Guaranty - Smithfield Foods Inc. and Rabobank Nederland
[CONFORMED COPY]
FOURTH AMENDED, RESTATED AND CONTINUED GUARANTY, dated as of April 30,
1996, made by SMITHFIELD FOODS, INC., a corporation organized and existing under
the laws of Delaware (the "GUARANTOR"), in favor of COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as Agent
for the banks a party to the Credit Agreement, as defined below (the "AGENT").
PRELIMINARY STATEMENTS.
The Agent and certain banks have entered into a Fourth Amended, Restated
and Continued Revolving Credit Agreement dated as of the date hereof (said
Agreement, as it may hereafter be amended or otherwise modified from time to
time, being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) among Gwaltney of
Smithfield, Ltd. ("GWALTNEY"), The Smithfield Packing Company, Incorporated
("PACKING"), Patrick Cudahy Incorporated ("CUDAHY"), Esskay, Inc. ("ESSKAY"),
Brown's of Carolina, Inc. ("BROWN'S"), and John Morrell & Co. ("MORRELL")
(individually, a "BORROWER" and collectively, the "BORROWERS") and the Agent and
each of the banks a party thereto. It is a condition precedent to the making of
Advances by the Banks under the Credit Agreement that the Guarantor, as owner of
100 percent of the outstanding shares of stock of each of the Borrowers (other
than Brown's) and 86 percent of the outstanding shares of stock of Brown's,
shall have executed and delivered this Guaranty.
The Credit Agreement is a complete Amendment, Restatement and
Continuation of the Third Amended, Restated and Continued Revolving Credit
Agreement (the "1995 AGREEMENT") dated as of July 31, 1995, as amended by First
Amendment to the 1995 Agreement dated as of July 31, 1995, and as amended by
Amendment Agreement dated December 20, 1995, among Gwaltney, Packing, Cudahy,
Esskay and Brown's, Rabobank as agent for the Banks and each financial
institution a party thereto, with the 1995 Agreement being a complete amendment,
restatement and continuation of the Second Amended, Restated and Continued
Revolving Credit Agreement (the "1994 AGREEMENT") dated as of March 1, 1994, as
amended by amendments dated as of May 1, 1994, November 28, 1994, January 31,
1995, February 24, 1995, March 27, 1995, April 30, 1995, May 31, 1995 and July
12, 1995 among Gwaltney, Packing, Cudahy, Esskay, Brown's and Carolina Food
Processors, Inc. and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch ("RABOBANK"), with the 1994 Agreement
being a complete amendment, restatement and continuation of (a) the Amended,
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Restated and Continued Revolving Credit Agreement (the "1991 AGREEMENT") dated
as of November 27, 1991, as amended as of August 12, 1992 and as of October 28,
1992, among Gwaltney, Packing, Cudahy and Esskay and Rabobank, with the 1991
Agreement being a complete amendment, restatement and continuation of the
Revolving Credit Agreement dated as of October 26, 1990, as amended as of
October 30, 1991 between Gwaltney and Rabobank and (b) the Amended and Restated
and Continued Oral Finance Facility (the "1991 ORAL FINANCE FACILITY") dated as
of November 27, 1991 among Gwaltney, Packing, Cudahy and Esskay and Rabobank,
with the 1991 Oral Finance Facility being a complete amendment, restatement and
continuation of the Oral Finance Facility dated as of October 26, 1990, as
amended, between Gwaltney and Rabobank. This Guaranty is a complete amendment,
restatement and continuation of the Third Amended, Restated and Continued
Guaranty (the "1995 GUARANTY") dated as of July 31, 1995 made by the Guarantor
in favor of Rabobank.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to make Advances under the Credit Agreement, the Guarantor hereby
agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of one or more of the Borrowers now or hereafter
existing under the Credit Agreement, the Notes thereunder, the other Loan
Documents to which one or more of the Borrowers is a party, and any other
agreement or instrument relating thereto, whether for principal, interest, fees,
expenses, indemnities or otherwise (such obligations being the "OBLIGATIONS"),
and agrees to pay any and all expenses (including counsel fees and expenses)
incurred by the Agent or any Bank in enforcing any rights under this Guaranty.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement, the Notes thereunder and the other Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent or a Bank with respect
thereto. The liability of the Guarantor under this Guaranty shall be absolute
and unconditional irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement, the Notes thereunder, any other Loan Document, or any other
agreement or instrument relating thereto;
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(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment
or waiver of or any consent to departure from the Credit Agreement, the
Notes thereunder, any other Loan Document and any other agreement or
instrument relating thereto;
(iii) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Obligations; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by a Bank upon the insolvency, bankruptcy or
reorganization of one or more of the Borrowers or otherwise, all as though such
payment had not been made.
