1
EXHIBIT 10.18
PLEDGE 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"), each Subsidiary of the Borrower listed on
Schedule I hereto (each such Subsidiary individually
a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; the Guarantor, the Borrower
and the Subsidiary Pledgors are referred to
collectively herein as the "Pledgors"), and THE
CHASE MANHATTAN BANK, a New York banking corporation
("The Chase Manhattan Bank"), as collateral agent (in
such capacity, the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement
referred to 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 Lenders
(such term and each other capitalized term used but not defined herein having
the meaning assigned to it in the Credit Agreement), The Chase Manhattan Bank,
as issuing bank (in such capacity, the "Issuing Bank"), as administrative agent
(in such capacity, the "Administrative Agent"), and as Collateral Agent for the
Lenders, (b) the Parent Guarantee Agreement dated as of September 17, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Parent
Guarantee Agreement"), between the Guarantor and the Collateral Agent and (c)
the Subsidiary Guarantee Agreement dated as of September 17, 1996 (as amended,
supplemented or modified from time to time, the "Subsidiary Guarantee
Agreement") among the Subsidiary Guarantors and the Collateral Agent.
The Lenders have agreed to make Loans to and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrower, pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement.
The Guarantor and the Subsidiary Guarantors have each agreed
to guarantee, among other things, all the obligations of the Borrower under the
Credit Agreement. The obligations of the 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 Pledgors of a Pledge Agreement in the
form hereof to secure (a) the due and punctual payment by the Borrower of (i)
the principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Borrower under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon and obligations to provide
cash collateral and (iii) all other monetary obligations, including indemnities
and reasonable and invoiced fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the
2
2
Borrower to the Secured Parties under the Credit Agreement and the other Loan
Documents, (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Borrower under or pursuant to the Credit
Agreement and the other Loan Documents (c) the due and punctual payment and
performance of all the covenants, agreements, obligations and liabilities of
the Guarantor under or pursuant to the Parent Guarantee Agreement or the other
Loan Documents and (d) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Subsidiary Guarantor
pursuant to the Subsidiary Guarantee Agreement or the other Loan Documents (all
the monetary and other obligations referred to in the preceding clauses (a)
through (d) being referred to collectively as the "Obligations").
Accordingly, the Pledgors and the Collateral Agent, on behalf
of themselves and each Secured Party (and each of their respective successors
or assigns), hereby agree as follows:
SECTION 1. Pledge. As security for the payment and
performance, as the case may be, in full of the Obligations, each Pledgor
hereby transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets
over and delivers unto the Collateral Agent, its successors and assigns, and
hereby grants to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, a security interest in such Pledgor's
right, title and interest in, to and under (a) the shares of capital stock
owned by it and listed on Schedule II hereto and any shares of capital stock of
or any Subsidiary obtained in the future by the Pledgor and the certificates
representing all such shares (the "Pledged Stock"), provided that Pledged Stock
shall not include (i) more than 65% of the issued and outstanding shares of
stock of any foreign Subsidiary or (ii) to the extent that applicable law
requires that a Subsidiary of a Pledgor issue directors' qualifying shares,
such qualifying shares, (b)(i) the debt securities listed opposite the name of
such Pledgor on Schedule II hereto, (ii) any debt securities in the future
issued to such Pledgor and (iii) the promissory notes and any other instruments
evidencing such debt securities (the "Pledged Debt Securities"); (c) all other
property that may be delivered to and held by the Collateral Agent pursuant to
the terms hereof; (d) subject to Section 5, all payments of principal or
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed, in respect of, in exchange for
or upon the conversion of the securities referred to in clauses (a) and (b)
above; (e) subject to Section 5, all rights and privileges of such Pledgor with
respect to the securities and other property referred to in clauses (a), (b),
(c) and (d) above; and (f) all proceeds of any of the foregoing (the items
referred to in clauses (a) through (f) above being collectively referred to as
the "Collateral"). Upon delivery to the Collateral Agent, (a) any stock
certificates, notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by undated stock
powers duly executed in blank or other instruments of transfer reasonably
satisfactory to the Collateral Agent and by such other instruments and
documents as the Collateral Agent may reasonably request and (b) all other
property comprising part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by the applicable Pledgor and such
other instruments or documents as the Collateral Agent may reasonably request.
