the fiscal year ending December 26, 1998.
5. SECURITY FOR LOANS.
5.1. Collateral. The Loans have been and continue to be secured by the
following liens and security interests, and the Borrowers, or any one or more of
them as appropriate, and Swine Investment, shall have
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executed and delivered and will execute and deliver to Lender, as deemed
necessary by Lender in its sole discretion, appropriate security agreements,
financing statements, assignments, the Deeds of Trust, the Pledge Agreement and
other security documents required by Lender in form satisfactory to Lender,
covering the following:
(a) Operating RLOC Collateral. As collateral for the Operating RLOC:
(i) Personal Property. A first priority perfected security
interest, subject to the concurrent rights of Rabobank and NationsBank under the
Intercreditor Agreement, in all of each Borrower's now owned and hereafter
acquired or arising accounts and contract rights, inventory, farm products,
instruments, chattel paper, notes receivable, general intangibles, and other
obligations, wherever located, and all products, proceeds, and substitutions of
the foregoing;
(ii) Assignment of Contracts. An assignment of any and all
Marketing Contracts, in a form satisfactory to Lender;
(iii) Assignment of Promissory Note. An assignment (a) by Foods of
that certain $15,000,000.00 promissory note from Carroll's Processing, Inc.
dated October 26, 1990, as such note may be renewed, replaced, or substituted
from time to time, and (b) by Carroll's Processing, Inc. of all of its interest
in that certain $15,000,000.00 promissory note from Carolina Turkeys, as such
note may be renewed, replaced, or substituted from time to time; and
(iv) Assignment of Security Interest. An assignment by Foods of
its interest in a security agreement from Carolina Turkeys, which security
agreement secures all outstanding payment obligations owing by Carolina Turkeys
to Foods covering turkeys and other inventory.
(b) Evergreen RLOC Collateral. As collateral for the Evergreen RLOC:
(i) Personal Property. A first priority perfected security
interest in all equipment (including, without limitation, farm equipment),
machinery, fixtures, furniture, and leasehold improvements, wherever located,
whether now owned or hereafter acquired, and all accessions, parts or
replacements now or hereafter affixed thereto or used in connection therewith,
including without limitation, the fixtures located or to be located on the Real
Estate Collateral and all products, proceeds, and substitutions of the
foregoing; and
(ii) Real Property. A first priority perfected security interest
in or lien on the Real Estate Collateral (and all tobacco allotments appurtenant
thereto).
(c) Stock Loan Collateral. As collateral for the Stock Loan, a first
priority perfected security interest in the "Collateral" as defined in the
Pledge Agreement including, but not limited to, the Pledged Shares and
Additional Pledged Shares, and all products, proceeds and substitutions of the
foregoing.
5.2. Affirmation of Prior Liens on Real Estate Collateral. Partnership
hereby acknowledges and affirms that all advances under the Evergreen RLOC shall
be deemed future advances under the Deeds of Trust. Lender shall be provided
with title insurance, acceptable to Lender and at Borrowers' expense, in the
amount of the Evergreen RLOC.
5.3. Release of Pledged Shares/Reduction of Stock Loan Availability.
(i) Release of Pledged Shares. During the term of the Stock Loan,
provided that Borrowers, Guarantors, and Swine Investment are in full compliance
with the Stock Loan Borrowing Base requirements of Section 2.1(c) and all other
terms and conditions of this Loan Agreement and the Pledge Agreement,
respectively, and no Event of Default or default under the Pledge Agreement
exists or is continuing, Lender agrees to release, at Borrowers' expense, from
Stock Loan Collateral, such shares of the Pledged Shares (or Additional Pledged
Shares, if applicable) as Borrowers and Swine Investment may request of Lender
in writing ( the "Release Shares"). Upon receipt of Borrowers' and Swine
Investment's written request, Lender shall have three (3) Business Days from
receipt to deliver the Release Shares to Notice Borrower (on behalf of Swine
Investment) or to such securities broker or transfer agent designated in the
written request. Lender
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will cooperate with Borrowers and with Swine Investment and any such securities
broker or transfer agent to confirm that the Release Shares will be released and
delivered in accordance with the foregoing.