SECTION 3. WAIVER. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Agent or a Bank protect, secure,
perfect or insure any security interest or lien or any property subject thereto
or exhaust any right or take any action against one or more of the Borrowers or
any other person or entity or any collateral.
SECTION 4. WAIVER OF SUBROGATION. The Guarantor hereby waives any claim,
right or remedy which the Guarantor may now have or hereafter acquire against
any Borrower that arises hereunder and/or from the performance by the Guarantor
hereunder including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, contribution, indemnification, or
participation in any claim, right or remedy of the Agent or a Bank against any
Borrower or any security which the Agent or a Bank now has or hereafter
acquires, whether or not such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise until the Agent and the
Banks are paid in full and the Credit Agreement is terminated.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
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(a) The Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction
indicated at the beginning of this Guaranty.
(b) The execution, delivery and performance by the Guarantor of
this Guaranty are within its corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the
Guarantor's charter or by-laws or (ii) any law or any contractual
restriction binding on or affecting the Guarantor.
(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
Guarantor of this Guaranty.
(d) This Guaranty is a legal, valid and binding obligation of the
Guarantor enforceable against it in accordance with its terms.
(e) The audited balance sheets for the Guarantor and its
subsidiaries as at April 30, 1995, and the related statements of income,
stockholders equity and cash flows of the Guarantor and its subsidiaries
for the fiscal period then ended, copies of which have been furnished to
the Banks, fairly present the financial condition of the Guarantor and
its subsidiaries as at such date and the results of the operations of
the Guarantor and its subsidiaries for the period ended on such date,
all in accordance with generally accepted accounting principles
consistently applied, and since April 30, 1995, there has been no
material adverse change in such condition or operations.
(f) There is no pending or threatened action or proceeding
affecting the Guarantor or any of its subsidiaries before any court,
arbitrator or governmental agency, which could materially adversely
affect the financial condition or operations of the Guarantor or any of
its subsidiaries or which purports to affect the legality, validity or
enforceability of this Guaranty.
SECTION 6. COVENANTS. The Guarantor covenants and agrees that, so long
as any part of the Obligations shall remain unpaid or a Bank shall have any
Commitment, the Guarantor will, unless the Banks, in accordance with Section 8
hereof, shall otherwise consent in writing:
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(a) REPORTING REQUIREMENTS. Furnish to the Agent and each
Bank:
(i) as soon as available and in any event 30 days after
the end of each calendar month, (A) a consolidated balance sheet
of the Guarantor and its subsidiaries as at the end of such
calendar month and a consolidated statement of income and cash
flows of the Guarantor and its subsidiaries for the period
commencing at the end of the previous fiscal year and ending with
the end of such calendar month and (B) a certificate of the
treasurer or chief financial officer of the Guarantor (with
calculations in reasonable detail) certifying that the Guarantor
is in compliance in every respect with the terms of this Section
6 and that no Default or Event of Default exists;
(ii) as soon as available and in any event within 45 days
after the end of each quarter of each fiscal year of the
Guarantor, (A) a consolidated balance sheet of the Guarantor and
its subsidiaries as of the end of such quarter and a consolidated
statement of income and cash flows of the Guarantor and its
subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, and (B) a
certificate of the treasurer or chief financial officer of the
Guarantor (with calculations in reasonable detail) certifying
that the Guarantor is in compliance with the terms of this
Section 6 and that no Default or Event of Default exists;
(iii) as soon as available and in any event within 90 days
after the end of each fiscal year of the Guarantor, (A) a copy of
a consolidated financial statement for the Guarantor and its
subsidiaries for such year reported on and certified in a manner
acceptable to the Agent by independent public accountants
acceptable to the Banks, and (B) a certificate of the treasurer
or chief financial officer of the Guarantor (with calculations in
reasonable detail) certifying that the Guarantor is in compliance
with the terms of this Section 6 and that no Default or Event of
Default exists;
(iv) promptly and in any event within five days of the
transmission thereof, copies of all financial statements, proxy
statements, notices and reports as the Guarantor shall send to
its public stockholders and copies of all registration statements
(without exhibits) and all reports which the Guarantor files with
the Securities and Exchange Commission (or any governmental body
or agency
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succeeding to the functions of the Securities and Exchange
Commission) and copies of all press releases reporting financial
results of the Guarantor or any of its subsidiaries or any
material development with respect to the Guarantor or any of its
subsidiaries;
(v) such other information respecting the condition or
operations, financial or otherwise, of the Guarantor or any of
its subsidiaries as the Agent or a Bank may from time to time
reasonably request; and
(vi) promptly, upon the occurrence of an Event of Default
or an event that but for the passage of time or the giving of
notice or both would constitute an Event of Default, notice of
such Event of Default or event.
