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REVOLVING CREDIT AGREEMENT
BY AND BETWEEN
GRUPO PILGRIM'S PRIDE FUNDING, S. DE ▇.▇. DE C.V.
(THE "COMPANY" OR "BORROWER")
COMERICA BANK
("COMERICA")
AND
COMERICA ▇▇▇▇ ▇▇▇▇▇▇, S.A.,
INSTITUCIN DE BANCA MLTIPLE
( "CBM")
SEPTEMBER 7, 2001
______________________________________________________________________________
______________________________________________________________________________
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, is made as of the 7{th} day of
September, 2001, by and between GRUPO PILGRIM'S PRIDE FUNDING S. de ▇.▇. de
C.V., a SOCIEDAD DE RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE duly
organized and validly existing under the laws of the United Mexican States
("Mexico"), having its corporate domicile in Queretaro, Mexico ("Company"
or "Borrower"), and COMERICA BANK ("Comerica"), a banking corporation duly
organized and validly existing under the laws of the State of Michigan, of
Detroit, Michigan and COMERICA ▇▇▇▇ ▇▇▇▇▇▇, S.A., INSTITUCIN DE BANCA
MLTIPLE a banking institution organized and existing under the laws of
Mexico ("CBM;" collectively with Comerica, the "Bank").
WITNESSETH:
WHEREAS, Company has requested Bank to provide it with a revolving
loan in the amount of Thirty Million Dollars ($30,000,000) which shall
include a Seven Million Dollar ($7,000,000) sublimit in equivalent Pesos,
and Bank is willing to do so upon the terms and conditions of this
Agreement.
NOW, THEREFORE, Company and Bank agree to the following:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
"Accounts" means, with respect to any Person, all accounts
receivables, monies and book debts at any time owed to such Person, and all
instruments, chattel paper and other documents evidencing or securing any
such accounts receivable, monies or book debts.
"Advance" shall mean a borrowing requested by ▇▇▇▇▇▇▇▇ and made by
Comerica with respect to Dollars and CBM with respect to Pesos, pursuant
hereto.
"Affiliates" shall mean (i) any Subsidiary of Avicola; (ii) U.S.
Guarantor; and (iii) any Subsidiary of U.S. Guarantor.
"Applicable Interest Rate" shall mean, with respect to indebtedness
outstanding hereunder or under the Notes in Dollars the LIBOR-based Rate or
if required in accordance with the terms and conditions set forth in this
Agreement the Federal Funds-based Rate, as the alternative base rate, and
in respect to indebtedness outstanding hereunder or under the Notes in
Pesos the TIIE-based rate, or if required in accordance with the terms and
conditions set forth in this Agreement the CETES-based Rate.
"Avicola" shall mean Avicola Pilgrim's Pride de Mexico, S.A. de C.V.,
a SOCIEDAD ANNIMA DE CAPITAL VARIABLE duly organized under the laws of
Mexico.
"Business Day" shall mean (i) with respect to any borrowing, payment
or rate selection of LIBOR-based Loans, any day, other than Saturday,
Sunday or holiday on which commercial banks generally are open in Detroit,
Michigan for the conduct of all or substantially all of their commercial
lending activities and on which dealings in U.S. Dollars are carried on in
the London interbank market, (ii) with respect to any borrowing, payment or
rate selection of TIIE-based Loans or CETES-based Loan, any day, other than
Saturday, Sunday or holiday on which commercial banks generally are open in
Mexico City, Mexico for the conduct of all or substantially all of their
commercial lending activities and (ii) for all other purposes, a day (other
than a Saturday or Sunday) on which commercial banks generally are open in
Detroit, Michigan and Mexico City, Mexico for the conduct of all or
substantially all of their commercial lending activities.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or
otherwise would be disclosed as such in a note to such balance sheet.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease or otherwise be disclosed in a note to such
balance sheet.
"CETES-based Loan" shall mean any portion of the Loan which bears
interest at the CETES-based Rate.
"CETES-based Rate" shall mean, with respect to any CETES-based Loan
outstanding under this Agreement bearing interest at the CETES-based Rate
for an applicable Interest Period, a per annum interest rate which is equal
to the quotient achieved by dividing (i) the sum of the CETES Margin plus
the CETES Rate, by (ii) the difference of 1.0 minus the rate of Mexican
income tax withholding rate applicable to payment of interest receivable
hereunder, expressed as a decimal number applicable to interest payments
hereunder.
"CETES Margin" shall mean:
(a) to the extent the outstanding principal balance of all Loans is
$15,000,000 (or the Equivalent Amount in Pesos) or less, 1.25%;
and
(b) to the extent the outstanding principal balance of all Loans is
greater than $15,000,000 (or the Equivalent Amount in Pesos),
1.5%.
"CETES Rate" shall mean, with respect to any CETES based loan
outstanding under this Agreement, the average weighted value of all primary
placement rates of the Certificados de la Tesorera de la Federacin
having a maturity of 28 days or such term as may substitute such 28 day
term in case the maturity of such instrument is not a Business Day,
published in the "Economic Indexes" Section of the Official Gazette on any
day that the CETES Rate shall be the applicable interest rate with respect
to the indebtedness outstanding hereunder.
"Collateral" means all Accounts, Inventory, Equipment and Real Estate
of Operating Company, and any substitutions for, or replacements of, any of
the foregoing.
"Consolidated" or "consolidated" shall mean when used with reference
to any financial term in this Agreement, the aggregate for two or more
Persons of the amounts signified by such term for all such Persons
determined on a consolidated basis in accordance with GAAP. Unless
otherwise specified herein, references to "consolidated" financial
statements or data of Borrower, Operating Company or Avicola includes
consolidation with the Subsidiaries of such Person in accordance with GAAP.
"Credit Party" shall mean Borrower and Guarantors.
"Current Ratio" shall mean, as of any applicable date of
determination, the ratio of current assets to current liabilities, each
determined in accordance with GAAP.
"Default" shall mean any condition or event which, with the giving of
notice or the passage of time, or both, would constitute an Event of
Default.
"Dollars" and "$" shall mean lawful currency of the United States of
America.
"EBITDA" shall mean as of any date, with respect to any Person for a
period of six consecutive fiscal quarters of such Person ending at the
close of the fiscal quarter most recently ended of such Person, operating
income of such Person for such period PLUS, any amounts with respect to
depreciation or amortization, all determined in accordance with GAAP.
"Effective Date" shall mean the date of this Agreement.
"Eligible Accounts" shall mean an Account arising in the ordinary
course of the Operating Company's business which meets each of the
following requirements:
(a) to the extent it is not owing more than ninety (90) days after
the date of the original invoice or other writing evidencing such
Account;
(b) it arises from the sale or lease of goods and such goods have
been shipped or delivered to the account debtor; or it arises
from services rendered and such services have been performed;
(c) it is evidenced by an invoice, dated not later than 5 days of the
date of shipment or performance, rendered to the account debtor,
or some other evidence of billing acceptable to Bank;
(d) it is not evidenced by any note, trade acceptance, draft or other
negotiable instrument or by any chattel paper, unless such note
or other document or instrument previously has been endorsed and
delivered or otherwise legally conveyed to Bank;
(e) it is a valid, legally enforceable obligation of the account
debtor thereunder, and to the extent it is not subject to any
offset, counterclaim or other defense on the part of such account
debtor or to any claim on the part of such account debtor denying
liability thereunder in whole or in part;
(f) it is not an Account billed in advance, payable on delivery, for
consigned goods, for guaranteed sales, for unbilled sales, for
progress ▇▇▇▇▇▇▇▇, payable at a future date in accordance with
its terms, or to the extent it is not subject to a retainage or
holdback by the account debtor or insured by a surety company;
(g) the Account is subject to a duly perfected lien in favor of the
Bank pursuant to the Security Documents ranking in priority to
all other liens, which lien has been duly registered, filed or
recorded in all applicable jurisdictions and all other steps
necessary have been taken to create, perfect and maintain such
lien, to the extent such actions are required under applicable
law;
(h) the Account does not constitute an obligation of (i) any Person
whose principal place of business is, or who is organized under
the laws of, any jurisdiction other than a jurisdiction included
in the United States or Mexico, (ii) an Affiliate of Operating
Company, or (iii) any governmental entity;
(i) the Account has not arisen out of a written order or contract
with or from an account debtor which by its nature or terms
prevents, restricts, forbids or makes void or unenforceable the
assignment to the Bank of such Account, or requires notice to, or
the consent of, the account debtor(unless such consent has been
secured or such notice has been given).
An Account which is at any time an Eligible Account, but which
subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account.
"Eligible Inventory" shall mean all finished animal feed, corn,
soybean, soybean meal and imported sorghum of Operating Company, excluding:
(a) Consigned goods;
(b) Inventory covered by or subject to a title retention agreement or
a seller's right to repurchase, or any consensual or
nonconsensual lien (including without limitation purchase money
security interests) other than in favor of Bank; and
(c) any Inventory which is not subject to a duly perfected lien in
favor of the Bank ranking in priority to all other liens, which
lien has been duly registered, filed or recorded in all
applicable jurisdictions and all other steps necessary have been
taken to create, perfect and maintain such liens, to the extent
such actions are required under applicable law.
Inventory shall be valued at the lower of cost or market value as
determined in accordance with GAAP or appraisals as determined by Bank in
its reasonable credit judgment, and Inventory which is at any time Eligible
Inventory, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be Eligible Inventory.
"Environmental Complaint" shall have the meaning set forth in Section
5.15(c) hereof.
"Environmental Law(s)" shall mean all applicable laws, codes,
ordinances, rules, regulations, orders, decrees and directives issued by
any federal, state, local, foreign or other governmental or quasi-
governmental authority or body (or any agency, instrumentality or political
subdivision thereof) in which Borrower, Avicola, Operating Company or any
of their respective Subsidiaries conducts business pertaining to Hazardous
Materials, including without limitation, any hazardous materials or wastes,
toxic substances, flammable, explosive or radioactive materials, asbestos,
and/or other similar materials; or any portion thereof including, without
limitation, those relating to soil, surface, subsurface ground water
conditions and the condition of the ambient air; and any other federal,
state, foreign or local statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to, or imposing liability or standards
of conduct concerning, any hazardous, toxic, radioactive, flammable or
dangerous waste, substance or material, as now or at any time hereafter in
effect.
"Equipment" shall mean all machinery and equipment of Operating
Company located on the Real Estate.
"Equivalent Amount" shall mean (i) with respect to each Advance made
or carried (or to be carried) in Dollars, the principal amount thereof and
(ii) with respect to each Advance made or carried (or to be made or
carried) in Pesos, the amount of Dollars which is equivalent to such amount
of Pesos at the fixed exchange rate established by the Central Bank of
Mexico and published in the Official Gazette for the sale of Dollars for
such Pesos two (2) Business Days before determination of such Equivalent
Amount is to be made.
"Event of Default" shall mean each of the Events of Default specified
in Section 8.1 of this Agreement.
"Federal Funds-based Loan" shall mean an Advance which bears an
interest at the Federal Funds-based Rate.
"Federal Funds-based Rate" shall mean a per annum interest rate which
is equal to the quotient achieved by dividing (i) the sum of the Federal
Funds Margin plus the Federal Funds Rate, by (ii) the difference of 1.0
minus the rate of Mexican income tax withholding rate applicable to
payments of interest receivable hereunder, expressed as a decimal number
applicable to interest payments hereunder.
"Federal Funds Margin" shall mean:
(a) to the extent the outstanding principal balance of all Loans is
$15,000,000 (or the Equivalent Amount in Pesos) or less, 1.25%;
and
(b) to the extent the outstanding principal balance of all Loans is
greater than $15,000,000 (or the Equivalent Amount in Pesos),
1.5%.
"Federal Funds Rate" shall mean a per annum rate of interest
determined on the basis of quotations for overnight federal funds
transactions appearing on Page 60 of the ▇▇▇▇▇▇-▇▇▇▇▇▇ Moneycenter News
Services (▇▇▇▇▇▇ GuyButler-Domestic Composite Indicators - Term Federal
Funds for Domestic Banks), on any day that the Federal Funds Rate shall be
the applicable interest rate with respect to the indebtedness outstanding
hereunder. If, for any reason, such rates do not appear on said Page 60 of
the ▇▇▇▇▇▇-▇▇▇▇▇ Moneycenter News Services (or otherwise on such service),
the "Federal Funds Rate" shall be determined by reference to such other
publicly available service for displaying Federal Funds Rates, as shall be
designated by the Bank from time to time.
"Fixed Assets" shall mean the Equipment and Real Estate.
"Formula Amount" shall mean as of the date of any determination
thereof the sum of:
(a) 70% of the Eligible Accounts; plus
(b) the lesser of (i) 60% of the Eligible Inventory or (ii)
$10,000,000; plus
(c) 60% of the "net market value" of the Fixed Assets, determined
pursuant to appraisals, in form and substance reasonably
satisfactory to Bank.
"Funded Debt" shall mean with respect to any Person, all Indebtedness
for borrowed money evidenced by notes, bonds, debentures, or similar
evidences of Indebtedness and which by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender
or lenders to extend credit over a period of more than one year from the
date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor.
"GAAP" shall mean generally accepted accounting principles in Mexico,
applied on a consistent basis.
"Guarantor(s)" shall mean Operating Company, Avicola, Holding,
Inmobiliaria, US Guarantor and any Replacement Guarantor.
"Guaranty" shall mean to guaranty agreement and the (FIANZA SOLIDARIA)
executed and delivered to Bank by the Guarantors in form and substance
satisfactory to Bank pursuant to which:
(a) Operating Company, Avicola and Holding guaranty all of Company's
obligations and indebtedness to Bank hereunder, with respect to
the Loans and under the other Loan Documents;
(b) US Guarantor guarantees $15,000,000 of the principal balance of
the Loans, plus interest accruing thereon and cost of
collections.
"Hazardous Material" shall mean and include any hazardous, toxic or
dangerous waste, substance or material defined as such in, or for purpose
of, any Environmental Laws.
"Holding" means Grupo Pilgrim's Pride Funding Holding, S. de ▇.▇.▇▇
C.V., a SOCIEDAD DE RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE duly
organized under the laws of Mexico.
"Indebtedness" of any Person shall mean: (i) all indebtedness of such
Person for borrowed money; (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments; (iii) all indebtedness created or
arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property); (iv) all
Capital Lease Obligations; (v) all guaranteed indebtedness; and (vi) all
indebtedness referred to in clauses (i), (ii), (iii), (iv) or (v) above
secured by (or for which the holder of such indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien upon or in
property (including accounts and contract rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such indebtedness.
"Indebtedness Ratio" shall mean, as of any applicable date of
determination, the ratio of Total Liabilities to the sum of Total
Liabilities and Net Worth.
"Indenture" shall mean that certain Indenture dated as of August 9,
2001 by US Guarantor, as Issuer and The Chase Manhattan Bank, as Trustee
relating to $200,000,000, 9-5/8% Senior Notes due 2011 and additional notes
evidencing an additional aggregate principal amount of up to $200,000,000
and all amendments and supplements thereto.
"Inmobiliaria" shall mean Immobiliaria Avicola Pilgrim's Pride, S. de
▇.▇. de C.V., a SOCIEDAD DE RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE
duly organized under the laws of Mexico.
"Interest Coverage Ratio" shall mean, as of any applicable date of
determination, the ratio of EBITDA to Interest Expense, measured on a
rolling 6 fiscal quarters basis.
"Interest Expense" shall mean, the interest expense of a Person,
determined in accordance with GAAP.
"Interest Period" shall mean for:
(A) a LIBOR-based Loan, an interest period of one (1), two (2) or
three (3) months as selected by ▇▇▇▇▇▇▇▇;
(B) a TIIE-based Loan, an interest period of one (1) month;
provided however for (A) and (B) above that:
(a) any Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next succeeding
Business Day, except that if the next succeeding Business Day
falls in another calendar month, the Interest Period shall end on
the next preceding Business Day, and when an Interest Period
begins on a day which has no numerically corresponding day in the
calendar month during which such Interest Period is to end, it
shall end on the last Business Day of such calendar month; and
(b) no Interest Period shall extend beyond the Maturity Date.
"Inventory" shall mean all finished animal feed, corn, soybean,
soybean meal and imported sorghum of Operating Company.
"LIBOR-based Loan" shall mean any portion of the Loan which bears
interest at the LIBOR-based Rate.
"LIBOR-based Rate" shall mean, with respect to any LIBOR-based Loan
outstanding under this Agreement bearing interest at the LIBOR-based Rate
for an applicable Interest Period, a per annum interest rate which is equal
to the quotient achieved by dividing (i) the sum of the LIBOR Margin plus
the LIBOR Rate, by (ii) the difference of 1.0 minus the rate of Mexican
income tax withholding rate applicable to payments of interest receivable
by the Bank hereunder, expressed as a decimal number applicable to interest
payments hereunder.
"LIBOR Lending Office" shall mean any Comerica office located in the
Cayman Islands, British West Indies, or such other branch of Bank, domestic
or foreign, as it may hereafter designate as its LIBOR Lending Office by
notice to Borrower or any office of CBM located in Mexico.
"LIBOR Margin" shall mean:
(a) to the extent the outstanding principal balance of all Loans is
$15,000,000 (or the Equivalent Amount in Pesos) or less, 1.25%;
and
(b) to the extent the outstanding principal balance of all Loans is
greater than $15,000,000 (or the Equivalent Amount in Pesos),
1.5%.
"LIBOR Rate" shall mean, with respect to any LIBOR-based Loan
outstanding under this Agreement, the per annum rate of interest determined
on the basis of the rate for deposits in United States Dollars for a period
equal to the relevant Interest Period for such Advance, commencing on the
first day of such Interest Period, appearing on Page BBAM of the Bloomberg
Financial Markets Information Service as of 11:00 a.m. (Detroit, Michigan
time) (or soon thereafter as practical), two (2) Business Days prior to the
first day of such Interest Period.
"Loan" or "Loans" shall mean the borrowings requested by Company and
to be made by Bank under this Agreement, including any refunding of such
borrowing pursuant to Section 2.11 hereof.
"Loan Documents" shall mean collectively, this Agreement, the Notes,
the Guaranty (FIANZA), the Security Documents and any other documents,
instruments or agreements executed pursuant to or in connection with the
Loans, this Agreement or the other Loan Documents, as such documents may be
amended from time to time.
