EX-10 6 firststamendment.txt FIRST AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.25 SANDERSON FARMS, INC. FIRST AMENDMENT TO CREDIT AGREEMENT Harris Trust and Savings Bank Chicago, Illinois SunTrust Bank, Atlanta Atlanta, Georgia Deposit Guaranty National Bank Jackson, Mississippi Caisse Nationale de Credit Agricole, Chicago Branch Chicago, Illinois Trustmark National Bank Jackson, Mississippi Ladies and Gentlemen: Reference is hereby made to that certain Credit Agreement dated as of July 31, 1996 (the "Credit Agreement") among the undersigned, Sanderson Farms, Inc., a Mississippi corporation (the "Company"), you (the "Banks") and Harris Trust and Savings Bank, as agent for the Banks (the "Agent"). All defined terms used herein shall have the same meaning as in the Credit Agreement unless otherwise defined herein. The Credit Agreement provides for a Revolving Credit to be made available to the Company for the period up to and including July 31, 1999 and the Company now applies to the Banks to extend the availability of the Revolving Credit up to and including July 31, 2000 in the manner and on the terms and conditions set forth herein. 1. AMENDMENTS. Upon satisfaction of all of the conditions precedent set forth in Section 2 hereof, the Credit Agreement shall be amended as follows: 1.1. The date "July 31, 1999" appearing in the last sentence of Section 1.1(a) of the Credit Agreement shall be replaced with the date "July 31, 2000", and the Revolving Credit Termination Date under the Credit Agreement shall be July 31, 2000. 1.2. Section 7.8 of the Credit Agreement shall be amended to read as follows: "Section 7.8. Consolidated Net Working Capital. The Company will maintain at all times Consolidated Net Working Capital in an amount not less than the amount indicated below during each fiscal year of the Company indicated below: FISCAL YEAR ENDING MINIMUM REQUIRED AMOUNT October 31, 1996 $42,000,000 October 31, 1997 $45,000,000 October 31, 1998 $48,000,000 October 31, 1999 $50,000,000 October 31, 2000 $50,000,000 October 31, 2001 $50,000,000 October 31, 2002 $50,000,000 October 31, 2003 $50,000,000 October 31, 2004 $50,000,000" 1.3. Section 7.10 of the Credit Agreement shall be amended to read as follows: "Section 7.10. Consolidated Indebtedness for Borrowed Money to Total Capitalization. The Company will not permit the ratio of its Consolidated Indebtedness for Borrowed Money to its Total Capitalization (the "Funded Debt Ratio") at any time to exceed the percentage indicated below during each fiscal year of the Company specified below: FISCAL YEAR ENDING MAXIMUM PERCENTAGE October 31, 1996 55% October 31, 1997 65% October 31, 1998 65% October 31, 1999 55% October 31, 2000 55% October 31, 2001 50% October 31, 2002 45% October 31, 2003 40% October 31, 2004 40%" 1.4. Section 7.12 of the Credit Agreement shall be amended to read as follows: "Section 7.12. Capital Expenditures. The Company will not, and will not permit any Subsidiary to, be obligated to spend during any fiscal year for capital expenditures (as defined and classified in accordance with generally accepted accounting principles consistently applied, including without limitation any such capital expenditures in respect of Capitalized Leases but excluding any acquisition permitted by Section 7.14(d) which might constitute such a capital expenditure) an aggregate amount for the Company and its Subsidiaries in excess of the amount indicated below for each fiscal year of the Company plus an amount (the "Carryover Amount") permitted to be spent in the preceding fiscal year but not actually spent therein (the "Maximum Carryover Amount to the Next Fiscal Year"): MAXIMUM MAXIMUM CARRYOVER AMOUNT FISCAL YEAR ENDING LIMITATION AMOUNT TO THE NEXT FISCAL YEAR October 31, 1996 $65,000,000 Unlimited October 31, 1997 $45,000,000 Unlimited October 31, 1998 $25,000,000 $ 7,500,000 October 31, 1999 Prior Year's $ 7,500,000 Depreciation October 31, 2000 Prior Year's $ 7,500,000 Depreciation October 31, 2001 Prior Year's $ 7,500,000 Depreciation October 31, 2002 Prior Year's $ 7,500,000 Depreciation October 31, 2003 Prior Year's $ 7,500,000 Depreciation October 31, 2004 Prior Year's $ 7,500,000 Depreciation For purposes of this Section, any capital expenditures made in any fiscal year shall be applied first to the Carryover Amount, if any, available during such fiscal year." 2. CONDITIONS PRECEDENT. The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent: 2.1. The Company and each of the Banks shall have executed this Amendment. 