EXHIBIT 4.11
FOURTH SUPPLEMENTAL INDENTURE
THIS FOURTH SUPPLEMENTAL INDENTURE dated as of March 8, 2004 (the
"Fourth Supplemental Indenture") by and among Pierre Foods, Inc. (formerly Fresh
Foods, Inc.), a North Carolina corporation (the "Company"), Fresh Foods
Properties LLC, a North Carolina limited liability company and wholly-owned
subsidiary of the Company ("Fresh Foods") and Compass Outfitters LLC, a North
Carolina limited liability company and wholly-owned subsidiary of the Company,
each as a subsidiary guarantor (collectively, the "Subsidiary Guarantors") and
U.S. Bank National Association, a national banking association and successor to
State Street Bank and Trust Company ("SSBT"), as trustee (the "Trustee").
WHEREAS, an Indenture dated as of June 9, 1998 among the Company, each
of several subsidiaries of the Company as Guarantors and SSBT as trustee was
executed and delivered to SSBT, as supplemented by a First Supplemental
Indenture dated as of September 5, 1998 among the Company, Pierre Leasing, LLC,
a North Carolina limited liability company, as Additional Guarantor, and SSBT as
trustee, a Second Supplemental Indenture dated as of February 26, 1999 among the
Company, Fresh Foods Restaurant Group, LLC, a Delaware limited liability company
as Additional Guarantor, and SSBT as trustee, and a Third Supplemental Indenture
dated as of October 8, 1999 among the Company and SSBT as trustee (collectively,
the "Original Indenture" and, collectively, with this Fourth Supplemental
Indenture, the "Indenture"), providing for the issuance of the Company's 10-3/4%
Senior Notes due 2006 (the "Notes"). Capitalized terms used herein but not
otherwise defined have the definitions set forth in the Original Indenture.
WHEREAS, Section 9.02 of the Original Indenture provides that the
Company and the Trustee may amend the Original Indenture or the Notes with the
written consent of the Holders of not less than a majority in principal amount
of the Notes then outstanding.
WHEREAS, Holders representing not less than a majority in principal
amount of the Notes currently outstanding ("Majority Holders") have heretofore
agreed to certain amendments to the Original Indenture to: (i) increase the per
annum rate of interest payable with respect to the Notes; (ii) grant to the
Trustee for the benefit of all Holders a lien on all assets of the Company,
junior and subordinate only to the liens securing the Senior Debt; (iii) provide
the Holders with the right to require the Company to repurchase the Notes; (iv)
establish provision for the mandatory redemption of the Notes in certain
circumstances; (v) limit the aggregate annual compensation that may be paid to
certain executives of the Company; (vi) require the Company to terminate all
related party transactions, including related party transactions with its
Covered Executive Group (as defined herein), other than the certain permitted
related party transactions as set forth herein; (vii) permit the transfer of
certain assets and the transfer on a subordinated basis of certain indebtedness
of PF Management, Inc. ("PFMI") to the Company; (viii) provide for the terms of
subordination of the PFMI indebtedness assumed by the Company; and (ix) provide
for certain changes to the Company's corporate governance and oversight
including, without limitation, (A) the appointment to the Company's Board of
Directors of one outside director acceptable to both the Company and the
Majority Holders and (B) the appointment of an independent audit firm to
monitor, at the Company's expense, the Company's compliance on an annual basis
with the covenants set forth in the Indenture.
WHEREAS, Section 6.04 of the Original Indenture provides that certain
past Defaults (as defined in the Original Indenture) or compliance with any
provisions of the Indenture may be waived with the consent of the Majority
Holders.
WHEREAS, the Majority Holders have heretofore agreed to waive any and
all Defaults occurring prior to the date hereof by the Company under the
Indenture.
NOW THEREFORE, the Company, the Subsidiary Guarantors and the Trustee
hereby agree as follows:
ARTICLE I
AMENDMENTS
1. Section 1.01 of the Original Indenture is hereby amended as
follows:
(a) The following new definitions are hereby added to
Section 1.01:
(i) "Additional Bonus Pool" has the
meaning assigned to it in Section 4.20.
(ii) "Assumed PFMI Indebtedness" means the
Indebtedness set forth on Exhibit C hereto,
which shall be subordinated as set forth in
Section 4.21.
(iii) "Cash Sweep Payment" has the meaning
assigned to it in Section 3.07.
(iv) "Cash Sweep Payment Conditions" has the
meaning assigned to it in Section 3.07.
(v) "Collateral" means all assets of the
Company, the Subsidiary Guarantors or any of
their respective Restricted Subsidiaries,
defined as Collateral in any of the
Collateral Documents, including without
limitation, all of the following property
and interests in such property, whether now
owned or existing or hereafter created,
acquired or arising and wheresoever located:
accounts, certificated securities, chattel
paper, computer hardware and software,
contract rights, deposit accounts,
documents, equipment, financial assets,
fixtures, general intangibles, goods,
instruments, intellectual property,
inventory, investment property, money,
letter-of-credit rights, payment
intangibles, security entitlements,
supporting obligations, uncertificated
securities, and all other personal and real
property.
2
(vi) "Collateral Documents" means,
collectively, (i) the Security Agreement;
(ii) Second Mortgage executed by the Company
in favor of the Trustee dated as of March 8,
2004 for property located at 0000 Xxxxxxxxx
Xxxx, Xxxxxxxxxx, Xxxx; (iii) the Second
Deed of Trust executed by the Company in
favor of the Trustee dated as of March 8,
2004 for property located at 0000 XXXX
Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx; (iv) the
Pledge Agreement between the Company and the
Trustee dated as of March 8, 2004; (v)
Trademark Security Agreement between the
Company and the Trustee dated as of March 8,
2004 and (vi) Trademark Security Agreement
between Fresh Foods and the Trustee dated as
of March 8, 2004, as each such document may
from time to time be amended, restated,
supplemented or otherwise modified.
(vii) "Consent Fee Payment" means the fee in an
amount equal to 3% of the outstanding
principal amount of the Notes held by those
Holders consenting to the restructuring of
the Notes as set forth herein.
(viii) "Consolidated Excess Cash" means, with
respect to any Fiscal Year, the amount by
which the sum of (i) the Consolidated EBITDA
(as defined in the Bank Facility in
existence on the date hereof) of the Company
and its Subsidiaries for such Fiscal Year,
less (ii) the Company's and its
Subsidiaries' Capital Expenditures permitted
by (and as Capital Expenditures is defined
in) the Company's Bank Facility in existence
on the date hereof; less (iii) cash payments
made during such Fiscal Year by the Company
and its Subsidiaries for taxes, assessments
and governmental charges levied or imposed
upon the Company or any of its Subsidiaries
by reason of the income, profits or Property
of the Company or any of its Subsidiaries,
is greater than one hundred ten percent
(110%) of the sum of (a) the Company's
Consolidated Interest Expense (as defined in
the Bank Facility in existence as of the
date hereof) for such Fiscal Year, plus (b)
principal payments required to be made
during such Fiscal Year by the Company and
its Subsidiaries under the instruments and
agreements governing the Company's and its
Subsidiaries' Permitted Indebtedness.
(ix) "Covered Executives" means Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxx and Xxxxx Xxxxxxxxx.
3
(x) "Covered Executive Group" has the meaning
assigned to it in Section 4.20.
(xi) "Credit Availability Amount" means, on
any date of determination thereof, the
amount which the Company is entitled to
borrow under its revolving line of credit
extended to it as part of the Bank Facility,
such amount being the difference derived
when the sum of the principal amount of
revolving loans and letters of credit then
outstanding under the Bank Facility is
subtracted from the Company's borrowing base
as calculated and determined in accordance
with the terms of the Bank Facility.
(xii) "Distribution" has the meaning assigned
to it in Section 4.09(c).
(xiii) "Fiscal Year" means the fiscal year of
the Company which means twelve (12) periods
consisting of four (4) or five (5) weeks
each determined based on a 52-53 week
accounting period, the last week of which
ends on the last day of February if it falls
on a Saturday, and, if not, on the first
Saturday in March of each year. When a year
is used in connection with a Fiscal Year,
such as Fiscal Year 2004, such reference
shall mean the Fiscal Year ending in that
year.
(xiv) "Independent Director" has the meaning
assigned to it in Section 4.23(b).
(xv) "PFMI" means PF Management, Inc., a North
Carolina corporation.
(xvi) "Security Agreement" means that certain
Security Agreement dated as of March 8, 2004
by the Company in favor of the Trustee (for
the benefit of the Holders).
(xvii) "Senior Debt" means all Indebtedness
arising under the Bank Facility.
(xviii) "Senior Lender" means Fleet Capital
Corporation, and any other lenders or
financial institutions that are parties to
the Bank Facility from time to time.
(xix) "Subordination Agreement" means the Lien
Subordination Agreement between the Trustee
and the Senior Lender, and acknowledged and
agreed to by the Company and others, in the
form attached as Exhibit D, as
4
the same may from time to time be amended,
restated, modified or supplemented.
(xx) "2005 Offer" has the meaning assigned to
it in Section 4.22(a).
(xxi) "2005 Offer Purchase Date" has the
meaning assigned to it in Section 4.22(a).
(xxii) "2005 Offer Purchase Price" has the
meaning assigned to it in Section 4.22(a).
(b) The definition of "Bank Facility" is hereby amended
by (1) deleting the words "Credit Agreement dated as of June 9, 1998
among the Company and the Subsidiaries listed therein, the lenders
party thereto and First Union Commercial Corporation as administrative
agent thereunder"; and substituting therefor the words "Loan and
Security Agreement dated as of August 13, 2003 among the Company, PFMI
and the Senior Lender" and (2) striking "$75,000,000" in the fourth
line thereof and substituting therefor "$40,000,000".
(c) The definition of "Net Available Cash" in the
Indenture is hereby amended by adding the words "other than any fees or
other amounts paid or payable to the Company, any Affiliate of the
Company, the Covered Executives or any Affiliate of the Covered
Executives" immediately after the word "commissions" in the eighth line
thereof.
(d) The definition of "Permitted Indebtedness" is hereby
amended as follows: (1) subsection (ii) thereof shall read in its
entirety as follows: "Indebtedness under the Bank Facility; provided
that the aggregate principal amount of Indebtedness outstanding under
the Bank Facility at any one time shall not exceed $40.0 million."; (2)
in subsection (ix) thereof, by adding "(xii), (xiii), (xiv)" after (i)
in the second line thereof; and (3) by adding the following subsections
at the end thereof to read as follows: "(xii) the Assumed PFMI
Indebtedness; (xiii) Indebtedness arising from the transfer and
assignment to the Company of the British Aerospace BAe Series 800A
aircraft from Columbia Hill Aviation, LLC; or (xiv) Indebtedness
arising from the Company's repurchase of the Notes pursuant to Section
4.22."
(e) The definition of "Permitted Investment" is hereby
amended by: (1) in subsection (iv) thereof, adding the words ", other
than the Covered Executives, and" after the word "Subsidiaries"; and
(2) adding the following clause to the end of subsection (viii)
thereof, immediately preceding the period: "; provided, however, that
no such Investment may be made in an Affiliate of the Company other
than as expressly permitted in this Indenture."
(f) The definition of "Permitted Liens" is hereby amended
by: (1) in subsection (xii) thereof, adding the following after the
reference to clause (xi): ", (xiii) or (xiv)"; (2) deleting the words
"Liens existing on the Issue Date and" at the beginning of subsection
(xiii) thereof; (3) deleting the word "and" from the end of subsection
(xiii), (4)
5
deleting the "." and adding "; and" to the end of subsection (xiv) and
adding a subsection (xv) to the end thereof, reading "(xv) Liens
securing the Notes."
(g) The definition of "Refinancing Indebtedness" is
hereby amended by: (1) adding the words "each of the following
conditions are first satisfied" immediately after the clause "provided
that" in the fourth line thereof; and (2) subsection (ii) is hereby
amended in its entirety to read as follows: "the terms and conditions
of the Refinancing Indebtedness, including the required principal
payments or prepayments and interest rate, are to the Company at least
as favorable as, and no more restrictive than, the terms and conditions
of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded;".
2. Section 2.01(a) of the Original Indenture is hereby amended in
its entirety to read as follows: "The Notes and the certificate of
authentication of the Trustee thereon shall be substantially in the form of
Exhibit A hereto, which is hereby incorporated in and expressly made a part of
this Indenture."
3. Section 2.05(c) of the Original Indenture is hereby amended by
adding the words "or mandatory" immediately after the word "optional" in the
first line thereof.
4. The first sentence of Section 3.01 of the Original Indenture
is hereby amended, in its entirety, to read as follows: "If the Company elects
to redeem Notes pursuant to paragraph 6(a) thereof or is required to redeem
Notes pursuant to paragraph 6(b) thereof, it shall, in any such case, notify the
Trustee in writing of the Redemption Date and the principal amount of Notes to
be redeemed."
5. A new Section 3.07 is hereby added to the Indenture, which
shall read in its entirety as follows:
SECTION 3.07. Cash Sweep Payment. The Company shall
redeem Notes following the end of each Fiscal Year in
accordance with the procedures set forth in this Section 3.07.