"Material Adverse Effect" shall mean with respect to the Credit
Parties other than the US Guarantor, taken as a whole or with respect to
the US Guarantor: (i) a material adverse effect on (a) the business,
assets, operations or financial or other condition of such applicable
parties, (b) such applicable party's ability to pay or perform the
obligations under the Loan Documents to which such Credit Party is a party
in accordance with the terms thereof, or (c) Bank's rights and remedies
under the Agreement and the other Loan Documents.
"Maturity Date" shall mean September 7, 2004.
"Mexican Guarantors" shall mean the Guarantors other than the US
Guarantor.
"Mortgage" shall mean the first priority mortgage to be granted in
favor of Comerica and CBM by: (i) Inmobiliaria in respect to the real
estate in which the farm known as Granja la Pursima, which is located
in Municipio ▇▇ ▇▇▇▇, Estado de Queretaro, substantially in the terms
of Exhibit E; (ii) Operating Company in respect to the real estate in which
the farm known as Granja el Coyote, which is located in Municipio de
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Estado de Queretaro, substantially in the terms of Exhibit
E, (iii) Operating Company in respect to the real estate in which the farm
known as Granja Nogales, which is located in Municipio ▇▇ ▇▇▇▇, Estado
de Queretaro, substantially in the terms of Exhibit E, (iv) Operating
Company in respect to the real estate in which the farm known as Granja
Buenos Aires, which is located in Municipio ▇▇ ▇▇▇▇, Estado de
Queretaro, substantially in the terms of Exhibit E, (v) Operating Company
in respect to the real estate in which the farm known as Granja Atongo I,
which is located in Municipio del ▇▇▇▇▇▇▇, Estado de Queretaro,
substantially in the terms of Exhibit E, and (vi) by Operating Company in
respect to the real estate in which the farm known as Granja Cerro ▇▇▇▇▇▇,
which is located in Municipio del ▇▇▇▇▇▇▇, Estado de Queretaro,
substantially in the terms of Exhibit E.
"Net Worth" shall mean:
(a) With respect to Operating Company on a consolidated basis, its
Total Assets (other than patents, patent rights, trademarks,
trade names, copy rights, franchises, licenses, goodwill and
similar general intangible assets) less: (i) advances to and/or
accounts receivables owing from Affiliates (other than Operating
Company and its Subsidiaries); and (ii) Total Liabilities; and
(b) With respect to Avicola on a consolidated basis, its Total Assets
(other than patents, patent rights, trademarks, trade names, copy
rights, franchises, licenses, goodwill and similar general
intangible assets) less: (i) advances to and/or accounts
receivables owing from Affiliates (other than Avicola and its
Subsidiaries); (ii) Total Liabilities; and (iii) loans made to
third parties other than to Affiliates.
"Note(s)" or "Note" shall mean the Promissory Notes (PAGARS)
evidencing the Loans made by Bank pursuant to Section 2.1 hereof in the
form of Exhibit "A" attached to this Agreement executed and delivered by
the Company as of date of and evidencing each requested Advance, or if
applicable, the Federal Funds-based Rate Note executed and delivered by
Company in accordance with Section 2.6 below (in the form attached hereto
as Exhibit "B"), or if applicable, the TIIE-based Rate Note or the CETES-
based Rate Note (in the forms attached hereto as Exhibit C) and in all
events guaranteed (por aval) by the Guarantors.
"Official Gazzete" shall mean the DIARIO OFICIAL DE LA FEDERACIN
of Mexico.
"Operating Company" shall mean Pilgrim's Pride, S.A. de C.V. a
SOCIEDAD ANNIMA DE CAPITAL VARIABLE duly organized and validly existing
under the laws of Mexico.
"Payment Date" shall mean the last day of the Interest Period selected
for each Note.
"Permitted Liens" shall mean those liens, security interests and
encumbrances expressly permitted by Section 7.1.
"Person" shall mean any individual, corporation, partnership, limited
liability company, trust, incorporated or unincorporated organization,
joint venture, joint stock company, or a government (whether foreign,
federal, state, country, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof) or any
agency or political subdivision thereof or other entity of any kind.
"Pesos" shall mean Mexican pesos, the lawful currency of Mexico.
"Pesos Subfacility" shall mean Advances requested to be made by CBM in
Pesos, in an aggregate amount not to exceed the Pesos Subfacility Maximum
as may be reduced pursuant to Section 2.19.
"Pesos Subfacility Maximum" shall mean up to the Equivalent Amount of
US $7,000,000, in Pesos as may be reduced pursuant to Section 2.19.
"Premises" shall have the meaning set forth in Section 5.15 and shall
include the Real Estate.
"Process Agent" shall mean CT Corporation System or its successors or
assigns, or any other person or entity acting on behalf of the Company and
Mexican Guarantor as agent for the service of process in respect of any
lawsuits or proceedings initiated in the United States of America in
connection with the Loan Documents.
"Real Estate" shall mean the real estate described in the Mortgage.
"Replacement Guarantor" shall mean any Subsidiary created by Operating
Company or US Guarantor to be the primary importer and/or distributor in
Mexico of poultry product exported by US Guarantor to Mexico.
"Request for Loan" shall mean a Request for Loan issued by Company
under this Agreement in the form annexed to this Agreement as Exhibit "D".
"Reserve Requirements" shall mean the stated maximum rate (expressed
as a decimal) of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) that is
specified at any time during such Interest Period by the Board of Governors
of the Federal Reserve System (or any successor agency thereto) for
determining the maximum reserve requirements with respect to eurodollar
funding (currently referred to as "eurocurrency liabilities") in Regulation
D of such Board maintained by a member bank of such System; all as
conclusively determined by Bank, absent manifest error.
"Revolving Loan" or "Revolving Loans" shall mean the revolving credit
loans to be advanced and readvanced to the Borrower pursuant to Section 2.1
hereof.
"Revolving Loan Commitment" shall mean Thirty Million Dollars
($30,000,000), as may be reduced pursuant to Section 2.19.
"Revolving Maximum" shall mean, as of any date the lesser of the
Revolving Loan Commitment or the Formula Amount, provided, however, that a
portion of the Revolving Maximum may be designated by the Borrower in the
Equivalent Amount of Pesos, not to exceed the Pesos Subfacility Maximum.
"Revolving Maximum - Dollars" shall mean the Revolving Maximum less
the Equivalent Amount of the aggregate Advances outstanding under the Pesos
Subfacility.
"Revolving Maximum - Pesos" shall mean the Revolving Maximum less the
aggregate Advances under the Revolving Maximum - Dollars facility, but not
to exceed the amount of the Pesos Subfacility Maximum.
"Security Documents" shall mean the Mortgage and that certain Contrato
de Prenda ("Pledge Agreement") to be executed by Operating Company in favor
of the Bank in substantially the same form as set forth on the attached
Exhibit F.
"Subsidiary" of any Person shall mean any corporation, association,
joint stock company or business trust of which more than fifty percent
(50%) of the voting stock or other voting interest is owned either directly
or indirectly by such Person and/or one or more of its Subsidiaries.
"TIIE-based Loan" shall mean any portion of the Loan which bears
interest at the TIIE-based Rate.
"TIIE-based Rate" shall mean, with respect to any TIIE-based Loan
outstanding under this Agreement bearing interest at the TIIE-based Rate
for an applicable Interest Period, a per annum interest rate which is equal
to the quotient achieved by dividing (i) the sum of the TIIE Margin plus
the TIIE Rate, by (ii) the difference of 1.0 minus the rate of Mexican
income tax withholding rate applicable to payments of interest receivable
hereunder, expressed as a decimal number applicable to interest payments
hereunder.
"TIIE Lending Office" shall mean any CBM office located in Mexico
"TIIE Margin" shall mean:
(a) to the extent the outstanding principal balance of all Loans is
$15,000,000 (or the Equivalent Amount in Pesos) or less, 1.25%;
and
(b) to the extent the outstanding principal balance of all Loans is
greater than $15,000,000 (or the Equivalent Amount in Pesos),
1.5%.
"TIIE Rate" shall mean, the average rate equivalent to the "Tasa de
Inters Interbancaria de Equilibrio" for 28 (twenty eight) day periods
as published by Banco de Mexico in the Official Gazette. The Interest Rate
shall be modified or updated pursuant to the TIIE Rate variations published
by Banco de Mxico.
"Total Assets" shall mean, as of the date of any determination
thereof, all assets of Company, determined on a consolidated basis in
accordance with GAAP.
"Total Liabilities" shall mean, as of the date of any determination
thereof, all liabilities and other obligations of Company, determined on a
consolidated basis in accordance with GAAP.
"US Guarantor" means Pilgrim's Pride Corporation, a corporation duly
organized under the laws of the State of Delaware.
2. REVOLVING CREDIT
2.1 COMMITMENT. Subject to the terms and conditions of this
Agreement: (a) Comerica agrees to lend to Borrower from time to time
from the date of this Agreement until the Maturity Date, Revolving
Loans, with such Advances to be made in Dollars in the aggregate
principal amount outstanding at any time not to exceed the Revolving
Maximum - Dollars; and (b) CBM agrees to lend to Borrower from time to
time from the date of this Agreement until the Maturity Date,
Revolving Loans, with such Advances to be made in Pesos in the
aggregate principal amount outstanding at any time not to exceed the
Revolving Maximum - Pesos. At no time shall the aggregate Advances
requested by ▇▇▇▇▇▇▇▇ and outstanding hereunder exceed the Revolving
Maximum.
2.2 NOTES (PAGARS). Each Advance shall be evidenced by a
separate Note (pAGAR), duly executed by Borrower in the principal
amount of the Advance requested, bearing interest at the Applicable
Interest Rate, indicating the Interest Period and signed POR AVAL by
the Guarantors..
2.3 REPAYMENT. Each Note, and all principal outstanding
thereunder, shall bear interest at its Applicable Interest Rate. The
principal amount of and the interest accrued under each Note made by
Borrower pursuant to Section 2.2 above shall be repaid, converted or
rolled over by the Borrower on the Payment Date indicated in the
applicable Request for Loan, but in no event later than ninety (90)
days after the date of advance for such Note. At the Maturity Date,
the entire balance of all Notes then outstanding and all then accrued
and unpaid interest thereon, shall be due and payable. The amount and
date of each Loan, the Applicable Interest Rates, the Interest Periods
and the amount and date of any repayment shall be noted on Bank's
records, which records will be conclusive evidence thereof, absent
manifest error; provided, however, any failure by Bank to record any
such information shall not relieve Company of its obligations to repay
the outstanding principal amount of the Loans, accrued interest
thereon, and any other amounts payable by Company hereunder in
accordance with the terms of this Agreement. All payments by Company
to Bank under or pursuant to this Agreement or any of the other Loan
Documents, whether principal, interest or otherwise, shall be made
without setoff, deduction or counterclaim on the date specified for
such payment, in immediately available funds, (i) if payment is due in
Dollars, to Comerica at Comerica Tower at Detroit Center, ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, account no. 1851-355014 and (ii) if payment
is due in Pesos, to CBM, at account no. 7336-0201. Principal amounts
repaid may be subsequently reborrowed provided no Advance may mature
after the Maturity Date. Each payment by or on behalf of the Borrower
hereunder shall, unless a specific determination is made by Bank with
respect thereto, be applied (A) first, to any fees, costs, expenses
and other amounts (other than principal and interest) due Bank; (B)
second, to accrued and unpaid interest and fees due Bank; and (C)
third, to principal due Bank.
2.4 REQUESTS FOR LOANS. ▇▇▇▇▇▇▇▇ may request Advances under the
Revolving Loans by delivery to Bank of a Request for Loan form
executed by an authorized officer of Borrower and subject to the
following:
(A) EACH SUCH REQUEST FOR LOAN SHALL INDICATE THE CURRENCY TO WHICH
IT RELATES AND SHALL SET FORTH ALL OTHER INFORMATION REQUIRED ON
THE REQUEST FOR LOAN FORM;
(B) EACH SUCH REQUEST FOR LOAN SHALL BE DELIVERED TO BANK BY 10:00
A.M. (DETROIT TIME) THREE (3) BUSINESS DAYS PRIOR TO THE PROPOSED
DATE OF LOAN, EXCEPT IN THE CASE OF A TIIE-BASED LOAN, FOR WHICH
THE REQUEST FOR LOAN MUST BE DELIVERED BY 10:00 A.M. (MEXICO CITY
TIME) ON SUCH PROPOSED DATE;
(C) THE PRINCIPAL AMOUNT OF SUCH ADVANCE, SHALL BE AT LEAST $500,000
(OR THE EQUIVALENT AMOUNT OF PESOS);
(D) A REQUEST FOR LOAN, ONCE DELIVERED TO BANK, SHALL NOT BE
REVOCABLE BY BORROWER;
(E) EACH REQUEST FOR LOAN SHALL CONSTITUTE A CERTIFICATION BY THE
BORROWER AS OF THE DATE THEREOF THAT ALL OF THE CONDITIONS SET
FORTH IN SECTION 4.15 HEREOF ARE SATISFIED AS OF THE DATE OF SUCH
REQUEST AND SHALL BE SATISFIED AS OF THE DATE SUCH ADVANCE IS
REQUESTED; AND
(F) THE PRINCIPAL AMOUNT REQUESTED, TOGETHER WITH THE PRINCIPAL
AMOUNT OF ALL OTHER OUTSTANDING ADVANCES UNDER THE REVOLVING LOAN
SHALL NOT EXCEED THE REVOLVING MAXIMUM AND IF THE REQUEST FOR
LOAN IS FOR AN ADVANCE IN PESOS, THEN THE PRINCIPAL AMOUNT
REQUESTED TOGETHER WITH THE PRINCIPAL AMOUNT OF ALL OTHER
OUTSTANDING PESOS ADVANCES SHALL NOT EXCEED THE PESOS SUBFACILITY
MAXIMUM.
2.5 LIBOR-BASED RATE. Interest on each LIBOR-based Loan shall
accrue at the LIBOR-based Rate, and shall be payable on the last day
of the Interest Period applicable thereto. Interest accruing at the
LIBOR-based Rate shall be computed on the basis of a 360 day year and
shall be assessed for the actual number of days elapsed from the first
day of the Interest Period applicable thereto to, but not including
the last day thereof.
2.6 FEDERAL FUNDS-BASED RATE. In the event that the Federal
Funds-based Rate is required to be the Applicable Interest Rate
pursuant to this Agreement, interest on the unpaid balance of the Loan
from time to time outstanding shall accrue until paid at a per annum
rate equal to the Federal Funds-based Rate, and shall be payable
monthly on the first Business Day closest to the first day of each
succeeding month and in such event Company shall execute and deliver
to Bank a note (in the form attached hereto as Exhibit B; the "Federal
Funds-based Rate Note") evidencing the Federal Funds-based Rate as the
Applicable Interest Rate on or before 48 hours prior to the
commencement of such period in which the Federal Funds-based Rate is
the Applicable Interest Rate. Interest accruing at the Federal Funds-
based Rate shall be computed on the basis of a 360 day year and shall
be assessed for the actual number of days elapsed (including the first
day, but not the last day that the Federal Funds-based Rate is
applicable), and in such computation, effect shall be given to any
change in the Federal Funds-based Rate on the date of each such
change.
2.7 TIIE-BASED RATE. Interest on each TIIE-based Loan shall
accrue at the TIIE-based Rate, and shall be payable on the last day of
the Interest Period applicable thereto. Interest accruing at the TIIE-
based Rate shall be computed on the basis of a 360 day year and shall
be assessed for the actual number of days elapsed from the first day
of the Interest Period applicable thereto to, but not including the
last day thereof.
2.8 CETES-BASED RATE. Interest on the unpaid balance of each
CETES-based Loan from time to time outstanding shall accrue until paid
at a per annum rate equal to the CETES-based Rate, and shall be
payable monthly on the first Business Day closest to the first day of
each succeeding month and in such event Company shall execute and
deliver to Bank a note (in the form attached hereto as Exhibit C; the
"CETES-based Rate Note") evidencing the CETES-based Rate as the
Applicable Interest Rate on or before 48 hours prior to the
commencement of such period in which the CETES-based Rate is the
Applicable Interest Rate. Interest accruing at the CETES-based Rate
shall be computed on the basis of a 360 day year and shall be assessed
for the actual number of days elapsed (including the first day, but
not the last day that the CETES-based Rate is applicable), and in such
computation, effect shall be given to any change in the CETES-based
Rate on the date of each such change.
2.9 INTEREST PAYMENTS UPON REFUNDINGS. Notwithstanding anything
to the contrary set forth in this Agreement, all accrued and unpaid
interest on any Loan which is refunded pursuant to Section 2.11 hereof
shall be due and payable in full on the date such Loan is refunded,
together with any amounts payable under Section 3.1 hereof if a
refunding of a TIIE-based Loan occurs on any day other than the last
day of the Interest Period applicable thereto.
2.10 DEFAULT INTEREST. Notwithstanding anything to the contrary
set forth herein, in the event that and so long as there exists any
default in payment hereunder (including, without limitation, failure
to pay indebtedness under the Loan on any accelerated date for payment
thereof), (a) interest shall be payable on the principal amount of all
LIBOR-based Loans from time to time outstanding at a per annum rate
equal to the Applicable Interest Rate for each such Loan plus two
percent (2%) per annum, (b) at all other times when the Federal Funds-
based Rate is in effect, interest shall be payable at a per annum rate
equal to the Federal Funds-based Rate plus two percent (2%), (c) at
all other times when the TIIE-based Rate is in effect, interest shall
be payable at a per annum rate equal to the TIIE-based Rate plus two
percent (2%), and (d) at all other times when the CETES-based Rate is
in effect, interest shall be payable at a per annum rate equal to the
CETES-based Rate plus two percent (2%). Any interest accruing under
this Section 2.10 shall be payable upon demand.
2.11 REFUNDINGS. Subject to the payment of any break-funding
reimbursements/prepayment premiums set forth in Section 3.1, as to any
outstanding LIBOR-based Loan or TIIE-based Loan, Borrower may convert
any LIBOR-based Loan to a TIIE-based Loan (provided there is
availability under Pesos Subfacility) or convert any TIIE-based Loan
to a LIBOR-based Loan or continue a LIBOR-based Loan or TIIE-based
Loan, by making a written request therefore to the Comerica or CBM, as
the case may be, by facsimile, specifying (a) the principal amount
that is to bear interest at the LIBOR Rate or TIIE-based Rate and
(b) the Interest Period selected by Borrower during which the LIBOR
Rate or TIIE-based Rate, as the case may be, is to be applied. Any
conversion requested by Borrower must be in an amount not less than
$500,000 or the Equivalent Amount of Pesos. Following the expiration
of the Interest Period for any LIBOR-based Loan or TIIE-based Loan, as
the case may be, interest shall automatically accrue (x) if such Loan
is a LIBOR-based Loan, at the Federal Funds Rate unless Borrower
requests and receives another LIBOR-based Loan as provided in this
Section 2.11 or (y) if such Loan is a TIIE-based Loan, at the CETES
Rate unless Borrower requests and receives another TIIE-based Loan as
provided in this Section 2.11.