Each delivery of Pledged Securities shall be accompanied by a schedule
describing the securities theretofore and then being pledged hereunder, which
schedule shall be attached hereto as Schedule II and made a part hereof. Each
schedule so delivered shall supersede any prior schedules so delivered.
3
3
TO HAVE AND TO HOLD the Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor
agrees promptly to deliver or cause to be delivered to the Collateral Agent
from time to time any and all Pledged Securities, and any and all certificates
or other instruments or documents representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed
money owed to such Pledgor by any person to be evidenced by a duly executed
promissory note that is pledged and delivered to the Collateral Agent pursuant
to the terms hereof.
SECTION 3. Representations, Warranties and Covenants. Each
Pledgor hereby represents, warrants and covenants, as to itself and the
Collateral pledged by it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock represents that percentage as set forth
on Schedule II of the issued and outstanding shares of each class of
the capital stock of the issuer with respect thereto;
(b) except for the security interest granted hereunder, such
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (ii) holds the same free and clear of all Liens, other
than those permitted by Section 6.02 of the Credit Agreement, (iii)
will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto, and (iv) subject to
Section 5, will cause any and all Collateral, whether for value paid
by such Pledgor or otherwise, to be forthwith deposited with the
Collateral Agent and pledged or assigned hereunder;
(c) such Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will
defend its title or interest thereto or therein against any and all
Liens (other than the Lien created by this Agreement and the Liens
permitted by Section 6.02 of the Credit Agreement), however arising,
of all persons whomsoever;
(d) no consent of any other person (including stockholders or
creditors of such Pledgor) and no consent or approval of any
Governmental Authority or any securities exchange was or is necessary
to the validity of the pledge effected hereby;
(e) by virtue of the execution and delivery by such Pledgor of
this Agreement, when the Pledged Securities, certificates or other
documents representing or evidencing the Collateral are delivered to
the Collateral Agent in accordance with this Agreement,
4
4
the Collateral Agent will obtain a valid and perfected first priority
lien upon and security interest in such Pledged Securities as security
for the payment and performance of the Obligations;
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized and
validly issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged
Stock is accurate and complete in all material respects as of the date
hereof; and
(i) the pledge of the Pledged Stock pursuant to this Agreement
does not violate Regulation G, T, U or X of the Federal Reserve Board
or any successor thereto as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in
its sole and absolute discretion) to hold the Pledged Securities in its own
name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the
name of the applicable Pledgor, endorsed or assigned in blank or in favor of
the Collateral Agent. Each Pledgor will promptly give to the Collateral Agent
copies of any notices or other communications received by it with respect to
Pledged Securities registered in the name of such Pledgor. The Collateral
Agent shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a)
Unless and until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner
of the Pledged Securities or any part thereof for any purpose
consistent with the terms of this Agreement, the Credit Agreement and
the other Loan Documents; provided, however, that such Pledgor will
not be entitled to exercise any such right if the result thereof could
materially and adversely affect the rights inuring to a holder of the
Pledged Securities or the rights and remedies of any of the Secured
Parties under this Agreement, the Credit Agreement or any other Loan
Document or the ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all
such proxies, powers of attorney and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and/or consensual rights and powers it is entitled
to
5
5
exercise pursuant to subparagraph (i) above and to receive the cash
dividends it is entitled to receive pursuant to subparagraph (iii)
below.
(iii) Each Pledgor shall be entitled to receive and retain any
and all cash dividends, interest and principal paid on the Pledged
Securities to the extent and only to the extent that such cash
dividends, interest and principal are permitted by, and otherwise paid
in accordance with, the terms and conditions of the Credit Agreement,
the other Loan Documents and applicable laws. All noncash dividends,
interest and principal of a type that would otherwise constitute
Collateral hereunder, and all dividends, interest and principal paid
or payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, return of capital, capital surplus or
paid-in surplus, and all other distributions (other than distributions
referred to in the preceding sentence) made on or in respect of the
Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the issuer of any Pledged
Securities or received in exchange for the Pledged Securities or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by any Pledgor, shall not be commingled
by such Pledgor 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 shall be forthwith delivered to
the Collateral Agent in the same form as so received (with any
necessary endorsement).