Within thirty (30) days following the delivery by the Company
to the Trustee and the Senior Lender of the audited financial
statements of the Company and its Subsidiaries for each Fiscal
Year ending after the date of the Fourth Supplemental
Indenture, but in no event later than one hundred twenty (120)
days following the end of each such Fiscal Year, the Company
shall redeem Notes by paying an amount (the "Cash Sweep
Payment") equal to 60% of the Company's Consolidated Excess
Cash for such Fiscal Year to the Trustee. Each Cash Sweep
Payment shall be used to redeem, on a pro rata basis, the
outstanding Notes at a redemption price in cash equal to 100%
of the aggregate principal amount thereof plus accrued and
unpaid interest thereon to the Redemption Date.
Notwithstanding the foregoing, a Cash Sweep Payment shall be
paid by the Company only if each of the Cash Sweep Payment
Conditions is first satisfied. The "Cash Sweep Payment
6
Conditions" are as follows: (i) the payment is made after the
Senior Lender shall have received the Company's audited
financial statements required by the Bank Facility; and (ii)
the Credit Availability Amount on the date of such payment and
for each day during the 90-day period immediately preceding
the date of such payment equals or exceeds $5.0 million, in
each case determined on a pro forma basis after giving effect
to such payment. At the time that a Cash Sweep Payment is
made, the Company shall deliver to the Trustee a certificate
(as set forth in Section 11.05) confirming that the Cash Sweep
Payment Conditions have been satisfied and setting forth the
applicable calculations showing satisfaction thereof.
6. Section 4.01 of the Indenture is hereby amended to add ",
Section 4.22" immediately after the word "Section 4.11" in the second sentence
of the second paragraph thereof.
7. Section 4.05 of the Indenture is hereby amended to add "except
as otherwise provided in any of the Collateral Documents," immediately prior to
the word "nothing" in the seventh line thereof.
8. Section 4.08 of the Indenture is hereby amended by adding the
following sentence at the end thereof: "Notwithstanding anything set forth in
this Section 4.08, in no event shall the Company be permitted to assume or
otherwise become responsible for making any payments with respect to any
Indebtedness of PFMI other than the Assumed PFMI Indebtedness, which shall be
subordinated as set forth in Section 4.21."
9. Section 4.09(b)(i) of the Indenture is hereby amended by
deleting the words "or Subordinated Obligations" in the second line thereof.
10. Section 4.09(b)(ii) of the Indenture is hereby amended by: (1)
deleting the word "Indebtedness" in the fourth line thereof and substituting
therefor the words "Subordinated Obligations" and deleting the word "is" and
substituting therefor the word "are" and (2) adding the following proviso at the
end thereof: "and provided, further, however, that in the case of any
refinancing of Assumed PFMI Indebtedness with Subordinated Obligations of the
Company, such Subordinated Obligations must have a maturity date that is no
earlier than the maturity date of the Assumed PFMI Indebtedness being refinanced
thereby and on terms no more favorable to the lender of such Subordinated
Obligations than the Assumed PFMI Indebtedness; and".
11. Section 4.09(b)(iii) of the Indenture is hereby deleted in its
entirety.
12. Section 4.09(b)(iv) of the Indenture is hereby renumbered as
Section 4.09(b)(iii).
13. Section 4.09 of the Indenture is hereby amended to add a new
subsection (c) thereto, which shall read, in its entirety, as follows: "(c)
Notwithstanding anything set forth in this Section 4.09, in no event shall the
Company be permitted to declare or make, or permit any of its respective
Subsidiaries to declare or make, any Distributions. "Distribution" shall mean
(i) the payment of any dividends or other distributions on capital stock of a
corporation or
7
membership interests of the limited liability company (except distributions in
such stock or membership interests) or (ii) the redemption or acquisition of
securities (or any warrant or option for the purchase of any such securities)
unless made contemporaneously from the net proceeds of the sale of such
securities."
14. Section 4.12 of the Indenture is hereby amended, in its
entirety, to read as follows:
"SECTION 4.12 Limitation on Affiliate Transactions.
Except for those transactions specifically listed below, the
Company shall not, and shall not permit any Restricted
Subsidiary, to enter into or permit to exist any transaction
with any Affiliate of the Company (an "Affiliate
Transaction"):
(i) compensation arrangements with directors
and officers of the Company (other than
Covered Executives) in their capacities as
such, which shall be approved by the Board
of Directors of the Company including the
Independent Director;
(ii) compensation arrangements with the
Covered Executives that meet the
requirements of Section 4.20 hereof;
(iii) the loan of $5,000,000 to Xxxxx
Xxxxxxxxxx pursuant to the promissory note
dated January 31, 2000 pledged as Collateral
to the Senior Lender and the Trustee, until
a Change of Control occurs as provided in
Section 4.14(a)(i) or (ii);
(iv) the lease agreement dated September 1,
1998 between the Company and Columbia Hill
Land, LLC with respect to the Company's
Hickory, North Carolina office; provided
that annual payments of rent under that
lease do not exceed $116,000;
(v) the continuance of the guarantees of the
value and validity of the collateral
securing the Senior Debt made by Xxxxx
Xxxxxxxxxx and Xxxxx Xxxxx;
(vi) the assumption by the Company of the
Assumed PFMI Indebtedness, which shall be
subordinated as set forth in Section 4.21;
and
(vii) the transfer by Columbia Hill Aviation,
LLC to the Company of title to the British
Aerospace BAe Series 800A aircraft and
engines and the assumption by the Company of
the purchase money debt secured thereby
owing to
8
Bombardier Capital, Inc. under a term loan
agreement dated December 11, 2001, as
amended March 1, 2002."
15. A new Section 4.20 is hereby added to the Indenture, which
shall read in its entirety as follows:
"SECTION 4.20 Limitation on Compensation of Covered
Executives. The aggregate annual base cash compensation or
management or consulting fees payable, collectively, to the
Covered Executives, Affiliates of the Covered Executives, or
management companies on behalf of the Covered Executives
(collectively, the "Covered Executive Group"), shall not
exceed $2.2 million and the aggregate annual benefits and
perquisites provided, collectively, to the Covered Executives
shall be similar in type to those benefits and perquisites
described on Exhibit B hereto and shall not exceed $500,000 in
aggregate value per Fiscal Year; provided that:
(a) the Covered Executive Group also shall,
collectively, be eligible to receive up to
$1.2 million in the aggregate in annual
bonus compensation with respect to a Fiscal
Year of the Company, if the Company's
Consolidated EBITDA for that Fiscal Year is
equal to or greater than $35.0 million. For
the purpose of calculating the annual bonus
compensation for the Company's 2004 Fiscal
Year, Consolidated EBITDA for such Fiscal
Year shall be deemed to be equal to: the
Company's Consolidated EBITDA for the period
from August 1, 2003 through the end of the
Company's 2004 Fiscal Year, as such amount
shall be annualized; and
(b) the Covered Executives also shall be
eligible to receive, collectively,
additional annual bonus compensation, with
respect to a Fiscal Year of the Company,
from a bonus pool (the "Additional Bonus
Pool"), the maximum amount of which shall be
calculated for each Fiscal Year of the
Company as follows:
(i) With respect to the first $2.0
million in aggregate principal
amount of the Notes that are
redeemed as the result of the Cash
Sweep Payment in that Fiscal Year,
$0 shall be added to the Additional
Bonus Pool for that Fiscal Year;
9
(ii) With respect to the next $2.0
million in aggregate principal
amount of the Notes that are
redeemed as the result of the Cash
Sweep Payment in that Fiscal Year,
5% of such amount so redeemed
thereby shall be added to the
Additional Bonus Pool for that
Fiscal Year;
(iii) With respect to the next $2.0
million in aggregate principal
amount of the Notes that are
redeemed as the result of the Cash
Sweep Payment in that Fiscal Year,
10% of such amount so redeemed
thereby shall be added to the
Additional Bonus Pool for that
Fiscal Year;
(iv) With respect to the next $2.0
million in aggregate principal
amount of the Notes that are
redeemed as the result of the Cash
Sweep Payment in that Fiscal Year,
15% of such amount so redeemed
thereby shall be added to the
Additional Bonus Pool for that
Fiscal Year;
(v) With respect to each
additional $2.0 million in
aggregate principal amount of the
Notes that are redeemed as the
result of the Cash Sweep Payment in
that Fiscal Year, an additional 5%
of such amount so redeemed thereby
shall be added to the Additional
Bonus Pool for that Fiscal Year.
The amounts added to the Additional Bonus Pool for a
Fiscal Year shall be based only on the aggregate principal
amount of the Notes redeemed as a result of the Cash Sweep
Payment in that Fiscal Year, calculated as provided in this
Section 4.20. No other Note redemptions or repayments of any
kind shall be included in the calculation of the Additional
Bonus Pool."
16. A new Section 4.21 is hereby added to the Indenture, which
shall read, in its entirety, as follows:
"SECTION 4.21 Subordination of Assumed PFMI
Indebtedness. The Assumed PFMI Indebtedness shall be
subordinated in right of payment to the Senior Debt, the
Notes, and to all other Indebtedness of the Company not
expressly subordinated to the Assumed PFMI Indebtedness or
declared to be pari passu with the Assumed PFMI Indebtedness.
Subject to such subordination, the Assumed PFMI Indebtedness
shall be subject to repayment only in accordance with the
amortization schedule attached hereto as Exhibit C; provided,
however, that the Assumed
10
PFMI Indebtedness may be refinanced in accordance with the
terms of Section 4.09 (b)(ii) hereof. For every full Fiscal
Year (or part thereof in the case of Fiscal Year 2004)
following the date hereof, the Company shall not permit any
amortization of principal or interest of the Assumed PFMI
Indebtedness if, after taking into account such amortization,
Consolidated Excess Cash for such Fiscal Year (or part thereof
in the case of Fiscal Year 2004) would be reduced below zero.
17. A new Section 4.22 is hereby added to the Indenture, which
shall read, in its entirety, as follows:
"SECTION 4.22 Repurchase of Notes on March 31, 2005.
(a) Each Holder shall have the right to require
that the Company repurchase such Holder's Notes pursuant to
the offer described in Section 4.22(b) hereof (the "2005
Offer") at a purchase price in cash in an amount equal to 100%
of the aggregate principal amount of such Notes (the "2005
Offer Purchase Price") (or portions thereof) to be redeemed
plus accrued and unpaid interest (in $1,000 multiples) on
March 31, 2005 (the "2005 Offer Purchase Date") (subject to
the right of holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date).
(b) At least thirty (30) days prior to January
1, 2005, the Company shall mail a notice to each Holder with a
copy to the Trustee stating:
(i) That on March 31, 2005, the
Holders have the right to require
the Company to repurchase their
Notes, that the 2005 Offer is being
made pursuant to this Section 4.22
and that all Notes that are timely
tendered will be accepted for
payment;
(ii) the 2005 Offer Purchase Price
to be paid with respect to Notes
tendered;
(iii) that any Notes or portions
thereof not tendered or accepted
for payment will continue to accrue
interest;
(iv) that, unless the Company
defaults in the payment of the 2005
Offer Purchase Price with respect
thereto, all Notes or portions
thereof accepted for payment
pursuant to the 2005 Offer shall
cease to accrue interest from and
after the 2005 Offer Purchase Date;
11
(v) that any Holder may elect to
have any Notes or portions thereof
purchased pursuant to the 2005
Offer by completing the form
entitled "Option of Holder to Elect
Purchase" on the reverse of such
Notes and tendering the Notes to
the Paying Agent at the address
specified in the notice no later
than January 15, 2005. Any Holder
not completing such form and
tendering such Holder's Notes to
the Paying Agent by January 15,
2005 shall be automatically deemed
to have irrevocably waived its
right to require the Company to
repurchase such Holder's Notes
pursuant to the 2005 Offer;
(vi) that no Holder shall be
entitled to withdraw such election
once made;
(vii) that any Holder electing to
have Notes purchased pursuant to
the 2005 Offer must specify the
principal amount that is being
tendered for purchase;
(viii) that the Trustee will return
to the Holder of a Global Note that
is being purchased in part, such
Global Note with a notation on
Schedule A thereof adjusting the
principal amount thereof to be
equal to the unpurchased portion of
such Global Note; and
(ix) any other information
necessary to enable any Holder to
tender Notes and to have such Notes
purchased pursuant to this Section
4.22.
(c) On the 2005 Offer Purchase Date, the Company
shall (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the 2005 Offer, (ii) irrevocably
deposit with the Paying Agent, by 10:00 a.m., New York City
time, on such date, in immediately available funds, an amount
equal to the 2005 Offer Purchase Price in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to
be delivered to the Trustee an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof
being purchased by the Company. Subject to the provisions of
Section 4.01 hereof, the Paying Agent shall promptly send by
first-class mail, postage prepaid, to each Holder or portions
thereof so accepted for payment the 2005 Offer Purchase Price
for such Notes or portions thereof. The Company shall publicly
announce the results of the 2005 Offer on or as soon as
practicable after the 2005 Offer Purchase Date. For purposes
of this Section 4.22, the Trustee shall act as the Paying
Agent.
12
(d) Upon surrender of a Global Note that is
purchased in part pursuant to the 2005 Offer, the Paying Agent
shall forward such Global Note to the Trustee who shall make a
notation on Schedule A thereof to reduce the principal amount
of such Global Note to an amount equal to the unpurchased
portion of such Global Note, as provided in Section 2.05(c)
and 4.22 hereof.
(e) The Company shall comply, to the extent
applicable, with the requirements of Section 14(e) of the
Exchange Act and any other securities laws or regulations in
connection with the repurchase of Notes pursuant to this
Section 4.22. To the extent that the provisions of any
securities laws or regulations conflict with provisions of
this Section 4.22, the Company shall comply with the
applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section
4.22 by virtue thereof.
