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EXHIBIT 10.16
INTERCREDITOR AGREEMENT dated as of September 17,
1996, among PSF Holdings, L.L.C., a Delaware limited liability
company (the "Guarantor"), PREMIUM STANDARD FARMS, Inc., a
Delaware corporation and a wholly owned subsidiary of the
Guarantor (the "Borrower"), THE CHASE MANHATTAN BANK, a New
York banking corporation ("Chase"), as administrative agent
(in such capacity, the "Administrative Agent") and collateral
agent (in such capacity, the "Collateral Agent") for the
Senior Lenders referred to below and the Secured Parties (as
defined in the Credit Agreement referred to below; such
Secured Parties being referred to herein as the "Senior
Secured Parties"), and FLEET NATIONAL BANK, as collateral
agent (in such capacity, the "Junior Collateral Agent") for
the Junior Secured Parties (as defined below).
Reference is made to (a) the Credit Agreement dated as of September
17, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Guarantor, the Borrower, the financial
institutions from time to time party thereto (the "Senior Lenders") and Chase,
as Administrative Agent, Collateral Agent and issuing bank (in such capacity,
the "Issuing Bank"), (b) the Security Agreement dated as of September 17, 1996
(as amended, supplemented or otherwise modified from time to time, the "Senior
Security Agreement"), among the Guarantor, the Borrower and the Collateral
Agent, (c) the Pledge Agreement dated as of September 17, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Senior Pledge
Agreement"), among the Guarantor, the Borrower and the Collateral Agent, (d)
certain Deeds of Trust, Security Agreements, Assignment of Leases and Rents and
Fixture Filings dated as of September 17, 1996, in favor of the Collateral
Agent for the benefit of the Senior Secured Parties (as amended, supplemented
or otherwise modified from time to time, the "Senior Mortgages"), (e) the
Assignment of Contracts dated as of September 17, 1996, between the Borrower
and the Collateral Agent (the "Senior Assignment of Contracts" and, together
with the Senior Security Agreement, the Senior Pledge Agreement and the Senior
Mortgages, the "Senior Security Documents"), (f) the Note Purchase Agreement
dated as of September 17, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Second Priority Note Purchase Agreement"), among the
Guarantor, the Borrower and Xxxxxx Xxxxxxx Group, Inc., a Delaware corporation
("MS Group"), (g) the Indenture dated as of September 17, 1996 (as amended,
supplemented or otherwise modified from time to time, the "PIK Note
Indenture"), among the Guarantor, the Borrower and Fleet National Bank, as
trustee (the "PIK Note Trustee") for the holders of the PIK Notes (as defined
in the Credit Agreement; such holders being referred to herein as the "PIK Note
Holders" and, together with MS Group and any other holders of Second Priority
Notes outstanding under the Second Priority Note Purchase Agreement, the
"Junior Secured Parties"), (h) the Security Agreement dated as of September 17,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Junior Security Agreement"), among the Guarantor, the Borrower and the Junior
Collateral Agent, (i) the Pledge Agreement dated as of September 17, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Junior
Pledge Agreement"), among the Guarantor, the Borrower and the Junior Collateral
Agent, (j) certain Deeds of Trust in favor of the Junior Collateral Agent for
the benefit of the Junior Secured Parties (as amended, supplemented or
otherwise modified from time to time, the "Junior Mortgages") and (k) the
Assignment of
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Contracts dated as of September 17, 1996 (as amended, supplemented or otherwise
modified from time to time, the "Junior Assignment of Contracts" and, together
with the Junior Security Agreement, the Junior Pledge Agreement and the Junior
Mortgages, the "Junior Security Documents").
The Senior Lenders and the Issuing Bank have extended and agreed to
extend credit to the Borrower pursuant to, and upon the terms and conditions
specified in, the Credit Agreement. Pursuant to the Senior Security Documents,
the Guarantor and the Borrower have granted to the Collateral Agent for the
ratable benefit of the Senior Secured Parties perfected first-priority security
interests (the "First-Priority Security Interest") in the Collateral (as
defined in the Credit Agreement) to secure the payment and performance of their
Obligations (as defined in the Credit Agreement) (such Obligations being
referred to herein as the "Senior Secured Obligations").