2.12 PREPAYMENTS. Company may prepay (without premium or penalty
but subject to Article 3) all or part of the outstanding balance of
the Loan at any time during any period when it bears interest at the
Federal Funds-based Rate or the CETES-based Rate. Upon two (2)
Business Days prior written notice to Bank, Company may prepay all or
part of any LIBOR-based Loan or any TIIE-based Loan, provided that:
(a) the amount of any such partial prepayment shall be at least
$500,000 (or the Equivalent Amount of Pesos) or the outstanding
balance of such Loan, whichever is less; and (b) if such prepayment
occurs on other than the last day of the Interest Period therefore,
Company shall pay accrued interest on the amount prepaid and such
other amounts as are required pursuant to Section 3.1 hereof, together
with such prepayment.
2.13 PAYMENTS ON NON-BUSINESS DAY. Subject to the definition of
"Interest Period" in this Agreement, in the event that any payment of
principal, interest, fees or any other amounts payable by Company
under this Agreement is due on any day which is not a Business Day,
such due date shall be extended to the next succeeding Business Day,
and, to the extent applicable, interest shall continue to accrue and
be payable for any such extension.
2.14 REVIEW DATE. Without commitment by either party, Bank and
Borrower agree to review the Agreement prior to the Maturity Date and
consider an extension of the Maturity Date, subject to Bank's
satisfaction, with the financial performance and economic situation of
Borrower.
2.15 UPFRONT FEE. Borrower shall pay CBM on the Effective Date:
(i) an up-front fee equal to US $150,000.00, calculated by applying
0.5% to US $30,000,000.00; and (ii) US $22,500.00 representing the
VAT on such fee. CBM agrees to promptly deliver to Borrower an
original official invoice with respect to such payment in accordance
with applicable laws.
2.16 COMMITMENT FEE. Unless this Agreement is sooner terminated
(in which case the Commitment Fee shall be prorated and payable upon
such termination), following the first anniversary of this Agreement,
Borrower shall pay Bank a commitment fee calculated by multiplying
0.250% by the average monthly unutilized amount of US $30,000,000.00
measured from the first anniversary date from the execution of this
Agreement to the second anniversary date from the execution of this
Agreement and each anniversary date thereof until the Maturity Date.
2.17 RECEIPT OF PAYMENTS. Any payments hereunder received by Bank
after: (i) 2:00 p.m. Detroit time for payments in Dollars, and (ii)
2:00 p.m. Mexico City time for payments in Pesos, shall be deemed
received by Bank on the next Business Day.
2.18 USE OF LOAN PROCEEDS. Borrower shall use the principal
amount of the Loan for its and its Subsidiaries' working capital needs
and the general corporate needs of the Affiliates.
2.19 REDUCTIONS OF REVOLVING LOAN COMMITMENT. Upon at least five
(5) days' prior written notice (or telephonic notice promptly
confirmed in writing) from the Borrower to the Bank, the Borrower
shall have the right, without premium or penalty, to reduce the
Revolving Loan Commitment in part or to terminate the Revolving Loan
Commitment in whole, provided that (i) any partial termination
pursuant to this Section 2.19 shall be in an amount of at least
$1,000,000 (or the Equivalent Amount of Pesos) and integral multiples
of $500,000 (or the Equivalent Amount of Pesos), and (ii) no such
reduction shall be permitted which would reduce the Revolving Loan
Commitment to an amount less than the aggregate outstanding principal
amount of the Revolving Loans. If the Revolving Loan Commitment is
reduced to amount less than the Pesos Subfacility Maximum, the Pesos
Subfacility Maximum shall automatically be deemed reduced to an amount
equal to the Revolving Loan Commitment.
3. SPECIAL PROVISIONS, CHANGES IN CIRCUMSTANCES AND YIELD PROTECTION
3.1 BREAK-FUNDING REIMBURSEMENTS/PREPAYMENT PREMIUMS. If Company
makes any payment of principal with respect to any LIBOR-based Loan or
any TIIE-based Loan on any day other than the last day of the Interest
Period applicable thereto (whether voluntarily, by acceleration, or
otherwise), or if Company fails to borrow any LIBOR-based Loan or
TIIE-based Loan after notice has been given by Company to Bank in
accordance with the terms of this Agreement requesting such Loan,
Company shall reimburse Bank, within thirty (30) days of Bank's
demand, for any resulting loss, cost or expense incurred by Bank as a
result thereof, including, without limitation, any such loss, cost or
expense incurred in obtaining, liquidating, employing or redeploying
deposits from third parties (but excluding any loss of anticipated
margin over Bank's cost of funds). Such amount payable by Company to
Bank may include, without limitation, an amount equal to the excess,
if any, of (a) the amount of interest which would have accrued on the
amount so prepaid, or not so borrowed or refunded, for the period from
the date of such prepayment or of such failure to borrow or refund,
through the last day of the relevant Interest Period, at the
Applicable Interest Rate for said Loan provided under this Agreement,
over (b) the amount of interest (as reasonably determined by Bank)
which would have accrued to Bank on such amount by placing such amount
on deposit for a comparable period with leading banks in the relevant
interbank market. Calculation of any amounts payable to Bank under
this Section 3.1 shall be made as though Bank shall have actually
funded or committed to fund the relevant LIBOR-based Loan or TIIE-
based Loan through the purchase of an underlying deposit in an amount
equal to the amount of such Loan and having a maturity comparable to
the relevant Interest Period; provided, however, that Bank may fund
any LIBOR-based Loan or TIIE-based Loan in any manner it deems fit and
the foregoing assumptions shall be utilized only for the purpose of
the calculation of amounts payable under this Section. Upon the
written request of Company, Bank shall deliver to Company a
certificate setting forth the basis in reasonable detail for
determining such losses, costs and expenses, which certificate shall
be conclusively presumed correct, absent manifest error.
3.2 ILLEGALITY. If, after the date hereof, the introduction of,
or any change in, any applicable law, rule or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or
compliance by Bank (or its LIBOR Lending Office or TIIE Lending
Office) with any request or directive (whether or not having the force
of law) of any such authority, shall make it unlawful or impossible
for Bank (or its LIBOR Lending Office or TIIE Lending Office) to honor
its obligations hereunder to make or maintain any LIBOR-based Loan or
TIIE-based Loan under this Agreement, Bank shall forthwith give notice
thereof to Company. Thereafter, until Bank notifies Company that the
circumstance giving rise to such suspension no longer exists (a) the
obligation of Bank to make LIBOR-based Loans or TIIE-based Loans and
the right of Company to request LIBOR-based Loans or TIIE-based Loans
and to convert a Loan or refund a Loan as a LIBOR-based Loan or TIIE-
based Loan shall be suspended, and thereafter, the Federal Funds-based
Rate shall be the Applicable Interest Rate, and (b) if Bank may not
lawfully continue to maintain a LIBOR-based Loan or a TIIE-based Loan
to the end of the then current Interest Period applicable thereto, the
Federal Funds-based Rate shall be the Applicable Interest Rate for the
remainder of such Interest Period for such LIBOR-based Loan and the
CETES-based Rate for such TIIE-based Loan as applicable. To the extent
that doing so will not be, in Bank's sole judgment, disadvantageous to
Bank, if doing so will eliminate the need to suspend LIBOR-based Loan
CETES-based Loan availability pursuant to this Section 3.2 Bank will
designate a different LIBOR Lending Office or TIIE Lending Office for
the Loans hereunder.
3.3 INCREASED COSTS. If the adoption after the date hereof, or
any change after the date hereof in, any applicable law, rule or
regulation of any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by Bank (or its LIBOR Lending Office or TIIE Lending
Office) with any request or directive (whether or not having the force
of law) made by any such authority, central bank or comparable agency
after the date hereof:
(A) SHALL SUBJECT BANK (OR ITS LIBOR LENDING OFFICE OR TIIE LENDING
OFFICE) TO ANY TAX, DUTY OR OTHER CHARGE WITH RESPECT TO ANY
LOAN, THE NOTES, OR ANY OF THE INDEBTEDNESS UNDER THIS AGREEMENT,
OR SHALL CHANGE THE BASIS OF TAXATION OF PAYMENTS TO BANK (OR ITS
LIBOR LENDING OFFICE OR TIIE LENDING OFFICE) OF THE PRINCIPAL OF
OR INTEREST ON ANY LOAN, THE NOTES, OR ANY OF THE INDEBTEDNESS
UNDER THIS AGREEMENT, OR ANY OTHER AMOUNTS DUE UNDER THIS
AGREEMENT IN RESPECT THEREOF (EXCEPT FOR CHANGES IN THE RATE OF
TAX ON THE OVERALL NET INCOME OF BANK OR ITS LIBOR LENDING OFFICE
OR TIIE LENDING OFFICE IMPOSED BY THE JURISDICTION IN WHICH
BANK'S PRINCIPAL EXECUTIVE OFFICE OR LIBOR LENDING OFFICE OR TIIE
LENDING OFFICE IS LOCATED); OR
(B) SHALL IMPOSE, MODIFY OR DEEM APPLICABLE ANY RESERVE (INCLUDING,
(TO THE EXTENT NOT PROVIDED ELSEWHERE IN THIS AGREEMENT) WITHOUT
LIMITATION, ANY IMPOSED BY THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM), SPECIAL DEPOSIT OR SIMILAR REQUIREMENT AGAINST
ASSETS OF, DEPOSITS WITH OR FOR THE ACCOUNT OF, OR CREDIT
EXTENDED BY BANK (OR ITS LIBOR LENDING OFFICE) OR SHALL IMPOSE ON
BANK (OR ITS LIBOR LENDING OFFICE) OR THE FOREIGN EXCHANGE AND
INTERBANK MARKETS ANY OTHER CONDITION AFFECTING ANY LOAN, THE
NOTES, OR ANY INDEBTEDNESS UNDER THIS AGREEMENT;
and the result of any of the foregoing is to increase the cost to Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount
of any sum received or receivable by Bank under this Agreement, the Notes,
or any of the indebtedness hereunder, by an amount reasonably deemed by
Bank to be material, then Company shall pay to Bank, within thirty (30)
days of Company's receipt of written notice from Bank demanding such
compensation, such additional amount or amounts as will reasonably
compensate Bank for such increased cost or reduction. Bank will promptly
notify Company of any event of which it has knowledge which will entitle
Bank to compensation pursuant to this Section 3.3. A certificate of Bank
setting forth the basis in reasonable detail for determining such
additional amount or amounts necessary to compensate Bank shall be
conclusively presumed to be correct, absent manifest error.
3.4 CAPITAL ADEQUACY. In the event that after the Effective Date,
any applicable law, treaty, rule or regulation (whether domestic or
foreign) now or hereafter in effect and whether or not presently
applicable to Bank, or any interpretation or administration thereof by
any governmental authority charged with the interpretation or
administration thereof, or compliance by Bank with any guideline,
request or directive of any such authority (whether or not having the
force of law), including any risk-based capital guidelines, affects or
would affect the amount of capital required or expected to be
maintained by the Bank (or any corporation controlling the Bank), and
the Bank determines that the amount of such capital is increased by or
based upon the existence of any obligations of the Bank hereunder or
the making or maintaining any Loans, and such increase has the effect
of reducing the rate of return on Bank's (or such controlling
corporation's) capital as a consequence of such obligations or the
making or maintaining such Loans to a level below that which the Bank
(or such controlling corporation) could have achieved but for such
circumstances (taking into consideration its policies with respect to
capital adequacy), then Company shall pay to Bank, within thirty (30)
days of Company's receipt of written notice from Bank demanding such
compensation, additional amounts sufficient to compensate the Bank (or
such controlling corporation) for any increase in the amount of
capital and reduced rate of return which Bank reasonably determines to
be allocable to the existence of any obligations of Bank hereunder or
to the making or maintaining any Loans hereunder or otherwise in
respect of any of the indebtedness hereunder. A certificate of Bank
setting forth the basis in reasonable detail for determining such
additional amounts necessary to compensate Bank shall be conclusively
presumed correct, absent manifest error. Notwithstanding the
foregoing, Company shall not be required to compensate Bank pursuant
to this Section for any period prior to the ninetieth (90th) day
preceding the date of Bank's demand for such compensation.
3.5 TAXES. Notwithstanding anything to the contrary contained
herein, all payments to be made by Company under this Agreement and
the Notes shall be made without set-off or counterclaim, as aforesaid,
and without deduction for or on account of any present or future
withholding or other taxes of any nature imposed by any governmental
authority of Mexico or of any political subdivision thereof or any
federation or organization of which such governmental authority may at
the time of payment be a member, unless Company is compelled by law to
make payment subject to such tax. In such event, Company shall:
(A) PAY TO THE BANK SUCH ADDITIONAL AMOUNTS AS MAY BE NECESSARY TO
ENSURE THAT THE BANK RECEIVES A NET AMOUNT IN DOLLARS OR PESOS,
AS THE CASE MAY BE, EQUAL TO THE FULL AMOUNT WHICH WOULD HAVE
BEEN RECEIVABLE HAD PAYMENT NOT BEEN MADE SUBJECT TO SUCH TAX;
AND
(B) REMIT SUCH TAX TO THE RELEVANT TAXING AUTHORITIES ACCORDING TO
APPLICABLE LAW, AND SEND TO BANK WITHIN FORTY FIVE (45) DAYS
FOLLOWING THE DATE IN WHICH SUCH TAX IS DUE AND PAYABLE SUCH
CERTIFICATES OR CERTIFIED RECEIPTS AS BANK SHALL REASONABLE
REQUIRE AS PROOF OF THE PAYMENT BY THE COMPANY OF ANY SUCH TAXES;
PROVIDED, THAT BANK SHALL PROMPTLY REIMBURSE TO BORROWER AN
AMOUNT IN DOLLARS EQUAL TO THE AMOUNT, IF ANY, OF ANY SUCH TAX
CREDITS ACTUALLY USED BY BANK TO OFFSET ITS TAX LIABILITIES IN
THE UNITED STATES OF AMERICA ON ITS FOREIGN SOURCE INCOME, IN
ACCORDANCE WITH UNITED STATES OF AMERICA TAX REGULATIONS. IN
CONNECTION THEREWITH, BANK SHALL ENDEAVOR TO OBTAIN FROM THE TAX
AUTHORITIES OF THE UNITED STATES OF AMERICA A TAX CREDIT ON ANY
MEXICAN INCOME TAX WITHHELD FROM INTEREST PAYMENTS RECEIVED BY
BANK HEREUNDER AND THE NOTES.
THE PROVISIONS OF THIS SECTION SHALL SURVIVE TERMINATION HEREOF.
As used herein, the terms "tax", "taxes" and "taxation" include all
existing taxes, levies, imposts, duties, charges, fees, deductions and
withholdings and any restrictions or conditions resulting in a charge
together with interest thereon and fines and penalties with respect thereto
which may be imposed by any governmental authority of Mexico or of any
political subdivision thereof or any federation or organization of which
such governmental authority may at the time of payment be a member by
reason of any violation or default with respect to the law regarding such
tax, assessed as a result of or in connection with the transactions in
Dollars or Pesos, as the case may be, the payment or delivery of funds into
or out of any jurisdiction other than the United States of America or to
non-Mexican residents (whether assessed against Company or Bank).
Notwithstanding the foregoing or anything contained herein or in any other
Loan Document to the contrary, it is understood and agreed that the CETES-
based Rate, the Federal Funds-based Rate, the LIBOR-based Rate and the
TIIE-based Rate expressly provides for the payment by Borrower of
withholding for Mexican Income taxes applicable to interest payments to
Bank hereunder and the Notes.
3.6 CURRENCY INDEMNITY. The Bank will make all advances and
disbursements in Dollars or Pesos, as the case may be, and Company is
bound to repay the Loan in Dollars, if such advance was disbursed by
the Company in Dollars and in Pesos if such advance was disbursed by
the Company in Pesos, accordingly, the parties agree that:
(A) IN THE EVENT OF A JUDGMENT OR ORDER BEING RENDERED BY ANY COURT
OR TRIBUNAL HAVING JURISDICTION THEREOF, FOR THE PAYMENT OF ANY
AMOUNTS OWED TO THE BANK UNDER A LIBOR-BASED LOAN, OR FOR THE
PAYMENT OF DAMAGES RESULTING FROM ANY BREACH OF THIS LOAN OR OF
THE LOAN DOCUMENTS AND IF SUCH JUDGMENT OR ORDER IS BEING
EXPRESSED IN A CURRENCY OTHER THAN DOLLARS ("JUDGMENT CURRENCY"),
THE COMPANY HEREBY AGREES TO INDEMNIFY AND HOLD HARMLESS THE BANK
AGAINST ANY DEFICIENCY IN TERMS OF DOLLARS IN THE AMOUNT RECEIVED
BY THE BANK ARISING OUT OR RESULTING FROM ANY VARIATION IN (I)
THE RATE OF EXCHANGE AT WHICH DOLLARS ARE CONVERTED INTO THE
JUDGMENT CURRENCY AND, (II) THE RATE OF EXCHANGE AT WHICH THE
BANK IS ABLE TO PURCHASE DOLLARS WITH THE AMOUNT OF THE JUDGMENT
CURRENCY ACTUALLY RECEIVED BY THE BANK ON THE BUSINESS DAY
FOLLOWING SUCH RECEIPT.
(B) THE ABOVE INDEMNITY SHALL CONSTITUTE A SEPARATE AND INDEPENDENT
OBLIGATION OF THE COMPANY FROM ITS OTHER OBLIGATIONS ASSUMED
HEREUNDER OR UNDER THE LOAN DOCUMENTS AND SHALL APPLY
IRRESPECTIVE OF ANY INDULGENCE GRANTED BY THE BANK AND NO PROOF
OR EVIDENCE OF ANY ACTUAL LOSS SHALL BE REQUIRED BY THE COMPANY.
THE ABOVE INDEMNITY SHALL ALSO APPLY IN THE EVENT FOR ANY REASON
THE COMPANY MAKES PAYMENT TO THE BANK IN A CURRENCY OTHER THAN
DOLLARS, EXCEPT FOR PAYMENTS IN PESOS MADE UNDER A TIIE-BASED
LOAN OR CETES-BASED LOAN.