(f) Notwithstanding any delay or failure by the
Company to give notice of the 2005 Offer, each Holder shall
have the right to tender its Notes for purchase in accordance
with this Section 4.22."
18. A new Section 4.23 is hereby added to the Indenture, which
shall read, in its entirety, as follows:
"SECTION 4.23 Corporate Governance and Oversight.
(a) The Company shall at all times follow
currently accepted "best practices" for a private company of
its approximate size operating in the food processing industry
in its governance and financial reporting.
(b) The Company shall, within 90 days following
the earlier of the end of a Fiscal Year or the date of the
Fourth Supplemental Indenture, engage and continue to engage,
and pay the reasonable expenses of an independent audit firm
to monitor compliance with the covenants and other provisions
set forth in the Indenture for each Fiscal Year.
(c) The Company and its shareholder PFMI agree
that so long as any of the Notes remain outstanding, at least
one independent director (the "Independent Director")
acceptable to both the Company and the holders of a majority
in principal amount of the Notes then outstanding shall be a
member of the Board of Directors of the Company. The holders
of a majority in principal amount of the Notes then
outstanding shall approve the Independent Director each year
following the date of the Fourth
13
Supplemental Indenture. The Independent Director shall be
covered by directors and officers liability insurance and
indemnification by the Company to the same extent as the other
directors of the Company, and the Company shall continue to
maintain such directors and officers liability insurance
coverage for so long as it is obligated hereunder to maintain
an Independent Director as a member of the Board of Directors.
The Independent Director shall not be removed by PFMI without
the prior written consent of the holders of a majority in
principal amount of the Notes then outstanding. On any removal
or resignation of the Independent Director, the provisions of
Section 4.23(c) and (d) shall apply to his or her replacement.
(d) The Company shall cause to be delivered to
the Noteholders and the Trustee no later than ten (10)
business days following the date of the resignation or removal
of the Independent Director, a consent solicitation seeking
approval of the Majority Holders of the Company's nominee for
the Independent Director. The Company shall provide the
information required by Item 404(a) and (b) of Regulation S-K
with respect to such nominee. Following the receipt of the
approval of the Majority Holders for the Company's nominee,
said nominee shall be appointed as a member of the board of
directors of the Company in accordance with standard
procedures for the seating of a director and shall serve as
the Independent Director. If the Majority Holders have not
approved the Company's nominee within fourteen (14) days
following the date the consent solicitation seeking approval
for the Company's nominee is caused to be delivered to the
Noteholders and the Trustee, the consent solicitation shall
close. The Noteholders may then nominate a candidate for the
Independent Director (the "Noteholder Nominee") by providing
written notification to the Company (with a copy to the
Trustee) setting forth the Noteholder Nominee and providing
information regarding any affiliations the Noteholder Nominee
has with any Noteholder. Upon the Company's approval of the
Noteholder Nominee, he or she shall be appointed as a member
of the board of directors of the Company in accordance with
standard procedures for the seating of a director and shall
serve as the Independent Director. If an Independent Director
has not been selected to become a member of the Company's
board of directors by the fortieth (40th) day following the
removal or resignation of the Independent Director, then the
parties hereby agree to submit the selection of the
Independent Director within five (5) days of such date to a
single arbitrator selected by the American Arbitration
Association in Wilmington, Delaware, in accordance with the
rules of the American Arbitration Association then in effect,
except as follows: Each of the Company and the Noteholders may
submit to the
14
arbitrator one additional nominee, as well as their respective
original nominees, in each case with the information required
by Item 404(a) and (b) of Regulation S-K with respect to such
nominee. The venue of the arbitration shall be at the offices
of the neutral arbitrator in Wilmington, Delaware unless
otherwise agreed by the parties. The award of the arbitrator
shall be specifically enforceable in any court of competent
jurisdiction. The arbitrator shall make the final,
nonappealable selection of the Independent Director within
fifteen (15) days, and such person selected as the Independent
Director shall be appointed as a member of the board of
directors of the Company in accordance with standard
procedures for the seating of a director and shall serve as
the Independent Director."
19. Section 5.01 of the Indenture is hereby amended by adding a
new subsection (c) thereto which shall read, in its entirety, as follows:
"(c) Notwithstanding anything set forth in this
Section 5.01 to the contrary, in no event shall PFMI be merged
with or into the Company."
20. A new ARTICLE 5A is hereby added to the Indenture, which shall
read, in its entirety, as follows:
ARTICLE 5A
SECURITY
SECTION 5A.01 Security.
The performance of the obligations of the Company and
the Subsidiary Guarantors under the Notes and the Indenture
are secured by the Collateral Documents to the extent
specified in the Collateral Documents.
SECTION 5A.02 Recording, etc.
The Company and the Subsidiary Guarantors will cause
the applicable Collateral Documents and any financing
statements, all amendments or supplements to each of the
foregoing and any other similar security documents as
necessary, to be registered, recorded and filed and/or re
recorded, re filed and renewed in such manner and in such
place or places, if any, as may be required by law or
reasonably requested by the Trustee in order fully to preserve
and protect (a) the Lien on the Collateral securing (for the
benefit of the Holders) the obligations under the Notes, (b)
the Lien of the Subsidiary Guarantors securing (for the
ratable benefit of the Holders) the guaranteed obligations
under the Indenture and to
15
effectuate and preserve the security of the Holders and all
rights of the Trustee under the Indenture and the Collateral
Documents.
The Company and the Subsidiary Guarantors shall
furnish to the Trustee:
(a) promptly after the execution and delivery of
this Fourth Supplemental Indenture, and promptly after the
execution and delivery of any other instrument of further
assurance or amendment, an Opinion of Counsel either (i)
stating that, in the opinion of such counsel, all action has
been taken with respect to the recording, registering and
filing of the Indenture, all applicable Collateral Documents,
financing statements and all other instruments necessary to
make effective the Lien intended to be created by such
Collateral Documents and reciting the details of such action,
or (ii) stating that, in the opinion of such counsel, no such
action is necessary to make any Lien created under any of the
Collateral Documents effective as intended by such Collateral
Documents; and
(b) within 30 days after the end of a Fiscal
Year in each year beginning with Fiscal Year 2005, an Opinion
of Counsel, dated as of such date, either (i)(1) stating that,
in the opinion of such counsel, action has been taken with
respect to the recording, registering, filing, re recording,
re registering and re filing of this Indenture and all
supplemental indentures, financing statements, continuation
statements or other instruments of further assurance as is
necessary to maintain the Lien of this Indenture and the
Collateral Documents and reciting the details of such action
or referring to prior Opinions of Counsel in which such
details are given, and (2) stating that, based on all relevant
laws as in effect on the date of such Opinion of Counsel, all
financing statements and continuation statements have been
executed and filed that are necessary as of such date and
during the succeeding twelve (12) months fully to preserve and
protect the rights of the Holders and the Trustee hereunder
and under the Collateral Documents with respect to the
security interests in the Collateral, or (ii) stating that, in
the opinion of such counsel, no such action is necessary to
maintain such Lien.
SECTION 5A.03 Protection of the Trust Estate.
Upon prior written notice to the Company and the
Subsidiary Guarantors, the Trustee shall have the power
subject to the provisions of the Subordination Agreement (i)
to institute and maintain such suits and proceedings as it may
deem expedient, to prevent any impairment of the Collateral
under any of the
16
Collateral Documents; and (ii) to enforce the obligations of
the Subsidiary Guarantors and/or the Company under this
Indenture or the Collateral Documents, to institute and
maintain such suits and proceedings as may be expedient to
prevent any impairment of the Collateral under the Collateral
Documents and in the profits, rents, revenues and other income
arising therefrom.
SECTION 5A.04 Release of Lien.
(a) Collateral may be released from the Lien and
security interest created by this Indenture and the Collateral
Documents at any time or from time to time in accordance with
the provisions of the Collateral Documents and the
Subordination Agreement and as provided hereby.
(b) Upon the request of the Company pursuant to
an Officers' Certificate and Opinion of Counsel certifying
that all conditions precedent hereunder have been met (and at
the sole cost and expense of the Company), the Trustee shall
release: (i) Collateral which is the subject of an Asset Sale,
provided that the Net Proceeds from such Asset Sale are
applied in accordance with Section 4.11 hereof; (ii) machinery
and equipment sold in the ordinary course of the Company's
business; (iii) Collateral which may be released with the
consent of the Holders pursuant to Section 9.02 hereof; and
(iv) all Collateral (except as provided in Article 8 hereof)
upon discharge or defeasance of this Indenture in accordance
with Article 8 hereof.
(c) Upon receipt of such Officers' Certificate,
the Trustee shall execute, deliver or acknowledge any
necessary or proper instruments of termination, satisfaction
or release to evidence the release of any Collateral permitted
to be released pursuant to this Indenture or the Collateral
Documents.
(d) The release of any Collateral from the Lien
under this Indenture and the Collateral Documents will not be
deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent
the Collateral is released pursuant to the terms hereof.
SECTION 5A.05. Subordination of Liens. The Liens
granted to the Trustee pursuant to the Collateral Documents
shall be subordinated in right of priority to all of the Liens
granted as security for the Senior Debt in the manner and to
the extent provided in the Subordination Agreement. Each of
the Collateral Documents shall contain the legend required by
the terms of the Subordination Agreement.
17
21. Section 6.01 of the Indenture is hereby amended by (a) adding
the section references "4.12, 4.20, 4.22, 4.23(b)" immediately after the section
reference "4.14" in the second line of subsection (c) thereof; (b) by deleting
the word "or" at the end of subsections (f), (g) and (h); (c) by deleting the
period at the end of subsection (i) and adding ";" to the end thereof; and (d)
by adding subsections (j) and (k) to the end thereof to read, in their entirety,
as follows:
"(j) the Company or either Subsidiary Guarantor
breaches or fails to comply with any agreement, covenant or
provision of any of the Collateral Documents and such default
has occurred and is continuing for the period specified
therein; or
(k) the repudiation by the Company or either
Subsidiary Guarantor of its obligations under, the initiation
or prosecution of any claim, action or other proceeding by the
Company or either Subsidiary Guarantor or their Affiliates
challenging the enforceability of, or any judgment or decree
by a court or governmental agency of competent jurisdiction
declaring the unenforceability of, any of the Collateral
Documents that would impair the benefits to the Trustee or the
Holders thereunder."
22. Section 6.03 of the Indenture is hereby amended by adding the
words "or any of the Collateral Documents" immediately after the word
"Indenture" in the fourth line of the second paragraph thereof.
23. Section 6.07 of the Indenture is hereby amended by adding the
following words to the end thereof, immediately before the period: ", except
that no Holder shall have the right to institute any such suit or take any
action if and to the extent that the institution or prosecution thereof or the
entry of judgment therein would, under applicable law, result in the surrender,
impairment or loss of the Lien of the Collateral Documents upon any property
subject to such Lien; provided that the foregoing shall not prevent the Trustee
from instituting any such suit or taking such action at the direction of and/or
with the written consent of the Holders of at least a majority in principal
amount of the Notes".
24. Section 7.01(b)(2) of the Indenture is hereby amended by
adding the words "and the Collateral Documents" immediately after the word
"Indenture" in each of the fourth and sixth lines thereof.
25. Section 7.04 of the Indenture is hereby amended by adding the
words ", the Collateral Documents" immediately after the word "Indenture" in the
second and fourth lines thereof.
26. Section 8.01(a)(ii) of the Indenture is hereby amended by (a)
adding the words ", as a result of the repurchase rights set forth in Section
4.11, 4.14 or 4.22 hereof" immediately after the word "Maturity" in the second
line thereof, (b) adding the words "or repurchase" immediately after the word
"redemption" in the fourth line thereof and (c) adding the words ", applicable
repurchase date" immediately after the word "Maturity" in the fifth line
thereof.
18
27. Section 8.01(b)(ii) of the Indenture shall be amended by
adding the words "and Sections 4.20 through 4.23" immediately after the word
"4.15" in the first line thereof.
28. Section 9.01(b) of the Indenture is hereby amended by adding
the following words to the end thereof, immediately before the semicolon: "or as
permitted in Article 5A".
29. Section 9.02(f) of the Indenture is hereby amended by deleting
the final word "or". Section 9.02(g) of the Indenture shall be amended by adding
the words "any of the Collateral Documents or" immediately after the word "in"
thereof and by replacing the period with the clause "; or".
30. Section 9.02 of the Indenture is hereby amended by adding a
subsection (h) thereto to read, in its entirety, as follows:
"(h) to directly or indirectly release all or
substantially all of the Liens granted pursuant to the
Collateral Documents."
31. Section 11.01 of the Indenture is hereby amended by replacing
the words "another provision which is required to be included in this Indenture
by the TIA, the required provision shall control" with "the duties imposed by
operation of Section 318(c) of the TIA, the imposed duties shall control."
32. Section 11.02 of the Indenture is hereby amended by restating
in its entirety the address for notice to the Company or any Guarantor to read
as follows:
"Pierre Foods, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Chief Financial Officer"
33. Section 11.02 of the Indenture shall be amended by restating
in its entirety the address for notice to the Trustee to read as follows:
"U.S. Bank National Association
Xxx Xxxxxxx Xxxxxx - 0xx Xxxxx
Xxxxxx, XX 00000
Attention: Corporate Trust Services
(Pierre Foods, Inc. (f/k/a Fresh Foods, Inc.)