(ii) Reduction of Stock Loan. During the term of the Stock Loan,
Lender shall have the right, in its sole discretion, upon reasonable prior
notice, to reduce the amount of the Stock Loan if the aggregate number of
Release Shares equals twenty percent (20%) or more of the number of shares
pledged to Lender as Stock Loan Collateral on the Closing Date. Any such
reduction in the Stock Loan will be in an amount determined by Lender in its
sole discretion, provided however that such reduction shall not exceed a
percentage amount commensurate with the percentage of reduction in the number of
shares pledged as Stock Loan Collateral.
5.4. Lender Equities. All equities (including allocated surplus) owned by
Borrowers in Lender shall secure the Loans and may be applied (at Lender's
discretion) against the Loans upon the occurrence of an Event of Default.
6. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
event of default ("Event of Default"):
6.1. Payment. Any payment of principal, interest, or other sum owed to
Lender under the Loan Documents or otherwise due from Borrowers, or any
Borrower, to Lender is not made when due or any payment of principal, interest,
or other sum owed to Rabobank or NationsBank under any credit agreement,
promissory note, deed of trust, security agreement or other security or loan
document from Borrowers to either of Rabobank or NationsBank, whether now
existing or hereafter arising, is not made when due.
6.2 Performance. Borrowers or Guarantors fail to perform according to the
terms of this Loan Agreement or permit conditions to arise or exist so that
performance would be rendered hazardous or unduly difficult for Lender.
6.3. Existence. Failure of any Borrower or any Guarantor to maintain its
existence in good standing.
6.4. Dissolution or Bankruptcy. (a) Any Borrower, any Guarantor, or Swine
Investment commences dissolution procedures, terminates its existence, enters
into liquidation, becomes insolvent, experiences business failure, requests
appointment of a receiver of any part of its property, enters into an assignment
for the benefit of creditors, or enters any proceeding under state or federal
bankruptcy laws or other insolvency laws, (b) any Borrower, any Guarantor, or
Swine Investment has an involuntary proceeding commenced against it under state
or federal bankruptcy laws or other insolvency laws which proceeding is not
dismissed within ninety (90) days after its commencement, (c) any Borrower, any
Guarantor, or Swine Investment enters into a merger or consolidation or sale of
its assets, which sale has not been consented to by Lender, other than a sale of
assets in the ordinary course of business, or (d) any Borrower's, any
Guarantor's, or Swine Investment's ownership changes, other than by devise or
descent, without the prior written consent of Lender.
6.5. Judgments. The entry of any monetary judgment or the assessment or
filing of any tax lien against any Borrower or Borrowers in the aggregate in
excess of $100,000.00, or the issuance of any writ of garnishment or attachment
against any property, debts due or rights of any Borrower, specifically
including the commencement of any action or proceeding to seize moneys of any
Borrower on deposit in any bank account owned by any Borrower, which is not
promptly paid or stayed.
6.6. Additional Defaults. Any provision or covenant of the Loan Documents or
any other agreement between Borrowers (or any of them) and Lender or any other
creditor or lender, including without limitation Rabobank and NationsBank, is
breached, or any warranty, representation, or statement made or furnished to
Lender or any other creditor or lender by any Borrower or Guarantor in
connection with the Loans, the Loan Documents, or any other agreement between
Borrowers (or any of them) and Lender or any other creditor or lender, including
without limitation Rabobank and NationsBank, (including any warranty,
representation, or statement in any Borrower's or Guarantor's financial
statements) or to induce Lender to make the Loans, is untrue or misleading in
any material respect.
6.7. Adverse Change. There shall be any material adverse change(s) in the
business, properties, assets, or conditions (financial or otherwise) of any
Borrower.
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6.8. Cross-Default. Any default by any Borrower, any Guarantor, or Swine
Investment occurs under any agreement with Lender, Rabobank, or NationsBank or
another financial institution, whether now existing or hereafter arising, which
default is not corrected within the cure period provided in such agreement, if
any.
7. LENDER'S REMEDIES. In addition to any remedies available to Lender under the
Notes, the Guaranties, and other Loan Documents, the Lender shall have the
following remedies:
7.1. Acceleration. Upon the occurrence of an Event of Default, Lender, at
its option, may declare the entire unpaid principal amount of the Loans, accrued
interest, and all other Obligations immediately due and payable, without
presentment, demand, or notice of any kind to Borrowers or Guarantors.
