WAIVER AGREEMENT AND SECOND AMENDMENT TO CREDIT AGREEMENT
Exhibit
10.51
WAIVER
AGREEMENT
AND
SECOND AMENDMENT TO
THIS WAIVER AGREEMENT AND SECOND
AMENDMENT TO CREDIT AGREEMENT (the “Agreement”) is made
and entered into as of this 30th day of November, 2008 (the “Effective Date”), by
and among AVÍCOLA PILGRIM’S PRIDE DE MÉXICO, S. de ▇.▇. de C.V., a sociedad de responsabilidad limitada
de capital variable organized under the laws of the United Mexican States
(the “Borrower”), PILGRIM’S
PRIDE CORPORATION, a Delaware corporation (the “Parent”), THE
SUBSIDIARIES OF THE BORROWER PARTY HERETO, as Guarantors, the several banks and
other financial institutions parties hereto which constitute Majority Lenders,
and ING CAPITAL LLC, as lead arranger and as administrative agent for the
Lenders.
RECITALS
A. Borrower,
Guarantors, Lenders and the Administrative Agent are parties to that certain
Credit Agreement dated as of September 25, 2006 (as amended, modified or
supplemented from time to time, the “Credit Agreement”),
pursuant to which Lenders agreed to make loans to Borrower from time to time
subject to the terms and conditions set forth therein. Capitalized
terms not otherwise defined herein shall have the meanings given such terms in
the Credit Agreement.
B. Borrower
has advised the Administrative Agent and the Lenders that (i) Parent has
determined to file a case (the “Bankruptcy Filing”)
under Title 11 of the United States Code with a U.S. Bankruptcy Court (the
“Bankruptcy
Court”), and if such Bankruptcy Filing occurs, an Event of Default will
occur under Section 7.1(g) of the Credit Agreement (the “Bankruptcy Event”),
and (ii) Parent has defaulted as of the date hereof, or will default during the
Bankruptcy Filing, in the payment of principal or interest, beyond the
applicable period of grace, with respect to Indebtedness of the Parent in an
aggregate principal amount greater than US$20,000,000, and if such payment
default occurs, an Event of Default will occur under Section 7.1(f) of Credit
Agreement (the “Payment Event”; the
Payment Event, and the Bankruptcy Event shall be collectively referred to
hereinafter as the “Credit
Events”).
C. As a
result of the occurrence of the Credit Events, Lenders would have no obligation
to make additional Revolving Loans under the Credit Agreement, and
Administrative Agent would have the full legal right to exercise its rights and
remedies under the Credit Agreement and the Loan Documents. Such
rights and remedies include, but are not limited to, the right to accelerate the
Obligations and the right to exercise its remedies under the Collateral
Documents.
D. Borrower
has requested the Administrative Agent and Majority Lenders, for the Waiver
Period (defined below), to continue to make Loans (if available) and waive any
Events of Default arising from the Credits Events.
E. Administrative
Agent and Majority Lenders are willing, for the Waiver Period (defined below),
to continue to make certain Loans (if available) to Borrower and to waive any
Events of Default arising from the Credit Events, subject to the terms and
conditions of this Agreement.
AGREEMENT
In
consideration of the Recitals and of the mutual promises and covenants contained
herein, Administrative Agent, Majority Lenders and Borrower agree as
follows:
1. Waiver. During
the period commencing on the date of a Bankruptcy Filing and ending on the
earlier of the Waiver Termination Date (defined below) and the date that any
Waiver Default (defined below) occurs (the “Waiver Period”), and
subject to the other terms and conditions of this Agreement, Administrative
Agent and Majority Lenders agree that they hereby waive any Default or Event of
Default arising under the Credit Agreement and the Loan Documents by reason of
the Credit Events and agree that they will waive their rights and remedies that
arise upon the occurrence of a Default or an Event of Default under the Credit
Agreement and the Loan Documents by reason of the Credit Events (the “Waiver”), including,
without limitation, waiving the right to (a) initiate judicial proceedings for
the collection of the Obligations, (b) initiate any judicial enforcement action
for the repossession and sale of the collateral as set forth in the Loan
Documents or (c) apply default interest to the Obligations in accordance with
Section 2.5(e) of the Credit Agreement. Upon the expiration or
termination of the Waiver Period, the Waiver shall automatically terminate and
Administrative Agent and the Lenders shall be entitled to exercise any and all
of their rights and remedies under this Agreement, the Credit Agreement and/or
the Loan Documents without further notice, subject to the terms of the Loan
Documents. Borrower agrees that neither Administrative Agent nor any
Lender shall have any obligation to extend the Waiver Period. “Waiver Termination
Date” shall mean the date that Parent exits any Insolvency
Proceeding.
2. Amendments to Credit
Agreement. To induce Administrative Agent and the Lenders to
enter into this Agreement, and as separately bargained-for consideration, each
of Borrower and the Guarantors agree to the following amendments to the Credit
Agreement:
(a) Amendment to
Definitions.