Senior Notes Due 2006)"
34. A new ARTICLE 12 is hereby added to the Indenture, which shall
read, in its entirety, as follows:
ARTICLE 12
SUBORDINATION
The Company agrees, and each Holder by accepting a
Note
19
agrees, that the Liens securing the Notes granted pursuant to
this Indenture and the Collateral Documents are subordinated
to the extent and in the manner provided in the Subordination
Agreement annexed hereto as Exhibit D.
ARTICLE II
WAIVER AND RELEASE
Pursuant to Section 6.04 of the Original Indenture providing that
certain past Defaults or compliance with any provisions of the Indenture may be
waived with the consent of the Majority Holders, as of the date of this Fourth
Supplemental Indenture, consents were received from the Holders of 97.74% of the
aggregate principal amount of the outstanding Notes to waive any and all
Defaults by the Company under the Indenture occurring on or prior to the date
hereof.
In connection with the receipt of consents from the Majority Holders,
the Trustee, on behalf of the Holders, in their capacities as such, fully and
forever waives any defaults or events of default under the Indenture existing on
the date hereof that are capable of being waived by the holders of a majority of
the aggregate principal amount of the Notes outstanding, including any Defaults
or Events of Default and those Defaults and Events of Default previously alleged
by certain of the Noteholders. Notwithstanding the foregoing, the waiver of the
Default of Section 4.07 of the Original Indenture (requiring filing of reports
with the SEC) shall be effective only upon the Company's filing of its
delinquent SEC reports within the time period set forth in Article III, Section
2 of this Fourth Supplemental Indenture.
ARTICLE III
MISCELLANEOUS
1. The execution of this Fourth Supplemental Indenture and the
Subordination Agreement by the Trustee (the "Closing") shall be subject to the
satisfaction by the Company of each of the following conditions, and shall occur
on a date mutually agreed upon by the parties (the "Closing Date") following
satisfaction of these conditions precedent, which will be no later than five (5)
business days after the closing of the consent solicitation effectuated by the
Company to obtain the consent of the Majority Holders set forth in subsection
(a) below. At the Closing, the Company shall deliver to the Trustee a
certificate (as set forth in Section 11.05) confirming that each of the
following conditions has been satisfied:
(a) Receipt of consents of the Majority Holders to the
amendments to the Original Indenture set forth in this Fourth
Supplemental Indenture and the Subordination Agreement;
(b) Satisfaction of the requirements of Sections 9.02 and
9.06 of the Indenture;
(c) The Company has paid (or has reimbursed the
Noteholders for) the reasonable fees and disbursements of Xxxxxxxx Kill
& Olick, P.C. incurred in connection
20
with the Company to the extent that the same have not previously been
paid by the Company;
(d) The Company has paid the reasonable fees and
disbursements (not to exceed $112,500) charged by CIBC in connection
with its engagement by the Noteholders to perform financial due
diligence of the Company;
(e) The Company has paid the outstanding fees and
disbursements of the Trustee;
(f) The Company has paid the reasonable fees and
disbursements of Xxxxxxx & Xxxxxxx LLP, counsel to the Trustee;
(g) The Company has obtained an executed Consent to
Assignment from each party to whom the Assumed PFMI Indebtedness is
owed, such consents to be in substantially in the form agreed to by the
Company and Xxxxxxxx Kill & Olick, P.C. on January 30, 2004, with such
changes therein as do not materially impair the rights of the
Noteholders as set forth herein or in the Collateral Documents; and
(h) The Company has paid the Consent Fee Payment to the
Trustee.
2. At the Closing, the Company, the Subsidiary Guarantors and
PFMI shall enter into the each of the agreements set forth below to which such
party is a party:
(a) Fourth Supplemental Indenture;
(b) Acknowledgement of the Subordination Agreement;
(c) Assignment and Assumption and Subordination Agreement
between the Company and PFMI substantially in the form agreed to by the
Company and Xxxxxxxx Kill & Olick, P.C. on January 30, 2004, with such
changes therein as do not materially impair the rights of the
Noteholders as set forth herein or in the Collateral Documents;
(d) Termination Agreements substantially in the form
agreed to by the Company and Xxxxxxxx Kill & Olick, P.C. on January 30,
2004, with such changes therein as do not materially impair the rights
of the Noteholders as set forth herein or in the Collateral Documents,
terminating all Affiliate Transactions except those permitted under
Section 4.12;
(e) the Collateral Documents substantially in the form
agreed to by the Company and Xxxxxxxx Kill & Olick, P.C. on January 30,
2004, with such changes therein as do not materially impair the rights
of the Noteholders as set forth herein or in the Collateral Documents
(f) Transfer and Assumption Agreement between the Company
and Columbia Hill Aviation LLC, pursuant to which Columbia Hill
Aviation, LLC to the Company shall convey title to the British
Aerospace BAe Series 800A aircraft and engines to the Company, and the
Company shall assume the purchase money debt secured thereby
21
owing to Bombardier Capital, Inc. under a term loan agreement dated
December 11, 2001, as amended March 1, 2002; and
(g) Amendment No. 1 to, and Consent under, the Bank
Facility.
3. The Company shall comply with the following covenants
following the Closing:
(a) The Company shall file the following reports with the
SEC on the business day next following the date of this Fourth
Supplemental Indenture: (a) the Company's Annual Report on Form 10 K
with respect to its Fiscal Year ended March 1, 2003; (b) the Company's
Quarterly Report on Form 10-Q with respect to the fiscal quarter ended
May 31, 2003; (c) the Company's Quarterly Report on Form 10-Q with
respect to the fiscal quarter ended August 30, 2003; and (d) the
Company's Quarterly Report on Form 10-Q with respect to the fiscal
quarter ended November 29, 2003.
(b) The Company shall cause to be delivered to the
Noteholders and the Trustee no later than ten (10) business days
following the Closing Date, a consent solicitation seeking approval of
the Majority Holders of the Company's nominee for the Independent
Director. The Company shall provide the information required by Item
404(a) and (b) of Regulation S-K with respect to such nominee.
Following the receipt of the approval of the Majority Holders for the
Company's nominee, said nominee shall be appointed as a member of the
board of directors of the Company in accordance with standard
procedures for the seating of a director and shall serve as the
Independent Director. If the Majority Holders have not approved the
Company's nominee within fourteen (14) days following the date the
consent solicitation seeking approval for the Company's nominee is
caused to be delivered to the Noteholders and the Trustee, the consent
solicitation shall close. The Noteholders may then nominate a candidate
for the Independent Director (the "Noteholder Nominee") by providing
written notification to the Company (with a copy to the Trustee)
setting forth the Noteholder Nominee and providing information
regarding any affiliations the Noteholder Nominee has with any
Noteholder. Upon the Company's approval of the Noteholder Nominee, he
or she shall be appointed as a member of the board of directors of the
Company in accordance with standard procedures for the seating of a
director and shall serve as the Independent Director. If an Independent
Director has not been selected to become a member of the Company's
board of directors by the fortieth (40th) day following the Closing
Date, then the parties hereby agree to submit the selection of the
Independent Director within five (5) days of such date to a single
arbitrator selected by the American Arbitration Association in
Wilmington, Delaware, in accordance with the rules of the American
Arbitration Association then in effect, except as follows: Each of the
Company and the Noteholders may submit to the arbitrator one additional
nominee, as well as their respective original nominees, in each case
with the information required by Item 404(a) and (b) of Regulation S-K
with respect to such nominee. The venue of the arbitration shall be at
the offices of the neutral arbitrator in Wilmington, Delaware unless
otherwise agreed by the parties. The award of the arbitrator shall be
specifically enforceable in any court of competent jurisdiction. The
arbitrator shall make the final, nonappealable selection of the
Independent Director within fifteen (15) days, and such person selected
as the Independent Director shall be appointed as a member of the board
of directors of
22
the Company in accordance with standard procedures for the seating of a
director and shall serve as the Independent Director.
4. Exhibit A, Exhibit B, Exhibit C and Exhibit D attached to this
Fourth Supplemental Indenture shall be Exhibit A, Exhibit B, Exhibit C and
Exhibit D, respectively, to the Indenture. Exhibits A, B, C and D attached to
the Original Indenture, and all references in the Original Indenture to such
exhibits, are hereby deleted from the Indenture.
5. The Trustee accepts the trusts created by the Original
Indenture, as supplemented by this Fourth Supplemental Indenture, and agrees to
perform the same upon the terms and conditions in the Original Indenture, as
supplemented by this Fourth Supplemental Indenture. The Trustee is relying on
the Opinion of Counsel and the Officers' Certificate delivered to the Trustee by
the Company stating that this Fourth Supplemental Indenture complies with and
has received all necessary authorizations under the Original Indenture,
including, without limitation, Section 9.02 thereof. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Fourth Supplemental Indenture, except for the Trustee's
certificate of authentication, or the due execution hereof by the Company and
the Subsidiary Guarantors, or for or in respect of the recitals contained
herein, all of which recitals are made by the Company and the Subsidiary
Guarantors.
6. All capitalized terms used and not defined herein shall have
the respective meanings assigned to them in the Original Indenture.
7. This Fourth Supplemental Indenture may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
23
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed as of the date first above written.
ATTEST: PIERRE FOODS, INC.
/S/ Xxxxx X. Xxxxx By: /S/ Xxxxxx X. Xxxxxxx
------------------------------- --------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxx
Title: Title: CFO
ATTEST: FRESH FOODS PROPERTIES LLC
/S/ Xxxxx X. Xxxxx By: /S/ Xxxxxx X. Xxxxxxx
------------------------------- --------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxx
Title: Title: Manager
ATTEST: COMPASS OUTFITTERS LLC
/S/ Xxxxx X. Xxxxx By: /S/ Xxxxxx X. Xxxxxxx
------------------------------- --------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxx
Title: Title: Manager
U.S. BANK NATIONAL
ASSOCIATION, AS TRUSTEE
By: /S/ Alison X.X. Xxxxxx
--------------------------
Name: Alison X.X. Xxxxxx
Title: Vice President
PF MANAGEMENT, INC. (WITH
RESPECT TO THE PROVISIONS OF
SECTION 4.23(c) AND (d) AND
ARTICLE III, SECTION 3(b)
By: /S/ Xxxxx X. Xxxxx
--------------------------
Name: Xxxxx X. Xxxxx
Title: President
24
EXHIBIT A
Form of Note
EXHIBIT A
FORM GLOBAL NOTE
FACE OF NOTE
PIERRE FOODS, INC.
No. ___________ CUSIP No. ______________
[THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO PIERRE FOODS, INC. OR A
SUCCESSOR THEREOF OR THE REGISTRAR FOR REGISTRATION OF
TRANSFER OR EXCHANGE AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS HAS BEEN REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFER IN
WHOLE, AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSORS NOMINEE.]
25
GLOBAL NOTE
REPRESENTING 10 3/4% SENIOR NOTES DUE 2006
Pierre Foods, Inc., a North Carolina corporation, for value received,
hereby promises to pay to Cede & Co., or its registered assigns, the principal
sum indicated on Schedule A hereof, on June 1, 2006.
Interest Payment Dates: June 1 and December 1, commencing December 1,
1998.
Record Dates: May 15 and November 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purposes.
26
IN WITNESS WHEREOF, Pierre Foods, Inc. has caused this Note to be duly executed.
PIERRE FOODS, INC.
By: ______________________________
Name:
Title:
Attest: _________________
Dated: _________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
U.S. Bank National Association,
as Trustee, certifies that this
is one of the Notes referred
to in the Indenture
By: _________________
Authorized Signatory
27
REVERSE SIDE NOTE
PIERRE FOODS, INC.
NOTE
REPRESENTING 10-3/4% SENIOR NOTES DUE 2006
1. Indenture
This Note is one of a duly authorized issue of debt securities of the
Company (as defined below) designated as its "10-3/4% Senior Notes Due 2006"
(herein called the "Notes") limited in aggregate principal amount to
$115,000,000, issued under an indenture dated as of June 9, 1998, as
supplemented from time to time, the "Indenture") among the Company, as issuer
and the guarantors listed on Annex A hereto (collectively, the "Guarantors"),
and U.S. Bank National Association, as trustee (the "Trustee," which term
includes any successor trustee under the Indenture). The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections
77aaa-77bbbb). The Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and such Act for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Guarantors, the Trustee and each Holder and of the terms upon which the Notes
are, and are to be, authenticated and delivered. The summary of the terms of
this Note contained herein does not purport to be complete and is qualified by
reference to the Indenture. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control. All capitalized terms used
in this Note which are not defined herein shall have the meanings assigned to
them in the Indenture.
The Indenture restricts, among other things, the Company's ability to
incur additional indebtedness, pay dividends or make certain other restricted
payments, incur liens to secure pari passu or subordinated indebtedness, sell
stock of Restricted Subsidiaries, apply net proceeds from certain asset sales,
merge or consolidate with any other person, sell, assign, transfer, lease,
convey or otherwise dispose of substantially all of the assets of the Company or
enter into certain transactions with affiliates. The Indenture permits, under
certain circumstances, Restricted Subsidiaries of the Company to be deemed
Unrestricted Subsidiaries and thus not subject to the restrictions of the
Indenture.
2. Principal and Interest
Pierre Foods, Inc., a North Carolina corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on June 1, 2006.
