-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IQ3mdi6A5WKxb2y7FRI6EbJJ84sseyntdVwaVRAuMpSdSl/w0w/2SkcGQwqCYuEB MQBSwa4dcs2FMPX3D5sfDg== 0000950144-03-008484.txt : 20030711 0000950144-03-008484.hdr.sgml : 20030711 20030711155512 ACCESSION NUMBER: 0000950144-03-008484 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20030711 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SANDERSON FARMS INC CENTRAL INDEX KEY: 0000812128 STANDARD INDUSTRIAL CLASSIFICATION: POULTRY SLAUGHTERING AND PROCESSING [2015] IRS NUMBER: 640615843 STATE OF INCORPORATION: MS FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-40009 FILM NUMBER: 03783850 BUSINESS ADDRESS: STREET 1: 225 N 13TH AVE STREET 2: PO BOX 988 CITY: LAUREL STATE: MS ZIP: 39441 BUSINESS PHONE: 6016494030 MAIL ADDRESS: STREET 1: 225 N 13TH AVENUE STREET 2: PO BOX 988 CITY: LAUREL STATE: MS ZIP: 39441 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ESTATE OF DEWEY K SANDERSON JR CENTRAL INDEX KEY: 0001114947 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O SANDERSON FARMS INC STREET 2: 225 N 13TH AVENUE CITY: LAUREL STATE: MS ZIP: 39441-0988 BUSINESS PHONE: 6016494030 MAIL ADDRESS: STREET 1: C/O SANDERSON FARMS INC STREET 2: 225 N 13TH AVENUE CITY: LAUREL STATE: MS ZIP: 39441-0988 SC 13D/A 1 g83753sc13dza.htm SANDERSON FARMS, INC. SC 13D/A SANDERSON FARMS, INC. SC 13D/A
 

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 4)*

Sanderson Farms, Inc.

(Name of Issuer)

Common Stock, $1.00 par value per share

(Title of Class of Securities)

800013

(Cusip Number)

Estate of Dewey R. Sanderson, Jr.
225 North Thirteenth Avenue
Laurel, Mississippi 39440
(601) 649-1336

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

June 19, 2003

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

             
CUSIP No. 800013 Page 2 of 6 Pages
  1. Name of Reporting Person:
Estate of Dewey R. Sanderson, Jr.		 I.R.S. Identification Nos. of above persons (entities only):
  2. Check the Appropriate Box if a Member of a Group (See Instructions):
    (a) o  
    (b) o  
  3. SEC Use Only:
  4. Source of Funds (See Instructions):
Not applicable
  5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): o
  6. Citizenship or Place of Organization:
Estate subject to the laws of the State of Mississippi
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
7. Sole Voting Power:
2,796,500 shares of common Stock, $1.00 par value per share (“Common Stock”)
8. Shared Voting Power:
0 shares of Common Stock
9. Sole Dispositive Power:
2,796,500 shares of Common Stock
10.Shared Dispositive Power:
0 shares of Common Stock
  11.Aggregate Amount Beneficially Owned by Each Reporting Person:
2,796,500 shares of Common Stock
  12.Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions):
o
  13.Percent of Class Represented by Amount in Row (11):
21.7%
  14.Type of Reporting Person (See Instructions):
OO

 

     
CUSIP No. 800013   Page 3 of 6 Pages

SCHEDULE 13D

Preliminary Statement

This filing by the Estate of Dewey R. Sanderson, Jr. amends Schedule 13D to report the sale of shares of Sanderson Farms, Inc. common stock as described in Item 5.

ITEM 1. Security and Issuer

The class of equity securities to which this statement relates is the common stock, $1.00 par value per share (the “Common Stock”), of Sanderson Farms, Inc. a Mississippi corporation (the “Company”), whose principal executive offices are located at 225 N. 13th Avenue, Laurel, Mississippi 39440.

ITEM 2. Identity and Background.

(a)  This statement is filed on behalf of the Estate of Dewey R. Sanderson, Jr. (the “Estate”).

(b)  The Estate’s address is 225 North 13th Avenue, Mississippi 39440.

(c)  Not applicable.

(d)  During the last five years, the Estate has not been convicted in a criminal proceeding (excluding any traffic violations or similar misdemeanors).

(e)  During the last five years, the Estate has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which it was or is subject to a judgment, order, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f)  The Estate is subject to the laws of the State of Mississippi.

ITEM 3. Source and Amount of Funds or Other Consideration.

Not applicable.

ITEM 4. Purpose of Transaction.

On December 2, 1999, Dewey R. Sanderson, Jr. died. The shares of Common Stock that Mr. Sanderson owned of record are now beneficially owned by the Estate, except for shares the Estate has disposed of since that date. The co-executors of the Estate are the decedent’s two sons, Robert Buck Sanderson and Hugh V. Sanderson, who were qualified as co-executors of the Estate. Since the filing of Amendment No. 3 to this Schedule 13D on January 18, 2002, the Estate has sold shares of Common Stock on various dates at various prices, as listed in Item 5.

The Estate does not have any plans or proposals that relate to or would result in any of the following actions, except as set forth below and in the last paragraph of this Item 4:

•   acquisition by any person of additional securities of the Company or the disposition of securities of the Company, other than the distribution of Common Stock of the Estate to the heirs and legatees of the decedent (which heirs and legatees are primarily the decedent’s children, as the decedent’s widow has disclaimed and renounced any and all interest in the Common Stock of the Estate bequeathed to her or to which she may otherwise be entitled under the Mississippi laws of descent and distribution), and other than sales of Common Stock of the Company from time to time to the extent required to pay obligations of the Estate, including the existing bank loan described in Item 6;
 
•   an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries;

 

 

     
CUSIP No. 800013   Page 4 of 6 Pages

•   a sale or transfer of a material amount of assets of the Company or any of its subsidiaries;
 
•   any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any vacancies on the board;
 
•   any material change in the present capitalization or dividend policy of the Company;
 
•   any other material change in the Company’s business or corporate structure;
 
•   changes in the Company’s charter, by-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person;
 
•   causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;
 
•   causing a class of securities of the Company to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or
 
•   any action similar to any of those enumerated above.

Each of the co-executors is a director of the Company and, as such, participates in deliberations of the Board of Directors that could involve actions such as the foregoing from time to time; and, in keeping with their fiduciary duties to the Estate, make proposals or recommendations to the Board of Directors that could involve actions such as the foregoing from time to time.

ITEM 5. Interest in Securities of the Issuer.

(a)  The Estate is the beneficial owner of 2,796,500 shares of Common Stock, representing approximately 21.7% of the shares of Common Stock believed to be outstanding. The amount reported in Amendment 3 to Schedule 13D was 2,967,403. The difference results from the Estate’s sale of shares in open market transactions on the following days and at the following prices: June 15, 2002, 5,000 shares at $25.95 per share; June 17, 2002, 16,000 shares at $25.2966 per share; July 3, 2002, 52,000 shares at $25.504 per share; July 5, 2002, 15,000 shares at $25.21 per share; and June 19, 2003, 82,903 shares at $24.869 per share.

(b)  The co-executors of the Estate share the power to vote or to direct the vote and to dispose or to direct the disposition (including selling or encumbering the shares or distributing them to heirs and legatees) of the 2,796,500 shares of Common Stock beneficially owned by the Estate. Pursuant to Rule 13d-4 under the Securities Exchange Act of 1934 (the “Exchange Act”), each of the co-executors disclaims the beneficial ownership of the 2,796,500 shares of Common Stock beneficially owned by the Estate.

Robert Buck Sanderson is employed as Corporate Live Production Assistant of the Company and is a member of the Board of Directors of the Company. Hugh V. Sanderson is employed as the Manager of Customer Relations of the Company and is a member of the Board of Directors of the Company. The business address for each of them is 225 N. 13th Avenue, Laurel, Mississippi 39440. During the last five years, neither of them has been (a) convicted in a criminal proceeding (excluding any traffic violations and similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he was or is subject to a judgment, order, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. They are both citizens of the United States.

(c)  During the past sixty days, the Estate has not effected any transactions involving the Common Stock of the Company, other than the sale of 82,903 shares in an open market transaction on June 19, 2003 at a price of $24.869 per share.

 

 

     
CUSIP No. 800013   Page 5 of 6 Pages

(d)  To the knowledge of the Estate, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the 2,796,500 shares of Common Stock beneficially owned by the Estate.

(e)  Not applicable.