(b) 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 its
property except to the extent contested in good faith.
(c) VISITATION RIGHTS; COLLATERAL EXAMINATION. At any reasonable
time and from time to time, permit the Agent or a 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 Guarantor and any of its subsidiaries, and to discuss the affairs,
finances and accounts of the Guarantor and any of its subsidiaries with
any of their respective officers or directors.
(d) WORKING CAPITAL. Maintain on a consolidated basis at all
times (i) an excess of current assets over current liabilities, in each
case, as determined in accordance with generally accepted accounting
principles ("WORKING CAPITAL") of not less than the amount set forth
below opposite the applicable period (it being understood that the
period shall include the ending date thereof):
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PERIOD AMOUNT
From 04/28/96 to 06/29/96 $ 60,000,000
From 06/30/96 to 07/27/96 $115,000,000
From 07/28/96 to 10/26/96 $110,000,000
From 10/27/96 to 01/25/97 $110,000,000
From 01/26/97 to 04/26/97 $125,000,000
From 04/27/97 to 07/27/97 $115,000,000
and (ii) a ratio of current assets to current liabilities, in each case,
as determined in accordance with generally accepted accounting
principles, of not less than the ratios set forth below opposite the
applicable period (it being understood that the period shall include the
ending date thereof):
PERIOD RATIO
From 04/28/96 to 06/29/96 1.15 to 1.0
From 06/30/96 to 07/27/96 1.25 to 1.0
From 07/28/96 to 10/26/96 1.15 to 1.0
From 10/27/96 to 01/25/97 1.15 to 1.0
From 01/26/97 to 04/26/97 1.30 to 1.0
From 04/27/97 to 07/27/97 1.30 to 1.0
(e) NET WORTH AND DEBT. Maintain on a consolidated basis at all
times (i) a Consolidated Tangible Net Worth (as hereinafter defined) of
not less than the higher of (a) $155,000,000, as of April 30, 1995, plus
75% of Consolidated Net Income, (without taking into account any losses)
on a cumulative basis for each quarter ending after April 30, 1995 and
(b) the amount set forth below opposite the applicable period (it being
understood that the period shall include the ending date thereof):
PERIOD AMOUNT
From 04/28/96 to 06/29/96 $185,000,000
From 06/30/96 to 07/27/96 $185,000,000
From 07/28/96 to 10/26/96 $200,000,000
From 10/27/96 to 01/25/97 $210,000,000
From 01/26/97 to 04/26/97 $220,000,000
From 04/27/97 to 07/27/97 $230,000,000
and (ii) a ratio of Debt to Consolidated Tangible Net Worth of not more
than 2.50 to 1.00.
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(f) TOTAL INDEBTEDNESS TO TOTAL CAPITALIZATION RATIO. Permit at
any time the aggregate outstanding principal amount of Consolidated
Total Indebtedness to exceed at any time during the period specified
below the percentage of Consolidated Total Capitalization set forth
opposite such applicable period (it being understood that the period
shall include the ending date thereof):
PERIOD PERCENTAGE
From 04/28/96 to 06/29/96 70.0%
From 06/30/96 to 07/27/96 71.0%
From 07/28/96 to 10/26/96 73.0%
From 10/27/96 to 01/25/97 73.0%
From 01/26/97 to 04/26/97 66.0%
From 04/27/97 to 07/27/97 67.0%
; provided, however, that if during the 30-day period prior to the date
of determination the average spot price quoted in the Wall Street
Journal for Iowa/South Minnesota hogs plus $3.00 (or such other amount
which is the average prevailing carcass merit premium paid by the
Borrowers during such period) equals or exceeds $55 per hundredweight,
the percentages shall be equal to the following for such applicable
period:
From 01/26/97 to 04/26/97 69.0%
From 04/27/97 to 07/27/97 69.0%
(g) INTEREST COVERAGE. Maintain at all times a ratio of
Consolidated EBITDA to Consolidated Interest Expense not less than 3.50
to 1.00 during any consecutive four quarter period prior to the date of
determination.