(i) The
definitions of “Applicable Margin”, “Change of Control”, “Eligible Assignee”,
“Loan Documents,” “Material Adverse Effect,” “Pledge Agreement” and
“Pledgors” contained in Section 1.1 of the Credit Agreement are hereby
amended and restated to read in their entirety as follows:
“Applicable Margin”
shall mean:
(i) prior
to the Parent Exit, the percentage set forth below for the applicable type of
Loan:
|
Applicable
Margin for
LIBOR Loans
|
Applicable
Margin for
Base Rate Loans
|
Applicable
Margin for
Peso Revolving Loans
|
|
6.0%
|
4.0%
|
5.8%
|
(ii) from
and after the Parent Exit, the Applicable Margin for each of the LIBOR Loans and
the Base Rate Loans shall be 0.375% higher than the highest applicable interest
rate margin (in a pricing grid or otherwise) under the Replacement Loan Facility
and the Applicable Margin for Peso Revolving Loans shall be 0.20% less than the
Applicable Margin for LIBOR Loans hereunder.
“Change of Control”
shall mean such time as:
(a) any
merger or consolidation of Borrower with or into any other Person or the merger
of another Person into the Borrower with the effect that immediately after such
transaction the Person or Persons who held Voting Stock in Borrower immediately
prior to such transaction shall hold less than 100% of the total voting power of
the Voting Stock generally entitled to vote in the election of directors,
managers or trustees of the Person surviving such merger or consolidation;
or
(b) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) is consummated with respect to all or substantially all of
the assets of the Borrower to any Person or group of Persons (other than in
compliance with the provisions hereof); or
(c) Parent
or its Subsidiaries shall cease to own, directly or indirectly, all of the
Voting Stock of Borrower; or
(d) any
liquidation or dissolution of Borrower; or
(e) after
the Parent Exit, any “Change of Control” (as such term, or similar term, is
defined in the Replacement Loan Facility) shall occur;
provided
that, notwithstanding anything to the contrary contained herein, no Change of
Control shall be deemed to have occurred as a result of any action permitted by
Sections 6.10 (other than Section 6.10(d) and 6.10(e)) and 6.11, so long as, the
Parent and/or a Subsidiary of the Parent shall own all of the Voting Stock of
the Borrower.
“Eligible Assignee”
shall mean, with respect to any assignments by the Lenders, (a) a Mexican
Financial Institution, or (b) unless such registration with Hacienda no longer
enables them to have a reduced withholding tax: (i) a financial
institution registered with Hacienda for purposes of Section I of Article 195 or
Section II of Article 196 of the Mexican Income Tax Law (or any successor or
replacement thereof), or (ii) a Person so registered with Hacienda that is
primarily engaged in the business of commercial banking and that
is: (A) a Subsidiary of a Lender, (B) a Subsidiary of a
Person of which a Lender is a Subsidiary or (C) a Person of which a Lender
is a Subsidiary. In any event, an Eligible Assignee shall be
headquartered in Mexico or a country that has a treaty with Mexico that limits
withholding in Mexico for financial institutions registered with Hacienda to a
rate no greater than 4.9%.
“Loan Documents” shall
mean the collective reference to this Agreement, the Notes, the Collateral
Documents, any Lender Hedging Agreements, and any other agreements, documents
and instruments executed and delivered in connection with the transactions
contemplated hereby and thereby.
“Material Adverse
Effect” shall mean any of (a) a material
adverse change in, or a material adverse effect upon the condition (financial or
otherwise), business, properties, or results of operations of (i) the
Borrower and its Subsidiaries who are Loan Parties, taken as a whole, or
(ii) Parent and its Subsidiaries, taken as a whole, (b) a material
adverse change in the ability of (i) the Borrower and the Loan Parties, taken as
a whole or (ii) the Loan Parties, taken as a whole, to fulfill any of their
obligations under this Agreement or any of the other Loan Documents or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability of
any Loan Document (other than the Parent Guaranty) or the rights or remedies of
the Administrative Agent or the Lenders thereunder; provided, however, that the
existence of the Credit Events shall not be taken into account in determining
whether there has been or will be, a Material Adverse Effect under clauses (a)
or (b) of this definition.”
“Pledge Agreement”
shall mean, collectively, those certain Pledge Agreements by each of Parent,
Borrower and Pledgors in favor of Administrative Agent, as the same may be
amended, restated or otherwise modified from time to time, over the equity
interests representing the equity capital of all Guarantors (other than
Parent).
“Pledgors” shall mean
each of (i) POPPSA 4, LLC, (ii) POPPSA 3, LLC, (iii) Pilgrim’s Pride, S. de ▇.▇.
de C.V., (iv) Incubadora ▇▇▇▇▇▇▇, S. de ▇.▇. de C.V., (iv) Grupo Pilgrim´s Pride
Funding Holdings, S de ▇.▇. de C.V., (vi) ▇▇▇▇▇▇ y Productos Avícolas de México,
S de ▇.▇. de C.V., (vii) Borrower and (viii) any Successor Person to a Pledgor
that becomes bound by a Pledge Agreement pursuant to Section 5.12.
(ii) The
definition of “Permitted Liens”
shall be amended by the addition of a new subsection (p) as
follows:
“(p) any
liens securing the Obligations.”
(iii) The
following definitions are added to Section 1.1 of the Credit Agreement in
their proper alphabetical order to read as follows:
“Bankruptcy Filing”
shall have the meaning set forth in the Second Amendment.
“Credit Events” shall
have the meaning set forth in the Second Amendment.
“Collateral Document”
shall mean, collectively, the Pledge Agreement, Security Agreement, Mortgage,
and any other agreements, documents and instruments which secure the
Obligations.
“DIP Loan Agreement”
shall mean that certain Post-Petition Credit Agreement, dated on or about
December 1, 2008, by and among Parent, various Subsidiaries of Parent, Bank of
Montreal as Agent and various lenders, as such agreement may be amended,
modified, supplemented or restated from time to time.