ITEM 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Pursuant to a Pledge Agreement dated as of September 2, 2000 (the “Pledge Agreement”) by and between Union Planters Bank, N.A. (the “Lender”) and the co-executors of Estate, not individually but solely in their capacities as co-executors, the Estate pledged 1,703,364 of its shares of Common Stock to secure its obligations under the Credit Agreement dated as of September 2, 2000 (the “Credit Agreement”) by and between the Lender and the Co-Executors, not individually but solely as co-executors. The Credit Agreement pertains to borrowings of $6,148,050, the proceeds of which were used primarily to pay estate taxes. Copies of the Credit Agreement and the Pledge Agreement are filed as exhibits to this Schedule 13D.

On January 3, 2002, the co-executors of the Estate entered into a stock purchase agreement, which is incorporated by reference herein (see Item 7, below) with the Company pursuant to which the Company acquired 301,079 shares of Common Stock from the Estate pursuant to the Company’s stock repurchase program, at a price of $20.42 per share.

Description of the contents of any document referred to in this Schedule 13D and filed as an exhibit hereto is necessarily not complete and, in each instance, reference is made to the document itself which is filed as an exhibit herewith.

ITEM 7. Material to be Filed as Exhibits.

     
EXHIBIT   DESCRIPTION
 
EXHIBIT 1   Credit Agreement dated as of September 2, 2000 among Robert Buck Sanderson and Hugh V. Sanderson, not individually but solely as co-executors of the Estate of Dewey R. Sanderson, Jr., deceased, and Union Planters Bank, N.A.
     
EXHIBIT 2   Pledge Agreement dated as of September 2, 2000 by and between Robert Buck Sanderson and Hugh V. Sanderson, not individually but solely as co-executors of the Estate of Dewey R. Sanderson, Jr., deceased, and Union Planters Bank, N.A.
     
EXHIBIT 3   Stock Purchase Agreement dated January 3, 2002 between Sanderson Farms, Inc. and Hugh V. Sanderson and Robert Buck Sanderson as co-executors of the Estate of Dewey R. Sanderson, Jr. and not in their individual capacities (incorporated by reference to Exhibit 3 to Amendment No. 3 to the Schedule 13D filed by the Estate of Dewey R. Sanderson, Jr. on January 18, 2002).

 

 

     
CUSIP No. 800013   Page 6 of 6 Pages

SIGNATURE.

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

         
    ESTATE OF DEWEY R. SANDERSON, JR.    
         
         
    /s/ Robert Buck Sanderson
Robert Buck Sanderson, Co-Executor 		   
         
         
    /s/ Hugh V. Sanderson
Hugh V. Sanderson, Co-Executor 		   
         
Dated: July 11, 2003        

 

 

INDEX TO EXHIBITS

     
EXHIBIT   DESCRIPTION
 
EXHIBIT 1   Credit Agreement dated as of September 2, 2000 among Robert Buck Sanderson and Hugh V. Sanderson, not individually but solely as co-executors of the Estate of Dewey R. Sanderson, Jr., deceased, and Union Planters Bank, N.A.
     
EXHIBIT 2   Pledge Agreement dated as of September 2, 2000 by and between Robert Buck Sanderson and Hugh V. Sanderson, not individually but solely as co-executors of the Estate of Dewey R. Sanderson, Jr., deceased, and Union Planters Bank, N.A.
     
EXHIBIT 3   Stock Purchase Agreement dated January 3, 2002 between Sanderson Farms, Inc. and Hugh V. Sanderson and Robert Buck Sanderson as co-executors of the Estate of Dewey R. Sanderson, Jr. and not in their individual capacities (incorporated by reference to Exhibit 3 to Amendment No. 3 to the Schedule 13D filed by the Estate of Dewey R. Sanderson, Jr. on January 18, 2002).