7.2. Other Remedies. Upon the occurrence of an Event of Default, Lender
shall be entitled to pursue all rights and remedies available under each of the
Loan Documents, as well as all rights and remedies available at law, or in
equity, and such rights and remedies shall be cumulative. Without in any way
limiting the generality of the foregoing, Lender also shall have the following
non-exclusive rights:
(a) Immediate Possession of Collateral. To take immediate possession
of all Collateral, whether now owned or hereafter acquired, without notice,
demand, presentment, or resort to legal process, and, for those purposes, to
enter any premises where any of the Collateral is located and remove the
Collateral therefrom or render it unusable;
(b) Assembly of Collateral. To require Borrowers to assemble and make
the Collateral available to Lender at a place to be designated by Lender which
is also reasonably convenient to Borrowers;
(c) Sale of Personal Property. To retain all non-real estate
Collateral in full or partial satisfaction of any unpaid Obligations as provided
in the North Carolina Uniform Commercial Code or sell the Collateral at public
or private sale after giving at least ten (10) days' notice of the time and
place of the sale, with or without having the Collateral physically present at
the place of the sale (such notice constituting reasonable notice under the
North Carolina Uniform Commercial Code);
(d) Set-off. To exercise any and all rights of set-off which Lender
may have against any account, fund, or property of any kind, tangible or
intangible, belonging to Borrowers (or any of them) which shall be in Lender's
possession or under its control (including equities owned by Borrowers in Lender
as described in Section 5);
(e) Cure. To cure any Event of Default in such manner as deemed
appropriate by Lender;
(f) Foreclosure. To foreclose pursuant to the terms of any Loan
Documents, or at law or in equity.
7.3. Expenses. In the event of occurrence of an Event of Default hereunder,
if suit is instituted by Lender to collect any unpaid balance(s) owed by
Borrowers hereunder, or if Lender deems it necessary or proper to employ an
attorney to acquire possession of any Collateral securing Borrowers' Obligations
and/or to enforce this Consolidating Loan Agreement and all Loan Documents or
otherwise to protect Lender's interests hereunder, including representation in
proceedings in bankruptcy, Borrowers agree to pay all collection and legal
expenses and the reasonable attorneys' fees paid or incurred hereunder by
Lender.
7.4 Proceeds. The proceeds from any disposition of the Collateral shall be
used to satisfy the following items in the order they are listed:
(a) The expenses of taking, removing, storing, holding, maintaining
and selling the Collateral and otherwise enforcing the rights of Lender under
the Loan Documents, including any legal costs and attorney fees;
(b) The expense of liquidating or satisfying any liens, security
interests, or encumbrances on the Collateral which may be prior to the security
interest of Lender that Lender, at its option, elects to satisfy;
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(c) Any unpaid fees, accrued interest and other sums due Lender with
respect to Loan Documents, and the then unpaid principal amount of the Loans;
(d) Any other Obligations.
7.5. Resort to Borrowers or Guarantors. Lender, at its option, may pursue
any and all rights and remedies directly against Borrowers, Guarantors, any
Borrower, any Guarantor, or Swine Investment without resort to any Collateral.
7.6. Deficiency. To the extent that the proceeds realized from the
disposition of the Collateral shall fail to satisfy any of the foregoing items,
Borrowers shall remain liable to pay any deficiency to Lender.
7.7. Advances/Reimbursements. All amounts advanced by Lender under the Loan
Documents, or due Lender as a result of expenditures made by Lender or losses
suffered by Lender, shall bear interest at the rate applicable to past due
principal as specified in the Notes or herein from the date demanded until paid
in full. Unless otherwise specified in the Loan Documents, such advances and
other sums, together with accrued interest, shall be due and payable on demand.