(C) THE TERM RATE OF EXCHANGE SHALL INCLUDE ANY PREMIUMS, COMMISSIONS
AND COSTS OF EXCHANGE PAYABLE IN CONNECTION WITH THE PURCHASE OF,
OR CONVERSION INTO DOLLARS.
3.7 ALTERNATIVE INTEREST RATE. Notwithstanding anything to the
contrary contained herein:
(a) If Bank determines that by virtue of circumstances affecting the
LIBOR market or in the event that such rate does not appear on
Page BBAM of the Bloomberg Financial Markets Information Service
(or otherwise on such Service) or if the Reserve Requirements are
applicable to Bank or for any other reason set forth in this
Section 3, adequate and reasonable means do not exist to
determine or maintain the LIBOR Rate applicable to the Loan or
such event has the effect of reducing the Bank's rate of return,
Bank shall notify Borrower that the LIBOR-based Rate shall no
longer be the Applicable Interest Rate and Federal Funds-based
Rate shall be the Applicable Interest Rate. In such event, on or
before 48 hours prior to the commencement of such period in which
the Federal Funds-based Rate is the Applicable Interest Rate,
Borrower shall execute and deliver to Bank the Federal Funds-
based Rate Note. Thereafter, until it is reasonably determined
by Bank and notified to Borrower that such circumstances no
longer exist, the right of Borrower to request the applicability
of a LIBOR-based Rate on the Loan shall be suspended and Borrower
shall only be permitted to request the applicability of a Federal
Funds-based Rate on the Loan.
(b) ▇▇▇▇▇▇▇▇ hereby agrees that in the event Borrower does not accept
the Federal Funds-based Rate or fails to execute and deliver the
Federal Funds-based Rate Note in accordance with this Section,
then Bank shall be released from its obligation to maintain the
Loan. In such an event Borrower shall pay without any penalty,
precisely on the next succeeding date in which the payment of
interest is due, the principal amount of Loan, together with
interest accrued to the date of such payment, in accordance with
the Notes. ▇▇▇▇▇▇▇▇ hereby also agrees that in the event of such
payment all of Bank's obligations hereunder shall terminate
immediately without any liability for Bank. Bank hereby also
agrees that in the event of payment in full of all Borrower's
obligations hereunder, ▇▇▇▇▇▇▇▇'s obligations shall terminate
immediately without any liability for Borrower.
(c) If Bank determines that by virtue of circumstances affecting the
TIIE market or in the event that such rate is not published in
the Official Gazette or if the Reserve Requirements are
applicable to Bank or for any other reason set forth in this
Section 3, adequate and reasonable means do not exist to
determine or maintain the TIIE Rate applicable to the Loan or
such event has the effect of reducing the Bank's rate of return,
Bank shall notify Borrower that the TIIE-based Rate shall no
longer be the Applicable Interest Rate and CETES-based Rate shall
be the Applicable Interest Rate. In such event, on or before 48
hours prior to the commencement of such period in which the
CETES-based Rate is the Applicable Interest Rate, Borrower shall
execute and deliver to Bank the CETES-based Rate Note.
Thereafter, until it is reasonably determined by Bank and
notified to Borrower that such circumstances no longer exist, the
right of Borrower to request the applicability of a TIIE-based
Rate on the Loan shall be suspended and Borrower shall only be
permitted to request the applicability of a CETES-based Rate on
the Loan.
(a)Borrower hereby agrees that in the event Borrower does not accept the
CETES-based Rate or fails to execute and deliver the CETES-based Rate Note
in accordance with this Section, then Bank shall be released from its
obligation to maintain the Loan. In such an event Borrower shall pay
without any penalty, precisely on the next succeeding date in which the
payment of interest is due, the principal amount of Loan, together with
interest accrued to the date of such payment, in accordance with the Notes.
▇▇▇▇▇▇▇▇ hereby also agrees that in the event of such payment all of Bank's
obligations hereunder shall terminate immediately without any liability for
Bank. Bank hereby also agrees that in the event of payment in full of all
Borrower's obligations hereunder, ▇▇▇▇▇▇▇▇'s obligations shall terminate
immediately without any liability for Borrower.
1. CONDITIONS
A. The obligation of Bank to enter into this Agreement is subject to
the following conditions precedent:
1.1 EXECUTION OF THIS AGREEMENT. Company and the Credit Parties,
as applicable, shall have executed and delivered to Bank, or caused to
have been executed and delivered to the Bank, this Agreement, the
Guaranty (FIANZA SOLIDARIA), and all other applicable Loan Documents
(except the Security Documents), (including all schedules, exhibits,
certificates, opinions, financial statements and other documents to be
delivered pursuant hereto), and such Loan Documents (when executed and
delivered to Bank) shall be in full force and effect and binding and
enforceable obligations of Company and any other Credit Parties who
may be parties thereto, except to the extent limited by applicable
bankruptcy, insolvency or other insolvency laws.
1.2 COMPANY AUTHORITY DOCUMENTS. Bank shall have received
certified copies of Company's charter and estatutos sociales and
powers of attorney in form acceptable to Bank.
1.3 GUARANTOR'S AUTHORITY DOCUMENTS. Bank shall have received
certified copies of each Mexican Guarantor's estatutos sociales and
powers of attorney in form acceptable to Bank. With respect to the US
Guarantor, Bank shall have received a certificate of good standing
from the Secretary of State for the State of Delaware and such other
documentation as Bank may reasonably request to confirm that the
Guaranty executed by the US Guarantor has been duly authorized,
executed and delivered.
1.4 CERTIFICATES. Bank shall have received a Certificate of
Secretary and an Officer's Certificate from each of the Company and
Guarantors (other than the US Guarantor) in the form set forth in
Schedule 4.4(A), attached hereto.
1.5 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Company, and any other Person who is a party to any
of the Loan Documents, under this Agreement or any of the Loan
Documents, and the representations and warranties of any of the
foregoing made to Bank which are contained in any certificate,
document or financial or other statement furnished at any time
hereunder or thereunder or in connection herewith or therewith, shall
have been true and correct in all material respects when made.
1.6 COMPLIANCE WITH CERTAIN DOCUMENTS AND AGREEMENTS. Company and
any other Person who is a party to any of the Loan Documents shall
have each performed and complied in all material respects with all
agreements and conditions contained in the Loan Documents applicable
to it which have been (or will be) delivered pursuant to the terms
hereunder and are then in effect.
1.7 OPINION OF COUNSEL. Company shall have furnished Bank
opinions of counsel to Company and the Guarantors, dated the date
hereof, and covering such matters as required by Bank in substantially
the form attached hereto as Schedule 4.7, provided, however, that all
opinions with respect to the Notes and Security Documents shall be
condition to the funding of the initial Loan under Article 4 B below.
1.8 NO MATERIAL ADVERSE EFFECT; NO DEFAULT. No Default or Event
of Default shall have occurred and be continuing and there shall have
been no Material Adverse Effect with respect to the condition
(financial or otherwise), properties, business, results or operations
of the Credit Parties since the date of the financial statements of
Company and/or Guarantors mentioned in Section 5.17 hereof.
1.9 PROCESS AGENT APPOINTMENT. The Company has furnished to the
Bank evidence that the Process Agent has been duly appointed, and that
the Process Agent has accepted such designation.
1.10 SPECIAL POWER OF ATTORNEY. The Company and the Mexican
Guarantors have granted an irrevocable special power of attorney under
Mexican law in favor of the Process Agent.
1.11 LIEN SEARCHES. Bank shall have received such evidence
satisfactory to Bank indicating that upon the filing and/or recording
of the Security Documents, Bank's shall have a first priority,
perfected lien and/or security interest in the Collateral.
1.12 COMPLIANCE WITH INDENTURE. Bank shall have received an
opinion of counsel to the US Guarantor and a certificate from an
officer of the US Guarantor, in form and substance satisfactory to
Bank, indicating that this Agreement does not violate the terms of the
Indenture.
1.13 OTHER DOCUMENTS AND INSTRUMENTS. Bank shall have received
such other instruments and documents (not inconsistent with the terms
hereof) as Bank may reasonably request in connection with the making
of the Loans hereunder, and all such instruments and documents shall
be reasonably satisfactory in form and substance to the Bank.
1.14 POWER OF ATTORNEY. The Board of Directors of Company shall
have granted a special power of attorney authorizing and identifying
those individuals of Company authorized to sign the Loan Documents.
B. THE OBLIGATIONS OF BANK TO MAKE THE INITIAL LOAN UNDER THIS
AGREEMENT SHALL BE SUBJECT TO THE FOLLOWING CONDITIONS PRECEDENT:
1.15 EXECUTION OF NOTES AND SECURITY DOCUMENTS. Company and the
Credit Parties, as applicable, shall have executed and delivered to
Bank, or caused to have been executed and delivered to the Bank the
Note or Notes (PAGARS) as may be necessary to evidence the Loans
and the Security Documents and all other applicable Loan Documents,
(including all schedules, exhibits, certificates, opinions, financial
statements and other documents to be delivered pursuant hereto), not
executed and delivered under Article 4 A. above, the receipt by Bank
of evidence that the Security Documents shall have been filed for
registration with the applicable governmental authorities, and such
Loan Documents (when executed and delivered to Bank) shall be in full
force and effect and binding and enforceable obligations of Company
and any other Credit Parties who may be parties thereto, except to the
extent limited by applicable bankruptcy, insolvency or other
insolvency laws. Additionally, the Mortgages (i) shall have been duly
granted by the applicable Guarantors; (ii) shall have been filed for
registration with the relevant Public Registry of Property; (iii) all
registration and notary public fees have been paid; and (iv) and shall
constitute a first priority line in favor of the Bank.
1.16 CERTIFICATES. Bank shall have received an Officer's
Certificate from each of the Company and Guarantors (other than the US
Guarantor) in the forms set forth in Schedule 4.4(B) attached hereto.
1.17 COMPLIANCE WITH CERTAIN DOCUMENTS AND AGREEMENTS. Company
and any other Person who is a party to any of the Loan Documents shall
have each performed and complied in all material respects with all
agreements and conditions contained in the Loan Documents applicable
to it which have been delivered pursuant to the terms hereunder and
are then in effect.
1.18 OPINION OF COUNSEL. Company shall have furnished Bank
opinions of counsel to Company and the Guarantors, dated the date
hereof, with respect to the execution, delivery and enforceability of
the Notes and Security Documents in substantially the form attached
hereto as Schedule 4.7.
C. THE OBLIGATIONS OF BANK TO MAKE A LOAN UNDER THIS AGREEMENT
(INCLUDING THE INITIAL LOAN) SHALL BE SUBJECT TO THE FOLLOWING
CONDITIONS PRECEDENT:
1.19 NO EVENT OF DEFAULT. As of the date of such Loan, no default
or Event of Default shall have occurred and be continuing and there
shall have been no Material Adverse Effect with respect to the
condition (financial or otherwise), properties, business, results or
operations of the Credit Parties, taken as a whole, since the last
date of the financial statements of Company and/or Guarantors
delivered to Bank in accordance with Section 6.1 hereof.
1.20 REPRESENTATIONS AND WARRANTIES. As of the date of such Loan,
the representations and warranties made by Company, and any other
Credit Party under this Agreement or any of the Loan Documents, and
the representations and warranties of any of the foregoing made to
Bank which are contained in any certificate, document or financial or
other statement furnished at any time hereunder or thereunder or in
connection herewith or therewith, shall have been true and correct in
all material respects when made.
2. REPRESENTATIONS AND WARRANTIES
Company, and to the extent applicable, each Guarantor, represents and
warrants, and such representations and warranties shall be deemed to be
continuing representations and warranties during the entire life of this
Agreement, as follows:
2.1 DUE INCORPORATION. The Borrower and the Mexican Guarantor,
are corporations duly incorporated and validly existing under the laws
of Mexico, the US Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the United
States, and such corporations are duly qualified to do business.
2.2 CORPORATE AUTHORITY. Both the Borrower and the Guarantors
have all requisite power and authority, corporate or otherwise, to
conduct their business, to own their properties and to execute and
deliver, and to perform all of their obligations under this Agreement
and the Note(s).
2.3 DUE EXECUTION. The execution, delivery and performance of
this Agreement and the Note(s) have been duly authorized by all
necessary corporate and/or shareholder action of both the Borrower and
the Guarantors in the case of this Agreement, and the respective
Guarantors in the case of the Guaranty(s), and do not and will not (i)
violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in
effect having applicability to the Borrower or the Guarantors or the
estatutos sociales, charter or by-laws of the Borrower or the
Guarantors, (ii) result in a breach or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower or the Guarantors are a party or by
which their properties may be bound or affected or (iii) result in, or
require the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance of any
nature upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower or the Guarantors, and the Borrower
and the Guarantors are not in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination,
indenture or agreement, lease or instrument; the result of which would
render such Loan Document void or ineffective or result in a Material
Adverse Effect.
2.4 ENFORCEABILITY. This Agreement constitutes, and the Note(s)
when executed and delivered by the Borrower and the respective
Guarantors, as applicable, will constitute, the legal, valid and
binding obligations of the Borrower and of the Guarantors, enforceable
against the Borrower and against the Guarantors in accordance with
their terms.
2.5 PARI PASSU. The obligations of the Borrower, Avicola and
Holding under this Agreement and the Note(s) will rank at least pari
passu with all other present and future indebtedness of the Borrower,
Avicola and Holding other than the obligations secured by Permitted
Liens.
2.6 LITIGATION. Except as disclosed on Schedule 5.6, there is no
action, suit or proceeding pending against, or, to the knowledge of
the Borrower and/or the Guarantors, threatened against or affecting
the Borrower or the Guarantors before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable
possibility of an adverse decision which could result in a Material
Adverse Effect.
2.7 TAXES. The Borrower and the Mexican Guarantors have filed all
federal (or State of organization) income tax returns and all other
material tax returns which are required to be filed and have paid all
such taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower and by the Mexican Guarantors. The charges,
accruals and reserves on the books of the Borrower and of the Mexican
Guarantors in respect of taxes or other governmental charges are, in
the opinion of the Borrower and of the Mexican Guarantors, adequate.
2.8 COMPLIANCE WITH LAWS. The Borrower and the Mexican Guarantors
have complied with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including,
without limitation, environmental laws, social security laws, housing
and pension provisions) and have made payment of all quotas or
contributions required to be made thereunder, except where
non-compliance thereof would not reasonably be expected to result in a
Material Adverse Effect.
2.9 TITLE TO PROPERTY. Each Credit Party has, good and valid
title to all property and assets purported to be owned by it,
including those assets identified on the financial statements most
recently delivered to and accepted by Bank.
2.10 ENCUMBRANCES. There are no security interests in, liens,
mortgages, or other encumbrances on and no financing statements on
file with respect to, any of the Collateral other than the Permitted
Liens.
2.11 NON-CONTRAVENTION. The execution, delivery and performance
of this Agreement and the Loan Documents and any other documents and
instruments required under or in connection with this Agreement by
Company or the Guarantors are not in contravention of the terms of any
indenture, agreement or undertaking to which Company or the
Guarantors, as the case may be, is a party or by which it is bound,
the result of which would render such Loan Document void or
ineffective or result in a Material Adverse Effect.
2.12 CONSENTS, APPROVALS AND FILINGS ETC. Except as have been
previously obtained, no authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, environmental agency or regulatory
authority or other governmental body or any securities exchange and no
material authorization, consent or approval from any other person is
required in connection with the execution, delivery and performance of
any Loan Documents by Company or the Guarantors, except for the
registration of the Security Documents which must be recorded therein
in accordance with applicable laws. All such authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations
and registrations which have previously been obtained or made, as the
case may be, are in full force and effect and are not the subject of
any attack, or to the knowledge of Company, any threatened attack (in
any material respect), by appeal or direct proceeding or otherwise.
2.13 CONTRACTS, AGREEMENTS AND LEASES. Neither Company nor any of
its Subsidiaries (if any) is in default in complying with any
provision of any material contract, agreement, indenture, lease or
instrument to which it is a party or by which it is or those of its
properties or assets the default of which would have a Material
Adverse Effect, and, to the best of Company's knowledge, each such
contract, commitment, undertaking, agreement, indenture and instrument
is in full force and effect and is valid and legally binding.
2.14 NO MARGIN STOCK. No Credit Party is engaged principally, or
as one of its important activities, directly or indirectly, in the
business of extending credit for the purpose of purchasing or carrying
margin stock, and none of the proceeds of any of the Loans or other
indebtedness hereunder will be used, directly or indirectly, to
purchase or carry any margin stock or made available by a Credit Party
in any manner to any other Person to enable or assist such Person in
purchasing or carrying margin stock, or otherwise used or made
available for any other purpose which might violate the provisions of
Regulations G, T, U, or X of the Board of Governors of the Federal
Reserve System.
2.15 HAZARDOUS MATERIALS.
(A) NO CREDIT PARTY HAS USED HAZARDOUS MATERIALS ON OR AFFECTING ANY
REAL PROPERTY OWNED OR OPERATED BY BORROWER OR ANY MEXICAN
GUARANTOR (COLLECTIVELY AND SINGULARLY THE "PREMISES") IN ANY
MANNER WHICH VIOLATES ANY ENVIRONMENTAL LAWS, AND, TO THE BEST OF
EACH CREDIT PARTY'S KNOWLEDGE, NO PRIOR OWNER OF THE PREMISES OR
ANY CURRENT OR PRIOR OCCUPANT HAS USED HAZARDOUS MATERIALS ON OR
AFFECTING THE PREMISES IN ANY MANNER WHICH VIOLATES ANY
ENVIRONMENTAL LAWS, EXCEPT WHERE SUCH VIOLATION WOULD NOT
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.
EACH CREDIT PARTY COVENANTS AND AGREES THAT NEITHER IT, NOR ANY
OCCUPANT OF ANY OF THE PREMISES SHALL USE, INTRODUCE OR MAINTAIN
HAZARDOUS MATERIALS ON THE PREMISES IN ANY MANNER, UNLESS, IN ALL
MATERIAL RESPECTS, DONE IN STRICT COMPLIANCE WITH ALL
ENVIRONMENTAL LAWS.