  EX-1 3 g83753exv1.txt EX-1 CREDIT AGREEMENT 9/02/00 EXHIBIT 1 ================================================================================ CREDIT AGREEMENT Among ROBERT BUCK SANDERSON AND HUGH VIRDEN SANDERSON NOT INDIVIDUALLY BUT SOLELY AS CO-EXECUTORS OF THE ESTATE OF DEWEY R. SANDERSON, JR., DECEASED and UNION PLANTERS BANK, N. A. Dated as of September 2, 2000 ================================================================================ TABLE OF CONTENTS CREDIT AGREEMENT
PAGE SECTION 1. THE CREDIT .......................................................................... 1 Section 1.1. The Term Credit ..................................................................... 1 Section 1.2. The Term Notes ...................................................................... 1 Section 1.3. Interest Rate ....................................................................... 1 SECTION 2. COLLATERAL .......................................................................... 1 Section 2.1. Borrower's Obligations .............................................................. 1 Section 2.2. Under Margin - Additional Pledge .................................................... 2 Section 2.3. Application of Cash Collateral ...................................................... 2 SECTION 3. PREPAYMENTS, TERMINATIONS AND PLACE AND APPLICATION OF PAYMENTS ............................................................................ 2 Section 3.1. Prepayments Prohibited .............................................................. 2 Section 3.2. Place and Application of Payments ................................................... 2 SECTION 4. DEFINITIONS ......................................................................... 3 SECTION 5. REPRESENTATIONS AND WARRANTIES ...................................................... 4 Section 5.1. Authority; No Conflict .............................................................. 4 Section 5.2. Financial Information ............................................................... 4 Section 5.3. Litigation .......................................................................... 4 Section 5.4. Collateral .......................................................................... 4 Section 5.5. Other Obligations ................................................................... 5 Section 5.6. Income Taxes ........................................................................ 5 Section 5.7. No Default .......................................................................... 5 Section 5.8. Sanderson Farms, Inc. Stock Ownership ............................................... 5 Section 5.9. Enforceability ...................................................................... 5 SECTION 6. CONDITIONS PRECEDENT ................................................................ 5 Section 6.1. Before Initial Extension of Credit .................................................. 5 Section 6.2. Before Extension of Credit .......................................................... 6 SECTION 7. COVENANTS ........................................................................... 6 Section 7.1. Use of Proceeds ..................................................................... 7 Section 7.2. Financial Information ............................................................... 7
Section 7.3. Other Debts ......................................................................... 7 Section 7.4. Other Liens ......................................................................... 7 Section 7.5. Notices to Bank ..................................................................... 8 Section 7.6. Compliance with Laws ................................................................ 8 Section 7.7. Perfection of Liens ................................................................. 8 Section 7.8. Cooperation ......................................................................... 8 Section 7.9. Disposition of Assets ............................................................... 8 Section 7.10. Termination ......................................................................... 9 Section 7.11. Income Taxes ........................................................................ 9 SECTION 8. EVENTS OF DEFAULT AND REMEDIES ...................................................... 9 Section 8.1. Definitions ......................................................................... 9 Section 8.2. Remedies for Non-Bankruptcy Defaults ................................................ 11 Section 8.3. Remedies for Bankruptcy Defaults .................................................... 11 SECTION 9. MISCELLANEOUS ....................................................................... 11 Section 9.1. Amendments and Waivers .............................................................. 11 Section 9.2. Waiver of Rights .................................................................... 11 Section 9.3. Documentary Taxes ................................................................... 11 Section 9.4. Representations ..................................................................... 11 Section 9.5. Notices ............................................................................. 12 Section 9.6. Costs and Expenses .................................................................. 12 Section 9.7. Counterparts ........................................................................ 12 Section 9.8. Successors and Assigns; Governing Law; Entire Agreement ............................. 12 Section 9.9. No Joint Venture .................................................................... 12 Section 9.10. Severability ........................................................................ 13 Section 9.11. Table of Contents and Headings ...................................................... 13 Section 9.12. Waiver of Jury Trial ................................................................ 13 Section 9.13. Confidentiality ..................................................................... 13 Section 9.14. Adjustment of Number of Shares ...................................................... 13 Section 9.15. Borrower ............................................................................ 13 Signature Page ............................................................................................. 14
Exhibit A Term Loan Note Exhibit B Repayment Schedule -ii- ROBERT BUCK SANDERSON AND HUGH VIRDEN SANDERSON, NOT INDIVIDUALLY BUT SOLELY AS CO-EXECUTORS OF THE ESTATE OF DEWEY R. SANDERSON, JR., DECEASED CREDIT AGREEMENT The undersigned, ROBERT BUCK SANDERSON AND HUGH VIRDEN SANDERSON, not individually but solely as co-executors of the estate of Dewey R. Sanderson, Jr. Deceased (the "Borrower"), applies to you UNION PLANTERS BANK, NATIONAL ASSOCIATION (hereinafter the "Bank") for your commitment, subject to all the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, to make a term credit (the "Term Credit") available to the Borrower, all as more fully hereinafter set forth. SECTION 1. THE CREDIT. Section 1.1. The Term Credit. (a) Subject to all of the terms and conditions hereof, the Bank agrees to make a term loan (the"Term Loan") to the Borrower during the period commencing on the date of this Agreement and ending on September 15, 2000, at which time the Term Credit Commitment shall expire, time being of the essence. Only one borrowing may be made under the Term Credit Commitments and any part of the Term Credit Commitments not borrowed shall automatically terminate on the date the Borrower obtains any Term Loans hereunder. Section 1.2. The Term Note. The Term Loan made by the Bank shall be evidenced by a Term Note of the Borrower substantially in the form of Exhibit A hereto (the "Term Note" or "Note") payable to the order of the Bank in the principal amount of such Term Loan. Each Term Note shall be expressed to mature in eight (8) quarterly installments of principal commencing on October 31, 2003, and continuing on the last day of each February, May, August and October thereafter to and including August 31, 2005, with each such installment to be in accordance with the Repayment Schedule attached hereto as Exhibit B. Section 1.3. Interest Rates. The Term Loan shall bear interest (computed on the basis of a year of 365 days and actual days elapsed) payable in twenty (20) quarterly installments commencing on October 31, 2000, and continuing on the last day of each February, May, August and October thereafter to and including August 31, 2005, at a rate per annum equal to 8.09% per annum, simple interest. SECTION 2. COLLATERAL. Section 2.1. Borrower's Obligations. The Borrower's obligations to the Bank under this Agreement and the other Loan Documents will be secured by the shares of the common stock (the "Securities") of Sanderson Farms, Inc. referred to in the Pledge Agreement, dated the date hereof (the "Pledge Agreement"), between the Borrower and the Bank (the "Pledged Shares") and may also be secured by cash or cash equivalents pursuant to the terms of a Security Agreement by the Borrower in favor of the Bank, executed at the time of delivery of such cash or cash equivalents and any other collateral security mutually acceptable to the Borrower and the Bank. Section 2.2. Under Margin - Additional Pledge. If for any reason, including a decline in the Market Value of the Securities, the ratio (the "Loan-to-Value Ratio") of (i) the remainder of (x) the unpaid principal amount of the Term Loans, minus (y) the amount of any Cash Collateral provided to the Bank and securing the obligations of the Borrower with respect to the principal of the Term Loan, to (ii) the Market Value of the Securities, exceeds 70%, the Borrower will notify the Bank that the Borrower is under margin. Within five Business Days of the giving of any such notice to the Bank (or within five Business Days of Bank notifying Borrower that Borrower is under margin), the Borrower will cause the Loan-to-Value Ratio to be reduced to 60% by either (i) with the consent of the Bank, making a payment on the Term Loan in the amount of the shortfall, or (ii) pledging additional Collateral that is acceptable to the Bank in its sole discretion exercised in a commercially reasonable manner. It is acknowledged by the Bank that the common stock of Sanderson Farms, Inc. and cash or cash equivalents are acceptable Collateral and, to the extent pledged as additional collateral, shall become Pledged Shares. "Market Value" means, to the extent quotations are available, the closing sale price of the Securities on the preceding Business Day as appearing on any regularly published reporting or quotation service or, if there is no closing sale price, any reasonable estimate used by the Borrower or the Bank in accordance with sound banking practices. Section 2.3. Application of Cash Collateral. In the event that at any time the Borrower has provided to the Bank Cash Collateral for the Term Loans, as provided in Sections 2.2 and 7.10, provided that no Event of Default has occurred and is continuing and that after giving effect to any such application the 70% Loan to Value Ratio required by Section 2.2 is