Pilgrim’s Pride Corporation Limited Duration Waiver Agreement
EXHIBIT
10.3
EXECUTION
COPY
Pilgrim’s
Pride Corporation
This
Limited Duration Waiver Agreement (herein, the “Agreement”) is made as of
September 26, 2008, by and among PILGRIM’S PRIDE CORPORATION, a Delaware
corporation (the “Servicer”), PILGRIM’S PRIDE FUNDING
CORPORATION, a Delaware limited liability company (the “Seller” and, together with the
Servicer, the “Seller
Parties”), the PURCHASERS AND PURCHASER AGENTS ON THE SIGNATURE PAGES
HERETO (collectively, the “Purchasers”) and BMO
CAPITAL MARKETS CORP., as administrator (in such capacity, together with its
successors and assigns, the “Administrator”).
Recitals:
A.Fairway
and each other purchaser from time to time party to the Receivables Purchase
Agreement (as defined below) (collectively, the “Purchasers” and,
together with the Administrator, the “Waiving Parties”)
currently purchase and make reinvestments of undivided percentage ownership
interests with regard to the Participation from the Seller on the terms and
conditions set forth in that certain Amended and Restated Receivables Purchase
Agreement dated as of September 26, 2008, by and among the Servicer, the Seller,
the Purchasers and the Administrator (as amended, restated, supplemented or
otherwise modified from time to time, the “Receivables Purchase
Agreement”).
B.The
Servicer has informed the Waiving Parties that the Servicer expects that it will
not be in compliance with clause (v) of Exhibit IV to the Receivables Purchase
Agreement (Fixed Charge Coverage Ratio) as of September 27, 2008 (such
instance of noncompliance being hereinafter referred to as the “Subject Default”).
C.The
Seller Parties have requested that the Waiving Parties waive the Subject Default
during the period ending October 28, 2008, and the Waiving Parties are
willing to do so subject to the terms and conditions contained in this
Agreement.
Now,
Therefore, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1.Incorporation of Recitals; Defined
Terms. The Seller Parties acknowledge that the Recitals set
forth above are true and correct in all material respects. The
defined terms in the Recitals set forth above are hereby incorporated into this
Agreement by reference. All other capitalized terms used herein
without definition shall have the same meanings herein as such terms have in the
Receivables Purchase Agreement.
2.Amounts Owing. The
Seller Parties acknowledge and agree that the Investment and Discount in respect
of the Participation and all other amounts outstanding and payable by the
Originator, the Seller or the Servicer to the Purchasers, the Administrator or
any other Indemnified Party or Affected Person under the Transaction Documents
as of September 25, 2008 is $237,009,564.55 ($236,334,002.53 in Investment,
$483,311.77 in Discount, $192,250.25 in other amounts), and such amount
(together with interest and fees thereon) is justly and truly owing by the
Seller without defense, offset or counterclaim.
0.Xxxxxxx Duration
Waiver. Subject to the terms and conditions contained in this
Agreement, the Waiving Parties waive the Subject Default but only for the period
(the “Waiver Period”)
beginning September 26, 2008, and ending on October 28, 2008 (the
“Scheduled Waiver Expiration
Date”). The foregoing waiver shall become null and void on the
Scheduled Waiver Expiration Date and from and after the Scheduled Waiver
Expiration Date the Administrator and the Purchasers shall have all rights and
remedies available to them as a result of the occurrence of the Subject Default
as though this waiver had never been granted.
4.Additional
Agreements. The Seller Parties further agree
that:
(a)The
Administrator (or its counsel) shall have the right to engage on behalf of the
Purchasers a financial advisor, selected by the Administrator and acceptable to
the Purchasers, to review, evaluate and advise the Administrator and the
Purchasers as to the reports, analyses and cash flow forecasts and other
materials prepared by the Seller’s and the Servicer’s financial consultants
relating to the financial condition, operating performance, and business
prospects of the Seller and the Servicer and their Subsidiaries and to perform
such other information gathering or evaluation acts as may be reasonably
requested by the Administrator, and the reasonable costs and expenses of such
financial advisor shall be borne by the Seller and constitute part of the
Seller’s obligations outstanding under the Receivables Purchase
Agreement. Each of the Seller and the Servicer shall take reasonable
steps to make available to such financial advisor and its representatives such
information respecting the financial condition, operating performance, and
business prospects of the Seller and the Servicer and their Subsidiaries as may
be reasonably requested and shall make the Seller’s and the Servicer’s financial
consultants, officers, employees, and independent public accountants available
with reasonable prior notice to discuss such information with such financial
advisor and its representatives.