(B) EACH CREDIT PARTY SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS BANK,
ITS EMPLOYEES, AGENTS, OFFICERS AND DIRECTORS, FROM AND AGAINST
ANY AND ALL CLAIMS, DEMANDS, PENALTIES, FINES, LIABILITIES,
SETTLEMENTS, DAMAGES, COSTS AND EXPENSES OF WHATEVER KIND OR
NATURE ARISING OUT OF OR RELATED TO (I) THE PRESENCE, DISPOSAL,
RELEASE OR THREATENED RELEASE OF ANY HAZARDOUS MATERIALS ON, FROM
OR AFFECTING THE PREMISES OR THE SOIL, WATER, VEGETATION,
BUILDINGS, PERSONAL PROPERTY, PERSONS OR ANIMALS THEREON, (II)
ANY PERSONAL INJURY (INCLUDING WRONGFUL DEATH) OR PROPERTY DAMAGE
(REAL OR PERSONAL) ARISING OUT OF OR RELATED TO SUCH HAZARDOUS
MATERIALS, (III) ANY LAWSUIT BROUGHT OR THREATENED, SETTLEMENT
REACHED OR GOVERNMENTAL ORDER RELATING TO SUCH HAZARDOUS
MATERIALS, (IV) THE COST OF REMOVAL OF ALL SUCH HAZARDOUS
MATERIALS FROM ALL OR ANY PORTIONS OF THE PREMISES, (V) TAKING
NECESSARY PRECAUTIONS TO PROTECT AGAINST THE RELEASE OF HAZARDOUS
MATERIALS ON OR AFFECTING THE PREMISES, (VI) COMPLYING WITH ALL
ENVIRONMENTAL LAWS, AND/OR (VII) ANY VIOLATION OF ENVIRONMENTAL
LAWS OR REQUIREMENTS OF BANK, WHICH ARE BASED UPON OR IN ANY WAY
RELATED TO SUCH HAZARDOUS MATERIALS, INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' AND CONSULTANTS' FEES (SAID
ATTORNEYS AND CONSULTANTS TO BE SELECTED BY BANK), INVESTIGATION
AND LABORATORY FEES, ENVIRONMENTAL STUDIES REQUIRED BY BANK
(WHETHER PRIOR TO FORECLOSURE OR OTHERWISE), AND COURT COSTS AND
LITIGATION EXPENSES. UPON REQUEST OF BANK, A CREDIT PARTY SHALL
EXECUTE, A SEPARATE INDEMNITY COVERING THE SAME MATTERS SET FORTH
HEREIN.
(C) AS OF THE EFFECTIVE DATE, NO CREDIT PARTY HAS RECEIVED ANY NOTICE
("ENVIRONMENTAL COMPLAINT") OF ANY VIOLATIONS OF ENVIRONMENTAL
LAWS (AND, WITHIN FIVE (5) DAYS OF RECEIPT OF ANY ENVIRONMENTAL
COMPLAINT ARISING HEREAFTER, SUCH PARTY SHALL GIVE BANK A COPY
THEREOF), AND TO THE BEST OF EACH CREDITOR PARTY'S KNOWLEDGE,
THERE HAVE BEEN NO ACTIONS COMMENCED OR THREATENED BY ANY PARTY
FOR NONCOMPLIANCE BY A CREDIT PARTY WITH ANY ENVIRONMENTAL LAWS.
(D) THE PROVISIONS OF SECTION 5.15 (B) SHALL BE IN ADDITION TO ANY
AND ALL OTHER OBLIGATIONS AND LIABILITIES A CREDIT PARTY MAY HAVE
TO BANK AT COMMON LAW OR PURSUANT TO ANY OTHER AGREEMENT AND,
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, SHALL
SURVIVE (I) THE REPAYMENT OF ALL SUMS DUE UNDER THE NOTE AND THE
OTHER LOAN DOCUMENTS AND THE REPAYMENT OF ALL OTHER INDEBTEDNESS
HEREUNDER, AND (II) THE SATISFACTION OF ALL OF THE OTHER
OBLIGATIONS OF SUCH CREDIT PARTY HEREUNDER AND UNDER THE OTHER
LOAN DOCUMENTS.
2.16 LABOR DISPUTES AND CASUALTIES. LABOR MATTERS. As of the
Effective Date, there are no strikes or other labor disputes against
Borrower or any Mexican Guarantor that are pending or, to any Credit
Party's knowledge, threatened. All payments due from Borrower or any
Mexican Guarantor on account of employee health and welfare insurance
have been and will continue to be paid or accrued as a liability on
the books of such Credit Party. Except as set forth on Schedule 5.16,
as of the Effective Date (a) there is no organizing activity involving
Borrower or any Mexican Guarantor pending or, to any Credit Party's
knowledge, threatened by any labor union or group of employees; (b)
there are no representation proceedings pending or, to any Credit
Party's knowledge, threatened with the National Labor Relations Board
or any analogous organization in Mexico such as the JUNTA FEDERAL DE
CONCILIACIN Y ARBITRAJE or the JUNTA LOCAL DE CONCILIACIN Y
ARBITRAJE; and (c) no labor organization or group of employees of
Borrower or any Mexican Guarantor has pending any demand for
recognition, and each Credit Party shall give to Bank prompt written
notice of any of the foregoing occurring after the Effective Date.
2.17 ACCURACY OF INFORMATION. As of the Effective Date, the
financial statements of the Credit Parties dated June 30, 2001,
previously furnished to Bank by such Credit Parties, are complete and
correct in all material respects and fairly present the financial
condition of such Credit Party, and the results of its operations for
the periods covered thereby; and since the date of said financial
statements, there has been no Material Adverse Effect.
2.18 SOLVENCY. Company and Guarantors are solvent, able to pay
its debts as they mature, has capital sufficient to carry on its
business and has assets the fair market value of which exceed its
liabilities, and neither Company nor Guarantors will be rendered
insolvent, under-capitalized or unable to pay debts generally as they
become due by the execution or performance of this Agreement, or any
of the other Loan Documents to which it is party.
3. AFFIRMATIVE COVENANTS
Company, and to the extent applicable, each Guarantor, covenants and
agrees that it will, and it will cause each of its Subsidiaries of Borrower
and Mexican Guarantors (if any) to, so long as Bank is committed to make
any Loans pursuant to this Agreement, and thereafter, so long as any
indebtedness remains outstanding under or pursuant to this Agreement or the
Notes:
3.1 REPORTING. Furnish to the Bank:
(A) AS SOON AS POSSIBLE AND IN ANY EVENT WITHIN 10 (TEN) DAYS AFTER
OBTAINING KNOWLEDGE OF THE OCCURRENCE OF EACH EVENT OF DEFAULT,
OR EACH EVENT WHICH WITH THE GIVING OF NOTICE OR LAPSE OF TIME OR
BOTH WOULD REASONABLY EXPECTED TO CONSTITUTE AN EVENT OF DEFAULT,
WHICH IS CONTINUING ON THE DATE OF SUCH STATEMENT, THE STATEMENT
OF AN AUTHORIZED OFFICER OF THE BORROWER OR THE GUARANTORS
SETTING FORTH DETAILS OF SUCH EVENT OF DEFAULT OR EVENT WHICH
WOULD CONSTITUTE AN EVENT OF DEFAULT, AND THE ACTION WHICH THE
BORROWER OR THE GUARANTORS PROPOSE TO TAKE WITH RESPECT THERETO;
(B) AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 60 (SIXTY) DAYS
AFTER THE END OF EACH OF THE QUARTERS OF EACH FISCAL YEAR OF THE
BORROWER AND OF THE GUARANTORS (EXCLUDING THE LAST FISCAL QUARTER
OF BORROWER'S AND GUARANTOR'S FISCAL YEAR), A CONSOLIDATED
BALANCE SHEET OF THE BORROWER AND THE GUARANTORS AS OF THE END OF
SUCH QUARTER AND STATEMENTS OF INCOME AND RETAINED EARNINGS OF
THE BORROWER AND OF THE GUARANTORS FOR THE PERIOD COMMENCING AT
THE END OF THE PREVIOUS FISCAL YEAR AND ENDING WITH THE END OF
SUCH QUARTER, (I) IN DOLLARS AND IN PESOS FOR THE BORROWER AND
THE MEXICAN GUARANTORS, AND (II) IN DOLLARS FOR THE US GUARANTOR,
ALL IN REASONABLE DETAIL AND DULY CERTIFIED (SUBJECT TO YEAR END
AUDIT ADJUSTMENTS) BY AN OFFICER OF THE BORROWER OR OF THE
GUARANTORS, AS THE CASE MAY BE, AS HAVING BEEN PREPARED IN
ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN
MEXICO OR IN THE UNITED STATES, AS THE CASE MAY BE, CONSISTENTLY
APPLIED, AND TOGETHER WITH (X) A CERTIFICATE OF SAID OFFICER
STATING THAT THE COVENANTS SET FORTH IN SECTIONS 6.7, 6.8, 6.9
AND 6.10 ARE BEING COMPLIED WITH, TOGETHER WITH A SHEET SETTING
FORTH THE CALCULATIONS TO DETERMINE THE FOREGOING, AND (Y) A
CERTIFICATE OF SAID OFFICER STATING THAT HE HAS NO KNOWLEDGE THAT
AN EVENT OF DEFAULT, OR AN EVENT WHICH WITH THE GIVING OF NOTICE
OR LAPSE OF TIME OR BOTH WOULD CONSTITUTE AN EVENT OF DEFAULT,
HAS OCCURRED AND IS CONTINUING OR, IF AN EVENT OF DEFAULT OR SUCH
EVENT HAS OCCURRED AND IS CONTINUING, A STATEMENT AS TO THE
NATURE THEREOF AND THE ACTION WHICH THE BORROWER OR THE
GUARANTORS PROPOSE TO TAKE WITH RESPECT THERETO. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED HEREIN, AS LONG AS THE US
GUARANTOR FILES ITS "10-K" AND "10-Q" STATEMENTS WITH THE
SECURITIES AND EXCHANGE COMMISSION, IT WILL NOT BE REQUIRED TO
SUBMIT TO BANK THE STATEMENTS SET FORTH IN THIS SECTION OTHER
THAN THE CERTIFICATES SET FORTH IN (X) AND (Y);
(C) AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 135 (ONE HUNDRED
THIRTY FIVE) DAYS AFTER THE END OF EACH FISCAL YEAR OF THE
BORROWER AND OF THE GUARANTORS, A COPY OF THE AUDITED
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF INCOME AND RETAINED
EARNINGS FOR THE BORROWER AND FOR THE GUARANTORS (PROVIDED,
HOWEVER, THAT BORROWER AND GUARANTORS SHALL USE REASONABLE
EFFORTS TO DELIVER PRELIMINARY STATEMENTS WITHIN 120 DAYS AFTER
THE END OF EACH SUCH FISCAL YEAR), (I) IN DOLLARS AND IN PESOS
FOR THE BORROWER AND THE MEXICAN GUARANTOR, AND (II) IN DOLLARS
FOR THE U.S. GUARANTOR IN EACH CASE CERTIFIED BY INDEPENDENT
PUBLIC ACCOUNTANTS OF RECOGNIZED STANDING ACCEPTABLE TO THE BANK,
TOGETHER WITH (X) A CERTIFICATE OF AN OFFICER OF THE BORROWER AND
OF THE GUARANTORS, STATING THAT THE COVENANTS SET FORTH IN
SECTIONS 6.7, 6.8, 6.9 AND 6.10 ARE BEING COMPLIED WITH, TOGETHER
WITH A SHEET SETTING FORTH THE CALCULATIONS TO DETERMINE THE
FOREGOING, AND (Y) A CERTIFICATE OF AN OFFICER OF THE BORROWER
AND OF THE GUARANTORS STATING THAT HE HAS NO KNOWLEDGE THAT AN
EVENT OF DEFAULT, OR AN EVENT WHICH WITH NOTICE OR LAPSE OF TIME
OR BOTH WOULD CONSTITUTE AN EVENT OF DEFAULT, HAS OCCURRED AND IS
CONTINUING, OR IF, IN THE OPINION OF SUCH OFFICER, AN EVENT OF
DEFAULT OR SUCH AN EVENT HAS AND IS CONTINUING, A STATEMENT AS TO
THE NATURE THEREOF AND THE ACTION WHICH THE BORROWER OR THE
GUARANTORS PROPOSE TO TAKE WITH RESPECT ▇▇▇▇▇▇▇. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED HEREIN, AS LONG AS THE US
GUARANTOR FILES ITS "10-K" AND "10-Q" STATEMENTS WITH THE
SECURITIES AND EXCHANGE COMMISSION, IT WILL NOT BE REQUIRED TO
SUBMIT TO BANK THE STATEMENTS SET FORTH IN THIS SECTION OTHER
THAN THE CERTIFICATES SET FORTH IN (X) AND (Y);
(D) IMMEDIATELY AFTER THE COMMENCEMENT THEREOF, NOTICE IN WRITING OF
ALL ACTIONS, SUITS AND PROCEEDINGS ADVERSELY PENDING IN ANY COURT
OF COMPETENT JURISDICTION AGAINST BORROWER OR A MEXICAN GUARANTOR
IN EXCESS OF US $5,000,000.00 (FIVE MILLION DOLLARS OF THE UNITED
STATES OF AMERICA);
(E) IN THE CASE OF THE OPERATING COMPANY, ON A MONTHLY BASIS WITHIN
THE FIRST 15 (FIFTEEN) BUSINESS DAYS, A REPORT LISTING THE THIRD
PARTY ACCOUNTS RECEIVABLE, ANY RESERVES FOR DOUBTFUL ACCOUNTS AND
INVENTORY;
(F) INTENTIONALLY OMITTED;
(G) IN THE CASE OF THE BORROWER AND ▇▇▇▇▇▇▇, UPON SUBMISSION OF THE
DOCUMENTATION MENTIONED IN PARAGRAPHS (B) AND (C) ABOVE, AND TO
THE EXTENT APPLICABLE, SUBMIT TO THE BANK A CALCULATION OF THE
FINANCIAL COVENANTS, AS WELL AS A COMPLIANCE CERTIFICATE STATING
THE FULFILLMENT OF THE BORROWER TO ALL THE OBLIGATIONS STATED
HEREIN; AND
(H) SUCH OTHER INFORMATION RESPECTING THE BUSINESS, PROPERTIES OR THE
CONDITIONS OF OPERATIONS, FINANCIAL OR OTHERWISE OF THE BORROWER
AND THE GUARANTORS AS THE BANK MAY FROM TIME TO TIME REASONABLY
REQUEST.
3.2 TAXES. Duly pay and discharge all taxes, assessments and
governmental charges or levies imposed upon the Borrower and the
Guarantors or upon their income or profits, or upon any properties
belonging to the them, by Mexico, the United States, or by any other
jurisdiction, or any political subdivision thereof, prior to the date
on which penalties are attached thereto, and all lawful claims which,
if not paid, may become a lien or charge upon any properties of the
Borrower or of the Guarantors, PROVIDED, HOWEVER, that the Borrower
and the Guarantors shall not be required to pay any such tax,
assessment, charge, levy or claim which is being contested in good
faith and by proper legal proceedings.
3.3 INSURANCE. Obtain prior to the initial Loan and thereafter,
maintain insurance with responsible and reputable insurance companies
or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower and the
Mexican Guarantors operate and such other insurance as may be required
by law, all of which Insurance shall be in such amounts, containing
such terms, in such form, for such purposes, prepaid for such time
period, and written by such companies as shall be reasonably
satisfactory to the Bank. All such policies covering the Collateral
shall contain a provision whereby they may not be canceled for non
payment of premiums (unless substitute insurance in compliance with
this Section 6.3 is obtain and provided on or before the date of such
cancellation) except upon thirty (30) days' prior written notice to
the Bank. The Operating Company will promptly deliver to the Bank, at
the Bank's request, evidence satisfactory to the Bank that such
insurance has been so procured and, with respect to casualty
insurance, endorsed with a loss payable clause in favor of the Bank.
If the Operating Company fails to maintain satisfactory insurance
covering the Collateral as herein provided, the Bank shall have the
option to do so, and the Borrower agrees to repay the Bank upon
demand, with interest at the Federal Funds-based Rate then in effect
for the Revolving Loan, all amounts so expended by the Bank. Upon an
Event of Default or with respect to any loss in excess of US
$2,500,000, the Operating Company appoints the Bank or any employee or
agent of the Bank as the Operating Company's attorney-in-fact, which
appointment is coupled with an interest and irrevocable, and
authorizes the Bank or any employee or agent of the Bank, on behalf of
the Operating Company, to adjust and compromise any loss under said
insurance covering the Collateral (which adjustment or compromise
shall only be made with the Operating Company's consent if an Event of
Default has not occurred and is not continuing hereunder)and to
endorse any check or draft payable to the Operating Company in
connection with returned or unearned premiums on said insurance or the
proceeds of said insurance, and any amount so collected shall be
applied toward repair and/or replacement of the Collateral to which
such casualty occurred or satisfaction of the indebtedness hereunder
in accordance in accordance with the provisions governing such
application in the Security Documents pursuant to which Bank's liens
on such Collateral were granted.
3.4 CORPORATE EXISTENCE. Preserve and maintain their corporate
existence, rights, franchises and privileges in Mexico or the United
States, as the case may be; except (i) when said rights, franchises
and privileges shall be terminated by operation of law or order of
authority; (ii) or the termination of such rights, franchises and
privileges would not reasonably be expected to result in a Material
Adverse Effect .
3.5 MAINTENANCE OF PROPERTIES. Maintain and preserve all of their
properties necessary or useful in the proper conduct of their business
in good working order and condition, ordinary wear and tear excepted,
provided, however, that no Credit Party will be prevented by this
covenant from discontinuing those operations or disposing of or
suspending the maintenance of those properties which, in the
reasonable judgment of such Credit Party, is no longer necessary or
useful in the conduct of such Credit Party's business or would not
result in a Material Adverse Effect.
3.6 COMPLIANCE WITH LAWS. Comply with all applicable laws and
regulations of any governmental entity and the terms of any indenture,
contract or other instrument to which the Borrower or the Guarantors
may be a party or under which their respective properties may be bound
or affected, if non-compliance would reasonably be expected to have a
Material Adverse Effect, except where contested in good faith and by
proper proceedings.
3.7 CURRENT RATIO. In the case of the Operating Company,
maintain, in accordance with its consolidated balance sheet, a minimum
Current Ratio of 1.25 to 1.0 for the interim quarterly and annual
audited financial statements, during the term hereof. In the case of
Avicola, maintain, in accordance with its consolidated balance sheet,
a minimum Current Ratio of 1.25 to 1.0 for the interim quarterly and
annual audited financial statements, during the term hereof.