The Company shall pay interest at a rate of (i) 10.75% per annum, from
the Issue Date or from the most recent Interest Payment Date thereafter to which
interest has been paid or duly provided for until __________, 2004, (ii) 12.25%
per annum from __________, 2004 or the most recent Interest Payment Date
thereafter to which interest has been paid or duly provided for
28
until March 31, 2005 and (iii) 13.25% per annum from April 1, 2005 or from the
most recent Interest Payment Date thereafter to which interest has been paid or
duly provided for, in each case, semiannually in arrears on June 1 and December
1 of each year, in cash, to the Holder hereof until the principal amount hereof
is paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, subject to certain
exceptions provided in the Indenture, be paid to the Person in whose name this
Note (or the Note in exchange or substitution for which this Note was issued) is
registered at the close of business on the Record Date for interest payable on
such Interest Payment Date. The Record Date for any interest payment is the
close of business on May 15 or November 15, as the case may be, whether or not a
Business Day, immediately preceding the Interest Payment Date on which such
interest is payable. Any such interest not so punctually paid or duly provided
for ("Defaulted Interest") shall forthwith cease to be payable to the Holder on
such Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium and Defaulted interest at the applicable interest
rate borne on this Note. The Company's obligation pursuant to the previous
sentence shall apply whether such overdue amount is due at its maturity, as a
result of the Company's obligations pursuant to Section 3.05, Section 4.11,
Section 4.14 or Section 4.22 of the Indenture, or otherwise.
3. Method of Payment
The Company, through the Paying Agent, shall pay interest on this Note
to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal, premium, if any, and interest and Liquidated Damages, if
any, in money of the United States of America that at the time of payment is
legal tender for payment of all debts public and private. Principal, premium, if
any, and interest and Liquidated Damages, if any, shall be paid by check mailed
to the registered Holders at their registered addresses; provided that all
payments with respect to Notes the Holders of which have given wire transfer
instructions to the Company will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
4. Paying Agent and Registrar
Initially, the Trustee will act as Paying Agent and Registrar under the
Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its Affiliates may
act as Paying Agent or Registrar, provided that if the Company or such Affiliate
is acting as Paying Agent, the Company or such Affiliate
29
shall segregate all funds held by it as Paying Agent and hold them in trust for
the benefit of the Holders or the Trustee.
5. Guarantees
This Note is entitled to the benefits of the Guarantees made by the
Guarantors listed on Annex A hereto and may thereafter be entitled to Guarantees
made by other Guarantors for the benefit of the Holders of Notes. Each present
Guarantor has, and each future Guarantor will, irrevocably and unconditionally,
jointly and severally, guarantee on a senior unsecured basis the punctual
payment when due, whether at Stated Maturity, by acceleration, in connection
with a Change of Control Offer, an Asset Sale Offer or redemption, or otherwise,
of all obligations of the Company under the Indenture and this Note, whether for
payment of principal of, premium, if any, interest or Liquidated Damages, if
any, on the Notes, expenses, indemnification or otherwise. A Guarantor shall be
released from its Guarantee upon the terms and subject to the conditions set
forth in the Indenture.
6. Redemption
(a) Optional Redemption. The Notes are subject to redemption at the
option of the Company, in whole or in part, on at least 30 calendar days, but
not more than 60 calendar days, prior notice, at the redemption prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest thereon, if any, and Liquidated Damages, if any, to the
applicable Redemption Date (subject to the right of each Holder of record on the
relevant Record Date to receive interest due on the relevant Interest Payment
Date), if redeemed during the twelve-month period beginning June 1 of the years
indicated below:
YEAR PERCENTAGE
---- ----------
2003 102.688%
2004 and thereafter 100.000%
(b) Mandatory Redemption
Within 30 days following the delivery by the Company to the Trustee and
the Senior Lender of the audited financial statements for the Company and its
Subsidiaries for the 2005 and 2006 Fiscal Years, but in no event later than 120
days following the end of each such Fiscal Year, the Company shall make a
payment to the Trustee equal to 60% of the Company's Consolidated Excess Cash
for such Fiscal Year (the "Cash Sweep Payment"), if, but only if, each of the
Cash Sweep Payment Conditions are first satisfied. The Cash Sweep Payment shall
be used to redeem, on a pro rata basis, outstanding Notes, at a redemption price
in cash equal to 100% of the aggregate principal amount thereof plus accrued and
unpaid interest thereon to the Redemption Date.
7. Notice of Redemption
At least 20 calendar days but not more than 60 calendar days before a
Redemption Date, the Company shall deliver to the Trustee and send, by
first-class mail, postage prepaid, to
30
Holders of Notes to be redeemed at the addresses of such Holders as they appear
in the Note Register, a notice of redemption.
In the case of a redemption pursuant to Section 6(a) above, if fewer
than all the Notes are to be redeemed at any time, the Trustee shall select the
Notes to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. In the
case of a redemption pursuant to Section 6(b) above, if fewer than all the Notes
are to be redeemed at any time, the Trustee shall select the Notes to be
redeemed pro rata. In either case, the Trustee shall make the selection from
outstanding Notes not previously called for redemption; provided that the
Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000 (Notes in denominations of $1,000 or less may be redeemed only in whole).
If any Note is redeemed subsequent to a Record Date with respect to any Interest
Payment Date specified above and on or prior to such Interest Payment Date, then
any accrued interest will be paid on such Interest Payment Date to the Holder of
the Note on such Record Date. If money in an amount sufficient to pay the
Redemption Price of all Notes (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent on or before the applicable
Redemption Date and certain other conditions are satisfied, interest on the
Notes or portions thereof to be redeemed on the applicable Redemption Date will
cease to accrue.
8. Repurchase at the Option of Holders upon Change of Control
Upon the occurrence of a Change of Control, each Holder shall have the
right in accordance with the terms hereof and the Indenture to require the
Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions thereof) plus accrued and unpaid interest and Liquidated
Damages, if any, to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the Company
shall send, or cause to be sent, by first-class mail, postage prepaid, a notice
regarding the Change of Control Offer to each Holder with a copy to the Trustee.
The Holder of this Note may elect to have this Note or a portion hereof in an
authorized denomination purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Change of Control Offer. Unless the Company defaults in the payment of the
Change of Control Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Change of Control Offer will cease
to accrue interest from and after the Change of Control Payment Date.
9. Repurchase at the Option of Holders upon Asset Sale
If at any time the Company or any Restricted Subsidiary engages in any
Asset Sale, as a result of which the aggregate amount of Excess Proceeds exceeds
$5.0 million, the Company shall, within 30 calendar days of the date the amount
of Excess Proceeds exceeds $5.0 million, use the then-existing Excess Proceeds
to make an offer to purchase from all Holders of Notes, on
31
a pro rata basis, Notes in an aggregate principal amount equal in amount to the
then-existing Excess Proceeds, at a purchase price in cash in an amount equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon
and Liquidated Damages to the Asset Sale Purchase Date (subject to the right of
each Holder of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date). Upon completion of an Asset Sale Offer
(including payment of the Asset Sale Purchase Price for accepted Notes), any
surplus Excess Proceeds that were the subject of such offer shall cease to be
Excess Proceeds, and the Company may then use such amounts for general corporate
purposes.
Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $5.0 million, the Company shall send, or cause to be sent, by
first-class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder. The Holder of this Note may elect to have this Note or a portion
hereof in an authorized denomination purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below and tendering this Note
pursuant to the Asset Sale Offer. Unless the Company defaults in the payment of
the Asset Sale Purchase Price with respect thereto, all Notes, or portions
thereof selected for payment pursuant to the Asset Sale Offer will cease to
accrue interest from and after the Asset Sale Purchase Date.
10. Repurchase at the Option of Holders on March 31, 2005
At least thirty (30) days prior to January 1, 2005, the Company shall
send or cause to be sent, by first-class mail, postage prepaid, a notice
regarding the 2005 Offer to each Holder. Pursuant to the 2005 Offer, the Holder
of this Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Elect Purchase" appearing below and tending this Note to the Paying Agent no
later than January 15, 2004. On March 31, 2005, the Company shall purchase all
Notes from Holders electing to have their Notes purchased on such date at a
purchase price in cash equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon to the 2005 Offer Purchase Date. Unless the
Company defaults in the payment of the 2005 Offer Purchase Price with respect
thereto, all Notes, or portions thereof, tendered for payment pursuant to the
2005 Offer will cease to accrue interest from and after March 31, 2005.
11. Collateral Documents.
The Notes are entitled to the benefits of the Collateral Documents
which set forth, among other things, the Collateral securing the obligations of
the Notes. Each Holder, by accepting a Note, agrees to be bound by all of the
terms and provisions of the Collateral Documents, as the same may be amended
from time to time. Each Holder, by accepting a Note, further agrees the Liens
securing the Notes granted pursuant to the Indenture and the Collateral
Documents are subordinated in right of priority to all of the Liens granted as
security for the Senior Debt to the extent and in the manner provided in the
Subordination Agreement.
12. The Global Note.
So long as this Global Note is registered in the name of the Depositary
or its nominee, members of, or participants in, the Depositary ("Agent Members")
shall have no rights under the Indenture with respect to this Note held on their
behalf by the Depositary or the Trustee as its
32
custodian, and the Depositary may be treated by the Company, the Guarantors, the
Trustee and any agent of the Company, the Guarantors or the Trustee as the
absolute owner of this Note for all purposes. Notwithstanding the foregoing,
nothing herein shall (i) prevent the Company, the Guarantors, the Trustee or any
agent of the Company, the Guarantors or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or (ii) impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder.
The Holder of this Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder is entitled to take under the Indenture or the Notes.
Whenever, as a result of optional or mandatory redemption by the
Company, a Change of Control Offer, an Asset Sale Offer or the 2005 Offer, this
Global Note is redeemed, repurchased or exchanged in part, this Global Note
shall be surrendered by the Holder thereof to the Trustee who shall cause an
adjustment to be made to Schedule A hereof so that the principal amount of this
Note will be equal to the portion not redeemed, repurchased or exchanged and
shall thereafter return this Note to such Holder; provided that this Note shall
be in a principal amount of $1,000 or an integral multiple of $1,000.
13. Transfer and Exchange
A Holder may transfer or exchange Notes as provided in the Indenture
and subject to certain limitations therein set forth. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes, fees and expenses required by law or permitted
by the Indenture.
14. Denominations
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof of principal amount.
15. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of the obligations of the Company and the Guarantors under the
Notes, the Guarantees and the Indenture if the Company irrevocably deposits in
trust with the Trustee cash or U.S. Government Obligations for the payment of
principal, premium, if any, interest and Liquidated Damages, if any, on the
Notes to redemption or maturity, as the case may be.
16. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes (which consent
may, but need not, be given in connection with any tender offer or exchange
offer for the Notes) and (ii) any past Default and its consequences or any
compliance with any provisions of the Indenture may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Notes. Subject to certain
33
exceptions set forth in the Indenture, without the consent of any Holder, the
Company and the Trustee may amend the Indenture or the Notes (i) to evidence the
succession of another Person to the Company and the assumption by such successor
of the covenants of the Company under the Indenture and contained in the Notes;
(ii) to add to the covenants of the Company, for the benefit of the Holders of
all of the Notes, or to surrender any right or power conferred on the Company
under the Indenture; (iii) to provide for uncertificated Notes in addition to or
in place of Certificated Notes; (iv) to secure the Notes; (v) to cure any
ambiguity, omission, defect or inconsistency in the Indenture, provided that
such actions shall not adversely affect the interests of the Holders of Notes in
any material respect; (vi) to comply with the requirements of the SEC in order
to effect or maintain the qualification of the Indenture under the TIA; or (vii)
to evidence the agreement or acknowledgment of a Restricted Subsidiary that it
is a Guarantor for all purposes under the Indenture (including, without
limitation, Article 11 thereof).
17. Defaults and Remedies
Under the Indenture, Events of Default include: (i) a default for 30
days in the payment when due of interest on, or Liquidated Damages with respect
to, the Notes (whether or not prohibited by the subordination provisions of the
Indenture); (ii) a default in the payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (iii) failure by the Company to observe or perform
certain covenants, conditions, agreements or other provisions of the Indenture
or this Note (and, in the case of certain covenants, agreements or other
provisions, such failure has continued for 30 calendar days after written notice
by the Trustee or the Holders of at least 25% in principal amount of the Notes);
(iv) a default in the payment of Indebtedness of the Company or any of its
Significant Subsidiaries within any applicable grace period after final maturity
or acceleration of such Indebtedness in an amount in excess of $5.0 million in
the aggregate; (v) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries; (vi) certain undischarged
judgments in excess of $5.0 million against the Company or any of its
Significant Subsidiaries; or (vii) the Guarantee of any Guarantor ceasing for
any reason to be in full force and effect (other than in accordance with the
terms of the Indenture) or any Guarantor denying or disaffirming its obligations
under its Guarantee.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency shall result in the Notes being
immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power under the Indenture.
The Holders of a majority in principal amount of the then outstanding Notes, by
written notice to the Trustee and the Company, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all existing Events of Default have been cured or
waived, except nonpayment of principal, interest,
34
premium or Liquidated Damages that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
18. Individual Rights of Trustee
Subject to certain limitations imposed by the TIA, the Trustee or any
Paying Agent or Registrar, in its individual or any other capacity, may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Guarantors or their Affiliates with the same rights it would have if it were not
Trustee, Paying Agent or Registrar, as the case may be, under the Indenture.