7.8. Default Rate of Interest. If Borrowers shall fail to pay within fifteen
(15) days following the due date therefor, whether by acceleration or otherwise,
any principal or interest owing under the Loans, or any of them, then interest
shall accrue on the entire unpaid principal balance of the Loans or the
respective Loan, from the date thereof until and including the date on which
such amount is paid in full at a rate of interest equal to the LIBOR Variable
Rate (as defined in the Notes), plus an additional two percent (2%) per annum
(200 basis points). The increase of such interest rates shall not affect or
otherwise limit or apply in lieu of any other remedy available to Lender as
provided for herein or under applicable law.
8. MISCELLANEOUS.
8.1. Notice. All notices, demands, or other communications given under the
Loan Documents shall be in writing, and shall be mailed to the address of the
Notice Borrower as set forth in Schedule 8.1 attached hereto (or as set forth in
any other Loan Document), said mailing to be certified United States government
mail to the mailing address, with notice in each case to be effective when sent.
Any party may provide written direction to the others to change the address to
which notices shall be sent.
8.2. Waiver. No failure or delay on the part of Lender in exercising any
power or right hereunder, and no failure of Lender to give Borrowers notice of
an Event of Default, shall operate as a waiver thereof, and no single or partial
exercise of any such right or power shall preclude any other or further exercise
thereof or the exercise of any other right or power hereunder. No modification
or waiver of any provision of any Loan Document or consent to any departure by
Borrowers from any Loan Document shall be effective unless the same shall be in
writing and signed by Lender, Borrowers, and Guarantors, and any such waiver or
consent shall be effective only in the specific instance and for the particular
purpose for which it was given.
8.3. Benefit. The Loan Documents shall be binding upon and shall inure to
the benefit of Borrowers, Guarantors, and Lender and their respective permitted
successors, assigns and participants and subparticipants.
8.4. Governing Law and Jurisdiction. The Loan Documents and this
Consolidating Loan Agreement, unless otherwise specifically provided therein,
and all matters relating thereto, shall be governed by and construed and
interpreted in accordance with the laws of the State of North Carolina, except
as superseded by applicable United States federal law.
8.5. Assignment. Lender may assign the Loan Documents, in whole or in part,
to any other person or entity; provided, however, that Lender shall provide to
Borrowers ninety (90) days' prior notice of its intent to assign. In the event
of such assignment, Lender thereafter shall be relieved of all liability
hereunder (excluding causes of action for Lender's gross negligence or
intentional acts prior to such transfer). Further, Lender may sell one or more
participation interests in the Loans or any one or more of them and/or assign
the Loan Documents, or any interest therein, to AgFirst, Farm Credit Bank, its
successors and assigns and subparticipants, without any notice whatsoever to
Borrowers. Borrowers hereby authorize Lender to disclose
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all information (including financial) provided to Lender by Borrowers in
connection with the Loans to any actual or prospective participant,
subparticipant, or assignee of all or part of the Loans. Borrowers may not
assign the Loan Documents or any interest therein without Lender's prior written
consent.
8.6. Severability. Invalidity of any one or more of the terms, conditions,
or provisions of this Consolidating Loan Agreement in no way shall affect the
balance hereof, which shall remain in full force and effect.
8.7. Construction. Whenever the context and construction so require, all
words used in the singular number herein shall be deemed to have been used in
the plural, and vice versa, and the masculine gender shall include the feminine
and neuter and the neuter shall include the masculine and feminine. All
references to Sections shall mean Sections of this Consolidating Loan Agreement.
The terms "herein," "hereinbelow," "hereunder," and similar terms are references
to this Consolidating Loan Agreement in its entirety and not merely the
particular Article, Section, Schedule or Exhibit in which any such term appears.
Captions are inserted only as a matter of convenience and for reference and in
no way define, limit or describe the scope of this Consolidating Loan Agreement
or the intent of any provision hereof. All references to any Loan Document shall
include all amendments, extensions, renewals, restatements, or replacements of
the same. The terms "include", "including", and similar terms shall be construed
as if followed by the phrase "without being limited to" and "Real Estate" and
"Collateral" shall be construed as if followed by the phrase "or any part
thereof." No inference in favor of any party shall be drawn from the fact that
such party has drafted any portion of the Loan Document. In the event of any
inconsistency between the terms of this Consolidating Loan Agreement and any
other Loan Document (with the exception of the Notes), the terms of this
Consolidating Loan Agreement shall control, provided that any provision of any
Loan Document, other than this Consolidating Loan Agreement, which imposes
additional Obligations upon Borrower or provides additional rights or remedies
to Lender shall be deemed to be supplemental to, and not inconsistent with, this
Consolidating Loan Agreement.