“▇▇▇▇▇▇▇” shall mean
▇▇▇▇▇▇▇ Pesada S.A. de C.V.
“Mortgage” shall mean,
collectively, the Mortgage Agreements executed by Borrower or any Guarantor in
favor of Administrative Agent, as the same may be amended, restated or otherwise
modified from time to time.
“Parent Exit” shall
mean when Parent is no longer in an Insolvency Proceeding as a result of the
Bankruptcy Filing (including, without limitation, as a result of any dismissal
of or emergence from such proceeding).
“Prepayment Event”
shall mean (a) any Asset Sale described in Sections 6.10(c), 6.10(d)(iii) or
6.10(g), (b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceedings of, any property or
asset of the Borrower or any Subsidiary, (c) the incurrence by the Borrower or
any of its Subsidiaries of any Indebtedness not permitted under Section 6.8, or
(d) receipt of cash equity by Borrower or any of its Subsidiaries from any
▇▇▇▇▇ other than Borrower and its Subsidiaries who are Loan
Parties.
“Replacement Loan
Facility” shall mean any credit agreement pursuant to which any
Indebtedness of the Parent is issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund the
Indebtedness owing under the DIP Loan Agreement.
“Reporting Date” means, with respect to any,
month the date occurring the number of days after the last day of such month set
forth below opposite such month:
|
Month
|
Number
of days after the last day of the month
|
|
October
|
60
|
|
November
|
30
|
|
December
|
45
|
|
January
|
45
|
|
February
|
30
|
|
March
|
45
|
|
April
|
45
|
|
May
|
30
|
|
June
|
45
|
|
July
|
45
|
|
August
|
30
|
|
September
|
90
|
“Second Amendment”
shall mean that certain Wavier Agreement and Second Amendment to Credit
Agreement dated November 30, 2008 by and among Borrower, Parent, Administrative
Agent and Majority Lenders.
“Security Agreement”
shall mean, collectively, (i) those certain Pledge Agreements Without the
Transfer of Possession executed and delivered by Borrower or any Guarantor
(organized under the laws of Mexico) in favor of Administrative Agent, as the
same may be amended, restated or otherwise modified from time to time and (ii)
the Security Agreement executed and delivered by POPPSA 3, LLC, POPPSA 4, LLC,
and Pilgrim’s Pride, LLC, in favor of Administrative Agent, as the same may be
amended, restated or otherwise modified from time to time.
“Waiver Period” shall
have the meaning set forth in the Second Amendment.
(b) Amendment to
Section 2.3. Section 2.3 of the Credit Agreement is
hereby amended in its entirety to read as follows:
“Section
2.3 Repayment. The
principal of the Revolving Loans of each Lender shall be payable in full on the
Final Maturity Date.”
(c) Amendment to
Section 2.4(b). Section 2.4(b) of the Credit
Agreement is hereby amended in its entirety to read as follows:
“(b) Mandatory
Prepayments.
(i) If
on any date the Borrower or any of the Subsidiary Loan Parties shall receive Net
Cash Proceeds from any Prepayment Event described in clause (a) of the
definition thereof, the Borrower shall make a prepayment of the Revolving Loans
in an aggregate amount equal to 100% of such Net Cash Proceeds received by the
Borrower and the Subsidiary Loan Parties in excess of US$2,500,000 (“$2,500,000
Threshold”) during any fiscal year in accordance with this Section 2.4(b)
within five (5) Business Days of receipt of such Net Cash Proceeds and the
Revolving Loan Commitment shall be permanently reduced by an amount equal to
such Net Cash Proceeds in excess of US$2,500,000; provided that, after the
$2,500,000 Threshold has been reached, there shall be no prepayment or Revolving
Loan Commitment reduction requirement for any Prepayment Event described in this
Section 2.4(b)(i) if the Net Cash Proceeds resulting therefrom are less than
$200,000; provided further that, the Borrower shall not be required to prepay
the Revolving Loans as a result of an Asset Sale permitted under Section
6.10(c), if, with respect to any Net Cash Proceeds received by the Borrower and
the Subsidiary Loan Parties from such Asset Sale, (x) the Borrower or one of the
Subsidiary Loan Parties uses such Net Cash Proceeds to replace the affected
property or asset, (y) the Borrower or a Subsidiary Loan Party enters into a
contract for such replacement within 120 days of the Prepayment Event, and (z)
such repair or replacement is effected within 360 days of the Prepayment
Event.
(ii) If
on any date the Borrower or any of the Subsidiary Loan Parties shall receive Net
Cash Proceeds from any Prepayment Event described in clause (b) of the
definition thereof, the Borrower shall make a prepayment of the Revolving Loans
in an aggregate amount equal to 100% of such Net Cash Proceeds received by
Borrower in excess of US$500,000 during any fiscal year which shall be applied
to prepay the Revolving Loans in accordance with this Section 2.4(b)
within five (5) Business Days; provided that the
Borrower shall not be required to prepay the Revolving Loans as a result of such
Prepayment Event, if, with respect to any Net Cash Proceeds received by the
Borrower and the Subsidiary Loan Parties from such Prepayment Events, (x) the
Borrower or one of the Subsidiary Loan Parties uses such Net Cash Proceeds to
repair or replace the affected property or asset, (y) the Borrower or a
Subsidiary Loan Party enters into a contract for such repair or replacement
within 120 days of the Prepayment Event, and (z) such repair or replacement is
effected within 360 days of the Prepayment Event, and if such repair or
replacement is not so contracted for or effected at the end of such 120 or 360
day period, as applicable, such Net Cash Proceeds shall be applied within five
(5) Business Days of the end of such period to prepay the Revolving Loans in
accordance with this Section 2.4(b) and
the Revolving Loan Commitment shall be permanently reduced by an amount equal to
such Net Cash Proceeds in excess of US$500,000.