3.8 INDEBTEDNESS RATIO. In the case of the Operating Company,
maintain, in accordance with its consolidated balance sheet, a maximum
Indebtedness Ratio of 0.50 to 1.0 for interim quarterly financial
statements and annual audited financial statements during the term
hereof. In the case of Avicola, maintain, in accordance with its
consolidated balance sheet, a maximum Indebtedness Ratio ratio of 0.50
to 1.0 for interim quarterly financial statements and annual audited
financial statements during the term hereof.
3.9 INTEREST COVERAGE RATIO. In the case of the Operating
Company, maintain, in accordance with its consolidated quarterly and
annual financial statements, a minimum Interest Coverage Ratio of 2.25
to 1.0. In the case of Avicola, maintain, in accordance with its
consolidated quarterly and annual quarterly and annual financial
statements, a minimum Interest Coverage Ratio of 2.25 to 1.0.
3.10 MINIMUM NET WORTH. In the case of the Operating Company,
maintain, in accordance with its consolidated financial statements on
an interim quarterly and annual basis, a minimum Net Worth of the sum
of US $100,000,000.00 (One Hundred Million Dollars) plus that amount
of Funded Debt of Operating Company in excess of the indebtedness
hereunder. In the case of Avicola, maintain, in accordance with its
consolidated financial statements on an interim quarterly and annual
basis, a minimum Net Worth of the sum of US $125,000,000.00 (One
Hundred Twenty Five Million Dollars) plus that amount of Funded Debt
of Operating Company in excess of the indebtedness hereunder.
3.11 SUBORDINATED CLAIMS. To the extent not prohibited by the
Indenture, if there is an Event of Default by Borrower or the Mexican
Guarantor that exists hereunder, then any claims that the US Guarantor
may have against them will be subordinated to the Loan.
3.12 INDENTURE. Subject to Section 7.11, notwithstanding anything
in this Agreement to the contrary, provided there is not an Event of
Default, or event which with the giving of notice or the lapse of time
or both, would constitute an Event of Default hereunder, nothing
contained herein shall be deemed to prohibit, encumber, restrict or
prevent Borrower or Mexican Guarantors or any of their respective
Subsidiaries from making any payments, loans, advances, dividends,
distributions or transfers to US Guarantor or any Subsidiary of US
Guarantor (each, a "Restricted Payment").
3.13 Intentionally omitted.
3.14 KEEPING OF BOOKS. Keep proper books of record and account in
which full and correct entries shall be made of all of its financial
transactions and its assets and businesses so as to permit the
presentation of financial statements prepared in accordance with GAAP;
and permit Bank, or its representatives, at reasonable times and
intervals, to visit all of its offices, discuss its financial matters
with its officers, employees, directors and independent certified
public accountants, and by this provision, Company authorizes such
officers, employees, directors and accountants to discuss the finances
and affairs of Company and examine any of its books and other
corporate records, subject only to reasonable security and
confidentiality procedures and provided that such requests and
visitations shall be related to and limited to matters relevant to
this Agreement and the transactions contemplated hereunder and shall
be during normal business hours and shall not unreasonably interfere
with or interrupt operations of the Company or the Guarantors.
3.15 INDEMNIFICATION. Indemnify and save Bank harmless from all
losses, costs, damages, liabilities and expenses, including, without
limitation, reasonable attorneys' fees, incurred by Bank by reason of
any Default or Event of Default hereunder, or its enforcing the
obligations of Company or any other Credit Party under this Agreement
or the Loan Documents; provided that no Credit Party shall have an
obligation to indemnify Bank hereunder to the extent the foregoing
results from the Bank's gross negligence or willful misconduct.
3.16 GOVERNMENTAL AND OTHER APPROVALS. Apply for, obtain and/or
maintain in effect, as applicable, all authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations
and registrations (whether with any court, governmental agency,
regulatory authority, securities exchange or otherwise) which are
necessary in connection with the execution, delivery and performance
by each Credit Party, of this Agreement, the Loan Documents, or any
other documents or instruments to be executed and/or delivered by such
Credit Party in connection therewith or herewith and all of the
obligations performed or contemplated to be performed, and material
transactions consummated or to be consummated thereunder.
3.17 PAYMENT OF OBLIGATIONS. Borrower will pay and discharge or
cause to be paid and discharged all obligations to Bank under this
Agreement or any of the Loan Documents in a timely manner.
3.18 Intentionally omitted.
3.19 YEARLY AUDIT/APPRAISAL. Operating Company shall cooperate
with Bank in a yearly audit of the Inventory (the average annual cost
of which shall not exceed $3,000) and appraisal of the Fixed Assets,
the cost of which shall be borne by Borrower.
4. NEGATIVE COVENANTS
Borrower and Guarantors covenant and agree that, so long as Bank is
committed to make any Loans, and thereafter, so long as any indebtedness
remains outstanding under or pursuant to this Agreement or the Notes, it
will not and it will not permit any of its Subsidiaries of Borrower or
Mexican Guarantors (if any) to, without Bank's prior consent:
4.1 ENCUMBRANCES. In the case of the Operating Company, create,
incur, assume or suffer to exist any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance of any nature
to any third party, upon or with respect to the Collateral other than:
(A) LIENS IN FAVOR OF THE BANK;
(B) LIENS EXISTING ON THE DATE OF THIS AGREEMENT AND DISCLOSED
ON SCHEDULE 7.1;
(C) ANY LIEN ON ANY PROPERTY (BUT EXCLUDING THE COLLATERAL)
SECURING INDEBTEDNESS INCURRED OR ASSUMED FOR THE PURPOSE OF
FINANCING ALL OR ANY PART OF THE ACQUISITION COST OF SUCH
PROPERTY OR SECURING ANY CAPITAL LEASE OBLIGATIONS, PROVIDED
THAT such lien does not extend to any other property and
secures Indebtedness and Capital Lease Obligations;
(d) (i) liens for taxes not yet due, or (ii) liens for taxes,
which are being contested in good faith by appropriate
proceedings;
(e) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, materialmen, worker's, repairman's,
miner's, ▇▇▇▇▇▇▇'s, attorney's and other liens imposed by
law created in the ordinary course of business for amounts
not yet due or which are being contested in good faith by
appropriate proceedings;
(f) liens under workers' compensation, unemployment insurance,
social security or similar legislation, or to secure
payments of premiums for insurance purchased in the ordinary
course of business, or to secure the performance of tenders,
statutory obligations, surety and appearance bonds and bids,
bonds for release of an attachment, stay of execution or
injunction, leases, government contracts, performance and
return-of-money bonds and other similar obligations, all of
which are incurred in the ordinary course of business and
not in connection with the borrowing of money);
(g) any attachment or judgment lien, the time for appeal or
petition for rehearing of which shall not have expired or in
respect of which a Credit Party or any of its Subsidiaries
is protected in all material respects by insurance, provided
that the execution or other enforcement of such liens is
effectively stayed and the claims secured thereby are being
contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in
accordance with GAAP consistently applied; and
(h) easements, rights-of-way, restrictions, encroachments,
covenants, servitudes, zoning and similar encumbrances
which, in the aggregate, do not materially interfere with
the occupation, use and enjoyment by a Credit Party or any
Subsidiary of the property or assets encumbered thereby in
the normal course of its business or materially impair the
value of the property subject thereto.
4.2 ADDITIONAL INDEBTEDNESS. In the case of the Borrower or the
Mexican Guarantor, incur additional indebtedness made available on the
basis of the Collateral (other than to Bank or Indebtedness secured by
Permitted Liens).
4.3 MERGER & CONSOLIDATION. In the case of Borrower or the
Mexican Guarantors, (i) merge or consolidate with another corporation,
unless Borrower or the Mexican Guarantors, as the case may be, is the
surviving entity and PROVIDED, HOWEVER, that the Borrower or
Guarantors are not in default of any of their obligations hereunder or
under the Note(s); or (ii) assign or transfer its assets into trust.
4.4 SALE OF ASSETS. Sell, assign, lease, transfer or in any other
manner dispose of (whether in one transaction or in a series of
transactions) all or substantially all of their assets (whether now
owned or hereafter acquired).
4.5 CHANGE OF BUSINESS. (i) Engage in any material respects in
any business activity or operations other than operations or
activities (a) in the poultry industry, (b) processing, packaging,
distribution and wholesales of poultry products, or (c) which are not
substantially different from or are related to its present business
activities or operations; or (ii) Operating Company fails to be the
primary importer or distributor in Mexico of poultry product exported
by US Guarantor to Mexico; provided that US Guarantor, Mexican
Guarantors or Operating Company may create a Subsidiary for the
purpose of the distribution and sale of such product to third parties
without the consent of the Bank so long as such Subsidiary executes
and delivers to Bank (i) a guaranty of the obligations under this
Agreement in substantially the same form as the Guaranty and (ii) a
security agreement granting a security interest in the Accounts of
such Subsidiary, which security interest shall secure the obligations
under this Agreement.
4.6 CHANGE IN OWNERSHIP. Change the participation of the current
shareholders of the Borrower or the Mexican Guarantors in a manner
that the Guarantors (other than the Operating Company) cease to
maintain, directly or indirectly, a majority interest in the capital
stock of the Borrower, unless the Bank has given the Borrower and
Guarantors, prior written approval of such changes which will not be
unreasonably withheld.
4.7 LIENS. In the case of the Borrower and the Mexican
Guarantors, carry out any arrangements to finance the Collateral
(other than Indebtedness securing Permitted Liens), and will not
create any security interest granted herein to any party (other than
Permitted Liens).
4.8 GUARANTY. In the case of the Borrower and the Mexican
Guarantors, to the extent not prohibited by the Indenture, that it and
its Affiliates will not guarantee, endorse or become secondarily
liable for the debt of the US Guarantor, other than guarantees of the
Indebtedness of US Guarantor under the Indenture.
4.9 CAPITAL STRUCTURE, BUSINESS OBJECTS OR PURPOSE. In the case
of the Borrower and the Mexican Guarantors, purchase, acquire or
redeem any of its capital stock, or enter into any reorganization or
recapitalization or reclassify its capital stock, or (and also with
respect to the US Guarantor) make any material change in its general
business objects or purpose unless (i) required due to changes in GAAP
procedures; or (ii) such changes do not cause a Material Adverse
Effect.
4.10 ENCUMBRANCES - CONTRACTS, NOTES. With respect to ▇▇▇▇▇▇▇▇,
create, incur, assume or suffer to exist any mortgage, pledge,
encumbrance, security interest, lien or charge upon any of its
contracts, notes or other evidence of indebtedness owing to it,
whether now owned or hereafter acquired, or create, suffer or permit
to exist any lien, security interest in, or encumbrance thereon other
than the Permitted Liens.
4.11 RESTRICTED PAYMENTS. So long as Bank is committed to make a
Loan, and thereafter, so long as any indebtedness remains outstanding
under or pursuant to this Agreement or the Notes, Borrower and Mexican
Guarantors will not and will not permit any of their respective
Subsidiaries (if any) to, without Bank's prior consent declare or pay
or make any Restricted Payments (other than to Borrower or a Mexican
Guarantor) while any Event of Default, or event which with the giving
of notice or the passage of time, or both, would constitute an Event
of Default under this Agreement has occurred and is continuing or
would occur as a result of the making of such Restricted Payment;
provided that nothing contained in this Agreement shall be deemed to
restrict, prohibit or prevent the payment or reimbursement (at prices
reflecting arms-length transactions) by Borrower or a Mexican
Guarantor to US Guarantor or its Subsidiaries in respect of: (x) the
sale of inventory, including without limitation, grain and hatching
eggs, sold in the ordinary course of business, (y) trade payables,
overhead, operating expenses and similar expenses incurred on behalf
of Borrower or a Mexican Guarantor by US Guarantor or its
Subsidiaries, and (z) sale of goods and equipment upon terms that are
no less favorable to Borrower or such Mexican Subsidiary than those
that could be obtained in a comparable transaction with an unrelated
Person.
5. EVENTS OF DEFAULT
5.1 If any of the following events shall occur and be continuing
(each an "Event of Default"), the Bank may declare all of its
obligations hereunder to be terminated, whereupon the commitment of
the Bank hereunder shall forthwith terminate and the Bank may declare
the entire unpaid principal amount of the Loan, together with all
interest and fees accrued and unpaid thereon and all other amounts
payable hereunder to be forthwith due and payable, whereupon the Loan,
all such accrued interest, fees and all such amounts shall become and
be forthwith due and payable without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived
by the Borrower and the Guarantors:
(A) THE BORROWER SHALL FAIL TO PAY THE ADVANCES WITHIN 5 DAYS FROM
WHEN DUE, OR SHALL FAIL TO PAY ANY INTEREST ON THE ADVANCES
WITHIN 5 DAYS FROM WHEN DUE; OR
(B) ANY REPRESENTATION OR WARRANTY MADE BY THE BORROWER OR BY THE
GUARANTORS IN THIS AGREEMENT OR IN ANY CERTIFICATE, AGREEMENT,
INSTRUMENT OR STATEMENT CONTEMPLATED HEREBY OR THEREBY SHALL
PROVE TO HAVE BEEN INCORRECT WHEN MADE IN ANY MATERIAL RESPECT;
OR
(C) THE BORROWER OR THE GUARANTORS SHALL FAIL TO PERFORM OR OBSERVE
ANY OTHER TERM, COVENANT OR AGREEMENT CONTAINED IN THIS AGREEMENT
AND SUCH FAILURE CONTINUES FOR A PERIOD OF 15 DAYS AFTER THE
BORROWER'S OR GUARANTOR'S LEARNING OF SUCH FAILURE TO COMPLY; OR
(D) THE FAILURE OF BORROWER OR GUARANTOR TO PAY WHEN DUE, OR FAILURE
TO PERFORM OR OBSERVE ANY OTHER OBLIGATION OR CONDITION WITH
RESPECT TO ANY OF THE FOLLOWING OBLIGATIONS TO ANY PERSON, BEYOND
ANY PERIOD OF GRACE UNDER THE INSTRUMENT CREATING SUCH
OBLIGATION: (I) ANY INDEBTEDNESS FOR BORROWED MONEY OR FOR THE
DEFERRED PURCHASE PRICE OF PROPERTY OR SERVICES, (II) ANY
OBLIGATIONS UNDER LEASES WHICH HAVE OR SHOULD HAVE BEEN
CHARACTERIZED AS CAPITAL LEASES, OR (III) ANY CONTINGENT
LIABILITIES, SUCH AS GUARANTIES AND LETTERS OF CREDIT, FOR THE
OBLIGATIONS OF OTHERS RELATING TO INDEBTEDNESS FOR BORROWED MONEY
OR FOR THE DEFERRED PURCHASE PRICE OF PROPERTY OR SERVICES OR
RELATING TO OBLIGATIONS UNDER LEASES WHICH HAVE OR SHOULD HAVE
BEEN CHARACTERIZED AS CAPITAL LEASES; PROVIDED THAT NO SUCH
FAILURE WILL BE DEEMED TO BE AN EVENT OF DEFAULT HEREUNDER UNLESS
THE AMOUNT OWING UNDER THE OBLIGATION WITH RESPECT TO WHICH SUCH
FAILURES HAVE OCCURRED AND ARE CONTINUING IS AT LEAST (X)
$5,000,000.00 WITH RESPECT TO BORROWER AND MEXICAN GUARANTORS, OR
(Y) $10,000,000 WITH RESPECT TO US GUARANTOR; OR
(E) THE OPERATING COMPANY OR AVICOLA, AS THE CASE MAY BE, FAILS TO
MAINTAIN ANY OF THE RATIOS AND/OR FINANCIAL COVENANTS SET FORTH
IN SECTION 6.7, 6.8, 6.9 OR 6.10 AND SUCH FAILURE CONTINUES FOR A
PERIOD OF 7 DAYS AFTER SUCH PARTIES' LEARNING OF SUCH FAILURE TO
COMPLY; OR
(F) THE PARTICIPATION OF THE CURRENT SHAREHOLDERS OF THE BORROWER OR
THE MEXICAN GUARANTORS, ARE MODIFIED IN ANY WAY WHATSOEVER
RESULTING, IN THE GUARANTORS (OTHER THAN THE OPERATING COMPANY)
CEASING TO MAINTAIN, DIRECTLY OR INDIRECTLY, A MAJORITY INTEREST
IN THE CAPITAL STOCK OF THE BORROWER, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE BANK GIVEN TO THE BORROWER AND THE MEXICAN
GUARANTOR WHICH WILL NOT BE UNREASONABLY WITHHELD; OR
(G) THIS AGREEMENT OR THE NOTE(S) SHALL AT ANY TIME FOR ANY REASON
CEASE TO BE IN FULL FORCE AND EFFECT OR SHALL BE DECLARED TO BE
NULL AND VOID OR THE VALIDITY OR ENFORCEABILITY THEREOF SHALL BE
CONTESTED BY THE BORROWER OR THE GUARANTORS OR THE GOVERNMENT OF
MEXICO, OR ANY POLITICAL SUBDIVISION OR AGENCY THEREOF, OR THE
BORROWER OR THE GUARANTORS SHALL DENY THAT IT IS ANY FURTHER
LIABILITY OR OBLIGATION HEREUNDER; OR
(H) AFTER THE FILING AND RECORDING THEREOF, IF THE MORTGAGE OR THE
SECURITY DOCUMENTS CEASE TO CONSTITUTE A VALID FIRST PRIORITY
LIEN IN FAVOR OF THE BANK; OR
(I) IF A CREDITORS' COMMITTEE, INTERVENTOR, VISITADOR, CONCILIADOR OR
A SNDICO SHALL HAVE BEEN APPOINTED FOR THE BUSINESS OF
COMPANY OR A GUARANTOR; OR IF COMPANY OR A GUARANTOR SHALL HAVE
MADE A GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS OR SHALL
HAVE BEEN ADJUDICATED BANKRUPT, OR SHALL HAVE FILED A VOLUNTARY
PETITION IN CONCURSO MERCANTIL OR BANKRUPTCY OR FOR
REORGANIZATION OR TO EFFECT A PLAN OR ARRANGEMENT WITH CREDITORS
OR SHALL FAIL TO PAY ITS DEBTS GENERALLY AS SUCH DEBTS BECOME DUE
IN THE ORDINARY COURSE OF BUSINESS (EXCEPT AS CONTESTED IN GOOD
FAITH AND FOR WHICH ADEQUATE RESERVES ARE MADE IN SUCH PARTY'S
FINANCIAL STATEMENTS); OR SHALL FILE AN ANSWER TO A CREDITOR'S
PETITION OR OTHER PETITION FILED AGAINST IT, ADMITTING THE
MATERIAL ALLEGATIONS THEREOF FOR AN ADJUDICATION IN BANKRUPTCY,
CONCURSO MERCANTIL OR FOR REORGANIZATION; OR SHALL HAVE APPLIED
FOR OR PERMITTED THE APPOINTMENT OF A RECEIVER, INTEVENTOR,
VISITADOR, CONCILIADOR, SNDICO, TRUSTEE OR CUSTODIAN FOR ANY
OF ITS PROPERTY OR ASSETS; OR SUCH CREDITORS COMMITTEE, RECEIVER,
SNDICO, TRUSTEE OR CUSTODIAN SHALL HAVE BEEN APPOINTED FOR
ANY OF ITS PROPERTY OR ASSETS (OTHERWISE THAN UPON APPLICATION OR
CONSENT OF COMPANY OR A GUARANTOR), AND SUCH RECEIVER,
INTERVENTOR, VISITADOR, CONCILIADOR, TRUSTEE, SNDICO OR
CUSTODIAN SO APPOINTED SHALL NOT HAVE BEEN DISCHARGED WITHIN
SIXTY (60) DAYS AFTER THE DATE OF SUCH APPOINTMENT, OR IF AN
ORDER FOR RELIEF OR OTHERWISE APPROVING ANY PETITION FOR
REORGANIZATION OF COMPANY OR THE RELEVANT GUARANTOR, SHALL BE
ENTERED AND SHALL NOT BE DISMISSED OR STAYED WITHIN SIXTY (60)
DAYS FROM THE DATE OF ENTRY; OR
(J) THE RENDERING OF ONE OR MORE JUDGMENTS OR DECREES AGAINST A
CREDIT PARTY FOR THE PAYMENT OF MONEY OR THE ATTACHMENT OR FILING
OF ANY LIEN OR CHARGE AGAINST A CREDIT PARTY OR ANY OF ITS
PROPERTY IN EXCESS OF $5,000,000 WITH RESPECT TO BORROWER OR
MEXICAN GUARANTORS OR $10,000,000 WITH RESPECT TO US GUARANTOR,
THAT IS NOT COVERED BY INSURANCE AND SUCH JUDGMENT(S), DECREE(S),
LIEN(S) OR CHARGE(S) SHALL REMAIN UNPAID, UNVACATED, UNBONDED OR
UNSTAYED BY APPEAL OR OTHERWISE OR NOT DISCHARGED OR RELEASED FOR
A PERIOD OF SIXTY (60) CONSECUTIVE DAYS, AFTER DATE OF ENTRY,
FILING OR ATTACHMENT; OR
(K) A BREACH BY A GUARANTOR UNDER ITS RESPECTIVE GUARANTY; OR
(L) SHOULD THE OPERATING COMPANY FAIL TO BE THE PRIMARY IMPORTER OR
DISTRIBUTOR IN MEXICO OF POULTRY PRODUCT EXPORTED BY US GUARANTOR
TO MEXICO WITHOUT THE US GUARANTOR OR OPERATING COMPANY CREATING
A SUBSIDIARY FOR THE PURPOSE OF THE DISTRIBUTION AND SALE OF SUCH
PRODUCT TO THIRD PARTIES AND SUCH SUBSIDIARY EXECUTES AND
DELIVERS TO BANK (I) A GUARANTY OF THE OBLIGATIONS UNDER THIS
AGREEMENT IN SUBSTANTIALLY THE SAME FORM AS THE GUARANTY AND (II)
A SECURITY AGREEMENT GRANTING A SECURITY INTEREST IN THE ACCOUNTS
OF SUCH SUBSIDIARY, WHICH SECURITY INTEREST SHALL SECURE THE
OBLIGATIONS UNDER THIS AGREEMENT; OR
(M) SHOULD BORROWER FAIL TO EXECUTE AND DELIVER A FEDERAL FUNDS-BASED
RATE NOTE OR A CETES-BASED NOTE, AS THE CASE MAY BE, IN
ACCORDANCE WITH ARTICLE 3.7 WITHIN 5 DAYS AFTER THE DATE SUCH
NOTE IS DELIVERED TO BORROWER IN EXECUTABLE FORM; OR
(N) SHOULD THE LOANS OR GUARANTEES PROVIDED FOR HEREIN BE IN
VIOLATION OF THE INDENTURE.