8.8. Execution in Counterparts. All Loan Documents may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same instrument, and in making proof of the
Loan Document, it shall not be necessary to produce or account for more than one
such counterpart.
8.9. Examinations/Communications. Lender's examinations, inspections, or
receipt of information pertaining to the matters set forth in the Loan Documents
shall not in any way be deemed to reduce the full scope and protection of the
Loan Documents or the Obligations of Borrowers related to the Loan Documents.
Borrowers agree that Lender shall have no duty or obligation of any nature to
(i) make any investigation, inspection or review regarding any Collateral at any
time, with any such investigation that is undertaken being solely for the
benefit of Lender; or (ii) communicate in any manner with Borrowers,
irrespective of the fact that Lender's information, or lack thereof, could be
material to Borrowers' actions with respect to the Obligations.
8.10. No Third Party Beneficiaries. The Loan Documents are entered into for
the sole benefit of Borrowers, Guarantors, and Lender, their respective
successors, assigns and participants, and no third party shall be deemed to have
any privity of contract or any right to rely on any Loan Document to any extent
or for any purpose whatsoever, and no other person shall have any right of
action of any kind hereunder or be deemed to be a third party beneficiary.
8.11. No Participation. Nothing in the Loan Documents, and no action or
inaction whatsoever on the part of Lender through the Closing Date, shall be
deemed to make Lender a partner or joint venturer with Borrowers, and Borrowers
agree to indemnify and hold Lender harmless from and against any and all claims,
losses, causes of action, expenses (including attorneys' fees) and damages
arising from the relationship between Lender and Borrowers being construed as
determined to be anything other than that of lender and borrower. This provision
shall survive the termination of all Loan Documents.
8.12. Notice of Conduct. Borrowers shall give Lender immediate written
notice of any action or inaction by Lender or any agent or attorney of Lender in
connection with the Loan Documents or the Obligations of any party under the
Loan Documents that may be actionable against Lender or any agent or attorney of
Lender or a defense to payment of any Obligations of Borrowers, including
commission of a tort or violation of any contractual duty implied by law, and a
reasonable opportunity to cure or correct such action or inaction. Upon request
of Lender from time to time, Borrowers also shall confirm to Lender in writing
the status of the
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Loans, and the Obligations, and provide other information reasonably requested
by Lender.
8.13. Limitation of Damages. No party shall be liable to the other for
incidental, consequential or speculative damages arising from any breach of
contract, tort or other wrongful conduct in connection with the negotiation,
documentation, administration, or collection of the Loans, but only for the
actual direct loss suffered by said party.
8.14. Costs, Expenses and Attorneys' Fees. Borrowers shall pay to Lender
immediately upon demand the full amount of all reasonable out-of-pocket costs
and expenses, including reasonable attorneys' fees, costs of experts and all
other expenses, incurred by Lender (a) in connection with the negotiation,
preparation, modification, renewal, restatement and replacement of this
Consolidating Loan Agreement and each of the other Loan Documents; (b) upon the
occurrence of an Event of Default, or of circumstances which, if left uncured,
would result in an Event of Default, the costs of additional appraisals,
environmental studies, title insurance, survey updates and legal reviews, such
costs to be incurred for reasonable cause; (c) the perfection, preservation,
protection and continuation of the liens and security interests granted Lender
in the Collateral, and the custody, preservation, protection, repair and
operation of any of the Collateral; (d) the pursuit by Lender of its rights and
remedies under the Loan Documents and applicable law; and (e) defending any
counterclaim, cross-claim or other action, or participating in any bankruptcy
proceeding, mediation, arbitration, litigation, or dispute resolution of any
other nature involving Lender, Borrowers, Guarantors, or any Collateral.