19. No Recourse Against Certain Others
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes, the Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company or such Guarantor.
By accepting a Note, each Holder waives and releases all such liability (but
only such liability) as part of the consideration for issuance of such Note to
such Holder.
20. Authentication
This Note shall not be valid until the Trustee or an authenticating
agent signs the certificate of authentication on the other side of this Note.
21. Abbreviations
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM ( tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian), and U/G/MIA (Uniform Gift to Minors
Act).
22. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
35
23. Governing Law
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SAID STATE.
The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture. Requests may be made to:
Pierre Foods, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Chief Financial Officer
36
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Note shall be
$___________________. The following decreases/increases in the principal amount
in denominations of $1,000 or integral multiples thereof at maturity of this
Note have been made:
Total Principal
Decrease in Amount at Maturity
Date of Decrease/ Principal Amount at Increase in Principal Following such Notation Made by or
Increase Maturity Amount at Maturity Decrease/ Increase on Behalf of Trustee
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
----------------- ------------------- --------------------- ------------------ --------------------
37
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
_____________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________ Attorney to transfer
this Note on the Note Register, with full power of substitution.
Date: ________________________
______________________________________ ____________________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securities and Exchange Commission Rule 17Ad-15.
38
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
[ ] In connection with the Change of Control Offer made pursuant to
Section 4.14 of the Indenture, the undersigned hereby elects to have
[ ] the entire principal amount
[ ] $______________ ($1,000 in principal amount or an integral
multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay
it or _____________________ an amount in cash equal to 101% of
the principal amount indicated in the preceding sentence plus
accrued and unpaid interest and Liquidated Damages thereon, if
any, to the Change of Control Payment Date.
[ ] In connection with the Asset Sale Offer made pursuant to Section 4.11
of the Indenture, the undersigned hereby elects to have
[ ] the entire principal amount
[ ] $______________ ($1,000 in principal amount or an integral
multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay
it or _____________________ an amount in cash equal to 100% of
the principal amount indicated in the preceding sentence plus
accrued and unpaid interest and Liquidated Damages thereon, if
any, to the Asset Sale Purchase Date.
[ ] In connection with the 2005 Offer made pursuant to Section 4.22 of the
Indenture, the undersigned elects to have
[ ] the entire principal amount
[ ] $______________ ($1,000 in principal amount or an integral
multiple thereof) of this Note repurchased by the Company. The
undersigned hereby directs the Trustee or Paying Agent to pay
it or _____________________ an amount in cash equal to 100% of
the principal amount indicated in the preceding sentence plus
accrued and unpaid interest, if any, to the 2005 Offer
Purchase Date.
39
Dated: __________
___________________________________ __________________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
SIGNATURE GUARANTEED: Signature must be guaranteed by an Eligible Guarantor
Institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program
pursuant to Securities and Exchange Commission Rule 17Ad-15.
40
ANNEX A
Fresh Foods Properties LLC
Compass Outfitters LLC
41
EXHIBIT B
Executive Perquisites
401(k) Company match
Auto and related expenses
Club membership, dues and expenses
Group medical insurance
Life insurance
42
EXHIBIT C
Assumed PFMI Indebtedness and Amortization Schedule
AMORTIZATION SCHEDULE
----------------------------------------------
ASSUMED F2005 F2005 F2005 F2005
PFMI 5/29/04 8/28/04 11/27/04 2/26/05
INDEBTEDNESS Q1 Q2 Q3 Q4
------------ ----------------------------------------------
PRINCIPAL BALANCE:
Bank of Granite 300,000 - 100,000 - -
Xxxxx Family Limited Partnership 250,000 250,000 - - -
Branch Banking and Trust Co 93,556 12,414 12,539 12,664 12,791
Carolina First Bank 1,140,000 - 380,000 - -
Xxxxxx, Xxxxxxx 2,097,773 239,949 245,998 252,199 258,557
First Century Bank 3,153,000 - 1,051,000 - -
Xxxxxxxx, Xxx 500,000 - - - -
Xxxx, Xxxxx 2,163,465 - - - -
Xxxx, Xxxxx 250,000 - - - -
Xxxxxx, Xxxxx 240,000 - - - -
Xxxxxxxxx, Xxxxx 73,245 - - - -
Xxxxxx, Xxxx & Xxxxx 182,970 - - - -
Xxxxxx, Xxxxxx 89,160 - - - -
Xxxxxx, Xxxx 94,268 - - - -
Xxxxxx, Xxxx 150,000 100,000 - - -
Xxxx, Xxxxx X. 86,798 - - - -
Xxxx, Xxxxx X. 27,638 - - - -
Xxxxxx, Xxxx 807,757 91,564 94,105 96,717 99,401
Xxxxxx, Xxxx 500,000 - - - -
Peoples Bank 900,000 - 300,000 - -
Pierre Foods, Inc. 993,247 993,247 - - -
Xxxxx, Xxxxx 22,500 - - - -
S&D Land Company 271,125 30,125 30,125 30,125 30,125
Xxxxxxx, Xxxx 250,000 - - - -
S&D Land Company 60,356 6,706 6,706 6,706 6,706
S&D Land Company (Peoples Bank) 430,000 - - - -
Xxxxxxx, Xxxx 250,000 - - - -
----------------------------------------------
TOTAL PRINCIPAL REDUCTIONS 1,724,006 2,220,473 398,411 407,580
----------------------------------------------
Less Non- Cash Elimination (993,247) - - -
TOTAL PRINCIPAL PAYMENTS 730,759 2,220,473 398,411 407,580
----------
TOTAL ASSUMED INDEBTEDNESS 15,376,858
----------
AMORTIZATION SCHEDULE
-----------------------------------------------------------
F2006 F2006 F2006 F2006 F2007
5/28/05 8/27/05 11/26/05 2/25/06 5/27/06
Q1 Q2 Q3 Q4 Q1
----------------------------------------------- --------
PRINCIPAL BALANCE:
Bank of Granite - 100,000 - - -
Xxxxx Family Limited Partnership - - - - -
Branch Banking and Trust Co 12,919 13,048 13,178 4,004 -
Carolina First Bank - 380,000 - - 380,000
Xxxxxx, Xxxxxxx 265,075 271,757 278,608 285,631 -
First Century Bank - 1,051,000 - - -
Xxxxxxxx, Xxx - - - - -
Xxxx, Xxxxx - - - - 2,163,465
Xxxx, Xxxxx - - - - 250,000
Xxxxxx, Xxxxx - - - - 240,000
Xxxxxxxxx, Xxxxx - - - - 73,245
Xxxxxx, Xxxx & Xxxxx - - - - 182,970
Xxxxxx, Xxxxxx - - - - 89,160
Xxxxxx, Xxxx - - - - 94,268
Xxxxxx, Xxxx 50,000 - - - -
Xxxx, Xxxxx X. - - - - 86,798
Xxxx, Xxxxx X. - - - - 27,638
Xxxxxx, Xxxx 102,160 104,995 107,909 110,904 -
Xxxxxx, Xxxx - - - - -
Peoples Bank - 300,000 - - -
Pierre Foods, Inc. - - - - -
Xxxxx, Xxxxx - - - - 22,500
S&D Land Company 30,125 30,125 30,125 30,125 30,125
Xxxxxxx, Xxxx - - - - 250,000
S&D Land Company 6,706 6,706 6,706 6,706 6,706
S&D Land Company (Peoples Bank) - - - - 430,000
Xxxxxxx, Xxxx - - - - 250,000
-------------------------------------------- -------------
TOTAL PRINCIPAL REDUCTIONS 466,984 2,257,631 436,526 437,370 4,576,875
-------------------------------------------- -------------
Less Non- Cash Elimination - - - - -
TOTAL PRINCIPAL PAYMENTS 466,984 2,257,631 436,526 437,370 4,576,875
TOTAL ASSUMED INDEBTEDNESS
Principal payments will fluctuate due to variable interest rates
Balance assumed is eliminated against Pierre Foods, Inc. receivable for same
amount
EXHIBIT D
LIEN SUBORDINATION AGREEMENT
THIS LIEN SUBORDINATION AGREEMENT (this "Agreement"), made and entered
into this _____ day of January, 2004, by and between U.S. BANK NATIONAL
ASSOCIATION, a national banking association, in its capacity as Trustee under
the Indenture (as defined below) (in such capacity, the "Junior Lienholder" as
hereinafter further defined); and FLEET CAPITAL CORPORATION, a Rhode Island
corporation (the "Senior Lienholder" as hereinafter further defined);
RECITALS:
A. Pierre Foods, Inc. (f/k/a Fresh Foods, Inc.) (the "Borrower"),
a North Carolina corporation, has issued its Senior Notes due 2006 in the
aggregate principal amount of $115,000,000 (hereafter, together with any and all
renewals, extensions, substitutions, modifications and consolidations of such
Senior Notes, the "Notes") pursuant to that certain Indenture, dated as of June
9, 1998, between the Borrower and certain of its subsidiaries named in such
Indenture and the Trustee, as successor to State Street Bank and Trust Company,
as supplemented by a certain (i) First Supplemental Indenture dated as of
September 5, 1999, (ii) Second Supplemental Indenture dated as of February 26,
1999, (iii) Third Supplemental Indenture dated as of October 8, 1999, and (iv)
Fourth Supplemental Indenture dated as of the date hereof (the "Fourth
Supplemental Indenture") (collectively, as so amended, together with any and all
renewals, extensions, substitutions, modifications and consolidations, the
"Indenture").
B. The Borrower, the Senior Lienholder and the parent company of
the Borrower have entered into a certain Loan and Security Agreement, dated
August 13, 2003 (such Loan and Security Agreement, as amended, modified,
supplemented or restated from time to time, being herein called the "Senior
Lienholder Loan Agreement" as hereinafter further defined), pursuant to which,
and upon the terms and subject to the conditions contained therein, the Senior
Lienholder has agreed to make loans and extend credit and other financial
accommodations to the Borrower.
C. To induce the Senior Lienholder to enter into the Senior
Lienholder Loan Agreement and make loans and credit and other financial
accommodations to the Borrower thereunder, Fresh Foods Properties, LLC, Columbia
Hill Aviation, LLC, Compass Outfitters, LLC, PF Purchasing, LLC, and PF
Distribution, LLC (the "Subsidiary Guarantors"), each a North Carolina limited
liability company, have each unconditionally guaranteed the payment and
performance of all of the indebtedness, obligations and liabilities owing from
time to time by the Borrower to the Senior Lienholder under the Senior
Lienholder Loan Agreement or in connection therewith.
D-1
D. Pursuant to the Fourth Supplemental Indenture and the Senior
Lienholder Loan Agreement, the Borrower and some or all of the Subsidiary
Guarantors are each concurrently herewith granting liens and security interests
in substantially all of their assets and properties to the Trustee, for the
benefit of itself and the holders of the Notes, and to the Senior Lienholder,
respectively.
E. It is a requirement of the Senior Lienholder's consenting to
the granting by the Borrower and the Subsidiary Guarantors of such liens and
security interests to the Trustee pursuant to the Fourth Supplemental Indenture
that the Trustee enter into this Agreement with the Senior Lienholder, by which
the Trustee subordinates its liens and security interests in all of the assets
and properties of the Borrower and the Subsidiary Guarantors to the liens and
security interests of the Senior Lienholder therein and grants other assurances
to the Senior Lienholder with respect thereto.
F. The Trustee is therefore willing to enter into this Agreement
with the Senior Lienholder in order to satisfy such requirements of the Senior
Lienholder under the Senior Lienholder Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. All terms used in this agreement that are
defined in the Code shall have the meanings ascribed thereto in the Code unless
otherwise expressly defined herein. As used in this Agreement, the following
terms shall have the following meanings for the purposes of this Agreement:
"Action" shall have the meaning ascribed to such term in
Section 8(b) of this Agreement.
"Code" shall mean the Uniform Commercial Code of the State of
North Carolina as in effect from time to time.
"Credit Parties" shall mean the Borrower and the Subsidiary
Guarantors and "Credit Party" shall mean any of them.
"Defense" shall have the meaning ascribed in such term in
Section 8(b) of this Agreement.
"Documents" shall mean the Junior Lienholder Documents and the
Senior Lienholder Documents, respectively.
D-2
"Junior Lienholder" shall mean U. S. Bank National
Association, in its capacity as trustee for the holders of the Notes
under the Indenture, and its successors and assigns, including any
successor trustee under the Indenture.
"Junior Lienholder Documents" shall mean all agreements,
documents and instruments evidencing, documenting, securing or
otherwise relating to the Notes or any of the other Junior Lienholder
Debt, whether now existing or hereafter incurred, all as the same may
from time to time be amended, modified, extended, renewed or restated.
"Junior Lienholder Debt" shall mean all present and future
indebtedness, whether principal, interest (including, without
limitation, interest accruing after the commencement of any bankruptcy
proceeding by or against a Credit Party), fees, costs, expenses,
liabilities and obligations and other amounts now or hereafter owed by
the Credit Parties or any of them to the Junior Lienholder or the
Noteholders arising under, on account of, or related to, the Notes
(including, without limitation, all of the indebtedness evidenced by or
arising under any one or more of the Junior Lienholder Documents), all
whether direct or indirect, absolute or contingent, secured or
unsecured, due or to become due, liquidated or unliquidated, and
whether arising under contract, in tort or otherwise.