5.2 REMEDIES. Upon the occurrence and during the continuation of
any Event of Default, unless such Event of Default, Bank may give
notice to Company declaring all outstanding indebtedness hereunder to
be due and payable in full, whereupon all indebtedness hereunder shall
immediately become due and payable without further notice or demand,
as the case may be, and Bank's commitment to make further Loans or to
extend additional credit to Company under this Agreement or otherwise
and Bank may exercise any remedies it has under the Security Documents
as provided for therein and/or under applicable law. Notwithstanding
the foregoing, in the case of an Event of Default under Section 8.1(i)
hereof, and notwithstanding the lack of any notice, demand or
declaration by Bank, the entire unpaid indebtedness hereunder shall
become automatically due and payable in full and any commitment by
Bank to make Loans shall be automatically and immediately terminated,
without any requirement of notice or demand by Bank upon Company, each
of which are hereby expressly waived by Company. The right of Bank to
terminate its commitment to make Loans and or to accelerate
indebtedness shall expire with respect to any particular Event of
Default of which Bank has been given actual notice, if such Event of
Default is cured prior to Bank's exercise of such right to terminate
and/or accelerate.
5.3 SETOFF. During the continuance of any Event of Default
hereunder, Bank may, in accordance with any applicable requirements of
law, during any period when an uncured Event of Default is existing,
setoff and apply against the indebtedness (whether or not then due),
any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by
Bank to or for the credit or for the account of a Credit Party and any
property at the time in possession or control of Bank, irrespective of
whether or not Bank shall have made any demand hereunder and although
such obligations may be contingent and unmatured. In the event any
Bank exercises any such right of setoff, Bank shall use reasonable
efforts to notify the corresponding Credit Party affected by such
setoff in sufficient detail within five (5) Business Days as of the
date such setoff has occurred.
5.4 WAIVER OF DEFAULTS. No Default or Event of Default shall be
waived by Bank except in a written instrument specifying the scope and
terms of such waiver and signed by an authorized officer of Bank and
shall be effective only for the specific time and purpose given. No
single or partial exercise of any right, power or privilege hereunder,
nor any delay in the exercise thereof, shall preclude other or further
exercise of Bank's rights. No waiver of any Default or Event of
Default shall extend to any other or further Default or Event of
Default. No forbearance on the part of Bank in enforcing any of Bank's
rights or remedies hereunder or any of the other Loan Documents shall
constitute a waiver of any of its rights or remedies. Company
expressly agrees that this Section 8.4 may not be waived or modified
by Bank by course of performance, estoppel or otherwise.
6. MISCELLANEOUS
6.1 ACCOUNTING PRINCIPLES. Where the character or amount of any
asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is
required to be made for the purposes of this Agreement, it shall be
done in accordance with GAAP. Furthermore, all accounting terms not
specifically defined in this Agreement shall be construed in
accordance with GAAP.
6.2 EXECUTIVE TITLE. This Agreement, jointly with the account
statement certified by the duly authorized accountant of CBM,
constitutes an execution title pursuant to article 68 of the Credit
Institutions Law.
6.3 RESTRICTIONS. Pursuant to article 294 of the General Law of
Negotiable Instruments and Credit Transactions, the Bank shall
maintain the right to restrict the disbursements term or the amount of
the Loan or the disbursements and the amount of the Loan, by simple
written communication to the Borrower, limiting or terminating the
right to use non disbursed amounts.
6.4 INTEREST. In the event the obligation of Company to pay
interest on the principal balance of any Note is or becomes in excess
of the maximum interest rate which Company is permitted by law to
contract or agree to pay, giving due consideration to the execution
date of this Agreement, then, in that event, the rate of interest
applicable hereunder shall be deemed to be immediately reduced to such
maximum rate and all previous payments in excess of the maximum rate
shall be deemed to have been payments in reduction of principal and
not of interest.
6.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall become
effective when it shall have been executed by the Company and the
Bank, and thereafter shall be binding upon and inure to the benefit of
the Company and the Bank and their respective successors and assigns,
except that the Company shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of
the Bank, and that Bank shall not have the right to transfer, assign
or convey, whether by participation or otherwise, its rights hereunder
or any interest herein without the prior written consent of Company,
unless (a) Bank complies with the provisions of Section 9.10 and (b)
such transfer, assignment or conveyance is in favor of a financial
institution which is subject to a Mexican Income tax withholding rate
payable under the Loans equal to no more than the Mexican Income tax
withholding rate payable by Bank as of the date of any such
conveyance.
6.6 GOVERNING LAW.
(A) THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF MICHIGAN, UNITES STATES OF AMERICA, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE;
PROVIDED, HOWEVER that if any action or proceeding in connection
with the Note is brought in the courts of Mexico, such Note shall
be governed by the laws of Mexico;
(b) Any suit, action or proceeding with respect to this Agreement or
the Note or any judgement entered by any court in respect thereof
may be brought in the courts of the State of Michigan in the
United States and, in the case of suits, actions or proceedings
with respect to the Note, in the Courts of Mexico City, Mexico.
Each party hereby submits to the jurisdiction of such courts for
the purpose of any such suit, action, proceeding or judgement
(and waives for such purpose any other preferential jurisdiction
by reason of its present of future domicile or otherwise). Each
party hereby irrevocably waive any objection which they may now
or hereafter have to the laying of the venue of any suit, action
or proceeding arising out of or relating to this Agreement or the
Note brought in any such court as being brought in an
inconvenient forum. To the extent that a party has or hereafter
may acquire any immunity from jurisdiction of any court or from
any legal process (whether from service or notice, attachment
prior to judgement, attachment in aid of execution, execution or
otherwise) with respect to itself or its property, such party
hereby irrevocably waives such immunity in respect of its
obligations under this Agreement or the Notes.
6.7 COSTS AND EXPENSES. Subject to Section 6.19, Company shall
pay Bank, promptly, all reasonable and documented costs and expenses
incurred by Bank in connection with this Agreement, the Loan Documents
and the indebtedness, hereunder and the consummation and the closing
of the loans and transactions contemplated hereby, including, by way
of description and not limitation, reasonable attorneys' fees and
advances, appraisal and accounting fees, title and lien search fees.
All costs, including, without limitation, reasonable attorneys' fees
and costs and expenses to any environmental consultants retained by
Bank hereunder, incurred by Bank hereunder or in perfecting, revising,
protecting or enforcing any of its rights against Company, or incurred
by Bank in connection with any Default or Event of Default or the
enforcement of the indebtedness hereunder, including by way of
description and not limitation, (a) such charges in any court or
bankruptcy proceedings or (b) arising out of any claim or action by
any person against Bank which would not have been asserted were it not
for Bank's lending relationship with Company hereunder or otherwise,
shall also be promptly paid by Company to Bank. If not promptly paid,
all of such costs, expenses and other sums payable by Company to Bank
under this Section 9.7 shall bear interest at the highest per annum
interest rate applicable to any of the Loans at such time.
6.8 NOTICES. All notices and other communications provided for
herein or in any document contemplated hereby, given hereunder or
required by law to be given, shall be in writing (unless expressly
provided to the contrary). Subject to Section 9.22, if personally
delivered or delivered by facsimile transmission, such notices shall
be effective when delivered or transmitted, and in the case of
courier, such notices shall be effective four (4) Business Days after
sending by international courier service, in each case addressed to
the parties as set forth on the signature page of this Agreement, or
to such other address as a party shall have designated to the other in
writing in accordance with this Section. The giving of at least five
(5) days' notice before Bank shall take any action described in any
notice shall conclusively be deemed reasonable for all purposes;
provided, that this shall not be deemed to require Bank to give five
(5) days' notice or any notice if not specifically required in this
Agreement. IF ANY LEGAL PROCEEDING ARISES OR IS INITIATED BY THE BANK
IN THE UNITED STATES IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR
THE GUARANTY (FIANZA), then all notices and other communications shall
be delivered to the Process Agent.
6.9 FURTHER ACTION. Each Credit Party, from time to time, upon
written request of Bank, will promptly make, execute, acknowledge and
deliver, or cause to be made, executed, acknowledged and delivered,
all such further and additional instruments, and promptly take all
such further action as may be reasonably required to carry out the
intent and purpose of this Agreement.
6.10 SUCCESSORS AND ASSIGNS; PARTICIPATIONS. This Agreement shall
be binding upon and shall inure to the benefit of Company and Bank and
their respective successors and assigns. The foregoing shall not
authorize any assignment or transfer by Company of its rights or
duties hereunder, and such assignments or transfers being expressly
prohibited. Subject to the limitations set forth in Section 9.5, Bank
may assign, whether by assignment, participation or otherwise, its
rights and obligations hereunder, and is hereby authorized to disclose
(subject to reasonable security and confidentiality procedures) to any
such assignee or participant any financial or other information in its
knowledge or possession regarding Company, or the indebtedness
hereunder. Notwithstanding the foregoing (i) in connection with any
participation granted by Bank, Bank shall remain primarily obligated
to Company hereunder and Company shall be entitled to deal directly
with Bank with respect to all matters related hereto, and (ii) with
respect to any assignment by Bank, so long as no Event of Default has
occurred and is existing at the time of such assignment Bank shall be
required to obtain the prior written consent of Company and Guarantors
to such assignment (which consent shall not be unreasonably withheld
or delayed). In the event of any assignment made or participation
granted by Bank under this Agreement, neither the Company nor the
Guarantors shall be required to indemnify, or pay additional amounts
to, any such assignee or participant in excess of the amount that
would have been payable under this Agreement had no such assignment
occurred or participation granted.
6.11 INDULGENCE. No delay or failure of Bank in exercising any
right, power or privilege hereunder or under any of the Loan Documents
shall affect such right, power or privilege nor shall any single or
partial exercise thereof preclude any further exercise thereof, nor
the exercise of any other right, power or privilege. The rights of
Bank hereunder are cumulative and are not exclusive of any rights or
remedies of Bank.
6.12 COUNTERPARTS. This Agreement may be executed in several
counterparts, and each copy shall constitute an original instrument,
but such counterparts shall together constitute but one and the same
instrument.
6.13 AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement or any Loan Document, nor consent to any
departure by Company therefrom, shall in any event be effective unless
the same shall be in writing and signed by Bank, and then such waiver
or consent shall be effective only in the specific instance and for
the specific purpose for which given.
6.14 SEVERABILITY. In case any one or more of the obligations of
Company or any party to this Agreement, the Note or any of the other
Loan Document shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the
remaining obligations of Company or such other party shall not in any
way be affected or impaired thereby, and such invalidity, illegality
or unenforceability in one jurisdiction shall not affect the validity,
legality or enforceability of the obligations of Company or such other
party under this Agreement, the Notes or any of the other Loan
Documents in any other jurisdiction.
6.15 HEADINGS AND CONSTRUCTION OF TERMS. The headings of the
various subdivisions hereof are for convenience of reference only and
shall in no way modify or affect any of the terms or provisions
hereof. Where the context herein requires, the singular number shall
include the plural, and any gender shall include any other gender.
6.16 CONSTRUCTION OF CERTAIN PROVISIONS. If any provision of this
Agreement or any of the Loan Documents refers to any action to be
taken by any Person, or which such Person is prohibited from taking,
such provision shall be applicable whether such action is taken
directly or indirectly by such Person, whether or not expressly
specified in such provision.
6.17 INDEPENDENCE OF COVENANTS. Each covenant hereunder shall be
given independent effect so that if a particular action or condition
is not permitted by any such covenant, the fact that it would be
permitted by an exception to, or would be otherwise within the
limitations of, another covenant shall not avoid the occurrence of any
Default or Event of Default.
6.18 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of Company or
any other Person who is a party to any of the Loan Documents made
herein or in any of the Loan Documents or in any certificate, report,
financial statement or other document furnished by or on behalf of
Company in connection with this Agreement or any of the Loan Documents
shall be deemed to have been relied upon by the Bank, notwithstanding
any investigation heretofore or hereafter made by Bank or on Bank's
behalf.
6.19 WAIVER OF JURY TRIAL. BANK, COMPANY AND EACH CREDIT PARTY,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT,
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTION OF ANY OF
THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN
ANY RESPECT OR RELINQUISHED BY THE BANK OR COMPANY EXCEPT BY A WRITTEN
INSTRUMENT EXECUTED BY ALL OF THEM.
6.20 COMPLETE AGREEMENT; CONFLICTS. This Agreement, the other
Loan Documents, any agreements certificates, or other documents given
in connection with the Loans and any commitment letter previously
issued by Bank with respect thereto contain the entire agreement of
the parties thereto, and none of the parties shall be bound by
anything not expressly in writing. In the event that and to the extent
that any of the terms, conditions or provisions of any of the other
Loan Documents are inconsistent with or in conflict with any of the
terms, conditions or provisions of this Agreement, the applicable
terms, conditions and provisions of this Agreement shall govern and
control.
6.21 CONFIDENTIALITY. Bank agrees that all non-public information
made available by Credit Parties to it pursuant to this Agreement and
the Loan Documents shall (except to the extent required by legal,
regulatory authority or government process) be held in confidence by
Bank except to the extent use and or disclosure is necessary in
connection with the enforcement of the indebtedness hereunder.