(iii) If
on any date the Borrower shall receive Net Cash Proceeds from any Prepayment
Event described in clause (c) or (d) of the definition thereof, the Borrower
shall make a prepayment of the Revolving Loans in an aggregate amount equal to
100% of such Net Cash Proceeds received by Borrower which shall be applied to
prepay the Revolving Loans in accordance with this Section 2.4(b)
within five (5) Business Days and permanently reduce the Revolving Loan
Commitment.
(iv) Amounts
to be applied in connection with prepayments made pursuant to clauses (i)-(iii)
of this Section 2.4(b) shall be applied to prepay the Revolving Loans, on a pro
rata basis.
(v) Pending
the final application of any such Net Cash Proceeds in accordance with this
Section 2.4, the
Borrower and its Subsidiaries may temporarily invest such Net Cash Proceeds in
any manner that is not prohibited by this Agreement.”
(d) Amendment to Sections
2.12(e) and (g). Sections 2.12(e) and (g) of the Credit
Agreement are hereby amended in their entirety to read as follows:
“(e) If
the Borrower is required to pay any amount to any Person pursuant to either
paragraph (b) or (c) in an amount greater than would otherwise be
applicable if such Person is registered with the Hacienda, then such Person
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office or other relevant office so as
to eliminate any such additional payment by the Borrower that may thereafter
accrue, if such change (in the sole judgment of such Person) is not otherwise
disadvantageous to such Person and shall cooperate with the Borrower to recover
any contested amount.
(g) The
Lender shall promptly reimburse to the Borrower an amount in Dollars equal to
the amount, if any, of any Taxes, Other Taxes or Further Taxes deducted or
withheld by the Borrower hereunder and actually used by the Lender to offset its
tax liabilities in the United States of America or any other
jurisdiction. On July 1 of each calendar year, each Lender will
give notice to the Borrower regarding the amount, if any, of the tax credit
obtained by the Lender for the prior calendar year pursuant to the above, and
the Lender will advance the corresponding Dollar amount to the Borrower, if any,
within ten Business Days following the date of such notice. The
Borrower’s indemnification and reimbursement rights and the Lender’s
reimbursement obligations under this Section 2.12 shall survive the termination
of this Agreement until six months after all of the Lenders’ tax returns for the
years during which the Agreement was in existence are originally filed with the
U.S. Internal Revenue Service or the applicable Governmental Authority in any
other jurisdiction.”
(e) Amendment to Section
4.20. During the Waiver Period, Section 4.20 of the Credit
Agreement is hereby amended by deleting each reference to the words “Loan Party”
and substituting in lieu therefor the words “Loan Party (other than the
Parent)”.
(f) Amendment to Section
4.23. Section 4.23 of the Credit Agreement is hereby amended
by deleting the phrase “subject to Section
2.4(b)(viii),”
therefrom.
(g) Amendment to Section
5.2(b). Section 5.2(b) of the Credit Agreement is hereby
amended in its entirety to read as follows:
“(b) as
soon as available but in no event later than the applicable Reporting Date for
each calendar month, a copy of the consolidated balance sheet of Borrower and
its Subsidiaries and of Parent and its Subsidiaries and the consolidated
statements of income and cash flows of the Borrower and its Subsidiaries and of
Parent and its Subsidiaries for the month and for the fiscal year-to-date period
then ended, each in reasonable detail showing in comparative form the figures
for the corresponding date and period in the previous fiscal year, prepared by
the Borrower (but not necessarily in accordance with GAAP) and certified by
their Responsible Officers;”
(h) Amendment
to Section 6.2(b). Section 6.2(b) of the Credit Agreement is hereby
amended in its entirety to read as follows:
“(b) so
long as no Default or Event of Default shall have occurred and be continuing or
would result therefrom, the Borrower may make non-cash dividends to the holders
of its Equity Interests solely in Equity Interests of the Borrower or options,
warrants and other rights to purchase Equity Interests of
Borrower;”
(i) Amendment to Section
6.10. Section 6.10 of the Credit Agreement is hereby
amended in its entirety to read as follows:
“Section
6.10 Limitation on Asset
Sales. Consummate any Asset Sale, except:
(a) sales
or other dispositions of inventory, receivables and other current assets, in the
ordinary course of business;
(b) sales
or other dispositions of Temporary Cash Investments if the Net Cash Proceeds
thereof are delivered to Borrower or its Subsidiaries;
(c) sales,
transfers, assignments or other disposition of any property or equipment that
has become damaged, worn out, obsolete or otherwise unsuitable for use in
connection with the business of the Borrower or its Subsidiaries if the Net Cash
Proceeds thereof are delivered to Borrower or its Subsidiaries;
(d) sales,
transfers or other dispositions: (i) from any Loan Party to a Loan Party that is
party to a Security Agreement; (ii) from any Loan Party to a Loan Party in the
ordinary course of business in accordance with past practice; and (iii) to any
Person in an amount not to exceed $10,000,000 in the aggregate, in any fiscal
year for all such sales, transfers or other dispositions (excluding sales,
transfers or other dispositions permitted under (i) or (ii) above);
(e) an
issuance of Equity Interests by the Borrower or any of the Borrower’s
Subsidiaries to one or more of the Loan Parties;
(f) the
sale, lease or other disposition of any assets or rights to the extent
constituting a Restricted Payment permitted by Section 6.2 or
an Investment that is permitted by Section 6.3
hereof; and
(g) sales,
transfers and other dispositions of assets (other than Equity Interests in a
Subsidiary) that are not permitted by any other clause of this Section; provided that (i) the
consideration received by the Borrower or such Subsidiary is at least equal to
the fair market value of the assets sold or disposed of, (ii) at least 80%
of the consideration received consists of cash or Temporary Cash Investments,
and (iii) the Net
Cash Proceeds of such Asset Sale are applied to the extent required by Section 2.4(b).