(h) FIXED CHARGE COVERAGE. Maintain at all times a Fixed
Charge Coverage of not less than 1.00.
(i) LIENS, ETC. Not create or suffer to exist, or permit any
subsidiary to create or suffer to exist, any lien, security interest or
other charge or encumbrance, or any other type of preferential
arrangement, upon or with respect to any of its properties or its
subsidiaries', whether now owned or hereafter acquired, or assign any
right to receive income, in each case to secure any Debt (as defined
below) of any person or entity, other than
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(i) purchase money liens or purchase money security interests upon or in
any property acquired or held by the Guarantor or any of its
subsidiaries in the ordinary course of business to secure the purchase
price of such property or to secure indebtedness incurred solely for the
purpose of financing the acquisition of such property, (ii) liens or
security interests existing on such property at the time of its
acquisition, (iii) liens in existence on the date hereof and set forth
on Schedule 6(f) hereto, provided that the aggregate principal amount of
the indebtedness secured by the liens or security interests referred to
in clauses (i), (ii) and (iii) above shall not exceed $285,000,000 at
any time outstanding or (iv) liens granted to the Agent on behalf of the
Banks.
(j) DIVIDENDS, ETC. Not 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 any Borrower, except that (i) it may declare and
pay dividends on its $20,000,000 principal amount of its Series C 6.75%
Cumulative Convertible Preferred Stock in an aggregate amount not to
exceed $1,350,000 during any fiscal year and (ii) a Borrower may declare
and deliver dividends and distributions payable in common stock of such
Borrower.
(k) CAPITAL EXPENDITURES. Not incur on a consolidated basis with
its subsidiaries, Capital Expenditures in excess of the amount for the
quarterly period set forth below on a cumulative basis for each fiscal
year:
QUARTER ENDING AMOUNT
April 28, 1996 $75,000,000
July 28, 1996 $25,000,000
October 27, 1996 $35,000,000
January 26, 1997 Permitted Amount
April 27, 1997 Permitted Amount
July 31, 1997 $30,000,000
"PERMITTED AMOUNT" shall mean an amount equal to the sum (i)
year-to-date after tax income plus (ii) year-to-date depreciation plus
(iii) year-to-date amortization, all as calculated in accordance with
generally accepted accounting principles.
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(l) LIMITATION ON TYPES OF BUSINESS. Not enter into or engage in,
or permit any subsidiary to enter or engage in, any business other than
pork production and pork processing and with respect to Ed Kelly, Inc.,
the retail electronics and automobile stereo business and with respect
to John Morrell & Co., the spices and chemicals business.
(m) BORROWING BASE. Cause each Borrower to provide a duly
completed borrowing base certificate pursuant to Section 5.01(c)(iv) of
the Credit Agreement.
(n) STOCK OWNERSHIP. Maintain 100% ownership of the capital
stock and all other equity interests in any of its subsidiaries (except
S.F. Investments, Inc. and Brown's of Carolina, Inc.) and 86% ownership
of the capital stock and all other equity interests of Brown's of
Carolina, Inc.
(o) MERGER, CONSOLIDATION AND OTHER ARRANGEMENTS. Not merge or
consolidate with any other person or liquidate or dissolve or windup its
affairs, nor permit any of its subsidiaries to do so. Further, after the
date hereof, neither the Guarantor nor any of its subsidiaries shall
enter into any partnerships, joint ventures or sale-leaseback
transactions or purchase or otherwise acquire (in one or a series of
related transactions) any part of the property or assets (other than
purchases or other acquisitions of materials and equipment in the
ordinary course of business in an aggregate amount not to exceed
$1,000,000 in any fiscal year) of any person.
(p) SALE OF ASSETS. Not sell, lease, assign, transfer or
otherwise dispose of any assets (whether or not related), nor permit any
of its subsidiaries to do so, other than
(i) obsolete or worn out property disposed of in the
ordinary course of business; and
(ii) other dispositions of assets (other than assets of
Morrell), so long as (x) such other dispositions are for fair
value, (y) the aggregate consideration (whether in the form of
cash, promissory notes or other instruments) for such other
dispositions does not exceed $10,000,000 in the aggregate for any
fiscal year, and (z) such consideration is reinvested in the
business of the Guarantor; and
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(iii) disposition of assets of John Morrell so long as (x)
such dispositions are for fair value, (y) the aggregate
consideration (whether in the form of cash, promissory notes or
other instruments) for such dispositions does not exceed
$5,000,000 in the aggregate for any fiscal year and (z) such
consideration is used to repay the Advances.