2.2. Each Guarantor Subsidiary shall have executed the Guarantors' Acknowledgment attached hereto. 2.3. The Agent shall have received the favorable written opinion of counsel for the Company in the form of Exhibit A attached hereto. 2.4. The Agent shall have received a Certificate of the Treasurer of the Company and each of the Guarantor Subsidiaries with respect to (a) resolutions of their respective Board of Directors authorizing the transactions contemplated hereby, and (b) incumbency and signature of the President, Treasurer and Secretary of the Company and each Guarantor Subsidiary. 3. REPRESENTATIONS AND WARRANTIES. 3.1. Each of the representations and warranties set forth in Section 5 of the Credit Agreement are true and correct. 3.2. The Company is in full compliance with all of the terms and conditions of the Credit Agreement and no Event of Default or Potential Default has occurred and is continuing thereunder or shall result after giving effect to this Amendment. 4. MISCELLANEOUS. 4.1. Reference to this specific Amendment need not be made in any note, document, letter, certificate, the Credit Agreement itself, the Revolving Notes, or any communication issued or made pursuant to or with respect to the Credit Agreement or the Revolving Notes, any reference to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby. 4.2. This Amendment may be executed in any number of counterparts, and by the different parties on different counterparts, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Amendment shall be governed by the internal laws of the State of Illinois. Upon acceptance hereof by the Agent and the Banks in the manner hereinafter set forth, this Amendment shall be a contract between us for the purposes hereinabove set forth. Dated as of October 23, 1997. SANDERSON FARMS, INC. By /s/D. Michael Cockrell Its Treasurer and Chief Financial Officer Accepted and agreed to as of the day and year last above written. HARRIS TRUST AND SAVINGS BANK individually and as Agent By /s/Carl Blackham Its Vice President SUNTRUST BANK, ATLANTA By /s/Gregory L. Cannon Its Vice President By /s/Brian Davis Its Assistant Vice President DEPOSIT GUARANTY NATIONAL BANK By /s/Stanley A. Herren Its Senior Vice President CAISSE NATIONALE DE CREDIT AGRICOLE, CHICAGO BRANCH BY /s/W. Leroy Startz ITS First Vice President TRUSTMARK NATIONAL BANK By /s/W. H. Edwards Its Vice President -2- GUARANTORS' ACKNOWLEDGMENT The undersigned, each of which has executed and delivered to the Banks a Guaranty Agreement dated as of July 31, 1996 (the "Guaranty Agreement"), hereby acknowledges the amendment of the Credit Agreement as set forth above and agrees that all of the Company's indebtedness, obligations and liabilities to the Banks and the Agent under the Credit Agreement and the Notes as amended by the foregoing Amendment shall continue to be entitled to the benefits of said Guaranty Agreement. The undersigned further agree that the Acknowledgment or consent of the undersigned to any further amendments of the Credit Agreement shall not be required as a result of this Acknowledgment having been obtained, except to the extent, if any, required by the Guaranty Agreement. Dated as of October 23, 1997. SANDERSON FARMS, INC. (FOODS DIVISION) By /s/D. Michael Cockrell Its Treasurer and Chief Financial Officer SANDERSON FARMS, INC. (PRODUCTION DIVISION) By /s/D. Michael Cockrell Its Treasurer and Chief Financial Officer SANDERSON FARMS, INC. (PROCESSING DIVISION) By /s/D. Michael Cockrell Its Treasurer and Chief Financial Officer -2- EXHIBIT A FORM OF OPINION OF COUNSEL