MS Group has agreed to purchase from the Borrower $10,000,000
aggregate original principal amount of second priority notes (the
"Second-Priority Notes") pursuant to, and upon the terms and conditions
specified in, the Second Priority Note Purchase Agreement. Pursuant to the
Junior Security Documents, the Guarantor and the Borrower have granted to the
Junior Collateral Agent for the ratable benefit of the holders of the Second
Priority Notes perfected second priority security interests (the "Second
Priority Security Interests") in the Collateral to secure the payment and
performance of all of their obligations in respect of the Second Priority Notes
and under the Second Priority Note Purchase Agreement and the Junior Security
Documents (such obligations being referred to herein as the "Second Priority
Secured Obligations").
Pursuant to the Plan of Reorganization, the PIK Note Holders hold
$117,500,000 aggregate original principal amount of PIK Notes. Pursuant to the
Junior Security Documents, the Guarantor and the Borrower have granted to the
Junior Collateral Agent for the ratable benefit of the holders of the PIK Notes
perfected third priority security interests (the "Third Priority Security
Interests", and together with the Second Priority Security Interests, the
"Junior Security Interests") in the Collateral to secure the payment and
performance of all of their obligations in respect of the PIK Notes and under
the PIK Note Indenture and the Junior Security Documents (the "Third Priority
Secured Obligations"; the Third Priority Secured Obligations and the Second
Priority Secured Obligations being referred to herein as the "Junior Secured
Obligations").
The obligations of the Senior Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit are conditioned upon, among other things, the
execution and delivery by the Guarantor, the Borrower, the Administrative
Agent, the Collateral Agent and the Junior Collateral Agent of an agreement in
the form hereof.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the Guarantor, the Borrower, the
Junior Collateral Agent, on behalf of itself and each Junior Secured Party, and
the Administrative Agent and the Collateral Agent, on behalf of themselves and
each Senior Lender and Senior Secured Party, respectively, hereby agree as
follows:
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SECTION 1. Perfection and Priority of Security Interests. (a) Any and
all security interests, mortgages, assignments, pledges and other liens,
charges or encumbrances now existing or hereafter created or arising in favor
of the Junior Collateral Agent for its benefit and the benefit of any holder of
Junior Secured Obligations are expressly junior in priority, operation and
effect to any and all security interests, mortgages, assignments, pledges and
other liens, charges or encumbrances now existing or hereafter created or
arising in favor of the Collateral Agent for the benefit of the Senior Secured
Parties, notwithstanding anything to the contrary contained in any agreement or
filing to which the Guarantor, the Borrower or the Junior Collateral Agent may
now or hereafter be a party, and irrespective of the time, order or method of
attachment or perfection of any mortgages, financing statements or other
security interests, assignments, pledges and other liens, charges or
encumbrances or any defect or deficiency or alleged defect or deficiency in any
of the foregoing. Any assets and properties of the Guarantor or the Borrower
or any of their respective subsidiaries now or from time to time hereafter
given, granted, assigned or pledged to secure both the Senior Secured
Obligations and the Junior Secured Obligations shall be subject to the priority
established by this Section 1.
(b) At all times until the Senior Secured Obligations shall have been
paid and satisfied in full, the Collateral Agent shall be entitled to sell,
transfer or otherwise dispose of or deal with the Collateral as provided in the
Senior Security Documents, in each case without regard to the Junior Security
Interests therein, or any rights to which the Junior Secured Parties would
otherwise be entitled as a result of such Junior Security Interests, the only
obligation of the Collateral Agent to the Junior Secured Parties in respect
thereof being to act in a commercially reasonable manner in making any such
disposition of the Collateral and to deliver to the Junior Collateral Agent
(unless otherwise directed by a court of competent jurisdiction) any proceeds
remaining from the sale of the Collateral after such payment and satisfaction
in full of the Senior Secured Obligations or, if the Collateral Agent shall
still be in possession of all or any part of the Collateral after such payment
and satisfaction in full, the Collateral or such part thereof remaining,
without representation or warranty on the part of the Collateral Agent or the
Senior Secured Parties; provided that, except as aforesaid, nothing contained
in this sentence shall be construed to give rise to, nor shall the Junior
Secured Parties have, any claims whatsoever against any Senior Secured Party on
account of any act or omission to act in connection with the exercise of any
right or remedy of the Senior Secured Parties with respect to the Collateral.