maintained, upon the request of the Borrower the Bank will permit the application of such Cash Collateral to regularly scheduled principal installments of the Term Loan or to the principal or interest installments or payments on the Term Loan, as the case may be. SECTION 3. PREPAYMENTS, TERMINATIONS AND PLACE AND APPLICATION OF PAYMENTS. Section 3.1. Prepayment Prohibited. (a) The Borrower may not prepay the outstanding principal amount of the Term Note in full or in part. (b) Prepayment Fee. In the event that the Borrower prepays the Term Note in violation of subsection (a) above for any reason, such prepayment will be accompanied by payment of all accrued interest on the amount prepaid, plus an amount equal to the amount of interest that would have otherwise been paid on that portion of the Term Note so prepaid through and including August 31, 2005. Such interest rate shall not be less than the interest rate specified in Section 1.3 above. Section 3.2. Place and Application of Payments. All payments of principal and interest made by the Borrower in respect of the Note and all fees payable by the Borrower hereunder, -2- shall be made to the Bank at its office at 110 S. 40th Avenue, Hattiesburg, Mississippi 39402 in immediately available funds, prior to 12:00 noon on the date of such payment. Any payments received after 12:00 noon Hattiesburg time (or after such later time as the Bank may otherwise direct) shall be deemed received upon the following Business Day. The Borrower hereby authorizes the Bank to automatically debit its account with Bank for any principal, interest and fees when due under the Notes or this Agreement and to transfer the amount so debited from such account to the Bank for application as herein provided, but the Bank shall give prompt telephonic notice thereof to the Borrower. SECTION 4. DEFINITIONS. The terms hereinafter set forth when used herein shall have the following meanings: "Agreement" shall mean this Credit Agreement as supplemented and amended from time to time. "Bank" shall have the meaning specified in the first paragraph of this Agreement. "Banking Day" shall mean a day on which banks are open for business in Hattiesburg, Mississippi, other than a Saturday or Sunday. "Borrower" shall have the meaning specified in the first paragraph of this Agreement. "Business Day" shall mean any day except Saturday or Sunday on which banks are open for business in Hattiesburg, Mississippi. "Cash Collateral" shall mean cash or cash equivalents in which the Borrower has granted to the Bank a first priority security interest as Collateral for the Term Loans. "Collateral" shall mean any and all collateral security for the Borrower's indebtedness, obligations and liabilities to the Bank under this Agreement and the other Loan Documents. "Estate" means the estate of Dewey R. Sanderson, Jr., deceased. "Event of Default" shall mean any event or condition identified as such in Section 8.1 hereof. "Loan Documents" shall mean this Agreement and any and all exhibits hereto, the Term Note and the Pledge Agreement. "Note" shall have the meaning specified in Section 1.2. "Person" shall mean and include any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, entity, party or government (whether national, federal, state, county, city, municipal, or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof). -3- "Pledge Agreement" shall have the meaning specified in Section 2.1. "Potential Default" shall mean any event or condition which, with the lapse of time, or giving of notice, or both, would constitute an Event of Default. "Property" shall mean all assets and properties of any nature whatsoever, whether real or personal, tangible or intangible. "Term Loan" shall have the meaning specified in Section 1.1(a) hereof. "Term Note" shall have the meaning specified in Section 1.2 hereof. SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Bank as follows: Section 5.1. Authority; No Conflict. The Borrower has full right, power and authority, including the necessary authorization and approval from the Chancery Court of the Second Judicial District of Jones County, Mississippi, to enter into this Agreement and the other Loan Documents, make the borrowings herein provided for and encumber its assets as collateral security therefor, to execute and issue the Note in evidence thereof, and to perform its obligations under the Loan Documents; and the Borrower's execution of this Agreement and the other Loan Documents does not, nor does the performance or observance by the Borrower of any of the matters or things provided for in this Agreement and the other Loan Documents, contravene any provision of law or any covenant, indenture or agreement of or judgment, order or decree applicable to or affecting the Borrower or any of its Property. Section 5.2. Financial Information. The financial and other information heretofore delivered to the Bank, including the Borrower's financial statements as of July 31, 2000, is sufficiently complete to give the Bank accurate knowledge of the Borrower's financial condition, including all material contingent liabilities, and is in compliance with all applicable government regulations and requirements. Since said date of July 31, 2000 there has, through the date of this Agreement, been no material adverse change in the Borrower's financial condition or its ability to repay the Term Loan, other than any change that may have resulted from a change in the market value of the common stock of Sanderson Farms, Inc. Section 5.3. Litigation. Except as otherwise disclosed to the Bank in writing prior to the date hereof, there is no known litigation, or governmental proceeding pending, nor to the best knowledge of the Borrower threatened, against the Borrower which, if adversely determined could reasonably be expected to result in any material adverse change in the financial condition of the Borrower or to impair the Borrower's ability to repay the Term Loans. The Bank acknowledges that the Borrower has disclosed that inchoate liens may exist against the Borrower's Property for state and federal estate taxes until such taxes are paid. Section 5.4. Collateral. All Collateral required by this Agreement is owned by the Borrower free of any title defects or any liens or interests of others, except as disclosed in writing -4- to the Bank. It is acknowledged by the Bank that the Borrower has disclosed to the Bank that inchoate liens may exist against the property of the Borrower for state and Federal estate taxes until such taxes are paid. Section 5.5. Other Obligations. As of the date of this Agreement, the Borrower is not in default on any obligations for borrowed money, any purchase money obligation or any material lease, commitment, contract, instrument or obligation. Section 5.6. Income Taxes. As of the date of this Agreement, (a) the Borrower has filed (or has obtained extension of the due date from the applicable authorities) all tax returns required to be filed and has paid, or made adequate provisions for the payment of, all taxes due and payable pursuant to such returns and pursuant to any assessments made against the Borrower or any of the Borrower's Property, (b) no tax liens have been filed and no material claims are being asserted with respect to any such taxes, and (c) the Borrower is not aware of any proposed assessment or adjustment for additional taxes (or any basis for any such assessment) which might be material to the Borrower. Section 5.7. No Default. No Potential Default or Event of Default is existing under this Agreement. Section 5.8. Sanderson Farms, Inc. Stock Ownership. As of the date of this Agreement, the Borrower owns not less than 3,268,482 shares of the common stock of Sanderson Farms, Inc. Section 5.9. Enforceability. This Agreement and the other Loan Documents are the legal, valid and binding agreements of the Borrower, enforceable against it in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws or judicial decisions for the relief of debtors or the limitation of creditors' rights generally; and any equitable principles relating to or limiting the rights of creditors generally or any equitable remedy which may be granted to cure any defaults. SECTION 6. CONDITIONS PRECEDENT. The obligation of the Bank to make any Term Loan pursuant hereto shall be subject to the following conditions precedent: Section 6.1. Before Extension of Credit. Prior to making the Term Loan hereunder, the Borrower shall have delivered to the Bank: (a) the Term Note; (b) the Pledge Agreement providing for the pledge by the Borrower to the Bank of 1,703,364 shares of the common stock of Sanderson Farms, Inc., together with stock certificates representing such shares and undated blank stock powers therefor; -5- (c) a Security Agreement providing for the grant of a security interest by the Borrower to the Bank in any money market account or accounts or certificates of deposit of the Borrower described therein; (d) evidence that the execution and delivery and performance by the Borrower of this Agreement and the other Loan Documents have been duly authorized; (e) evidence that security interests and liens in favor of the Bank are valid, enforceable, and prior to all others' rights and interests, except those the Bank consents to in writing; (f) a certificate of the co-executors of the Borrower concerning such matters as the Bank may reasonably require, together with a copy of the evidence of the appointment and authority of the co-executors of the Borrower; (g) a written opinion from the Borrower's legal counsel, Wise Carter Child & Caraway, Professional Association, covering such matters as the Bank may require, the terms of the opinion to be acceptable to the Bank; (h) Federal Reserve Form U-1 executed by the Borrower; (i) an order from the Chancery Court of the Second Judicial District of Jones County, Mississippi (a) authorizing the Term Loan, and (b) finding that the Term Loan were necessarily incurred in the administration of the Estate of Dewey R. Sanderson, Jr., Deceased; and (j) any other items that the Bank reasonably require. Section 6.2. Extension of Credit. As of the time of the making of the Term Loan hereunder: (a) each of the representations and warranties set forth in Section 5 hereof shall have been true and correct in all material respects; and (b) after giving effect to the Borrower's application of the proceeds of the Term Loan hereunder, no Potential Default or Event of Default shall have occurred and be continuing; and the request by the Borrower for any Term Loan pursuant hereto shall be and constitute a warranty to the foregoing effects. SECTION 7. COVENANTS. It is understood and agreed that so long as credit is in use or available under this Agreement or any amount remains unpaid on any Note, except to the extent compliance in any case or cases is waived in writing by the Bank: -6- Section 7.1. Use of Proceeds. The Borrower shall use the proceeds of the Term Loan only to pay the Borrower's federal and state estate tax obligations. Section 7.2. Financial Information. The Borrower shall provide the following financial information and statements in form and content acceptable to the Bank and such additional information