SECTION 7. CERTAIN DEFINED TERMS. The following capitalized terms used
herein shall have the following meanings:
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets
(including any replacements in the ordinary course of business without reduction
for sales, retirements or replacements) which are not, in accordance with
generally accepted accounting principles, treated as expense items for such
Person in the year made or incurred or as a prepaid expense applicable to a
future year or years, and shall include (i) all Capitalized Lease Obligations
and (ii) any advances remaining outstanding (any repayment or other reduction,
for purposes of this calculation, shall be subject to the approval of the Agent)
to Smithfield Carroll's and any advances to any other hog production operations
in which the Guarantor or any of its subsidiaries has invested as a joint
venturer or partner.
"CAPITALIZED LEASE OBLIGATION" shall mean, with respect to any Person,
any rental obligation which, under generally accepted accounting principles, is
or will be required to be capitalized on the books of such Person, taken at the
amount thereof accounted for as indebtedness (net of interest expense) in
accordance with such principles.
"CONSOLIDATED EBITDA" shall mean, for any fiscal period of the
Guarantor, an amount equal to (A) the sum for such fiscal period of Consolidated
Net Income and, to the extent subtracted in determining such Consolidated Net
Income, provisions for (i) taxes based on income, (ii) Consolidated Interest
Expense, and (iii) depreciation and amortization expense minus (B) any items of
gain (or plus any items of loss) which were included in determining such
Consolidated Net Income, and were (x) not realized in the ordinary course of
business or (y) the result of any sale of assets.
"CONSOLIDATED FIXED CHARGES" shall mean at any time for the Guarantor
and its subsidiaries on a consolidated basis the quotient resulting from
dividing (A) by (B), with (A) being the sum of (i) the aggregate amount of all
Capital Expenditures during
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the preceding four quarters, (ii) scheduled principal payments on Debt of the
Guarantor or any of its subsidiaries due within the succeeding four quarters
(including any principal payments to be made as a result of mandatory reductions
under revolving credit facilities), plus (iii) the gross interest accrued on
such Debt during the preceding four quarters, and plus (iv) the aggregate amount
of any dividends paid or other distributions made during the preceding four
quarters and with (B) being, four.
"CONSOLIDATED INTEREST EXPENSE" for any period shall mean the
consolidated interest expense of the Guarantor and its subsidiaries (whether
cash or non-cash interest expense or deferred or accrued interest expense and
including, without limitation, capitalized interest expense and the interest
portion of all Capitalized Lease Obligations during such period) determined in
accordance with generally accepted accounting principles.
"CONSOLIDATED NET INCOME" shall mean and refers to as of the date of any
determination, the net income (or deficit) of the Guarantor and its
subsidiaries; provided, however, that there shall be excluded from Consolidated
Net Income (i) the income (or deficit) of any Person accrued prior to the date
it becomes a subsidiary of the Guarantor or is merged into or consolidated with
the Guarantor or such Person's assets are acquired by the Guarantor; (ii) the
income (or deficit) of any Person (other than a consolidated subsidiary of the
Guarantor) in which the Guarantor has an ownership interest, except to the
extent that any such income has been actually received by the Guarantor in the
form of dividends or similar distributions; (iii) the undistributed earnings of
any subsidiary of the Guarantor to the extent that the declaration or payment of
dividends or similar distributions of such subsidiary is restricted; and (iv)
any income or gain resulting from any write-up or revaluation of the assets of
the Guarantor and its subsidiaries. The calculation of Consolidated Net Income
shall in no event be less than zero and shall be determined in accordance with
generally accepted accounting principles.
"CONSOLIDATED NET WORTH" shall mean, at any time, for the Guarantor and
its subsidiaries on a consolidated basis, shareholders' equity at such time
determined in accordance with generally accepted accounting principles, plus the
aggregate redemption value of any convertible preferred stock of the Guarantor
or any of its subsidiaries.
"CONSOLIDATED TANGIBLE NET WORTH" means at any time, for the Guarantor
and its subsidiaries on a consolidated basis, the excess of total assets over
total liabilities, with total assets and total liabilities each to be determined
in accordance with generally accepted accounting principles consistent with
those applied in the
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preparation of the financial statements referred to in subsection 6(a),
including in the determination of total assets the aggregate redemption value of
any convertible preferred stock of the Guarantor or any of its subsidiaries, and
excluding, however, from the determination of total assets (i) Intangible
Assets, (ii) treasury stock, (iii) securities which are not readily marketable,
(iv) cash held in a sinking or other analogous fund established for the purpose
of redemption, retirement or prepayment of capital stock or Debt, (v) any
write-up in the book value of any asset resulting from a revaluation thereof
subsequent to the date hereof, and (vi) any items not included in clauses (i)
through (v) above which are treated as intangibles in conformity with generally
accepted accounting principles.