(b)The
Seller (or the Servicer on its behalf) shall provide to the Administrator and
the Purchasers a 13-week cash flow forecast (the “Forecast”) showing
projected cash receipts and cash disbursements of the Seller and the Servicer
and their Subsidiaries over the following 13-week period, together with a
reconciliation of actual cash receipts and cash disbursements of the Seller and
the Servicer and their Subsidiaries from the prior week against the cash flow
forecast previously furnished to the Administrator and the Purchasers and
showing any deviations on a cumulative basis), prepared by the Servicer and in
form and substance, and with such detail, as the Administrator may
request. The first Forecast after the date hereof shall be provided
to the Administrator and the Purchasers no later than 5:00 p.m., Central time,
on Monday, October 6, 2008. Thereafter, each Forecast shall be
provided to the Administrator and the Purchasers no later than 5:00 p.m. Central
time, on Wednesday of each week (beginning October 15, 2008).
(c)During
the Waiver Period, unless approved by the required banks and the requisite
number of lenders under the CoBank Credit Agreement, the Servicer shall have at
all times undrawn commitments under the Credit Agreement and the Amended and
Restated Credit Agreement dated as of September 21, 2006, among the Servicer,
CoBank, ACB, as Administrative, Documentation and Collateral Agent for the
benefit of the present and future Syndication Parties and as a Syndication
Party, Lead Arranger and Book Manager thereunder (“Co-Bank”), Farm
Credit Services of America, FLCA, as Co-Arranger and as a Syndication Party, and
the other Syndication Parties party thereto, as amended, supplemented, restated
and otherwise modified from time to time (as so amended, supplemented, restated
and otherwise modified from time to time, the “CoBank Credit
Agreement”) in
an aggregate amount not less than $100,000,000.
(d)No
later than October 24, 2008, the Seller’s and the Servicer’s senior
management and their financial advisors shall meet with the Administrator and
the Purchasers and their financial advisors to discuss the Seller’s and the
Servicer’s business and financial affairs and such matters as the Purchasers or
the Administrator may request.
(e)(i) No
later than October 15, 2008, the Seller shall enter into Lock-Box Agreements in
form and substance reasonably satisfactory to the Administrator and covering the
Lock-Box Accounts listed on Schedule I hereto
with all of the Lock-Box Banks, and deliver original counterparts thereof to the
Administrator or (ii) no later than October 28, 2008, the Seller shall (A) cause
to be opened new Lock-Box Accounts at new lock-box banks reasonably satisfactory
to the Administrator, (B) enter into lock-box agreements in form and substance
reasonably satisfactory to the Administrator with respect to each such lock-box
account and deliver original counterparts thereof to the Administrator and (C)
instruct each Obligor to make payments of all Receivables to such lock-box
accounts; for the avoidance of doubt, the terms “Lock-Box Account” and “lock-box
account” include, without limitation, the Collection Account and the Liquidation
Account. A breach of this clause (e) shall constitute a Termination
Event under the Receivables Purchase Agreement.
5.Waiver
Termination. As used in this Agreement, “Waiver Termination” shall
mean the occurrence of the Scheduled Waiver Expiration Date, or, if earlier, the
occurrence of any one or more of the following events: (a) any Unmatured
Termination Event or Termination Event, in each case other than the Subject
Default; (b) any failure by the Seller or the Servicer for any reason to
comply with any term, condition, or provision contained in this Agreement;
(c) any representation made by the Seller or the Servicer in this Agreement
or pursuant to it proves to be incorrect or misleading in any material respect
when made; (d) the CoBank Limited Duration Waiver (as defined in
Section 12(b) hereof) shall for any reason not be or shall cease to be in
full force and effect or is declared to be null and void, or CoBank or any other
party to the CoBank Credit Agreement takes any action for the purpose of
terminating, repudiating or rescinding the CoBank Limited Duration Waiver or any
of its obligations thereunder; (e) the Credit Agreement Limited Duration
Waiver (as defined in Section 12(c) hereof) shall for any reason not be or
shall cease to be in full force and effect or is declared to be null and void,
or the Credit Agent (as defined below) or any other party to the Fourth Amended
and Restated Secured Credit Agreement dated as of February 8, 2007, among
Seller, as a borrower, To-Ricos, Ltd., To-Ricos Distribution, Ltd., the various
banks party thereto and Bank of Montreal, as agent (the “Credit Agent”), as amended, supplemented
and otherwise modified (as so amended,
supplemented and otherwise modified, the “Credit Agreement”), takes any action for the
purpose of terminating, repudiating or rescinding the Credit Agreement Limited
Duration Waiver or any of its obligations thereunder. Upon the
occurrence of a Waiver Termination, the Waiver Period is automatically
terminated and the Administrator and the Purchasers are then permitted and
entitled, with respect to the Subject Default and any other Termination Event
then in existence, under the Receivables Purchase Agreement, including without
limitation Sections 4.4 thereof, among other things, to do all things
necessary or desirable, in the determination of the Administrator, to collect
any and all amounts or portions thereof due under any and all Pool Receivables
or Related Security, including, without limitation, endorsing the name of the
Seller on checks and other instruments representing Collections and enforcing
such Pool Receivables, Related Security and the related Contracts, to cease
making purchases and reinvestments, to permanently terminate the commitments
thereunder, to accelerate the Seller’s indebtedness, obligations and liabilities
under the Transaction Documents, and to exercise any other rights and remedies
that may be available under the Transaction Documents or applicable
law.