After
giving effect to any merger, sales, transfers, or other dispositions permitted
by Section 6.10(d)(i) or (ii) or 6.11(a) or (b), Comercializadora ▇▇ ▇▇▇▇▇▇
de México, S. de ▇.▇. de C.V., Pilgrim’s Pride, S. de ▇.▇. de C.V., Inmobliaria
Avicola Pilgrim’s Pride, S. de ▇.▇. de C.V., and Incubadora ▇▇▇▇▇▇▇, S. de ▇.▇.
de C.V. must continue to have a book value of “customer” accounts receivable,
inventory and equipment (including autos and trucks) of at least
P$1,467,244,992.05 as determined in
accordance with Mexican GAAP (on an aggregate basis)
(all without giving effect to any depreciation) (the “Initial Minimum Collateral
Amount”); provided that the Initial Minimum Collateral Amount shall be
reduced from time to time as a result of reductions in the amount of the
Revolving Loan Commitment (as so reduced, the “Adjusted Minimum Collateral
Amount”). The Adjusted Minimum Collateral Amount in effect
from time to time shall be an amount equal to (i) the Initial Minimum Collateral
Amount less
(ii) an amount equal to 90% of the difference between
(A) Initial Minimum Collateral Amount and (B) the product of
(x) the Initial Minimum Collateral Amount times (y) the Peso
amount of the then-current reduced Revolving Loan Commitment divided by
P$557,415,000.”
(j) Indenture. Section 6.15
of the Credit Agreement is hereby deleted.
(k) Defaults. Section 7.1(j)
of the Credit Agreement is amended and restated as follows:
“(j) a
Change of Control or Material Adverse Effect shall occur; or”
(l) Amendment to Guarantor
List. Schedule 1.1(b) of the Credit Agreement shall be and
hereby is amended and restated and replaced in its entirety with Schedule 1.1(b)
attached hereto.
3. Covenants of
Borrower. Borrower and Guarantors covenant and agree until
such time as all of the Obligations have been paid in full in cash and all
Commitments have been terminated:
(a) No Commencement of
Proceeding. Borrower and Guarantors (other than Parent) will not (i) file
any petition for an order for relief under the Bankruptcy Code, (ii) make
an assignment for the benefit of creditors, (iii) make any offer or agreement of
settlement, extension or compromise to or with Borrower’s and Guarantors’ (other
than Parent’s) unsecured creditors generally or (iv) suffer the appointment of a
receiver, trustee, custodian or similar fiduciary.
(b) Compliance with Credit
Agreement, Collateral Documents and Loan Documents. Each of
Borrower and Guarantors will continue to comply with all covenants and other
obligations under this Agreement, the Credit Agreement and the Loan Documents,
subject to the applicable cure or grace periods, if any, provided
therein.
(c) Fees. In
consideration of the Administrative Agent and the Lenders agreement hereunder,
Borrower shall pay to Administrative Agent, for the benefit of the Lenders, on a
pro rata basis based upon their Revolving Loan Commitments, a waiver fee in the
amount of 1% of the Revolving Loan Commitment, which shall be deemed fully
earned and non-refundable on the date hereof.
(d) Grant of Additional
Collateral. In consideration of Administrative Agent and
Lenders agreements hereunder, on the date hereof, and at all times thereafter,
(i) Borrower and each of its Subsidiaries agree to grant to Administrative
Agent, for the benefit of Lenders, a Lien on all assets and other personal
property (including, without limitation, accounts receivable, inventory and
equipment) owned by Borrower and each Subsidiary of Borrower (other than
▇▇▇▇▇▇▇) pursuant to a Security Agreement, (ii) each Subsidiary of Borrower
whose Equity Interests are not pledged to Administrative Agent pursuant to a
Pledge Agreement shall cause the owner of its Equity Interests to pledge such
Equity Interests (as to Pilgrim’s Pride, LLC, it shall not be required to pledge
its interest in Borrower) to Administrative Agent, for the benefit of Lenders,
in each case, pursuant to documentation, in form and substance satisfactory to
Administrative Agent and the Lenders (collectively, together with the Real
Property Collateral (as defined below) the “Additional
Collateral”, together with the collateral currently existing under the
Pledge Agreements, the “Collateral”) and
(iii) Pilgrim’s Pride, LLC, POPPSA 3, LLC and POPPSA 4, LLC agree to execute a
Guarantor Accession Agreement. Within ten (10) Business Days after
the date hereof, Borrower and each of its Subsidiaries agree to grant to
Administrative Agent, for the benefit of Lenders, a Lien on certain real
property owned by Borrower or its Subsidiaries identified by Administrative
Agent to Borrower on or before December 1, 2008, and, at any time after the date
hereof, subject to the Filing Fee Cap, within a reasonable period of
time after written request from Administrative Agent, Borrower and its
Subsidiaries agree to grant to Administrative Agent, for the benefit of Lenders,
a Lien on any other real property owned by Borrower or its Subsidiaries
(collectively, the “Real Property
Collateral”). Notwithstanding anything in this Section 3(d) to
the contrary, Borrower shall not be required to pay any Perfection Expenses in
connection therewith on or after such time as the aggregate amount of the
Perfection Expenses exceed an amount equal to US$1,000,000 (“Filing Fee
Cap”). For the purposes of this Section 3(d), “Perfection Expenses”
shall mean any filing costs, recording costs, notary costs or taxes incurred in
recording or perfecting a Lien on any Additional Collateral in favor of
Administrative Agent; provided, however, that Perfection Expenses shall not
include attorneys fees. Notwithstanding anything to the contrary
herein or in the Loan Documents, any Perfection Expenses in excess of the Filing
Fee Cap shall be borne by Administrative Agent.