"Lienholders" shall mean the Junior Lienholder, on the one
hand, and the Senior Lienholder, on the other hand, and "Lienholder"
shall mean either of them.
"Liens" shall mean the liens and security interests granted by
the Credit Parties or any of them to each Lienholder under the
Documents and a "Lien" shall refer to the liens and security interests
granted by the Credit Parties or any of them to one of the Lienholders.
"Noteholders" shall mean the holders of the Notes.
"Person" shall mean an individual, partnership, corporation,
limited liability company, joint stock company, land trust, business or
unincorporated organization, or a government or agency or political
subdivision thereof.
"Senior Lienholder" shall mean Fleet Capital Corporation, a
Rhode Island corporation, its successors and assigns, and any other
lender or lenders refinancing or refunding all or any portion of the
Senior Lienholder Debt.
"Senior Lienholder Collateral" shall mean all of the assets,
properties and interests in property of the Credit Parties, whether now
existing or hereafter acquired or arising, wherever located.
D-3
"Senior Lienholder Documents" shall mean the Senior Lienholder
Loan Agreement and all other agreements, documents and instruments
evidencing, documenting, securing or otherwise relating to all or any
portion of the Senior Lienholder Debt, whether now existing or
hereafter entered into, all as the same may from time to time be
amended, modified, extended, renewed or restated.
"Senior Lienholder Debt" shall mean all present and future
indebtedness, whether principal, interest (including, without
limitation, interest accruing after the commencement of any bankruptcy
proceeding by or against a Credit Party), fees, costs, expenses,
liabilities and obligations (including, without limitation, letter of
credit reimbursement obligations) and other amounts now or hereafter
owed by the Credit Parties or any of them to the Senior Lienholder
arising under, on account of, or related to, the Senior Lienholder Loan
Agreement (including, without limitation, all of the indebtedness
evidenced by or arising under any one or more of the Senior Lienholder
Documents), all whether direct or indirect, absolute or contingent,
secured or unsecured, due or to become due, liquidated or unliquidated,
and whether arising under contract, in tort or otherwise.
2. No Third Party Beneficiaries. All undertakings, agreements,
representations and warranties contained in this Agreement are solely for the
benefit of the Junior Lienholder, the Noteholders and the Senior Lienholder and
there are no other parties (including, without limitation, the Credit Parties)
who are intended to be benefited in any way by this Agreement.
3. Reservation of Liens as Against Third Parties. Nothing
contained in this Agreement is intended to affect or limit in any way the Liens
of the Junior Lienholder and/or the Senior Lienholder in any of the property and
assets of the Credit Parties, whether tangible or intangible, insofar as the
Credit Parties and third parties are concerned. The Junior Lienholder and the
Senior Lienholder each specifically reserves all of its respective Liens and
rights to assert such Liens as against the Credit Parties and third parties.
4. Priority of Liens. Irrespective of (a) the time, order, manner
or method of creation, attachment or perfection of the respective Liens of the
Junior Lienholder or the Senior Lienholder in any property or assets of the
Credit Parties, (b) the time or manner of the filing of the respective financing
statements, mortgages, deeds of trust or other documents of the Junior
Lienholder or the Senior Lienholder, (c) whether the Junior Lienholder or the
Senior Lienholder or any bailee or agent thereof holds possession of any
property or assets of the Credit Parties, (d) the dating, execution or delivery
of any agreement, document or instrument granting the Junior Lienholder or the
Senior Lienholder Liens in any property or assets of the Credit Parties, (e) the
giving or failure to give notice of the acquisition or expected acquisition of
any purchase money or other Liens, and (f) any provision of the Code or any
other applicable law to the contrary, all Liens of the Junior Lienholder,
whether now or hereafter arising and howsoever existing, in all of the Senior
Lienholder Collateral shall be and hereby are subordinated to all Liens of the
Senior Lienholder in all of the Senior Lienholder Collateral.
D-4
5. Standstill as to Enforcement of Lien. Unless and until all of
the Senior Lienholder Debt shall have been fully, finally and indefeasibly paid
in cash and all outstanding commitments of the Senior Lienholder for the
incurring of additional Senior Lienholder Debt are terminated in writing, the
Junior Lienholder and the Noteholders shall not (a) take any action with respect
to the Senior Lienholder Collateral, whether by judicial or non-judicial
foreclosure, notification to account debtors or other obligors on the Senior
Lienholder Collateral, taking or obtaining possession of any of the Senior
Lienholder Collateral, or otherwise realizing upon the whole or any part of the
Senior Lienholder Collateral, or (b) in any manner interfere with the Senior
Lienholder's Lien in, or enforcement or collection of, the Senior Lienholder
Collateral. Nothing contained in this Section 5 shall be deemed to prohibit the
Junior Lienholder or the Noteholders from (i) enforcing their respective rights
under the Junior Lienholder Documents other than as expressly prohibited hereby
or (ii) intervening or participating in any judicial proceeding to the extent
necessary to establish or preserve its Lien in the Senior Lienholder Collateral,
so long as such intervention or participation does not interfere with the
foregoing rights of the Senior Lienholder.
6. Provisions Concerning Insurance and Condemnation.
(a) Each Lienholder agrees that the other Lienholder shall be
entitled to obtain loss payee endorsements and/or additional insured status with
respect to any and all policies of insurance now or hereafter obtained by the
Credit Parties insuring casualty or other loss to any property of the Credit
Parties in which such Lienholder may have a Lien. The rights and priorities of
any party to any insurance proceeds shall be as provided in Section 4 of this
Agreement.
(b) In the event of the occurrence of any casualty with respect to
any of the Senior Lienholder Collateral, the Lienholders agree that the Senior
Lienholder shall have the sole and exclusive right to adjust, compromise or
settle any such loss with the insurer thereof, and to collect and receive the
proceeds from such insurer. Any insurer shall be fully protected if it acts in
reliance on the provisions of this Section 6.
(c) In the event that the Senior Lienholder Collateral or any
portion thereof is taken by condemnation or insurance proceeds are payable for
loss, damage or other casualty to any of the Senior Lienholder Collateral, then
the proceeds payable from such condemnation or casualty shall be applied as set
forth in the Senior Lienholder Loan Agreement or as otherwise agreed by the
Senior Lienholder, and the decision made by the Senior Lienholder as to whether
such proceeds shall be applied in whole or in part to the payment of the Senior
Lienholder Debt or released therefrom to the Credit Parties for the repair,
restoration or replacement of the damaged or condemned Collateral shall be
conclusive and binding upon the Junior Lienholder and the Noteholders. The
Junior Lienholder agrees to execute such consents, releases, endorsements and
other documents as may be reasonably necessary to accomplish the application of
such condemnation or casualty proceeds, all without any additional consideration
or payment to the Junior Lienholder or the Noteholders.
D-5
7. Waivers by the Junior Lienholder.
(a) The Senior Lienholder shall not have any liability to the
Junior Lienholder or the Noteholders for, and the Junior Lender expressly waives
on behalf of itself and the Noteholders any claim which it may now or hereafter
have against the Senior Lienholder, arising out of or related to any actions
which the Senior Lienholder in good faith takes or omits to take with respect to
the Senior Lienholder Collateral, including, without limitation, actions with
respect to the creation, perfection or continuation of the Liens in the Senior
Lienholder Collateral, and actions with respect to the foreclosure upon, sale,
disposition, collection or failure to realize upon, the Senior Lienholder
Collateral. Without limiting the generality of the foregoing, the Senior
Lienholder may, without regard to the existence of any rights the Junior
Lienholder or the Noteholders may now or hereafter have in and to the Senior
Lienholder Collateral, and upon such terms and conditions as the Senior
Lienholder may deem appropriate, compromise, settle, adjust and in general deal
in any manner with the Senior Lienholder Collateral and the account debtors
indebted thereon, engage third parties to assist the Senior Lienholder in the
effectuation of the liquidation, collection or foreclosure of the Senior
Lienholder Collateral, and incur such out-of-pocket costs and expenses
incidental to the actions described in this Agreement as the Senior Lienholder
may deem appropriate, including, without limitation, the fees and disbursements
of counsel to the Senior Lienholder and any other third party professionals
engaged by it.
(b) The Junior Lienholder expressly waives on behalf of itself and
the Noteholders any right to require the Senior Lienholder to marshal the Senior
Lienholder Collateral for the Senior Lienholder Debt or otherwise to compel the
Senior Lienholder to seek recourse against or satisfaction of the Senior
Lienholder Debt from one source before seeking recourse or satisfaction from the
Senior Lienholder Collateral or any other source. The Junior Lienholder
irrevocably waives on behalf of itself and the Noteholders any claims it may
have against the Senior Lienholder, whether at law or in equity, including
rights under the Code, and, specifically, any right to assert any claim or bring
any action, suit or proceeding, whether at law or in equity (an "Action")
against the Senior Lienholder or raise any affirmative defense, claim or
counterclaim (a "Defense") in any Action brought against it by the Senior
Lienholder, the effect of which is to contest the commercial reasonableness of
the decisions or actions of the Senior Lienholder (whether made or taken alone
or through any of its agents or representations) with respect to the Senior
Lienholder Collateral, and in furtherance thereof, the Junior Lienholder
explicitly and irrevocably covenants with the Senior Lienholder on behalf of
itself and the Noteholders that the Junior Lienholder and the Noteholders shall
forever and for all time forbear from bringing any such Action or asserting any
such Defense.
(c) The Junior Lienholder hereby further waives any and all rights
to: (i) require the Senior Lienholder to enforce any guaranty or any Lien given
by any person or entity other than the Credit Parties to secure the payment of
any of the Senior Lienholder Debt as a condition precedent or concurrent to
taking any action against or with respect to the Senior Lienholder Collateral;
and (ii) bring any action to contest the validity, legality, enforceability,
perfection,
D-6
priority or avoidability of any of the Liens of the Senior Lienholder in the
Senior Lienholder Collateral.
(d) Except as otherwise set forth in Section 9 of this Agreement,
if a Credit Party shall become subject to a proceeding under the Bankruptcy
Code, or a proceeding under any other insolvency law, nothing contained in this
Section 7 shall in any way impair, limit or restrict the right of the Junior
Lienholder to object to any proposed sale or other disposition of any of the
Senior Lienholder Collateral in such proceeding.
8. Release of Lien of the Junior Lienholder. The Junior
Lienholder agrees, on behalf of itself and the Noteholders, whether or not a
default has occurred under the Indenture or any of the other Junior Lienholder
Documents, to release or otherwise terminate its Lien in all or any portion of
the Senior Lienholder Collateral upon written request of the Credit Parties or
the Senior Lienholder to the extent necessary to permit all or portion of the
Senior Lienholder Collateral to be sold or otherwise disposed of by the Credit
Parties or the Senior Lienholder, whether or not in the ordinary course of any
Credit Party's business; provided, however, that (i) the Senior Lienholder shall
have consented to such sale or other disposition, (ii) substantially
contemporaneously with such release or termination, the proceeds of such sale or
disposition (net of reasonable sales expenses and customary closing costs which
are required to be paid as a condition of the sale and which the Senior
Lienholder permits to be paid) are applied to the Senior Lienholder Debt, and
(iii) in the case of any such proceeds arising from the sale or other
disposition of any fixed assets of the Credit Parties, any outstanding
commitments for the incurring of Senior Lienholder Debt are reduced by the
amount of such proceeds actually received by the Senior Lienholder. Nothing
herein contained shall in any way constitute a waiver by the Junior Lienholder
or the Noteholders of any violation of Section 4.11 or any other provision of
the Indenture or the other Junior Lienholder Documents that may result from the
consummation of any such sale or other disposition of the Senior Lienholder
Collateral or a waiver of any default under the Junior Lienholder Documents that
may arise therefrom.
9. Bankruptcy Financing Issues. This Agreement shall continue in
full force and effect after the filing of any petition for relief by or against
any Credit Party under the Bankruptcy Code and all converted or succeeding cases
in respect thereof (all references herein to a Credit Party being deemed to
apply to such Credit Party as a debtor-in-possession and to a trustee for such
Credit Party), and shall apply with full force and effect with respect to all
Senior Lienholder Collateral acquired by such Credit Party, and to all Senior
Lienholder Debt and Junior Lienholder Debt incurred by such Credit Party,
subsequent to such filing. If a Credit Party shall become subject to a
proceeding under the Bankruptcy Code, and if the Senior Lienholder shall desire
to permit the use of cash collateral by such Credit Party or to provide
post-petition financing from the Senior Lienholder to such Credit Party, the
Junior Lienholder agrees that no objection will be raised by the Junior
Lienholder to any such use of cash collateral or such post-petition financing
from the Senior Lienholder on the grounds of a failure to provide adequate
protection for the Junior Lienholder's junior Lien, provided that the Junior
Lienholder is granted a comparable junior Lien on the post-petition Senior
Lienholder Collateral of such Credit Party.
D-7
10. Legend. Each of the Junior Debt Documents (including, without
limitation, any Code financing statement filed to perfect the Liens of the
Junior Lienholder in any of the Senior Lienholder Collateral) shall contain in a
conspicuous manner the following legend:
"The liens and security interests of the Trustee granted or
evidenced hereby, and the enforcement thereof, are
subordinated to the liens and security interests granted to
Fleet Capital Corporation ("Fleet"), its successors and
assigns, as the senior lienholder, in the manner and to the
extent set forth in, and is otherwise subject to the terms of,
that certain Lien Subordination Agreement, dated January ___,
2004, between the Trustee and Fleet, and acknowledged and
agreed to by the Borrower and its subsidiaries, as the same
may be amended, modified or otherwise supplemented from time
to time."
