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EXHIBIT 10.3
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INTERCREDITOR AGREEMENT
Dated as of November 17, 2005
Re: $20,000,000 6.65% Senior Notes,
due July 7, 2007
of
SANDERSON FARMS, INC.
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TABLE OF CONTENTS
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SECTION
HEADING
PAGE
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Parties..................................................................
1
Recitals.................................................................
1
SECTION 1.
DEFINITIONS........................................... 2
SECTION 2.
SHARING OF RECOVERIES................................. 3
SECTION 3.
AGREEMENTS AMONG THE CREDITORS........................ 4
Section 3.1. Independent Actions by
Creditors...................... 4
Section 3.2. Relation of
Creditors................................. 4
Section 3.3. Acknowledgment of
Guaranties.......................... 5
Section 3.4. Additional
Guarantors................................. 5
SECTION 4.
MISCELLANEOUS......................................... 5
Section 4.1. Entire
Agreement...................................... 5
Section 4.2.
Notices............................................... 5
Section 4.3. Successors and
Assigns................................ 5
Section 4.4. Consents, Amendment,
Waivers.......................... 5
Section 4.5. Governing
Law......................................... 5
Section 4.6.
Counterparts.......................................... 5
Section 4.7. Sale of
Interest...................................... 5
Section 4.8.
Severability.......................................... 5
Section 4.9.
Expenses.............................................. 6
Section 4.10. Term of
Agreement..................................... 6
Signatures...............................................................
1
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INTERCREDITOR AGREEMENT
INTERCREDITOR
AGREEMENT dated as of November 17, 2005 among the Creditors
(as defined below) of certain subsidiaries
(each a "Subsidiary Guarantor") of
Sanderson Farms, Inc., a corporation
incorporated under the laws of Mississippi
(the "Company").
RECITALS:
A. Under and
pursuant to separate and several Note Purchase Agreements,
each dated as of June 15, 1999 (the "Note
Purchase Agreements"), between the
Company and the purchasers named on Annex 1
attached to said Note Purchase
Agreements (individually a "Noteholder" and
collectively, the "Noteholders"),
the Company issued and sold to the
Noteholders $20,000,000 aggregate principal
amount of its 6.65% Senior Notes, due July
7, 2007 (collectively the "Notes").
B. The
Noteholders required as a condition of their purchase of the
Notes
that each of Sanderson Farms, Inc. (Foods
Division), a Mississippi corporation,
Sanderson Farms, Inc. (Production
Division), a Mississippi corporation, and
Sanderson Farms, Inc. (Processing
Division), a Mississippi corporation, (each a
"Subsidiary Guarantor" and collectively the
"Subsidiary Guarantors") enter into
a guaranty as security for the Notes and
accordingly each of the Subsidiary
Guarantors has agreed to provide a
guaranty. Each such Subsidiary Guarantor
executed and delivered a Guarantee
Agreement (each a "Noteholders' Guarantee"
and collectively the "Noteholders'
Guarantees") dated as of June 15, 1999,
pursuant to which such Subsidiary Guarantor
irrevocably, absolutely and
unconditionally guaranteed to the
Noteholders the payment of the principal of,
premium, if any, and interest on the Notes
and the payment and performance of
all other obligations of the Company under
the Note Purchase Agreements.
C. Under and
pursuant to that certain Credit Agreement dated as of November
17, 2005 (as such agreement may be
modified, amended, renewed or replaced,
including any increase in the amount
thereof, the "Revolving Credit Agreement")
between the Company, various lending
institutions and Harris N.A. (individually
a "Lender" and collectively the "Lenders"),
the Lenders have made available to
the Company certain credit facilities in a
current aggregate principal amount up
to $200,000,000 (all amounts outstanding in
respect of said credit facilities
being hereinafter collectively referred to
as the "Loans").
D. In connection
with the execution of the Revolving Credit Agreement and
as security for the Loans made thereunder,
the Subsidiary Guarantors have
guaranteed to the Lenders the payment of
the Loans and all other obligations of
the Company under the Revolving Credit
Agreement under those certain guaranty
agreements (as such agreement may be
modified, amended, renewed or replaced,
including any increase in the amount
thereof, the "Lenders' Guaranties").
E. The Lenders'
Guaranties and the Noteholders' Guarantees are each
hereinafter individually referred to as a
"Subsidiary Guaranty" and collectively
referred to as the "Subsidiary
Guaranties".
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F. The Company
and the Subsidiary Guarantors contemplate that from time to
time after the date hereof, additional
subsidiaries of the Company may, subject
to the terms and conditions of the
Revolving Credit Agreement and the Note
Purchase Agreements, issue additional
guaranties which the Company, the
Subsidiary Guarantors and the Creditors
wish to become subject to this
Intercreditor Agreement pursuant to the
requirements of SECTION 3.4 hereof.
G. Pursuant to
the requirements of the Note Purchase Agreements and the
Revolving Credit Agreement, the Company has
requested and the Lenders and the
Noteholders have agreed to enter into this
Agreement.
H. The Revolving
Credit Agreement replaces the Credit Agreement dated as of
July 31, 1996, as amended, among the
Company and the lenders named therein (the
"Original Revolving Lenders") and this
Agreement replaces the Intercreditor
Agreement dated as of June 15, 1999, among
the Original Revolving Lenders and
the Noteholders.
NOW, THEREFORE,
in consideration of the premises and other good and
valuable consideration, the sufficiency and
receipt of which are hereby
acknowledged, the parties hereto hereby
agree as follows:
SECTION 1. DEFINITIONS.
The following
terms shall have the meanings assigned to them below in this
SECTION 1 or in the provisions of this
Agreement referred to below:
"Additional
Guarantors" shall mean the Subsidiaries which are intended to
be subject to this Intercreditor Agreement
pursuant to the requirements of
SECTION 3.4 hereof.
"Company" shall
have the meaning assigned thereto in the Recitals hereof.
"Creditor" shall
individually mean any Lender or Noteholder and "Creditors"
shall mean all of the Lenders and the
Noteholders.
"Excess
Subsidiary Payment" shall mean as to any Creditor an amount
equal
to the Subsidiary Payment received by such
Creditor less the Pro Rata Share of
Subsidiary Payments to which such Creditor
is then entitled.
"Lender" and
"Lenders" shall have the meanings assigned thereto in the
Recitals hereto.
"Lenders
Guaranty" and "Lenders Guaranties" shall have the meanings
assigned thereto in the Recitals
hereof.
"Loans" shall
have the meaning assigned thereto in the Recitals hereof.
"Noteholder" and
Noteholders" shall have the meanings assigned thereto in
the Recitals hereof.
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"Noteholders'
Guarantee" and "Noteholders' Guarantees" shall have the
meaning assigned thereto in the Recitals
hereof.
"Note Purchase
Agreements" shall have the meaning assigned thereto in the
Recitals hereof.
"Notes" shall
have the meaning assigned thereto in the Recitals hereof.
"Person" shall
mean an individual, partnership, limited liability company,
corporation, trust or unincorporated
organization, and a government