(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of any Pledgor to dividends, interest or principal
that such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above
shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority
to receive and retain such dividends, interest or principal. All dividends,
interest or principal received by any Pledgor contrary to the provisions of
this Section 5 shall be held in trust for the benefit of the Collateral Agent,
shall be segregated from other property or funds of such Pledgor and shall be
forthwith delivered to the Collateral Agent upon demand in the same form as so
received (with any necessary endorsement). Any and all money and other property
paid over to or received by the Collateral Agent pursuant to the provisions of
this paragraph (b) shall be retained by the Collateral Agent in an account to
be established by the Collateral Agent upon receipt of such money or other
property and shall be applied in accordance with the provisions of Section 7.
After all Events of Default have been cured or waived, the Collateral Agent
shall, within five Business Days after all such Events of Default have been
cured or waived, repay to each Pledgor all cash dividends, interest or
principal (without interest) that such Pledgor would otherwise be permitted to
retain pursuant to the terms of paragraph (a)(iii) above and which remain in
such account.
(c) Upon the occurrence and during the continuance of an
Event of Default, all rights of any Pledgor to exercise the voting and
consensual rights and powers it is entitled to exercise pursuant to paragraph
(a)(i) of this Section 5, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 5, shall cease, and all such rights shall
thereupon become
6
6
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers,
provided that, unless otherwise directed by the Required Lenders, the
Collateral Agent shall have the right from time to time following and during
the continuance of an Event of Default to permit any Pledgor to exercise such
rights. After all Events of Default have been cured or waived, each Pledgor
shall have the right to exercise the voting and consensual rights and powers
that it would otherwise be entitled to exercise pursuant to the terms of
paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, subject to applicable regulatory
and legal requirements, the Collateral Agent may (to the extent permitted by
law) sell the Collateral, or any part thereof, at public or private sale or at
any broker's board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem appropriate. The Collateral
Agent shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale, the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Pledgor, and, to the extent permitted by applicable law, each Pledgor hereby
waives all rights of redemption, stay, valuation and appraisal that such
Pledgor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.
The Collateral Agent shall give each Pledgor 10 days' prior
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the Collateral
Agent's intention to make any sale of such Pledgor's Collateral. Such notice
(i) in the case of a public sale, shall state the time and place for such sale,
(ii) in the case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the day
on which the Collateral, or portion thereof, will first be offered for sale at
such board or exchange, and (iii) in the case of a private sale, shall state
the time after which any such sale is to be made. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Collateral Agent may fix and state in the notice of such sale.
At any such sale, the Collateral, or portion thereof to be sold, may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may (in
its sole and absolute discretion) determine. The Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do
so, regardless of the fact that notice of sale of such Collateral shall have
been given. The Collateral Agent may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid in full by the purchaser or
purchasers thereof, but the Collateral Agent shall not incur any liability in
case any such pur-
7
7
chaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by applicable law, private)
sale made pursuant to this Section 6, any Secured Party may bid for or
purchase, free from any right of redemption, stay or appraisal on the part of
any Pledgor (all said rights being also hereby waived and released to the
extent permitted by law), the Collateral or any part thereof offered for sale
and may make payment on account thereof by using any claim then due and payable
to it from such Pledgor as a credit against the purchase price, and it may,
upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to such Pledgor therefor. For purposes
hereof, (a) a written agreement to purchase the Collateral or any portion
thereof shall be treated as a sale thereof, (b) the Collateral Agent shall be
free to carry out such sale pursuant to such agreement and (c) such Pledgor
shall not be entitled to the return of the Collateral or any portion thereof
subject thereto, notwithstanding the fact that after the Collateral Agent shall
have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose upon the Collateral and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section
6 shall be deemed to conform to the commercially reasonable standards as
provided in Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions.