(e) Cash Flow
Forecast. During the Waiver Period, Borrower hereby agrees to
deliver to Administrative Agent on Friday of each week, a rolling 13 week cash
flow forecast (the “Cash Flow Forecast”)
for Borrower and its Subsidiaries, which Cash Flow Forecast shall be in form and
substance satisfactory to Administrative Agent.
(f) Trade Credit with
Parent. During the Wavier
Period, Borrower and Parent hereby covenant to maintain trade credit between
Parent and Borrower consistent with past practices and in the ordinary course of
business to the extent the same is permitted under the DIP Loan
Agreement.
4. Conditions Precedent to
Effectiveness of Agreement. This Agreement shall not be
effective unless and until each of the following conditions shall have
occurred:
(a) Administrative
Agent shall have received evidence reasonably satisfactory to Administrative
Agent that all corporate proceedings of the Borrower necessary to authorize the
transactions contemplated by this Agreement have been taken and all documents,
instruments and other legal matters incident thereto shall be satisfactory to
Administrative Agent;
(b) Borrower
shall have paid the Administrative Agent all of Administrative Agent’s costs and
expenses (including Administrative Agent’s reasonable attorney’s fees) incurred
prior to or in connection with the preparation of this Agreement or related to
Borrower or Parent;
(c) Administrative
Agent shall have received a copy of all written agreements between Parent and
Borrower (or its Subsidiaries) relating to any intercompany financing and/or
purchasing of goods and services by Parent for Borrower or its
Subsidiaries;
(d) Borrower
and its Subsidiaries shall have each executed a Security Agreement in favor of
Administrative Agent;
(e) Borrower
and its Subsidiaries shall have executed a Pledge Agreement pledging the equity
in their Subsidiaries in favor of Administrative Agent; and
(f) Pilgrim’s
Pride, LLC, POPPSA 3, LLC and POPPSA, 4, LLC shall have executed a Guarantor
Accession Agreement.
5. Representations and
Warranties. Borrower hereby represents and warrants to
Administrative Agent, for the benefit of the Lenders, as follows:
(a) Recitals. The
Recitals in this Agreement are true and correct with respect to the Loan Parties
in all material respects.
(b) Incorporation of
Representations. All representations and warranties of
Borrower and the Guarantors in the Credit Agreement are incorporated herein in
full by this reference and are true and correct, in all material respects, as of
the date hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct as of such earlier date.
(c) Power;
Authorization. Each of the Borrower and Guarantors has the
corporate power, and has been duly authorized by all requisite corporate action,
to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by
Borrower and Guarantors.
(d) Enforceability. This
Agreement is the legal, valid and binding obligation of Borrower and each
Guarantor, enforceable against Borrower and each Guarantor in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws relating to or affecting the enforcement of creditors’ rights generally and
general principles of equity.
(e) No
Violation. Borrower’s and each Guarantors’ execution, delivery
and performance of this Agreement does not and will not (i) violate any law,
rule, regulation or court order to which Borrower or such Guarantor is subject;
(ii) conflict with or result in a breach of Borrower’s or such Guarantors’
organizational documents or any agreement or instrument to which Borrower or any
Guarantor is party or by which it or its properties are bound, or (iii) result
in the creation or imposition of any lien, security interest or encumbrance on
any property of Borrower or such Guarantor, whether now owned or hereafter
acquired, other than liens in favor of Administrative Agent, for the benefit of
the Lenders, or as permitted by the Credit Agreement.
(f) Obligations
Absolute. The obligation of Borrower to repay the Loans and
the other Obligations, together with all interest accrued thereon, is absolute
and unconditional, and there exists no right of set off or recoupment,
counterclaim or defense of any nature whatsoever to payment of the
Obligations.
(g) Full Opportunity for Review;
No Undue Influence. This Agreement was reviewed by each of
Borrower and Guarantors which acknowledges and agrees that each of Borrower and
Guarantors (i) understands fully the terms of this Agreement and the
consequences of the issuance hereof; (ii) has been afforded an opportunity to
have this Agreement reviewed by, and to discuss this Agreement with, such
attorneys and other persons as Borrower may wish; and (iii) has entered into
this Agreement of its own free will and accord and without threat or
duress. This Agreement and all information furnished to
Administrative Agent and the Lenders is made and furnished in good faith, for
value and valuable consideration. This Agreement has not been made or
induced by any fraud, duress or undue influence exercised by Lenders or
Administrative Agent or any other person.