as reasonably requested by the Bank from time to time: (a) The Borrower's annual audited financial statements in form reasonably satisfactory to the Bank by February 15 of each year; (b) The Borrower's quarterly financial statements in form reasonably satisfactory to the Bank within 30 days after the end of each calendar quarter; (c) Copies of the Borrower's federal income tax return (with all forms K-1 attached), within 30 days of filing, and, if requested by the Bank, copies of any extensions of the filing date; Section 7.3. Other Debts. The Borrower shall not have outstanding or incur any direct or contingent liabilities or lease obligations (other than those under the Loan Documents), or become liable for the liabilities of others, without the Bank's written consent. This does not prohibit: (a) Liabilities for, and debt incurred by the Borrower to pay, estate taxes which are in excess of the amounts currently estimated to be due from the Borrower as disclosed in writing to the Bank and which are due and payable; (b) Liabilities for administration expenses of the Estate (as defined below) including, but not limited to, fees and expenses of attorneys, accountants and other professionals and income and capital gains taxes and liabilities incurred in the ordinary course in connection with the maintenance or sale of the assets of the Estate; (c) Liabilities for income taxes which are not yet due and payable; (d) Contingent liabilities permitted by this Agreement; and Section 7.4. Other Liens. The Borrower shall not create, assume, or allow any security interest or lien (including judicial liens) on Property the Borrower now or later owns, except: (a) Mortgages or deeds of trust and security agreements in favor of the Bank; (b) Liens for state and federal estate taxes and income taxes not yet due; (c) Liens on assets of the Borrower which are not subject to a security interest in favor of the Bank and which secure indebtedness permitted by Section 7.4; -7- (d) Liens arising by operation of law, which liens and/or the obligation secured thereby are being contested by the Borrower in good faith by proper legal actions or proceedings, and as to which the Borrower has given the Bank written notice of its intention to contest such lien and/or obligation and at the time of commencement of any such action or proceeding, and during the pendency thereof (i) no Event of Default shall have occurred and be continuing, (ii) adequate reserves with respect to the obligation which such lien secures are maintained on the books of the Borrower, (iii) such contest operates to suspend collection of the obligation such lien secures and such contest is maintained and prosecuted continuously with diligence, (iv) none of the Collateral for the Term Loan would be subject to forfeiture or loss of the security interest in favor of the Bank by reason of the institution or prosecution of such contest, and (v) the Borrower promptly pays or discharges the obligation secured by such lien, and provides to the Bank evidence thereof satisfactory to the Bank, if such contest is terminated or discontinued adversely to the Borrower; and Section 7.5. Notices to Bank. The Borrower shall promptly notify the Bank in writing of: (a) any lawsuits which in the aggregate seek over $500,000 against the Borrower or any of the Borrower's Property; (b) any substantial dispute between the Borrower and any government authority; (c) any Potential Default or Event of Default; and (d) any material adverse change in the Borrower's financial condition (other than any such change that results from a decrease in the market value of common stock of Sanderson Farms, Inc. unless such notice is otherwise required by the terms of this Agreement). Section 7.6. Compliance with Laws. The Borrower shall comply with the laws, regulations, and orders of any government body with authority over the Borrower. Section 7.7. Perfection of Liens. The Borrower shall help the Bank perfect and protect its security interests and liens, and reimburse it for related reasonable out-of-pocket expenses and reasonable fees of outside counsel it incurs to protect its security interests and liens. Section 7.8. Cooperation. The Borrower shall take any action reasonably requested by the Bank to carry out the intent of this Agreement. Section 7.9. Disposition of Assets. The Borrower shall not, without the prior written consent of the Bank, distribute, transfer, dispose or utilize dividends paid with respect to the Pledged Shares; provided, however, that the Borrower may utilize dividends received on the Pledged Shares to pay expenses of the Estate -8- including the principal of and interest on the Term Loan, income tax obligations, professional fees and expenses and other customary fees and expenses incurred in connection with the administration of the Estate, including, but not limited to, fees and expenses of attorneys, accountants and other professionals and income and capital gains taxes and liabilities incurred in the ordinary course in connection with the maintenance or sale of the assets of the Estate. The sale or disposition of shares of Sanderson Farms, Inc. common stock which are not Pledged Shares is not restricted by this Agreement. Furthermore, the provisions of this Section 7.9 are not intended to and do not prohibit the Borrower from selling the Pledged Shares provided that (i) at the time of such sale no Event of Default has occurred and is continuing (unless permitted by the Bank), (ii) such sale is effected in a manner reasonably acceptable to the Bank which provides for an uninterrupted security interest in favor of the Bank in the stock to be sold and following the sale, the proceeds thereof net of any commissions payable in connection with such sale and all state and federal taxes payable as a result of such sale, and (iii) after giving effect to such sale the Loan to Value Ratio shall not exceed 70%. The provisions of this Section 7.9 are not intended to and do not prohibit the Borrower from paying liabilities of the Estate permitted by this Agreement from the assets of the Estate which are not serving as Collateral for the Term Loan. The provisions of this Section are not intended to and do not prohibit liens permitted by Section 7.4. Section 7.10. Termination. The Borrower shall not close the Estate until the indebtedness evidenced by the Term Loans has been paid off in full. Section 7.11. Income Taxes. The Borrower will file (or obtain extension of the due date from the applicable authorities) all tax returns required to be filed and pay, or make adequate provisions for the payment of, all taxes due and payable pursuant to such returns and pursuant to any assessments made against the Borrower or any of the Borrower's property. SECTION 8. EVENTS OF DEFAULT AND REMEDIES. Section 8.1. Definitions. Any one or more of the following shall constitute an Event of Default: (a) (i) Default in the payment when due of any principal of any Note, whether at the stated maturity thereof or at any other time provided in this Agreement, or (ii) default in the payment when due of any interest on any Note and the continuation of such default for 5 Business Days, or (iii) default in the payment of any fee or other amount payable by the Borrower pursuant to this Agreement within 5 Business Days after the Borrower receives an invoice therefor; (b) Default in the observance or performance of any covenant, condition, agreement or provision hereof or any of the other Loan Documents and such default shall continue for 30 days after written notice thereof to the Borrower by any Bank; -9- (c) Default shall occur under any evidence of indebtedness for borrowed money in an aggregate principal amount exceeding $100,000 issued or assumed or guaranteed by the Borrower, or under any mortgage, agreement or other similar instrument under which the same may be issued or secured and such default shall continue for a period of time sufficient to permit the acceleration of maturity of the indebtedness evidenced thereby or outstanding or secured thereunder; (d) Any representation or warranty made by the Borrower herein or in any Loan Document or in any written statement or certificate furnished by it pursuant hereto or thereto after the date of this Agreement, proves untrue in any material respect as of the date made or deemed made pursuant to the terms hereof; (f) Any judgment or judgments, writ or writs, or warrant or warrants of attachment, or any similar process or processes which order the payment of money in excess of $500,000 over and above any insurance proceeds payable with respect thereto shall be entered or filed against the Borrower or any of its Property or assets and remain unstayed and undischarged for a period of 30 days from the date of its entry; (g) The Bank shall for any reason fail to have a perfected first priority security interest in any of the Collateral; (h) A material adverse change occurs, or is likely to occur, in the Borrower's ability to repay the Term Loan when due; (i) The Borrower shall (i) have entered involuntarily against it an order for relief under the Bankruptcy Code of 1978, as amended, and such order is not dismissed within 60 days thereafter, (ii) admit in writing its inability to pay, or not pay, its debts generally as they become due or suspend payment of its obligations, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, conservator, liquidator or similar official for it or any substantial part of its property, (v) file a petition seeking relief or institute any proceeding seeking to have entered against it an order for relief under the Bankruptcy Code of 1978, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, or (vi) fail to contest in good faith any appointment or proceeding described in Section 8.1(j) hereof; or (j) A custodian, receiver, trustee, conservator, liquidator or similar official shall be appointed for the Borrower or any substantial part of the Property of the Borrower, or a proceeding described in Section 8.1(i) (v) shall be instituted against the Borrower and such appointment continues undischarged or any such proceeding continues undismissed or unstayed for a period of 60 days. -10- Section 8.2. Remedies for Non-Bankruptcy Defaults. Section 8.2 Remedies for Non-Bankruptcy Defaults. When any Event of Default, other than an Event of Default described in subsections (i) and (j) of Section 8.1 hereof, has occurred and is continuing, the Bank shall give notice to the Borrower and take any or all of the following actions: (i) terminate the remaining Term Credit Commitments on the date (which may be the date thereof) stated in such notice, (ii) declare the principal of and the accrued interest on the Note to be forthwith due and payable and thereupon the Note (including both principal and interest, plus an amount equal to the amount of interest that would have otherwise been paid on the portion of the Note in default through and including August 31, 2005) shall be and become immediately due and payable without further demand, presentment, protest of notice of any kind, and (iii) take any action or exercise any remedy under any of the Loan Documents or exercise any other action, right, power or