Except as provided in Section 2(b) below, the Junior Collateral Agent shall
not, and shall not attempt to, exercise any rights with respect to the Junior
Security Interests in the Collateral, whether pursuant to the Junior Security
Documents or otherwise, until such payment and satisfaction in full of the
Senior Secured Obligations.
(c) For the sole purpose of perfecting the Junior Security Interests
in items of Collateral in which a security interest can be perfected only by
possession, the Collateral Agent acknowledges that it holds such items of
Collateral for itself and the Senior Secured Parties and as bailee for the
Junior Collateral Agent on behalf of the Junior Secured Parties, subject to the
terms and conditions hereof.
SECTION 2. No Interference; Right to Instruct Collateral Agent. (a)
The Junior Collateral Agent agrees that (i) it will not take or cause to be
taken any action, the purpose or
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effect of which is, or could be, to make any Junior Security Interest pari
passu with, or to give any Junior Secured Party any preference or priority
relative to the Senior Security Interest or the Senior Secured Parties with
respect to, the Collateral or the proceeds thereof, (ii) it will not interfere,
hinder or delay in any manner, whether by judicial proceedings or otherwise,
any sale or disposition of the Collateral by the Collateral Agent or any other
Senior Secured Party, (iii) it has no right to direct the Collateral Agent or
any other Senior Secured Party to exercise any right, remedy or power with
respect to the Collateral, (iv) it will not institute suit or assert in any
suit, bankruptcy, insolvency or other proceeding any claim against the
Collateral Agent or any other Senior Secured Party seeking damages from or
other relief by way of specific performance, instructions or otherwise, with
respect to any action taken or omitted by the Collateral Agent or the other
Senior Secured Parties in accordance with this Agreement with respect to the
Collateral, (v) it will not commence judicial or nonjudicial foreclosure
proceedings with respect to, seek to have a trustee, receiver, liquidator or
similar official appointed for or over, attempt any action to take possession
of, exercise any right, remedy or power under the Uniform Commercial Code as in
effect in any jurisdiction or any other applicable law with respect to, or
otherwise take any action to enforce its interest in or realize upon, the
Collateral (other than filing a proof of claim) until all the Senior Secured
Obligations shall have been paid and satisfied in full, (vi) it will not
exercise any right that it may have to require the Collateral Agent or the
Senior Secured Parties to xxxxxxxx any Collateral or to resort to or apply the
proceeds of any Collateral in any particular order and (vii) it will not
attempt, directly or indirectly, whether by judicial proceedings or otherwise,
to challenge the enforceability of any provision of this Agreement.
(b) Notwithstanding the provisions of paragraph (a) above, if (i)
either (x) the PIK Note Trustee or the PIK Note Holders, following any event of
default under the PIK Note Indenture, shall have accelerated the outstanding
principal amount of the PIK Notes or (y) the holders of the Second Priority
Notes, following any event of default under the Second Priority Note Purchase
Agreement, shall have accelerated the outstanding principal amount of the
Second Priority Notes, (ii) following the occurrence of either event described
in clause (x) or (y) above, the Junior Collateral Agent shall have requested in
a writing to the Collateral Agent the consent of the Senior Secured Parties to
the Junior Collateral Agent's exercising its rights and remedies against the
Collateral under the Junior Security Documents and (iii) the Collateral Agent
either shall have granted such consent in writing or shall have failed to do so
within 180 days after receipt of the notice referred to in clause (ii) above,
then the Junior Collateral Agent may exercise any right, remedy or power it may
have with respect to the Collateral; provided, however, that (x) the proceeds
of any sale or disposition of the Collateral shall be applied first (and prior
to the reimbursement of the costs of such sale or disposition or other expenses
of the Junior Collateral Agent or the Junior Secured Parties in connection
therewith) to the payment in full of any and all Senior Secured Obligations in
accordance with the terms of the Senior Security Documents and (y) should the
Collateral Agent commence the exercise of its rights and remedies against the
Collateral, whether during or after such 180-day period, the Junior Collateral
Agent shall not have the right to exercise the rights and remedies referred to
in this paragraph (b).