0.Xxxxxxx Waiver and Reservation of
Rights. The Seller Parties acknowledge and agree that
immediately upon expiration or termination of the Waiver Period, the
Administrator and the Purchasers have all of their rights and remedies with
respect to the Subject Default to the same extent, and with the same force and
effect, as if the waiver contained herein had not been granted. The
Seller Parties will not assert and hereby forever waives any right to assert
that the Administrator or the Purchasers are obligated in any way to continue to
waive the Subject Default beyond the Waiver Period or to forbear from enforcing
their rights or remedies with respect to the Subject Default after the Waiver
Period or that the Administrator and the Purchasers are not entitled to act on
the Subject Default after the occurrence of a Waiver Termination as if such
default had just occurred and the Waiver Period had never
existed. The Seller Parties acknowledge that none of the
Administrator or the Purchasers have made any representations as to what
actions, if any, such party will take after the Waiver Period or upon the
occurrence of any Waiver Termination, Unmatured Termination Event or Termination
Event, and the Purchasers and the Administrator must and do hereby specifically
reserve any and all rights, remedies, and claims they have (after giving effect
hereto) with respect to the Subject Default and each other default or
Termination Event that may occur.
7.Acknowledgement of
Liens. The Seller Parties hereby acknowledge and agree that
all indebtedness, obligations and liabilities of the Seller owing to the
Administrator and the Purchasers arising out of or in any manner relating to the
Transaction Documents shall continue to be secured by liens and security
interests on all of the Receivables, Contracts and Related Security and all
other collateral pursuant to the Transaction Documents heretofore or hereafter
executed and delivered by the Seller or the Servicer, and nothing herein
contained shall in any manner affect or impair the priority of the liens and
security interests created and provided for thereby as to the indebtedness,
obligations, and liabilities which would be secured thereby prior to giving
effect to this Agreement.
8.Representations and
Warranties. Each of the Seller Parties represents and warrants
to the Administrator and the Purchasers that:
(a)each
Seller Party has full right and authority to enter into this Agreement and to
perform all of its obligations hereunder;
(b)this
Agreement and the performance or observance by the Seller Parties of any of the
matters and things herein or therein provided for do not (i) contravene or
constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon any Seller Party or any provision of the
organizational documents (e.g., certificate or articles
of incorporation and by-laws) of any Seller Party, or (ii) contravene or
constitute a default under any covenant, indenture or agreement of or affecting
any Seller Party or any of its Property;
(c)the
obligations of each Seller Party under this Agreement and each of the
Transaction Documents executed and delivered by it are legal, valid, enforceable
(except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally) and subsisting and not subject to set-off, defense
(other than payment) or counterclaim;
(d)no
Unmatured Termination Event or Termination Event (other than the Subject
Default) has occurred and is continuing;
(e)as of
the close of business in Chicago, Illinois on September 24, 2008, the undrawn
amount of all commitments under the CoBank Credit Agreement was $143,000,000 and
the undrawn amount of all revolving credit commitments under the Credit
Agreement was $35,500,000.
9.Release. For value
received, including without limitation, the agreements of the Administrator and
the Purchasers in this Agreement, each Seller Party hereby releases the
Administrator, each Purchaser, each Indemnified Party and 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 Seller Party 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 between the Seller
Parties, the Administrator and the Purchasers, and each Seller Party further
acknowledges that, as of the date hereof, it does not have any counterclaim,
set-off, or defense against the Released Parties, each of which each Seller
Party hereby expressly waives.
10.Transaction Documents Remain
Effective. Except as expressly set forth in this Agreement,
the Transaction Documents and all of the obligations of the Seller Parties
thereunder, the rights and benefits of the Administrator and Purchasers
thereunder, and the liens and security interests created thereby remain in full
force and effect. Without limiting the foregoing, each Seller Party
agrees to comply with all of the terms, conditions, and provisions of the
Transaction Documents except to the extent such compliance is irreconcilably
inconsistent with the express provisions of this Agreement. This
Agreement and the Transaction Documents are intended by the Administrator and
the Purchasers as a final expression of their agreement and are intended as a
complete and exclusive statement of the terms and conditions of that
agreement.