(h) No Other
Defaults. As of the date hereof, no Event of Default (other
than the Credit Events) exists under the Credit Agreement, or any of the Loan
Documents and each of Borrower and the Guarantors is in full compliance with all
covenants and agreements contained therein, as amended hereby.
6. Default. Each
of the following shall constitute a “Waiver Default”
hereunder:
(a) Borrower
shall suffer the appointment of a receiver, trustee, custodian or similar
fiduciary, or shall make an assignment for the benefit of creditors, or any
petition for an order for relief shall be filed by or against Borrower or any
Guarantor (other than the Parent) under any Bankruptcy Law, or Borrower or any
Guarantor (other than the Parent) shall make any offer or agreement of
settlement, extension or compromise to or with such person’s unsecured creditors
generally; or
(b) any
representation or warranty of Borrower or any Guarantor contained in this
Agreement proves to have been false or misleading in any material respect when
made or furnished (or reaffirmed in connection with any Loan); or
(c) Borrower
or any Guarantor shall fail to keep or perform any of the covenants or
agreements contained herein (including, without limitation, the terms and
conditions of Section 3(d)); or
(d) Borrower
or any Guarantor shall fail to keep or perform any of the covenants or
agreements contained in the Credit Agreement, or the Loan Documents (other than
the Credit Events), subject to the applicable cure or grace periods, if any,
provided therein; or
(e) the
existence of any Event of Default (other than the Credit Events) under the
Credit Agreement; or
(f) the
occurrence of an event of default under the DIP Loan Agreement or the
Replacement Loan Facility that has not been cured after the delivery of all
required notices and the expiration of any applicable period of
grace.
7. Conditional Permanent
Waiver; Effect and Construction of Agreement. Upon the Waiver
Termination Date, if a Bankruptcy Filing has occurred but no Waiver Default has
occurred, Administrative Agent and the Lenders hereby permanently waive any
Events of Default that occurred as a result of the Credit Events as long as
Parent’s obligations, for claims before, during and after the Bankruptcy Filing,
under the Parent Guaranty are not discharged in any Bankruptcy
Filing. Except as expressly provided herein, the Credit Agreement and
the Loan Documents are hereby ratified and confirmed and shall be and shall
remain in full force and effect in accordance with their respective terms, and
this Agreement shall not be construed to: (i) impair the validity, perfection or
priority of any lien or security interest securing the Obligations; (ii) waive
or impair any rights, powers or remedies of Administrative Agent or the Lender
under the Credit Agreement or the Loan Documents upon termination of the Waiver
Period; (iii) constitute an agreement by Administrative Agent or the Lenders or
require Administrative Agent or the Lenders to extend the Waiver Period, or
grant additional waiver periods, or extend the term of the Credit Agreement or
the time for payment of any of the Obligations; or (iv) make any Loans or
other extensions of credit to Borrower. In the event of any
inconsistency between the terms of this Agreement and the Credit Agreement or
the Loan Documents, this Agreement shall govern. Borrower and Guarantors
acknowledge that they have consulted with counsel and with such other experts
and advisors as it has deemed necessary in connection with the negotiation,
execution and delivery of this Agreement. This Agreement shall be
construed without regard to any presumption or rule requiring that it be
construed against the party causing this Agreement or any part hereof to be
drafted.
8. Expenses. Borrower
and Guarantors agree to pay all reasonable out-of-pocket costs, fees and
expenses of Administrative Agent, Lenders and Administrative Agent’s and
Lenders’ attorneys incurred in connection with the negotiation, preparation,
administration and enforcement of, and the preservation of any rights under,
this Agreement and/or the Loan Documents, and the transactions and other matters
contemplated hereby and thereby, including, but not limited to, Perfection
Expenses and the out-of-pocket fees, costs and expenses incurred by
Administrative Agent and Lenders in the employment of auditors and/or
consultants to perform work on Lenders’ behalf to audit, appraise, monitor and
otherwise review any and all portions of the assets of Borrower of its
Subsidiaries (subject to the Filing Fee Cap, as applicable).
9. Miscellaneous.
(a) Further
Assurances. Borrower and Guarantors agree to execute such
other and further documents and instruments as Administrative Agent may request
to implement the provisions of this Agreement and to perfect and protect the
liens and security interests created by the Credit Agreement and the Loan
Documents.
(b) Benefit of
Agreement. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto, their respective
successors and assigns. No other person or entity shall be entitled
to claim any right or benefit hereunder, including, without limitation, the
status of a third-party beneficiary of this Agreement.
(c) Integration. This
Agreement, together with the Credit Agreement and the Loan Documents,
constitutes the entire agreement and understanding among the parties relating to
the subject matter hereof, and supersedes all prior proposals, negotiations,
agreements and understandings relating to such subject matter. In
entering into this Agreement, each of Borrower and Guarantor acknowledges that
it is relying on no statement, representation, warranty, covenant or agreement
of any kind made by the Administrative Agent or any Lender or any employee or
agent of the Administrative Agent or any Lender, except for the agreements of
Administrative Agent or any Lender set forth herein.
(d) Severability. The
provisions of this Agreement are intended to be severable. If any
provisions of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or enforceability without in any
manner affecting the validity or enforceability of such provision in any other
jurisdiction or the remaining provisions of this Agreement in any
jurisdiction.