remedy permitted by law. The Bank may exercise the right of set-off with regard to any deposit accounts or other accounts maintained by the Borrower with the Bank, and the Borrower's indebtedness hereunder shall be satisfied to the extent of any amount set-off against such indebtedness. Section 8.3. Remedies for Bankruptcy Defaults. When any Event of Default described in subsections (i) or (j) of Section 8.1 hereof has occurred and is continuing, then the Note shall immediately become due and payable without presentment, demand, protest or notice of any kind, and the obligation of the Bank to extend further credit pursuant to any of the terms hereof shall immediately terminate. In such event the amount set forth in Section 3.1(b) shall also be immediately due and payable without presentment, demand, protest or notice of any kind. SECTION 9. MISCELLANEOUS Section 9.1. Amendments and Waivers. Any term, covenant, agreement or condition of this Agreement may be amended only by a written amendment executed by the Borrower and Bank. No such amendment or waiver shall extend to or affect any obligation not expressly amended or waived. Section 9.2. Waiver of Rights. No delay or failure on the part of the Bank or on the part of the holder or holders of any Note in the exercise of any power or right shall operate as a waiver thereof, nor as an acquiescence in any Potential Default or Event of Default, nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof, or the exercise of any other power or right, and the rights and remedies hereunder of the Bank and of the holder or holders of any Notes are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have. Section 9.3. Documentary Taxes. Although the Borrower is of the opinion that no documentary or similar taxes are payable in respect to this Agreement or the Notes, the Borrower agrees that it will pay such taxes, including interest and penalties, in the event any such taxes are assessed irrespective of when such assessment is made and whether or not any credit is then in use or available hereunder. Section 9.4. Representations. All representations and warranties made herein or in certificates given pursuant hereto shall survive the execution and delivery of this Agreement and -11- of the Notes, and shall continue in full force and effect with respect to the date as of which they were made and as reaffirmed on the date of each borrowing (as and to the extent provided in Section 6.2 hereof) and as long as any credit is in use or available hereunder. Section 9.5. Notices. Unless otherwise expressly provided herein, all communications provided for herein shall be in writing or by telex and shall be deemed to have been given or made when served personally, when an answer back is received in the case of notice by telex, or 2 days after the date when deposited in the United States mail (registered, if to the Borrower) addressed if to the Borrower at 225 North 13th Avenue, Laurel, Mississippi 39440; if to the Bank at 110 S. 40th Avenue Hattiesburg, MS 39402; or at such other address as shall be designated by any party hereto in a written notice to each other party pursuant to this Section 9.5. Section 9.6. Costs and Expenses. The Borrower agrees to pay on demand all customary and reasonable out-of-pocket costs and expenses of the Bank in connection with the negotiation, preparation, execution and delivery of this Agreement, the other Loan Documents and the other instruments and documents to be delivered hereunder or in connection with the transactions contemplated hereby (unless otherwise expressly limited herein); all reasonable out-of-pocket costs and expenses of the Bank (including in each case reasonable attorneys' fees and expenses) incurred in connection with any consents or waivers hereunder or amendments hereto in each case requested by the Borrower, and all reasonable out-of-pocket costs and expenses (including reasonable attorneys' fees and expenses), if any, incurred by the Bank or any other holders of a Note in connection with the enforcement against the Borrower of this Agreement or the other Loan Documents and the other instruments and documents to be delivered hereunder. The provisions of this Section shall survive payment of the Note and the termination of the Bank's Term Credit Commitments hereunder. Section 9.7. Counterparts. This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same instrument. This Agreement shall become effective as and when the Bank and the Borrower have executed this Agreement or a counterpart thereof. Section 9.8. Successors and Assigns; Governing Law; Entire Agreement. This Agreement shall be binding upon each of the Borrower and the Bank and their respective successors and assigns, and shall inure to the benefit of the Borrower and of the Bank and the benefit of their respective successors and assigns, including any subsequent holder of any Note. This Agreement and the rights and duties of the parties hereto shall be construed and determined in accordance with the laws of the State of Mississippi, without regard to Mississippi conflict of laws principles. This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby. The Borrower may not assign any of its rights or obligations hereunder without the written consent of the Bank. Section 9.9. No Joint Venture. Nothing contained in this Agreement shall be deemed to create a partnership or joint venture among the parties hereto. -12- Section 9.10. Severability. In the event that any term or provision hereof is determined to be unenforceable or illegal, it shall be deemed severed herefrom to the extent of the illegality and/or unenforceability and all other provisions hereof shall remain in full force and effect. Section 9.11. Table of Contents and Headings. The table of contents and section headings in this Agreement are for reference only and shall not affect the construction of any provision hereof. Section 9.12. Waiver of Jury Trial. THE BORROWER AND THE BANK HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATIVE TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. Section 9.13. Confidentiality. The Bank will keep confidential any non-public information concerning the Borrower furnished by the Borrower (which is designated by the Borrower as confidential at the time such information is furnished to the Bank or is actually known by such Bank to be confidential), except that any Bank may disclose such information (a) to regulatory authorities having jurisdiction, (b) pursuant to subpoena or other legal process, (c) to such Bank's counsel and auditors in connection with matters concerning this Agreement, (d) to such Bank's consultants in connection with negotiations concerning this Agreement or the other Loan Documents and (e) to prospective participants or assignees in the Loans and participants and assignees in the Loan, provided that any Persons described in clauses (d) and (e) shall first agree to be bound to comply with the terms of this Section to the same extent as if it were the Bank. In the situations described above (except where the Borrower is a party), the Bank shall notify the Borrower as promptly as practicable of the receipt of a request for such disclosure and furnish it with a copy of such subpoena or other legal process (to the extent the Bank is legally permitted to do so). The provisions of this Section shall survive the payment of the Note and the termination of this Agreement. Section 9.14. Adjustment of Number of Shares. The number of shares of Sanderson Farms, Inc. common stock designated in Section 5.8 of this Agreement shall be automatically adjusted to give effect to any stock split or similar event. Section 9.15. Borrower. The Loan Documents are obligations of the Borrower, and do not constitute personal obligations of the Co-Executors in their individual capacities, and are enforceable solely against the assets of the Borrower and not the personal assets of the Co-Executors in their individual capacities. Upon your acceptance hereof in the manner hereinafter set forth, this Agreement shall be a contract between us for the purposes hereinabove set forth. -13- Dated as of September __, 2000. /s/Robert Buck Sanderson ROBERT BUCK SANDERSON, CO-EXECUTOR /S/HUGH VIRDEN SANDERSON HUGH VIRDEN SANDERSON CO-EXECUTOR AS CO-EXECUTORS OF THE ESTATE OF DEWEY R. SANDERSON, JR., DECEASED, AND NOT IN THEIR INDIVIDUAL CAPACITIES Accepted and Agreed to as of the day and year last above written. UNION PLANTERS BANK, NATIONAL ASSOCIATION BY: /s/ John C. Howell ITS: Regional Senior Lender -14- EXHIBIT A TERM NOTE $6,148,050 September __, 2000 FOR VALUE RECEIVED, the undersigned, Robert Buck Sanderson and Hugh Virden Sanderson, not individually but solely as co-executors of the estate of Dewey R. Sanderson, Jr., deceased (the "Borrower"), promises to pay to the order of Union Planters Bank, National Association (the "Lender"), at the principal office of 110 S. 40th Avenue, Hattiesburg, Mississippi, the principal sum of Six Million One Hundred Forty-Eight Thousand Fifty Dollars ($6,148,050), in eight (8) consecutive quarterly installments, payable on the dates and in the amounts specified in the Credit Agreement referred to below, together with interest on the principal amount of the principal indebtedness payable in twenty (20) consecutive quarterly installments payable on the dates and in the amount specified in the Credit Agreement. This Note evidences a Term Loan, as such term is defined in that certain Credit Agreement dated as of September ___, 2000, by and among the Borrower and Bank, (the "Credit Agreement"). The Borrower may not prepay the outstanding principal amount of this Note in full or in part at any time. This Note is issued by the Borrower under the terms and provisions of the Credit Agreement and this Note and the holder are entitled to all of the benefits and security provided for thereby or referred to therein. This Note may be declared to be, or be and become, due prior to its expressed maturity upon the occurrence of an event of default specified in the Credit Agreement. This Note is governed by and shall be construed in accordance with the internal laws of the State of Mississippi. The Borrower hereby waives presentment for payment and demand. -15- /S/ROBERT BUCK SANDERSON, CO-EXECUTOR /S/ HUGH VIRDEN SANDERSON, CO-EXECUTOR AS CO-EXECUTORS OF THE ESTATE OF DEWEY R. SANDERSON, JR., DECEASED -16- EXHIBIT B ESTATE OF DEWEY R. SANDERSON, JR. REPAYMENT SCHEDULE
PAYMENT DATE INTEREST PRINCIPAL - ------------ -------- --------- Oct. 31, 2000 80,398 Feb. 28, 2001 167,441 May 31, 2001 124,343 Aug. 31, 2001 124,343 Oct. 31, 2001 83,122 Feb. 28, 2002 166,050 May 31, 2002 124,343 Aug. 31, 2002 124,343 Oct. 31, 2002 83,123 Feb. 28, 2003 166,050 May 31, 2003 124,343 Aug. 31, 2003 124,343 Oct. 31, 2003 81,760 756,555 Feb. 28, 2004 143,178 695,137 May 31, 2004 96,045 742,271 Aug. 31, 2004 79,971 758,345 Oct. 31, 2004 43,207 795,109 Feb. 28, 2005 64,837 773,479 May 31, 2005 32,908 805,407 Aug. 31, 2005 16,619 821,697