SECTION 7. Application of Proceeds of Sale. The proceeds of
any sale of Collateral pursuant to Section 6, as well as any Collateral
consisting of cash, shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all reasonable and invoiced
out-of-pocket costs and expenses incurred by the Collateral Agent in
connection with such sale or otherwise in connection with this
Agreement, any other Loan Document or any of the Obligations,
including all court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all advances made by the
Collateral Agent hereunder or under any other Loan Document on behalf
of any Pledgor and any other costs or expenses incurred in connection
with the exercise of any right or remedy hereunder or under any other
Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the
date of any such distribution); and
THIRD, to each Pledgor, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement. Upon any sale of the Collateral by the Collateral Agent
(including pursuant to a power of sale granted by statute
8
8
or under a judicial proceeding), the receipt of the purchase money by the
Collateral Agent or the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Collateral Agent or such officer or be
answerable in any way for the misapplication thereof.
SECTION 8. Collateral Agent Appointed Attorney-in-Fact. Each
Pledgor hereby appoints the Collateral Agent the attorney-in- fact of such
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Collateral Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Collateral Agent's name or in the name of
such Pledgor, to ask for, demand, xxx for, collect, receive and give
acquittance for any and all moneys due or to become due under and by virtue of
any Collateral, to endorse checks, drafts, orders and other instruments for the
payment of money payable to such Pledgor representing any interest or dividend
or other distribution payable in respect of the Collateral or any part thereof
or on account thereof and to give full discharge for the same, to settle,
compromise, prosecute or defend any action, claim or proceeding with respect
thereto, and to sell, assign, endorse, pledge, transfer and to make any
agreement respecting, or otherwise deal with, the same; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent, or to present
or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.
SECTION 9. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent
hereunder and of the other Secured Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or consent to
any departure by any Pledgor therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Pledgor in any case shall entitle
such Pledgor to any other or further notice or demand in similar or other
circumstances.
9
9
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Collateral Agent and the Pledgors or such Pledgor with respect to
which such waiver, amendment or modification is to apply, subject to any
consent required in accordance with Section 9.08 of the Credit Agreement.
SECTION 10. Securities Act, etc. In view of the position of
any Pledgor in relation to the Pledged Securities, or because of other current
or future circumstances, a question may arise under the Securities Act of 1933,
as now or hereafter in effect, or any similar statute hereafter enacted
analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect being called the "Federal Securities Laws") with respect
to any disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Collateral Agent if the Collateral
Agent were to attempt to dispose of all or any part of the Pledged Securities,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Securities could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Collateral
Agent in any attempt to dispose of all or part of the Pledged Securities under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Each Pledgor recognizes that in light of such restrictions
and limitations the Collateral Agent may, with respect to any sale of the
Pledged Securities, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Securities for their own account, for
investment, and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that in light of such restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion, (a) may
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Securities or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate with
a single potential purchaser to effect such sale. Each Pledgor acknowledges
and agrees that any such sale might result in prices and other terms less
favorable to the seller than if such sale were a public sale without such
restrictions. In the event of any such sale, the Collateral Agent shall incur
no responsibility or liability for selling all or any part of the Pledged
Securities at a price that the Collateral Agent, in its sole and absolute
discretion, may in good xxxxx xxxx reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid
or if more than a single purchaser were approached. The provisions of this
Section 10 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.
SECTION 11. Registration, etc. Each Pledgor agrees that,
upon the occurrence and during the continuance of an Event of Default
hereunder, if for any reason the Collateral Agent desires to sell any of the
Pledged Securities of the Borrower at a public sale, it will, at any time and
from time to time, upon the written request of the Collateral Agent, use its
best efforts to take or to cause the issuer of such Pledged Securities to take
such action and prepare, distribute and/or file such documents, as are required
or advisable in the reasonable opinion of counsel for the Collateral Agent to
permit the public sale of such Pledged Securities. Each Pledgor further agrees
to indemnify, defend and hold harmless the Collateral Agent, each other Secured
Party,
10
10
any underwriter and their respective officers, directors, affiliates and
controlling persons from and against all loss, liability, expenses, costs of
counsel (including, without limitation, reasonable fees and expenses to the
Collateral Agent of legal counsel), and claims (including the costs of
investigation) that they may incur insofar as such loss, liability, expense or
claim arises out of or is based upon any alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or in
any notification or offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to such Pledgor or the issuer of such Pledged
Securities by the Collateral Agent or any other Secured Party expressly for use
therein. Each Pledgor further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the
issuer of such Pledged Securities to qualify, file or register, any of the
Pledged Securities under the Blue Sky or other securities laws of such states
as may be requested by the Collateral Agent and keep effective, or cause to be
kept effective, all such qualifications, filings or registrations. Each
Pledgor will bear all costs and expenses of carrying out its obligations under
this Section 11. Each Pledgor acknowledges that there is no adequate remedy at
law for failure by it to comply with the provisions of this Section 11 and that
such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Section 11 may be specifically
enforced.