SECTION 4. Obligations of Borrower Unimpaired. Nothing in this
Agreement is intended to or shall impair, as between the Borrower and (a) the
Senior Secured Parties and (b) the Junior Secured Parties, the obligations of
the Borrower under the Credit Agreement, the
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Second Priority Note Purchase Agreement and the PIK Note Indenture to pay the
principal of, premium, if any, and interest on the Loans, the Second Priority
Notes and the PIK Notes, in each case strictly in accordance with their
respective terms, which obligations are absolute and unconditional.
SECTION 5. Payments Held in Trust. The Junior Collateral Agent agrees
that, until the Senior Secured Obligations shall have been paid and satisfied
in full, all payments or other distributions received by it to which it is not
entitled hereunder, whether paid or payable in cash or otherwise, shall not be
commingled by the Junior Collateral Agent with any of its other funds or
property but shall be held separate and apart therefrom, shall be held in trust
for the benefit of the Collateral Agent and the Senior Secured Parties and
shall be forthwith delivered to the Collateral Agent in the same form as so
received (with any necessary endorsements).
SECTION 6. Note Legends. The Borrower shall cause each note or
instrument issued pursuant to the Second Priority Note Purchase Agreement or
the PIK Note Indenture to contain text or a legend, in form and substance
satisfactory to the Collateral Agent, stating that the liens securing such
Indebtedness are junior in right to the First-Priority Security Interest
pursuant to the terms set forth herein.
SECTION 7. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
SECTION 8. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to the Junior Collateral Agent shall be
given to it at its address set forth beneath its signature below.
SECTION 9. Changes, Waiver, etc. Neither this Agreement nor any
provision hereof may be waived, discharged or terminated orally, but only by a
statement or instrument in writing signed by the party or parties against which
enforcement of the waiver, discharge or termination shall be sought.
SECTION 10. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of (a) the parties hereto and their respective
successors and assigns, including any agent appointed to represent a Junior
Secured Party due to the disqualification of the Junior Collateral Agent
resulting from a conflict of interest, and (b) each of the Senior Secured
Parties, each holder of a Second Priority Note and each holder of a PIK Note
and their respective successors and assigns.
SECTION 11. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision
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in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 12. Counterparts. This Agreement may be executed in more
than one counterpart, each of which shall constitute an original but all of
which when taken together shall constitute but one instrument. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
SECTION 13. Jurisdiction; Consent to Service of Process. (a) Each
party hereto irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that party hereto may
otherwise have to bring any action or proceeding relating to this Agreement
against any other party or its properties in the courts of any jurisdiction.
(b) Each party hereto hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State
or Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND
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THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.
SECTION 15. Rights Absolute. All rights and obligations of the
parties hereto shall be absolute and unconditional irrespective of any lack of
validity or enforceability of the Credit Agreement or any Senior Security
Document, any agreement with respect to any of the Senior Secured Obligations
or any other agreement or instrument relating to any of the foregoing.
SECTION 16. Headings. The headings of this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized officers, all as of the day and year
first above written.
PSF HOLDINGS, L.L.C.,
by /s/ X.X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
PREMIUM STANDARD FARMS, INC.,,
by /s/ X.X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
THE CHASE MANHATTAN BANK, as
Administrative Agent and
Collateral Agent,
by /s/ Xxxxxxxx Xxxxxx
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Name:
Title:
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FLEET NATIONAL BANK,
as Junior Collateral Agent,
by /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Vice President
Address: Fleet National Bank
Corporate Trust Department
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