6.22 SERVICE OF PROCESS. The Borrower hereby irrevocably
designates the Process Agent, having its registered domicile at ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent to receive,
for and on behalf of the Borrower, service of process in the State of
Michigan and absolutely and in connection therewith, irrevocably
appoints the Process Agent as its true and lawful attorney-in-fact,
coupled with an interest, in its name and stead to receive such
process, as such appointment shall be evidenced by a duly notarized
power-of-attorney, granted pursuant to Mexican law. Service upon the
Borrower shall, for purposes of preserving the Bank's right to bring
an action or proceeding or enforcing a judgment in connection with the
Loan Documents in any court within Mexico, be deemed complete upon
personal delivery of service to the Process Agent, otherwise and for
all other purposes, service upon the Borrower will be deemed complete
upon delivery of the summons and complaint in accordance with Section
9.6., provided such notices, if delivered in connection with a court
procedure comply with Mexican procedural due process and public
policy laws. The Borrower shall continue said appointment of Process
Agent in full force and effect or appoint another agent so that the
Borrower will at all times have an agent for service of process for
the above purposes in Detroit, Michigan. The Borrower further
irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by any method
described in Section 9.6, such service of process to be effective upon
receipt of such registered mail (or as otherwise required under
Mexican procedural due process and public policy laws). Nothing
herein shall affect the right of the Borrower or the Bank to serve
process in any other manner permitted by applicable law or to commence
legal proceedings or otherwise proceed against Borrower in the State
of Michigan of the United States of America, the Federal District of
Mexico, or any other jurisdiction in which Borrower may be subject to
suit. The Borrower shall pay to Process Agent such compensation as
shall be required to be paid to Process Agent for its services
hereunder. In the event of the transfer of all or substantially all
of the assets and business of Process Agent to any other corporation,
by consolidation, merger, sale of assets or otherwise, such other
corporation shall be substituted hereunder for Process Agent with the
same effect as if named herein in place of CT Corporation System, in
which case such replacement in the appointment shall be evidenced by a
duly notarized power-of-attorney, granted pursuant to Mexican law.
Company shall be liable for the compliance of such obligation only as
of the date CT Corporation System notifies the occurrence of such
transfer to Company.
6.23 INDEMNIFICATION - INTEREST RATE. If the interest rate set
forth in any of the Notes is inconsistent with the interest rate as
determined pursuant to the terms of this Agreement, then the terms of
this Agreement with respect to the rate of interest payable by
Borrower shall control. If, as a result of any assignment or
participation by Bank, any Credit Party would be obligated to pay such
participant, assignee or other acquiror of any Note a rate of interest
higher than what any Credit Party would be obligated to pay under the
terms of this Agreement, then Bank shall indemnify the Credit Parties
against the costs and expenses incurred by the Credit Parties as a
result of such higher interest rate.
WITNESS THE DUE EXECUTION HEREOF AS OF THE DAY AND YEAR FIRST
ABOVE WRITTEN.
COMERICA BANK GRUPO PILGRIM'S PRIDE FUNDING, S.
de RL, de C.V.
By: By:
Its:________________________________ Its: Attorney-In-Fact
By:
International Dept. - Latin Group Its: Attorney-In-Fact
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. Avenida 5 de Febrero No. 1408
Detroit, Michigan 48226-3330 Queretaro, Queretaro, Mexico
Facsimile: __________________ Facsimile: 011 42 17 97 80
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Comerica ▇▇▇▇ ▇▇▇▇▇▇, S.A.
By:_______________________________
Its:_______________________________
_____________________________
_____________________________
_____________________________
ACKNOWLEDGEMENT
The undersigned are signatories to this Agreement in their capacity as
Credit Parties and not as a Borrower. Each of the undersigned who also are
Guarantors hereby: (i) acknowledge and consent to the execution, delivery
and performance of this Agreement; (ii) confirm the truth and validity of
the representations and warranties set forth herein, to the extent such
representations an warranties pertain to the undersigned, respectively, and
(iii) ratify and agree to perform the covenants and agreements set forth in
this Agreement, to the extent such covenants and agreements specifically
pertain to the undersigned, respectively.
GRUPO PILGRIM'S PRIDE FUNDING AVICOLA
PILGRIM'S PRIDE DE
HOLDING, S. de RL de C.V. MEXICO, S.A. de C.V.
By: By:
Its: Attorney-In-Fact Its: Attorney-In-Fact
By: By:
Its: Attorney-In-Fact Its: Attorney-In-Fact
Address: Same as Borrower Address: Same as Borrower
PILGRIM'S PRIDE, S.A. de ▇.▇. ▇▇▇▇▇▇▇'▇ PRIDE CORPORATION
By: By:
Its: Attorney-In-Fact Its:
Address:
By: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Its: Attorney-In-Fact Facsimile: 001 903 856 7505
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Address: Same as Borrower
EXHIBIT "A"
FORM OF LIBOR NOTE
[To be attached]
Exhibit B
EXHIBIT "B"
FORM OF FEDERAL FUNDS NOTE
[To be attached]
- 1 -
EXHIBIT "C"
FORM OF CETES NOTE
[To be attached]
- 2 -
EXHIBIT "D"
REQUEST FOR LOAN
Pursuant to the Revolving Credit Agreement dated as of ___________,
2001 (herein called "Agreement"), the undersigned hereby requests COMERICA
BANK and/or COMERICA ▇▇▇▇ ▇▇▇▇▇▇, S.A. to make a ________-Based Loan to the
undersigned on ____________________, ________, in the amount of
__________________ (____________) and the currency requested is
_____________. The LIBOR Interest Period for the requested Loan, if
applicable, shall be ________ months.
The undersigned certifies that there exists no Default or Event of
Default under the Agreement and none will exist upon the making of the Loan
requested hereunder. The undersigned further certifies that upon advancing
the sum requested hereunder, the aggregate amount of indebtedness (under
the Agreement) will not exceed the Revolving Maximum (as defined in the
Agreement) and with respect to a request for a Pesos Advance, the aggregate
amount of Pesos Advances shall not exceed the Pesos Subfacility Maximum. If
the aggregate amount of the indebtedness under the Agreement shall at any
time exceed the Revolving Maximum and/or the Pesos Subfacility Maximum, the
undersigned will pay such excess amount on demand.
The undersigned hereby authorizes said Bank to disburse the proceeds
of this Request for Loan by crediting the account of the undersigned with
Bank separately designated by the undersigned or as the undersigned may
otherwise direct.
Dated this day of _______________, 2001.
GRUPO PILGRIM'S PRIDE FUNDING, S. de RL de
C.V.
By:
Its:
- 3 -
EXHIBIT "E"
FORM OF MORTGAGE
[To be attached]
- 4 -
EXHIBIT "F"
FORM OF CONTRATO DE PRENDA
[To be attached]
Schedule 4.4(A)
SCHEDULE 4.4(A)
FORM OF CERTIFICATE OF SECRETARY
I, _____________________________, Secretary of [APPLICABLE CREDIT
PARTY] , a SOCIEDAD DE RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE duly
organized and validly existing under the laws of the United Mexican States
(the "Company"), hereby certify that:
1. Attached hereto as Exhibit A is a true, correct and complete copy
of the estatutos sociales of the Company certified by a notary public;
2. Attached hereto as Exhibit B is a true, correct and complete copy
of the powers of attorney of the Company certified by a notary public, and
granted to persons acting on behalf of the Company in connection with the
execution and delivery of the Loan Documents to which it is a party;
3. The persons named below are duly qualified and acting officers of
the Company; that such Persons, acting together, have sufficient authority
to sign, execute and deliver on behalf of the Company each of the Loan
Documents; that each such Person has been duly elected to the indicated
office; that set forth opposite each such Person's name is his or her true
and genuine signature.
Name Office Signature
____________________________ _______________________ _____________________
____________________________ _______________________ _____________________
capitalized terms used, but not defined herein have the meanings ascribed
to them in the Revolving Credit Agreement, dated as of
____________________, 2001, among GRUPO PILGRIM'S PRIDE FUNDING, S. de RL
de C.V. and Comerica Bank.
IN WITNESS WHEREOF, I have hereunto signed by name.
____________________________________________
By:
Name:
Dated:_________________ Title: Secretary
I, ______________________, the duly elected, qualified and acting
_______________ of the Company, hereby certify that
_________________________ is the duly, qualified and acting Secretary of
the Company and that the signature appearing above is his true and genuine
signature.
__________________________________________________
By:
Name:
Its:
Dated: , 2001
SCHEDULE 4.4(B)
FORM OF OFFICER'S CERTIFICATE
I, __________________________, hereby certify that I am the duly
elected and authorized ___________________ of [APPLICABLE CREDIT
PARTY] , a SOCIEDAD DE RESPONSABILIDAD LIMITADA DE CAPITAL VARIABLE duly
organized and validly existing under the laws of the United Mexican States
(the "Company"), and pursuant to Section 4 of the Revolving Credit
Agreement, dated as of ____________, 2001 (the "Credit Agreement"), between
GRUPO PILGRIM'S PRIDE FUNDING, S. de RL de C.V. and Comerica Bank, further
certify as follows:
1. All representations and warranties of the Company contained in
the Agreement are true and correct as of the date hereof.
2. No event has occurred and is continuing that constitutes an Event
of Default (as defined in the Credit Agreement).
3. The Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under the Credit
Agreement at or prior to the Closing Date.
IN WITNESS WHEREOF, I have executed this certificate in the name and
on behalf of the Company this ______ day of _______________, 2001.
_________________________________________
By:
Name:
Title:
SCHEDULE 4.7
Form of Opinion Letter
___________, 2001
Comerica Bank
Comerica ▇▇▇▇ ▇▇▇▇▇▇, S.A.,
Institucion de Banca Multiple
One Detroit Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Credit Agreement dated as of ____________, 2001 between ______________
(the "Borrower") and Comerica Bank and Comerica ▇▇▇▇ ▇▇▇▇▇▇, S.A.,
Institucion de Banca Multiple ("Lender")
Ladies and Gentlemen:
We have acted as counsel to (i) the Borrower, (ii) ___________,
______________ (collectively, the "Guarantors") in connection with the
preparation, execution and delivery of (A) the Credit Agreement, (B) the
promissory note dated ____________, 2001 (the "Note") made by the Borrower
in favor of ▇▇▇▇▇▇, (C) the Guarantee dated _______________, 2001 (the
"Guarantee") made by each of the Guarantors in favor of the Lender, and (D)
the form of notes (collectively with the Note, the "Notes") which may be
delivered after the date hereof. The Credit Agreement, the Notes, the
Guarantee and such other documents executed in connection therewith are
sometimes collectively referred to herein as the "Credit Documents".
Unless otherwise defined herein, terms defined in the Credit Agreement are
used herein as therein defined.
This opinion is furnished to you pursuant to Section ____ of the
Credit Agreement.
In connection with the opinion expressed below, I have reviewed:
(1) the Credit Documents;
(2) forms of the Notes to be delivered after the date hereof; and
(3) such other documents as I have deemed relevant or appropriate in
connection with the giving of this opinion.
I have assumed, without any independent investigation or verification
of any kind, (i) the due authorization, execution and delivery by the
Lender of the Credit Agreement; (ii) the validity, binding effect and
enforceability of the Credit Documents under the laws of the State of
Michigan, United States of America; (iii) the genuineness and authenticity
of all opinions, documents and papers submitted to me as well as the
signature contained therein; and (iv) that copies of all opinions,
documents and papers submitted to me are complete and conform to the
originals thereof.
I express no opinion as to any laws other than the laws of the United
Mexican States ("Mexico") and I have assumed that there is nothing in any
other law that affects my opinion which is delivered based upon Mexican law
applicable to the date hereof. In particular, I have made no independent
investigation of the laws of the United States of America or any state or
other political subdivision thereof or therein as a basis for the opinions
stated herein and do not express or imply any opinion on or based on such
laws.
Based upon the foregoing and subject to the further qualifications,
exceptions, assumptions and limitations stated herein, and upon such
investigations as I have deemed necessary, I am of the opinion that:
(a)The Borrower and each of the Guarantors is a corporation (sociedad
anonima de capital variable) duly organized and validly existing under the
laws of Mexico and has the corporate power and authority to enter into,
perform and comply with its obligations under the Credit Documents.
(b)The execution, delivery and performance by the Borrower and each of the
Guarantors of the Credit Documents to which such Borrower or Guarantor is a
party have been duly authorized by all necessary corporate action and do
not violate any material contractual obligation, the Estatutos Sociales
requirement of law or judgment, license or order, binding upon the Borrower
or the Guarantors or result in the creation or imposition of any lien on
any asset of the Borrower or the Guarantors other than the liens intended
to be created by such Credit Documents.
(c)No authorization or approval, notice to or filing with, any Governmental
Authority in Mexico is required for the execution, delivery and performance
by the Borrower and each of the Guarantors of the Credit Documents except
for such consents, approvals, authorizations, notices, filings or
qualifications which have been obtained prior to the date hereof, for the
validity or enforceability of the Credit Documents for the performance of
their obligations thereunder.
(d)The Credit Documents have been duly executed and delivered by the
Borrower and the Guarantors, as the case may be, and constitute valid and
binding obligations of the Borrower and the Guarantors, as the case may be,
enforceable against them in accordance with their respective terms, subject
to the suspension of payments, bankruptcy, insolvency, liquidation,
moratorium and other similar laws of general application relating to or
affecting the rights generally.
(e)Neither the Borrower, the Guarantors, nor any of their respective
property, has any immunity from the jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) under any
applicable law in Mexico in respect of their obligations under the Credit
Documents, as the case may be.
(f)There are no legal or governmental proceedings pending or, to the best
of my knowledge, threatened to which the Borrower, the Guarantors or any of
their respective subsidiaries are a party or of which any property of the
Borrower, the Guarantors or any of their respective subsidiaries are the
subject which, if determined adversely to the Borrower, the Guarantors or
any of their respective subsidiaries, would individually or in the
aggregate, have a Material Adverse Effect.
(g)It is not necessary under the laws of Mexico (i) in order to enable the
Lender to enforce its rights under the Credit Documents or (ii) solely by
reason of the execution, delivery or performance of the Credit Documents,
that the Lender be licensed, qualified or entitled to carry on business in
Mexico.
(h)Under currently existing Mexican law and regulations the Lender will not
be deemed resident, domiciled, carrying on business or subject to taxation
in Mexico, by reason solely of the execution, delivery, performance or
enforcement of the Credit Documents, provided that the Lender does not have
a permanent establishment in Mexico, for tax purposes, it being understood
that the mere performing of its obligations under such Credit Documents
would not result in the existence of such permanent establishment.
(i)Each Guarantor's obligations under the Guaranty rank and will under
current law, rank at least pari passu in priority of payment and in all
other respects with all its other present or future unsecured and
unsubordinated Indebtedness, except for obligations preferred by mandatory
provisions of law including, among others, labor claims, claims of tax
authorities for unpaid taxes, duties, social security quotas, retirement
funds quotas, and workers' housing funds quotas which have preference over
claims arising from the Notes and other Credit Documents.
(j)There is no tax, impost, deduction or withholding imposed by Mexico or
any political subdivision thereof on or by virtue of the execution,
delivery, enforcement or performance of the Credit Documents, except for
withholding taxes imposed on payments of interest and fees made under the
Credit Agreement and the Notes by the Borrower to the Lender that is not a
resident of Mexico for tax purposes, imposed under the Mexican Income Tax
Law (Ley del Impuesto sobre la Renta).
(k)To endure the legality, validity, enforceability or admissibility in
evidence of the Credit Documents in Mexico, it is not necessary that the
Credit Documents or any other document be filed or recorded with any court
or other Governmental Authority in Mexico.
(l)The choice of Michigan law as the governing law of the Agreement is a
valid choice of law. The submission by the Borrower to the jurisdiction of
the competent United States Federal District Court in the State of Michigan
and to the jurisdiction of the courts of the State of Michigan is valid and
binding on the Borrower and not subject to revocation.
(m)The Notes qualify as "Pagares" for the purposes of the Mexican General
Law of Credit Instruments and Transactions ("ley General de Titulos y
Operaciones de Credito") and may be enforced through executory proceedings.
(n)Any final judgment obtained against the Borrower or the Guarantors in
any of the courts specified in the Credit Documents, in respect of any sum
payable by the Borrower or the Guarantors under the Credit Documents would
be recognized and enforced by the courts of Mexico without reexamination of
the issues, pursuant to Articles 569 and 571 of the Mexican Federal Code of
Civil Procedure ("Codigo Federal de Procedimientos Civiles") and Article
1347A of the Mexican Commerce Code ("Codigo de Comerico"), which provide,
inter alia, that any judgment rendered outside Mexico may be enforced by
Mexican courts, provided that:
(i)such judgment is obtained in compliance with legal requirements of the
jurisdiction of the court rendering such judgment and in compliance with
all legal requirements of the Agreement;
(ii)such judgment is strictly for the payment of a certain sum of money and
has been rendered in a "in personam" action as opposed to an "in rem"
action:
(iii)service of process was made personally on the Borrower or on the
appropriate process agent (a court of Mexico would consider the service of
process upon the duly appointed agent, by means of a notarial instrument,
to be personal service of process meeting procedural requirements of
Mexico), provided such service of process is personally made upon the
process agent:
(iv)such judgment does not contravene Mexican law, public policy of Mexico,
international treaties or agreements binding upon Mexico or generally
accepted principles of international law;
(v)the applicable procedural requirements under the law of Mexico with
respect to the enforcement of foreign judgments (including the issuance of
letters rogatory by the competent authority of such jurisdiction and the
certification of such judgment as authentic by the corresponding
authorities of such jurisdiction in accordance with the laws thereof), are
complied with;
(vi)such judgment is final in the jurisdiction where obtained;
(vii)the action in respect of which such judgment is rendered is not the
subject matter of a lawsuit among the same parties, pending before a
Mexican court; and
(viii)any such foreign courts would enforce final judgments issued by the
federal or state courts of Mexico as a matter of reciprocity;
The opinion is subject to the following qualifications:
(a)Enforcement may be limited or affected by suspension of payments,
bankruptcy, insolvency, liquidation, reorganization, moratorium and other
similar laws of general application relating to or affecting the rights of
creditors generally; also pursuant to the laws of Mexico, labor claims,
claims of tax authorities for unpaid taxes, Social Security quotas,
Workers' Housing Fund quotas and Retirement Fund quotas will have priority
over claims of the Lender;
(b)I note that the payment of interest on interest is prohibited by Mexican
law;
(c)In the event that proceedings are brought in Mexico seeking performance
of the Borrower's obligations in Mexico, pursuant to Article 8 of the
Mexican Monetary Law ("Ley Monetaria de los Estados Unidos Mexicanos"), the
Borrower may discharge its obligations by paying any sums due in the
currency other than Mexican currency, in Mexican currency at the rate of
exchange fixed by Banco de Mexico in Mexico for the date when payment is
made;
(d)In the event that any legal proceedings are brought in the courts of
Mexico, a Spanish translation of the documents required in such proceedings
prepared by a court-approved translator would have to be approved by the
court after the defendant had been given an opportunity to be heard with
respect to the accuracy of the translation, and proceedings would
thereafter be based upon the translated documents.
This opinion is addressed to you solely for your benefit and it is not
to be transmitted to anyone else nor is it to be relied upon by anyone else
or for any other purpose or quoted circulated, filed or referred to in any
public document or filed with anyone without my express written consent.
Very truly yours,