11.Fees and
Expenses. The Seller and the Servicer shall pay on demand all
fees and expenses (including attorneys’ fees) incurred by the Administrator and
its counsel in connection with this Agreement and the other instruments and
documents being executed and delivered in connection herewith, and all fees and
expenses of counsel to the Administrator with respect to the securitization
facility subject to the Receivables Purchase Agreement.
12.Conditions
Precedent. The effectiveness of this Agreement is subject to
the satisfaction of the following conditions precedent:
(a)the
Seller Parties, the Administrator, and the Purchasers shall have executed and
delivered this Agreement on or before the close of business
in Chicago, Illinois on September 26, 2008;
(b)the
Administrator shall have received a copy of a fully executed limited duration
waiver from the lenders party to the CoBank Credit Agreement and CoBank, as
agent for such lenders, waiving any default under the CoBank Credit Agreement
that is analogous to the Subject Default for a period ending no earlier that the
Scheduled Waiver Expiration Date, which limited duration waiver shall not
contain any terms or provisions that are not contained in this Agreement or that
are inconsistent with the terms of this Agreement or that are more favorable to
the lenders under the CoBank Credit Agreement than the terms of this Agreement
are favorable to the Administrator and the Purchasers, and which otherwise shall
be in form and substance reasonably satisfactory to the Administrator (the “CoBank Limited Duration
Waiver”),
provided that the CoBank Limited Duration Waiver may require the Servicer to
grant mortgages and deeds of trust to CoBank, as agent under the CoBank Credit
Agreement, on real property and buildings and improvements thereon that are
currently unencumbered;
(c)the
Administrator shall have received a copy of a fully executed limited duration
waiver from the lenders party to the Credit Agreement and the Credit Agent,
waiving any default under the Credit Agreement that is analogous to the Subject
Default for a period ending no earlier that the Scheduled Waiver Expiration
Date, which limited duration waiver shall not contain any terms or provisions
that are not contained in this Agreement or that are inconsistent with the terms
of this Agreement or that are more favorable to the lenders under the Credit
Agreement than the terms of this Agreement are favorable to the Administrator
and the Purchasers, and which otherwise shall be in form and substance
reasonably satisfactory to the Administrator (the “Credit Agreement Limited
Duration Waiver”); and
(d)the
payment of the current legal fees and expenses referred to in Section 11
above.
13.Miscellaneous. By
its acceptance hereof, each Seller Party hereby represents that it has the
necessary power and authority to execute, deliver, and perform the undertakings
contained herein, and that this Agreement constitutes the valid and binding
obligation of such Seller Party enforceable against it in accordance with its
terms. Any provision of this Agreement held invalid, illegal, or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity, illegality, or unenforceability without
affecting the validity, legality, and enforceability of the remaining provision
hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other
jurisdiction. The parties hereto hereby acknowledge and agree that
this Agreement shall constitute a Transaction Document for all purposes of the
Receivables Purchase Agreement and the other Transaction
Documents. Unless otherwise expressly stated herein, the provisions
of this Agreement shall survive the termination of the Waiver
Period. This Agreement may be executed in counterparts and by
different parties on separate counterpart signature pages, each of which
constitutes an original and all of which taken together constitute one and the
same instrument. Delivery of executed counterparts of this Agreement
by telecopy shall be effective as an original. This Agreement shall
be governed by Texas law and shall be governed and interpreted on the same basis
as the Receivables Purchase Agreement.
[Signature
Pages to Follow]
1455788 98442494
This
Limited Duration Waiver Agreement is entered into as of the date and year first
above written.
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Pilgrim’s
Pride Corporation, as Servicer
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By/s/ Xxxxxxx X.
Xxxxxxx
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Name:Xxxxxxx
X. Xxxxxxx
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Title:CFO,
Secretary & Treasurer
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Pilgrim’s
Pride Funding Corporation, as
Seller
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By/s/ Xxxxxxx X.
Xxxxxxx
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Name:Xxxxxxx
X. Xxxxxxx
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Title:CFO,
Secretary & Treasurer
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1455788 98442494
Accepted
and agreed to:
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BMO
Capital Markets Corp., as
Administrator
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By/s/ Xxxxx
Xxxxx
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Name:Xxxxx
Xxxxx
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Title:Managing
Director
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BMO
Capital Markets Corp., as Purchaser
Agent
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By/s/ Xxxxx
Xxxxx
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Name:Xxxxx
Xxxxx
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Title:Managing
Director
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Fairway
Finance Company, LLC, as Uncommitted Purchaser and as Related Committed
Purchaser
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By/s/ Xxxx
Xxxxxx
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Name:Xxxx
Xxxxxx
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Title:Vice
President
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1455788 98442494