11. Term. This Agreement shall remain in full force and effect
until all of the Senior Lienholder Debt shall have been fully, finally, and
indefeasibly paid in cash and all outstanding commitments of the Senior
Lienholder for the incurring of additional Senior Lienholder Debt are terminated
in writing. This Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Senior Lienholder Debt
is rescinded or must otherwise be returned by the Senior Lienholder upon the
insolvency, bankruptcy or reorganization of a Credit Party or otherwise, all as
though such payment had not been made. This is a continuing agreement of
subordination and the Senior Lienholder may continue to extend credit or other
financial accommodations and loan monies to or for the benefit of the Credit
Parties, in reliance hereon, under the Senior Lienholder Documents or otherwise
without notice to the Junior Lienholder or the Noteholders.
12. No Waiver of Subordination Provisions.
(a) No right of the Senior Lienholder to enforce the
provisions of this Agreement shall at any time or in any way be prejudiced or
impaired by (i) any act or failure to act on the part of the Credit Parties, or
(ii) any act or failure to act by the Senior Lienholder, or (iii) any
non-compliance by the Credit Parties with the terms, provisions and covenants of
any of the Junior Lienholder Documents, regardless of any knowledge thereof the
Senior Lienholder may have or be otherwise charged with.
(b) Without in any way limiting the generality of
subsection (a) of this Section 12, the Senior Lienholder may, at any time and
from time to time, without the consent of or notice to the Junior Lienholder or
the Noteholders, without incurring responsibility to the Junior Lienholder and
the Noteholders, and without impairing or releasing the lien subordination
provided hereunder or the obligations of the Junior Lienholder or the
Noteholders hereunder, do any one or more of the following:
D-8
(i) Amend, modify, waive or consent to any term or
provision set forth in any of the Senior Lienholder Documents;
(ii) Change the manner, place or terms of payment or
extend the time of payment of, or refund or refinance, or renew or
alter, any of the Senior Lienholder Debt;
(iii) Sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing all or any portion of
the Senior Lienholder Debt;
(iv) Release any Person liable in any manner for the
payment or collection of any of the Senior Lienholder Debt;
(v) Exercise or refrain from exercising any rights
against the Credit Parties or any other Person; and
(vi) Take any other action under the Senior Lienholder
Documents or otherwise with respect to the Credit Parties, the Senior
Lienholder Debt or the Senior Lienholder Collateral which might
otherwise constitute a defense available to, or a discharge of, the
Junior Lienholder or the Noteholders in respect of their respective
obligations under this Agreement.
13. Reliance by the Senior Lienholder; Waiver of Notices; No
Representations by the Senior Lienholder. All of the Senior Lienholder Debt
shall be deemed to have been made or incurred in reliance upon this Agreement.
The Junior Lienholder for itself and the Noteholders expressly waives all notice
of the acceptance by the Senior Lienholder of the provisions of this Agreement
and all other notices not specifically required pursuant to the terms of this
Agreement. The Junior Lienholder agrees that the Senior Lienholder has not made
any representation or warranty with respect to the due execution, legality,
validity, completeness or enforceability of any of the Senior Lienholder
Documents, the perfection or priority of any Lien securing any of the Senior
Lienholder Debt or the collectability of any of the Senior Lienholder Debt. The
Senior Lienholder shall be entitled to manage and supervise its credit
facilities with the Credit Parties in accordance with applicable law and its
usual business practices, modified from time to time as it deems appropriate
under the circumstances, without regard to the existence of any rights that the
Junior Lienholder or the Noteholders may have in any of the property or assets
of the Credit Parties, and the Senior Lienholder shall have no liability to the
Junior Lienholder or the Noteholders for any loss, claim or damage allegedly
suffered by the Junior Lienholder or the Noteholders in any proceeding by the
Senior Lienholder to foreclose or otherwise enforce any of its Liens in any of
the Senior Lienholder Collateral.
14. Financial Condition of the Credit Parties. The Noteholders
shall each be responsible for keeping informed of the financial condition of the
Credit Parties and of all other circumstances bearing upon the risk of
nonpayment of the Junior Lienholder Debt that diligent
D-9
inquiry would reveal and the Junior Lienholder hereby agrees for itself and on
behalf of the Noteholders that the Senior Lienholder shall have no duty to
advise the Junior Lienholder or the Noteholders of any information regarding
such condition or any such circumstances.
15. Code Notices. If the Senior Lienholder shall be required by
the Code or any other applicable law to give notice to the Junior Lienholder or
the Noteholders of any action taken or to be taken by the Senior Lienholder
against or with respect to any of the Senior Lienholder Collateral, such notice
shall be given in accordance with Section 20 below and five (5) days notice
shall be conclusively deemed to be commercially reasonable.
16. Further Assurances. Each Lienholder agrees to take any and all
additional actions and execute, deliver, file and record any additional
documents, agreements and instruments as may be necessary or as the other
Lienholder may from time to time reasonably request to effect the subordination
and other provisions of this Agreement.
17. No Violation of Documents. Each Lienholder agrees that the
terms and provisions of this Agreement, or the Liens granted by the Credit
Parties to each of them thereunder, do not violate any term or provision of any
of its respective Documents with the Credit Parties; and to the extent any of
the terms or provisions of this Agreement are inconsistent with any of the terms
and provisions of such Lienholder's Documents, the provisions of such Documents
shall be deemed to have been superseded by this Agreement.
18. Entire Agreement; Modifications in Writing. This Agreement
constitutes and expresses the entire understanding among the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
whether express or implied, oral or written. No amendment, modification,
supplement, termination, consent to or waiver of any provision of this Agreement
nor any consent to any departure therefrom shall in any event be effective
unless the same shall be in writing and signed by or on behalf of each
Lienholder. Any waiver of any provision of this Agreement, and any consent to
any departure from the terms of any provision of this Agreement, shall be
effective only in the specific instances and for the specific purpose for which
given.
19. Waiver; Failure or Delay. No failure or delay on the part of a
Lienholder in the exercise of any power, right, remedy or privilege under this
Agreement shall impair such power, right, remedy or privilege or shall operate
as a waiver thereof; nor shall any single or partial exercise of any such power,
right, remedy or privilege preclude any other or further exercise of any other
power, right, remedy or privilege. The waiver of any such right, power, remedy
or privilege with respect to particular facts and circumstances shall not be
deemed to be a waiver with respect to other facts and circumstances.
20. Notices. All notices, requests and demands to or upon a
Lienholder, to be effective, shall be in writing and shall be sent by certified
or registered mail, return receipt requested, by overnight air courier or by
facsimile, and shall be deemed to have been received by the other Lienholder
when sent during customary business hours by facsimile, transmission
D-10
confirmed (or, if sent after 5:00 o'clock p.m., eastern time, on the following
business day), when delivered against a receipt, one (1) business day after
sending by overnight air courier, and three (3) business days after mailing, if
sent by certified or registered mail. Notices shall be addressed as follows:
If to the Senior Lienholder: Fleet Capital Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Southeast Loan Administration
Facsimile No.: 000-000-0000
With a copy to: Xxxxxxxxxx & Xxxx, P.A.
000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: 336-273-7885
If to the Junior Lienholder: U. S. Bank National Association
Xxx Xxxxxxx Xxxxxx - 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Corporate Trust Department
(Pierre Foods, Inc. a/k/a Fresh Foods,
Inc. Senior Notes due 2006)
Facsimile No. 000-000-0000
With a copy to: Xxxxxxx & Xxxxxxx LLP
Xxx Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxx Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 20. Any written notice or demand that is not
sent in conformity with the provisions hereof shall nevertheless be effective on
the date that such notice is actually received by the noticed party.
21. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
22. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of each Lienholder and their respective successors and
assigns. Any person or entity whose loans to the Credit Parties hereafter are
used to refinance the Senior Lienholder Debt shall
D-11
be deemed for all purposes hereof to be the successor to the Senior Lienholder,
and from and after the date of any such refinancing and satisfaction in full of
any Senior Lienholder Debt, such person or entity shall be deemed a party hereto
in the place and stead of the Senior Lienholder as if such person or entity had
been the original signatory hereto.
23. Equitable Remedies. Each party to this Agreement acknowledges
that the breach of any of the provisions of this Agreement is likely to cause
irrevocable damage to the other party. Therefore, the relief to which any party
shall be entitled in the event of any such breach or threatened breach shall
include, without limitation, a mandatory injunction for specific performance,
injunctive or other judicial relief to prevent a violation of any of the
provisions of this Agreement, damages and any other relief to which it may be
entitled at law or in equity.
24. Attorneys' Fees and Expenses. In the event of any dispute
concerning the meaning or interpretation of this Agreement which results in
litigation, or in the event of any litigation by a party hereto to enforce the
provisions hereof, the prevailing party shall be entitled to recover from the
non-prevailing party, in addition to its other damages, its reasonable
attorneys' fees and expenses and any actual court costs incurred.
25. Section Titles. The section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement among the parties hereto.
26. Authority. Each party represents and warrants to each other
party that it has the authority to enter into this Agreement and that the person
signing for such party is authorized and directed to do so. The Junior
Lienholder further warrants and represents to the Senior Lienholder that the
Junior Lienholder has been duly authorized by the requisite number of
Noteholders required under the terms of the Indenture to enter into this
Agreement on behalf of all of the Noteholders and that, upon the execution and
delivery hereof by all of the parties hereto, this Agreement shall be binding
upon and enforceable against the Noteholders.
27. Counterparts. This Agreement may be executed by the parties
hereto in one or more counterparts, each of which when so executed shall be an
original. When taken together, such counterparts shall constitute but one and
the same document.
28. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
NORTH CAROLINA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA. AS PART OF THE CONSIDERATION FOR
NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR
PRINCIPAL PLACE OF BUSINESS OF THE JUNIOR LIENHOLDER OR THE SENIOR LIENHOLDER,
EACH LIENHOLDER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF
MECKLENBURG COUNTY, NORTH CAROLINA, OR, AT THE
D-12
SENIOR LIENHOLDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF NORTH CAROLINA, CHARLOTTE DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE JUNIOR
LIENHOLDER AND THE SENIOR LIENHOLDER PERTAINING TO THIS AGREEMENT OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH LIENHOLDER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH LIENHOLDER HEREBY WAIVES ANY OBJECTION
WHICH SUCH LIENHOLDER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH
LIENHOLDER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH LIENHOLDER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH LIENHOLDER'S
ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE
RIGHT OF A LIENHOLDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW, OR TO PRECLUDE THE ENFORCEMENT BY SUCH LIENHOLDER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
29. WAIVERS OF TRIAL BY JURY. EACH LIENHOLDER WAIVES, TO THE
FULLEST EXTENT PROVIDED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE SENIOR LIENHOLDER COLLATERAL OR THE SENIOR LIENHOLDER
DOCUMENTS. EACH LIENHOLDER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO THE OTHER LIENHOLDER'S ENTERING INTO ITS RESPECTIVE
DOCUMENTS WITH THE CREDIT PARTIES AND EXTENDING CREDIT TO THE CREDIT PARTIES
THEREUNDER AND THAT EACH LIENHOLDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS
FUTURE DEALINGS WITH THE CREDIT PARTIES. EACH LIENHOLDER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS
KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF
D-13
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
D-14
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
JUNIOR LIENHOLDER:
U. S. BANK NATIONAL
ASSOCIATION, as Trustee
By: _____________________________________
Title: ______________________________
SENIOR LIENHOLDER:
FLEET CAPITAL CORPORATION
By: _____________________________________
Title: ______________________________
D-15
ACKNOWLEDGMENT AND AGREEMENT
OF CREDIT PARTIES
The undersigned, Pierre Foods, Inc. (the "Borrower"), a North Carolina
corporation, and its subsidiaries, Fresh Foods Properties, LLC, Columbia Hill
Aviation, LLC, Compass Outfitters, LLC, PF Purchasing, LLC, and PF Distribution,
LLC, each a North Carolina limited liability company (the "Subsidiary
Guarantors" and, together with the Borrower, the "Credit Parties"), each hereby
accepts and acknowledges receipt of a copy of the within and foregoing Lien
Subordination Agreement (the "Agreement") and consents to and agrees to bound by
all of the terms and provisions thereof.
IN WITNESS WHEREOF, the undersigned has caused this Acknowledgment and
Agreement to be duly executed on the day and year first above written.
BORROWER:
PIERRE FOODS, INC.
By: /S/ Xxxxxx X. Xxxxxxx
--------------------------------
Title: CFO
SUBSIDIARY GUARANTORS:
FRESH FOODS PROPERTIES, LLC
By: /S/ Xxxxxx X. Xxxxxxx
--------------------------------
Title: Manager
COMPASS OUTFITTERS, LLC
By: /S/ Xxxxxx X. Xxxxxxx
--------------------------------
Title: Manager
[Signatures Continue on the Next Page]
D-16
COLUMBIA HILL AVIATION, LLC
By: /S/ Xxxxx X. Xxxxx
--------------------------------
Title: Manager
PF PURCHASING, LLC
By: /S/ Xxxxx X. Xxxxx
--------------------------------
Title: Manager
PF DISTRIBUTION, LLC
By: /S/ Xxxxx X. Xxxxx
--------------------------------
Title: Manager
D-17