(e) Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of New York, without
regard to the choice of law principles of such state.
(f) Counterparts; Telecopied
Signatures. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same
agreement. Any signature delivered by a party by facsimile
transmission shall be deemed to be an original signature hereto.
(g) Notices. Any
notices with respect to this Agreement shall be given in the manner provided for
in Section 10.06 of the Credit Agreement.
(h) Survival. All
representations, warranties, covenants, agreements, undertakings, waivers and
releases of Borrower and Guarantors contained herein shall survive the
termination of the Waiver Period and payment in full of the
Obligations.
(i) Amendment. No
amendment, modification, rescission, waiver or release of any provision of this
Agreement shall be effective unless the same shall be in writing and signed by
the parties hereto.
(j) No Limitation on
Administrative Agent. Nothing in this Agreement shall be deemed in any
way to limit or restrict any of Administrative Agent’s and Lenders’ rights to
seek in a bankruptcy court or any other court of competent jurisdiction, any
relief Administrative Agent may deem appropriate in the event that a voluntary
or involuntary petition under any Bankruptcy Law is filed by or against
Borrower
10. Ratification of Liens and
Security Interest. Borrower and each Guarantor hereby
acknowledge and agree that the liens and security interests of the Credit
Agreement and the Loan Documents are valid, subsisting, perfected and
enforceable liens and security interests and are superior to all liens and
security interests other than Liens permitted under Section 6.7 of the Credit
Agreement.
11. No
Commitment. Borrower and Guarantors agree that Administrative
Agent and Lenders have made no commitment or other agreement regarding the
Credit Agreement or the Loan Documents, except as expressly set forth in this
Agreement. Borrower and Guarantors warrant and represent that
Borrower and Guarantors will not rely on any commitment, further agreement to
waive or other agreement on the part of Administrative Agent or Lenders unless
such commitment or agreement is in writing and signed by Administrative Agent
and Lenders.
12. RELEASE. FOR
VALUE RECEIVED, INCLUDING WITHOUT LIMITATION, THE AGREEMENTS OF THE AGENT AND
MAJORITY LENDERS IN THIS AGREEMENT, THE BORROWER AND GUARANTORS HEREBY RELEASE
THE ADMINISTRATIVE AGENT AND EACH LENDER, THEIR RESPECTIVE CURRENT AND FORMER
SHAREHOLDERS, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, ATTORNEYS, CONSULTANTS,
AND PROFESSIONAL ADVISORS (COLLECTIVELY, THE “RELEASED PARTIES”) OF
AND FROM ANY AND ALL DEMANDS, ACTIONS, CAUSES OF ACTION, SUITS, CONTROVERSIES,
ACTS AND OMISSIONS, LIABILITIES, AND OTHER CLAIMS OF EVERY KIND OR NATURE
WHATSOEVER, BOTH IN LAW AND IN EQUITY, KNOWN OR UNKNOWN, WHICH SUCH BORROWER OR
GUARANTOR HAS OR EVER HAD AGAINST THE RELEASED PARTIES FROM THE BEGINNING OF THE
WORLD TO THIS DATE ARISING IN ANY WAY OUT OF THE EXISTING FINANCING ARRANGEMENTS
AMONG THE BORROWER, THE GUARANTORS, THE ADMINISTRATIVE AGENT AND/OR THE LENDERS
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN DOCUMENTS, OR THE NEGOTIATION FOR AND EXECUTION OF THIS
AGREEMENT. THE BORROWER AND GUARANTORS FURTHER ACKNOWLEDGE THAT, AS
OF THE DATE HEREOF, THEY, JOINTLY OR SEVERALLY, DO NOT HAVE ANY COUNTERCLAIM,
SET-OFF, OR DEFENSE AGAINST THE RELEASED PARTIES, EACH OF WHICH SUCH BORROWER OR
GUARANTOR HEREBY EXPRESSLY WAIVES.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
AVÍCOLA
PILGRIM’S PRIDE DE MÉXICO, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
PILGRIM’S PRIDE CORPORATION, a
Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
INCUBADORA
▇▇▇▇▇▇▇, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
PILGRIM’S
PRIDE, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
INMOBLIARIA
AVÍCOLA PILGRIM’S PRIDE, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
SERVICIOS
ADMINISTRATIVOS PILGRIM’S PRIDE, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By:
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Attorney-in-Fact
GRUPO
PILGRIM’S PRIDE FUNDING HOLDINGS, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
COMERCIALIZADORA
▇▇ ▇▇▇▇▇▇ DE MÉXICO, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
GRUPO
PILGRIM’S PRIDE FUNDING, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
OPERADORA
DE PRODUCTOS AVÍCOLAS, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
▇▇▇▇▇▇
Y PRODUCTOS AVICOLAS de MEXICO, S. de ▇.▇. de C.V.
a Sociedad de Responsabilidad Limitada
de Capital Variable
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Attorney-in-Fact
POPPSA
3, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Title: CFO, Secretary
and Treasurer
POPPSA
4, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: CFO, Secretary
and Treasurer
PILGRIM’S
PRIDE, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Title: CFO,
Secretary and Treasurer
ING CAPITAL LLC,
as
Administrative Agent and Sole Lead Arranger
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Title: Managing Director
ING BANK N.V., acting through
its Curaçao Branch
By:
/s/ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Title: Head
Transaction Processing
By: /s/ A. C.
Maduro
Name: A.
C. Maduro
Title: Risk
Manager