8.15. Further Assurances. At any time after the Closing Date, Borrowers, at
the request of Lender, shall execute and deliver such further documents and
agreements and take such further actions as Lender reasonably deems necessary or
appropriate to permit each transaction contemplated by the Loan Documents to be
consummated in accordance with the provisions thereof and to perfect, preserve,
protect and continue all liens, security interests and rights of Lender under
the Loan Documents, security agreements, financing statements, continuation
statements, new or replacement notes, and/or agreements supplementing, extending
or otherwise modifying the Notes, this Consolidating Loan Agreement, and/or any
security agreement, and certificates as to the amount of the indebtedness
evidenced by the Notes. Borrowers irrevocably constitute and appoint Lender as
their attorney-in-fact, with full power of substitution, such appointment being
coupled with an interest, to enforce Lender's rights with respect to the above
further assurances.
8.16. Incorporation by Reference. This Consolidating Loan Agreement is
incorporated by reference into various Loan Documents, and shall govern each and
every Loan Document. In executing any Loan Document, the signatories thereto
other than Lender expressly agree to be bound by all provisions of this
Consolidating Loan Agreement pertaining to Borrowers and Guarantors, as
applicable.
8.17. Time of the Essence. Time is of the essence to all Loan Documents.
8.18. Ratification: Borrowers and Guarantors hereby ratify and confirm the
terms and conditions of the Original Loan Agreement, as amended, and the Stock
Loan Agreement, as amended, each as defined in the Factual Background statement
hereof, as the same are modified, amended and consolidated in this Consolidating
Loan Agreement.
8.19. No Novation: Borrower and Guarantors agree that the execution of this
Consolidating Loan Agreement shall constitute a modification, amendment and
consolidation of the terms of the Original Loan Agreement, as amended, and the
terms of the Stock Loan Agreement, as amended, each as defined in the Factual
Background statement hereof, and the loans evidenced thereby, and shall not be
construed as a novation. The Parties hereby acknowledge their intent that this
Consolidating Loan Agreement will not disturb
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the existing priority of the Loan Documents. The Parties intend that the
security interests evidenced by the Loan Documents retain the same priority as
when originally executed, delivered, and as applicable, recorded, as if this
Consolidating Loan Agreement were executed, tendered and delivered as of the
respective dates of the Loan Documents.
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BORROWERS:
ATTEST: CARROLL'S FOODS, INC.
/s/ By: /s/ F. J. Faison, Jr.
----------------------- ------------------------
Assistant Secretary Its: President
[Corporate Seal]
ATTEST: CARROLL'S REALTY, INC.
/s/ By: /s/ F. J. Faison, Jr.
----------------------- ------------------------
Assistant Secretary Its: President
[Corporate Seal]
CARROLL'S REALTY PARTNERSHIP (SEAL)
ATTEST: By: Carroll's Foods, Inc., General Partner
/s/ By: /s/ F. J. Faison, Jr.
----------------------- ------------------------
Assistant Secretary Its: President
[Corporate Seal]
ATTEST: By: Carroll's Realty, Inc., General Partner
/s/ By: /s/ F. J. Faison, Jr.
----------------------- ------------------------
Assistant Secretary Its: President
[Corporate Seal]
GUARANTORS:
ATTEST: CARROLL'S PROCESSING, INC.
/s/ By: /s/ F. J. Faison, Jr.
----------------------- ------------------------
Assistant Secretary Its: President
[Corporate Seal]
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ATTEST: CARROLL'S CAPITAL, INC.
/s/ By: /s/ F. J. Faison, Jr.
----------------------- ------------------------
Assistant Secretary Its: President
[CORPORATE SEAL]
ATTEST: CARROLL'S FOODS OF THE MIDWEST, INC.
/s/ By: /s/ F. J. Faison, Jr.
----------------------- ------------------------
Assistant Secretary Its: President
[CORPORATE SEAL]
ATTEST: CARROLL'S FOODS OF MEXICO, INC.
/s/ By:/s/ F.J. Faison, Jr.
----------------------- ------------------------
Assistant Secretary Its: President
[Corporate Seal]
CARROLL'S FOODS OF BRAZIL, LLC
/s/ By:/s/ F. J. Faison, Jr.
----------------------- ------------------------
Its: Manager
LENDER:
CAPE FEAR FARM CREDIT, ACA
(SEAL)
By: /s/ C. R. Edwards
------------------------
Its: Vice President
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