"CONSOLIDATED TOTAL CAPITALIZATION" means the sum of Consolidated Total
Indebtedness plus Consolidated Tangible Net Worth.
"CONSOLIDATED TOTAL INDEBTEDNESS" shall mean, at any time for the
Guarantor and its subsidiaries on a consolidated basis, Debt.
"DEBT" means (i) indebtedness for borrowed money or for the deferred
purchase price of property or services, (ii) Capitalized Lease Obligations,
(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, and
(iv) liabilities in respect of unfunded vested benefits under plans covered by
Title IV of the Employee Retirement Income Security Act of 1974 ("ERISA").
"FAIR MARKET VALUE" shall mean at any time, the sale value of property
that would be realized in an arm's-length sale at such time between an informed
and willing buyer, and an informed and willing seller, under no compulsion to
buy or sell, respectively.
"FIXED CHARGE COVERAGE" shall mean, at any time, the ratio of
Consolidated EBITDA to Consolidated Fixed Charges.
"INTANGIBLE ASSETS" shall mean those assets which would be treated as
intangible under generally accepted accounting principles, including, without
limitation, such items as goodwill, trademarks, trade names, service marks,
brand names, copyrights, patents, licenses, noncompete agreements and rights
with respect to the foregoing, unamortized debt discount and expense,
organizational expenses,
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and the excess of cost of purchased subsidiaries over equity in the net assets
(based on Fair Market Value) thereof at the date of acquisition.
SECTION 8. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantor therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Majority Banks, and then, in any event, such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 9. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing and mailed, telecopied or delivered
by hand or overnight courier, if to the Guarantor, at its address at 900
Dominion Tower, 999 Waterside Drive, Norfolk, Virginia 23510, Attention: Aaron
D. Trub, telephone: (804) 365-3000, telecopier: (804) 365-3017, if to the Agent
or a Bank, at its address specified in the Credit Agreement, 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 other communications shall be effective
(i) if mailed, when received, (ii) if telecopied, when transmitted and (iii) if
delivered by hand or overnight courier, when received.
SECTION 10. NO WAIVER; REMEDIES. No failure on the part of the Agent or
a Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 11. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default 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 Guarantor against any and all of the
obligations of the Guarantor now or hereafter existing under this Guaranty,
irrespective of whether or not the Agent on behalf of the Banks shall have made
any demand under this Guaranty and although such deposits, indebtedness or
obligations may be unmatured or contingent. Such Bank agrees promptly to notify
the Guarantor 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 each Bank under this Section are in addition to other
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rights and remedies (including, without limitation, other rights of set-off)
which such Bank may have.
SECTION 12. CONTINUING GUARANTY; TRANSFER OF NOTES. This Guaranty is a
continuing guaranty and shall (i) remain in full force and effect until the
later of payment in full of the Obligations and all other amounts payable under
this Guaranty or the Termination Date, (ii) be binding upon the Guarantor, its
successors and assigns, and (iii) inure to the benefit of and be enforceable by
the Agent on behalf of the Banks and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), if a Bank shall
comply with Section 8.10 of the Credit Agreement, such Bank may assign or
otherwise transfer the Notes delivered under the Credit Agreement to any other
person or entity, and such other person or entity shall thereupon become vested
with all the rights in respect thereof granted to such Bank herein or otherwise.
SECTION 13. CONSENT TO JURISDICTION. (a) The Guarantor 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 Guaranty, and the Guarantor 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 in such Federal court. The Guarantor 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
Guarantor irrevocably consents to the service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding by the mailing of copies of such process to the Guarantor to its
address specified in Section 9. The Guarantor agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Nothing in this Section 13 shall affect the right of the Agent on
behalf of the Banks to serve legal process in any other manner permitted by law
or affect the right of the Agent on behalf of the Banks to bring any action or
proceeding against the Guarantor or its property in the courts of any other
jurisdictions.
SECTION 14. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York.
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SECTION 15. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
SMITHFIELD FOODS, INC.
By /s/ Aaron D. Trub
Name: Aaron D. Trub
Title: Vice President, Secretary
and Treasurer