-17- EX-2 4 g83753exv2.txt EX-2 PLEDGE AGREEMENT 9/02/00 EXHIBIT 2 PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (THE "AGREEMENT") DATED AS OF SEPTEMBER 2, 2000 BY AND BETWEEN ROBERT BUCK SANDERSON AND HUGH VIRDEN SANDERSON, NOT INDIVIDUALLY BUT SOLELY AS CO-EXECUTORS, OF THE ESTATE OF DEWEY R. SANDERSON, JR. DECEASED (THE "PLEDGOR"), AND UNION PLANTERS BANK, NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION (THE "LENDER"); WITNESSETH THAT: WHEREAS, the Pledgor and the Lender, have entered into a Credit Agreement dated as of September __, 2000 (such Credit Agreement as the same may be amended, modified or restated from time to time being hereinafter referred to as the "Credit Agreement"), pursuant to which such Lender has agreed, subject to certain terms and conditions, to extend a term credit facility to the Pledgor NOW, THEREFORE, in order to induce Lender to make loans and advances to Pledgor pursuant to the Credit Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: SECTION 1. PLEDGE. Pledgor hereby pledges, hypothecates, assigns, transfers, sets over and delivers unto the Lender, and grants Lender, a security interest in, (a) the securities described in Schedule A, (b) all securities, rights and other property described in Section 2(b)(2), (c) each certificate or other instrument representing any of the foregoing, (d) all privileges and preferences appertaining or incidental to any or all of the foregoing, (e) all monies of every kind and nature payable in respect of any or all of the foregoing, and (f) the proceeds of the foregoing, (collectively, the "Collateral"), in order to secure all indebtedness, obligations and liabilities, whether now existing or hereafter arising, absolute or contingent, of Pledgor to the Lender hereunder and under the Credit Agreement (the "Obligations"). Pledgor may, from time to time, cause additional securities to be included as part of the Collateral by delivering to Lender a Pledge Amendment, duly executed by Pledgor, in substantially the form of Schedule B (a "Pledge Amendment"), in respect of the additional securities which are to be pledged. Pledgor hereby authorizes Lender to attach each such Pledge Amendment to this Agreement and agrees that all securities listed on any Pledge Amendment delivered to Lender shall for all purposes hereunder be considered Collateral. SECTION 2. POWER OF ATTORNEY; REGISTRATION; INCOME AND VOTING RIGHTS. (a) Pledgor hereby irrevocably appoints Lender Pledgor's attorney, coupled with an interest, with full power of substitution, (1) for purposes not inconsistent with this Agreement, to arrange for the transfer of the Collateral or any part thereof into the name of Lender or into the name of Lender's nominee, if, at any time, Lender shall, in its sole discretion, deem such a transfer to be desirable, and (2) for the purpose of taking any action and executing any instrument, in the name of Pledgor or otherwise, which Lender may at any time deem necessary or appropriate in order to (i) perfect its security interest in the Collateral or any part thereof, and/or (ii) foreclosure of said security interest or otherwise exercise its rights under this Agreement and in and to the Collateral. (b) As long as no Default, as hereinafter defined, and no event which with the giving of notice or the lapse of time or both would constitute such a Default, shall have occurred and be continuing: (1) Pledgor shall be entitled to exercise any and all voting and/or consensual rights and powers relating or pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement. (2) Pledgor shall, unless otherwise prohibited, be entitled to receive and retain any and all dividends and interest on the Collateral, but, except as otherwise provided in the Credit Agreement, any and all other cash and other property received in payment of the principal of or in redemption of or in exchange for any of the Collateral (either at maturity or otherwise), shall be and become part of the Collateral pledged hereunder and, if received by Pledgor, shall be held in trust for the benefit of Lender and shall forthwith be delivered to Lender or its designated nominee (accompanied by proper instruments of assignment and/or stock or bond powers executed by Pledgor in accordance with Lender's instructions) to be held subject to the terms of this Agreement. (3) Lender shall execute and deliver (or cause to be executed and delivered) to Pledgor all of such proxies, powers of attorney, interest coupons and other papers as Pledgor may request for the purpose of enabling Pledgor to exercise the voting and/or consensual rights and powers which Pledgor is entitled to exercise pursuant to (1) above -2- and/or to receive the interest which Pledgor is authorized to receive and retain pursuant to (2) above. (c) Upon the occurrence and during the continuance of a Default hereunder, or any event which with the giving of notice or the lapse of time, or both, would constitute such a Default, all rights of Pledgor to exercise the voting and/or consensual rights and powers which Pledgor is entitled to exercise pursuant to (b)(1) hereof and/or to receive the dividends and interest which Pledgor is authorized to receive and retain pursuant to (b)(2) hereof shall cease, and all such rights shall thereupon become vested in Lender; provided, however, that Lender, as the sole further condition to the vesting pursuant to this (c) of such voting and/or consensual rights and powers of Lender, shall notify Pledgor in writing that Lender elects to exercise such rights and powers, and Lender shall have the sole and exclusive right and authority to exercise such voting and/or consensual rights and powers and/or to receive and retain the dividends and interest which Pledgor would otherwise be authorized to retain pursuant to (b)(2) hereof. (d) Any and all money and other property paid over to or received by Lender pursuant to the provisions of (c) above shall be retained by Lender as additional Collateral under, and be applied in accordance with, the provisions of this Agreement and the Credit Agreement. SECTION 3. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants that: (a) All stock constituting Collateral is duly authorized, validly issued and outstanding, and non-assessable, and Pledgor will warrant and defend Pledgor's title thereto and sole beneficial ownership thereof against all persons claiming any interest therein except Lender or any person claiming through Lender. (b) Except for restrictions imposed by this Agreement and restrictions on public offerings and sales of securities imposed by applicable securities laws of the United States of America, or any state thereof, there are not and will not be any restrictions upon the sale or other disposition of any of the Collateral. (c) None of the Collateral was acquired pursuant to an investment letter or in any other fashion which would restrict free salability or require registration under applicable securities laws of the United States of America, or any state thereof, as a condition for sale of any of the Collateral, other than restrictions that result from Pledgor's status as an "affiliate" of Sanderson Farms, Inc., as such term is defined in Securities and Exchange Commission Rule 144. (d) Except as contemplated by (b) above, Pledgor now has and will have, without obtaining the consent of any governmental authority, stock exchange or any other person except Lender, the right to pledge, to grant a security interest in and otherwise to transfer and to dispose of the Collateral free of any liens, security interests or other encumbrances, and free of any rights or equities in favor of any other persons, except those created by this Agreement. -3- (e) This Agreement is Pledgor's valid and legally binding agreement enforceable in accordance with its terms. SECTION 4. DEFAULTS, ETC. AND REMEDIES. (a) Any of the following shall constitute a "Default" under this Agreement: (a) if any representation or warranty made by Pledgor in this Agreement or in any instrument, document or certificate furnished hereunder or in connection herewith shall prove to have been incorrect in any material respect at the time it was made, (b) if Pledgor fails to observe or perform any of Pledgor's covenants, agreements, obligations and undertakings contained in this Agreement, provided that if, in Lender's opinion, the failure is capable of being remedied, such failure will not be considered a Default under this Agreement for a period of 30 days after the date on which Lender gives written notice of the failure to Pledgor, or (c) if an "Event of Default" occurs under the Credit Agreement. (b) Upon the occurrence of any Default, Lender shall have, in addition to all other rights provided herein or by law, the rights and remedies of a secured creditor under the Uniform Commercial Code as adopted in the State of Mississippi (the "Code") (regardless of whether the Code is the law of the jurisdiction where the rights or remedies are asserted and regardless of whether the Code applies to the affected Collateral), and further Lender may, without demand and without advertisement, notice, hearing or process of law, all of which Pledgor hereby waives, at any time or times, sell and deliver (subject to compliance with applicable securities laws) any or all Collateral held by or for it at public or private sale, at any securities exchange or broker's board or elsewhere, for cash, upon credit or otherwise, at such prices and upon such terms as Lender deems advisable, in its sole discretion. In the exercise of any such remedies, Lender may sell all the Collateral as a unit even though the sales price thereof may be in excess of the amount remaining unpaid on the Obligations. Lender is authorized at any sale or other disposition of the Collateral, if it deems it advisable so to do, to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account for investment, and not with a view to the distribution or resale of any of the Collateral. In addition to all other sums due Lender hereunder, Pledgor shall pay Lender all costs and expenses incurred by Lender, including attorneys' fees and court costs, in obtaining, liquidating or enforcing payment of Collateral or the Obligations or in the prosecution or defense of any action or proceeding by or against Lender or Pledgor concerning any matter arising out of or connected with this Agreement or the Collateral or the Obligations, including, without limitation, any of the foregoing arising in, arising under or related to a case under the United States Bankruptcy Code (or any successor statute). Any requirement of reasonable notice shall be met if such notice is personally served on or mailed, postage prepaid, to Pledgor in accordance with Section 10(c) hereof at least 10 days before the time of sale or other event giving rise to the requirement of such notice; provided however, no notification need be given to Pledgor if Pledgor has signed, after a Default has occurred, a statement renouncing any right to notification of sale or other intended disposition. Lender shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. Lender or a Lender may be the purchaser at any such sale or other disposition of the Collateral or any part thereof. Pledgor hereby waives all of its rights of redemption from any sale or other disposition of the Collateral or any part thereof. Subject to the provisions of applicable law, Lender may postpone or cause the postponement of -4- the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, be made at the time and place to which the sale was postponed or Lender may further postpone such sale by announcement made at such time and place. (c) The powers conferred upon the Lender hereunder are solely to protect its interest in the Collateral and shall not impose on it any duty to exercise such powers. The Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equivalent to that which the Lender accords its own property, consisting of similar type securities, it being understood, however, that the Lender shall have no responsibility for (i) ascertaining or taking any action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Lender has or is deemed to have knowledge of such matters, (ii) taking any necessary steps to preserve rights against any parties with respect to any Collateral, or (iii) initiating any action to protect the Collateral against the possibility of a decline in market value. This Agreement constitutes an assignment of rights only and not an assignment of any duties or obligations of the Pledgor in any way related to the Collateral, and the Lender shall have no duty or obligation to discharge any such duty or obligation. (d) Failure by the Lender to exercise any right, remedy or option under this Agreement or any other agreement between the Pledgor and the Lender or provided by law, or delay by the Lender in exercising the same, shall not operate as a waiver; and no waiver by the Lender shall be effective unless it is in writing and then only to the extent specifically stated. Neither the Lender nor any party acting as attorney for the Lender shall be liable for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct. The rights and remedies of the Lender under this Agreement shall be cumulative and not exclusive of any other right or remedy which the Lender may have. For purposes of this Agreement, a Default shall be construed as continuing after its occurrence until the same is waived in writing by the Lender. SECTION 5. APPLICATION OF PROCEEDS OF SALE, ETC. Upon any exercise of remedies following a Default pursuant to Section 4, the proceeds of any sale or other disposition of, or any collection of or realization on, any of the Collateral, and any cash held by Lender as part of the Collateral hereunder, shall be applied by Lender from time to time to pay: first: all costs, fees and expenses paid by Lender or which Lender has agreed to pay (including all amounts paid by Lender for the account of Pledgor or to Lender's brokers, outside counsel and consultants) in connection with the exercise, protection or enforcement of Lender's rights and remedies under this Agreement and in and to the Collateral, including any and all taxes, assessments, charges and encumbrances of every kind affecting the Collateral prior to the security interest created by this Agreement which Lender may consider necessary or desirable to pay; -5- second: to the payment of the Obligations due the Lender under the Credit Agreement; and third: the excess, if any, shall be paid to Pledgor or to whomever is then legally entitled to receive the same. SECTION 6. DUTY OF PLEDGEE; EXERCISE OF RIGHTS AND REMEDIES. Lender shall have no duty as to the protection of any of the Collateral or any income with respect thereto, nor as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining to any of the Collateral beyond reasonable care in its custody. Upon Default, Lender may exercise its rights and remedies with respect to any of the Collateral without resort or regard to other security or sources of payment for the Pledgor's obligations. SECTION 7. TERMS SUBJECT TO APPLICABLE LAW. All rights, powers and remedies provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable laws, and are intended to be limited to the extent necessary so that they will not render this Agreement invalid, unenforceable or entitled to be recorded, registered or filed under any applicable law. If any term of this Agreement or any application thereof shall be held to be invalid, illegal or unenforceable, the validity of any other terms of this Agreement or any other applications of such term shall in no way be affected thereby. SECTION 8. RELEASE OF COLLATERAL. On payment in full of all Obligations of Pledgor hereunder and all Obligations of Pledgor under the Credit Agreement, Lender shall promptly release its security interest in the Collateral. In addition, any Collateral distributed by the Pledgor pursuant to, and in compliance with, Section 7.9 of the Credit Agreement shall automatically be released from the security interest granted to the Lender hereunder, effective on the date of such distribution by the Pledgor. In addition, upon written request of Pledgor, Lender shall release its security interest in the Collateral to the extent that, after giving effect to such release, the Loan to Value Ratio does not exceed 30%. SECTION 9. SUBSTITUTION OF COLLATERAL. Pledgor may substitute cash or cash equivalents as Collateral in substitution for shares of the common stock of Sanderson Farms, Inc. as provided in the Credit Agreement, provided that the Loan to Value Ratio does not exceed 70% after giving effect to such substitution. SECTION 10. MISCELLANEOUS. (a) Waivers. No failure to exercise and no delay in exercising on the part of Lender, any right, power or remedy under this Agreement or the Credit Agreement shall operate as a -6- waiver thereof; nor shall any single or partial exercise of any right, power or remedy hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The failure of the Lender to insist upon the strict observance or enforcement of any provision of this Agreement or the Credit Agreement shall not be construed as a waiver or relinquishment of such provision. Any waiver of any right, power, remedy, term or condition contained herein shall only be effective if it is in writing and signed by Lender. (b) Survival of Agreements, etc. All representations, warranties, covenants and agreements made by Pledgor in this Agreement or in any instrument, document or certificate furnished hereunder or in connection herewith shall be deemed to have been relied upon by Lender, notwithstanding any investigation heretofore or hereafter made by Lender, and shall survive the delivery of this Agreement, the Collateral and the incurrence of any obligations. (c) Notices. Except as otherwise specified herein, all notices hereunder shall be in writing (including, without limitation, notice by telecopy) and shall be given to the relevant party at its address or telecopier number set forth on the signature page to this Agreement, or such other address or telecopier number as such party may hereafter specify by notice to the other given by United States certified or registered mail, by telecopy or by other telecommunication device capable of creating a written record of such notice and its receipt. (d) Amendments. This Agreement may only be amended by a writing executed by Pledgor and Lender. (e) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Mississippi. (f) Waiver of Jury Trial. PLEDGOR AND THE LENDER EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT, THE CREDIT AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE CREDIT AGREEMENT OR (b) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR THE CREDIT AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. (g) Further Assurances. Pledgor agrees to cooperate with Lender and to execute and deliver, or cause to be executed and delivered, all such other papers and to take all such other actions as Lender may reasonably request from time to time in order to carry out the provisions and purposes of this Agreement. Without limiting the foregoing, Pledgor agrees that all securities constituting Collateral shall at all times be in such form that Lender may sell, transfer, or otherwise dispose of same without any signature, action, or assistance from Pledgor; and Pledgor agrees to deliver to Lender the Collateral (whether pledged at inception by substitution or by addition) endorsed in blank and with executed stock powers or bond powers, as appropriate. Lender agrees not to sell or transfer any securities constituting Collateral in violation of applicable securities laws. -7- (h) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of Pledgor, the Lenders and their respective successors and assigns. (i) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which when taken together shall be deemed to constitute one and the same agreement. (j) Section Headings. The headings set forth in this Agreement are for convenience of reference only and shall not be deemed to define or limit the provisions hereof or to affect in any way their construction and application. -8- IN WITNESS WHEREOF, Pledgor has executed and delivered this Agreement on the date first above written. /s/Robert Buck Sanderson ROBERT BUCK SANDERSON, CO-EXECUTOR /s/Hugh Virden Sanderson HUGH VIRDEN SANDERSON, CO-EXECUTOR AS CO-EXECUTORS OF THE ESTATE OF DEWEY R. SANDERSON, JR. DECEASED AND NOT IN THEIR INDIVIDUAL CAPACITIES Accepted and Agreed to as of the date first written above. UNION PLANTERS BANK, NATIONAL ASSOCIATION BY: /s/John C. Howell ITS: Regional Senior Lender -9- SCHEDULE A
ISSUER CLASS NUMBER OF SHARES CERTIFICATE NUMBERS Sanderson Farms, Inc. Common 1,003,364 8458 Sanderson Farms, Inc. Common 100,000 1238 Sanderson Farms, Inc. Common 100,000 1239 Sanderson Farms, Inc. Common 100,000 1240 Sanderson Farms, Inc. Common 100,000 1241 Sanderson Farms, Inc. Common 100,000 1242 Sanderson Farms, Inc. Common 100,000 1243 Sanderson Farms, Inc. Common 100,000 1244
A-1 SCHEDULE B PLEDGE AMENDMENT This Pledge Amendment, dated ____________, 20__ is delivered pursuant to Section 1 of the Pledge Agreement referred to below. The undersigned hereby agrees that this Pledge Amendment may be attached to that certain Pledge Agreement, dated as of September __, 2000, by the undersigned, as Pledgor, to UNION PLANTERS BANK, NATIONAL ASSOCIATION, acting as Lender thereunder, and that the Collateral listed on this Pledge Amendment shall be and become a part of the Collateral referred to in said Pledge Agreement and shall secure all of the Obligations referred to in said Pledge Agreement. Dated: ______________, 20___ ---------------------------------- ROBERT BUCK SANDERSON, CO-EXECUTOR ----------------------------------- HUGH VIRDEN SANDERSON, CO-EXECUTOR AS CO-EXECUTORS OF THE ESTATE OF DEWEY R. SANDERSON, JR. DECEASED, NOT IN THEIR INDIVIDUAL CAPACITIES DESCRIPTION OF COLLATERAL
Issuer Class Number of Shares Certificate Numbers ------ ----- ---------------- -------------------
B-1 ACKNOWLEDGEMENT The undersigned, UNION PLANTERS BANK, NATIONAL ASSOCIATION acting as Lender hereunder, hereby acknowledges receipt of the foregoing Pledge Agreement and further acknowledges the security interest granted in the securities held in Custody Account #________________. Dated as of __________, 2000. UNION PLANTERS BANK, NATIONAL ASSOCIATION ------------------------------------- By: __________________________________ Its _____________________________ -----END PRIVACY-ENHANCED MESSAGE-----