SECTION 12. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the grant of a security interest in the Collateral
and all obligations of each Pledgor hereunder, shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Credit Agreement, any other Loan Document, any agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
payment in full of all the Obligations).
SECTION 13. Termination or Release. (a) This Agreement and
the security interests granted hereby shall terminate when all the Obligations
have been paid in full in cash and the Lenders have no further commitment to
lend under the Credit Agreement, the L/C Exposure has been reduced to zero and
the Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any
Collateral that is permitted under the Credit Agreement to any person that is
not a Pledgor, or, upon the effectiveness of any written consent to the release
of the security interest granted hereby in any
11
11
Collateral pursuant to Section 9.08(b) of the Credit Agreement, the security
interest in such Collateral shall be automatically released.
(c) In connection with any termination or release pursuant to
paragraph (a) or (b) above, the Collateral Agent shall execute and/or deliver
to any Pledgor, at such Pledgor's expense, all documents that such Pledgor
shall reasonably request to evidence such termination or release. Any
execution and delivery of documents pursuant to this Section 13 shall be
without recourse to or warranty by the Collateral Agent.
SECTION 14. 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 any Subsidiary
Pledgor shall be given to it at the address set forth on Schedule I hereto with
a copy to the Borrower.
SECTION 15. Further Assurances. Each Pledgor agrees to do
such further acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments, as the Collateral Agent
may at any time reasonably request in connection with the administration and
enforcement of this Agreement or with respect to the Collateral or any part
thereof or in order better to assure and confirm unto the Collateral Agent its
rights and remedies hereunder.
SECTION 16. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of any Pledgor or
the Collateral Agent that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns. This Agreement
shall become effective as to any Pledgor when a counterpart hereof executed on
behalf of such Pledgor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Pledgor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Pledgor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Pledgor shall have the right
to assign its rights hereunder or any interest herein or in the Collateral (and
any such attempted assignment shall be void), except as expressly contemplated
by this Agreement or the other Loan Documents. This Agreement shall be
construed as a separate agreement with respect to each Pledgor and may be
amended, modified, supplemented, waived or released with respect to any Pledgor
without the approval of any other Pledgor and without affecting the obligations
of any other Pledgor hereunder.
SECTION 17. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by each Pledgor
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and, except for any terminations, amendments or modifications
thereof in accordance with the terms hereof, shall survive the making by the
Lenders of the Loans and the issuance of the Letters of Credit by the Issuing
Bank, regardless of any investigation
12
12
made by the Secured Parties or on their behalf, and, except for any
terminations, amendments or modifications thereof in accordance with the terms
hereof, shall continue in full force and effect as long as the principal of or
any accrued interest on any Loan or any other fee or amount payable under this
Agreement or any other Loan Document is outstanding and unpaid or the L/C
Exposure does not equal zero and as long as the Commitments and the L/C
Commitments have not been terminated.
(b) 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 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
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 18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 19. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all
of which, when taken together, shall constitute a single contract, and shall
become effective as provided in Section 16. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be as effective as delivery of a manually executed counterpart of this
Agreement.
SECTION 20. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement. Section headings used herein are for convenience
of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting this
Agreement.
SECTION 21. Jurisdiction; Consent to Service of Process. (a)
Each Pledgor hereby 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 the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that, to the extent permitted by applicable law, 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 the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or
its properties in the courts of any jurisdiction.
13
13
(b) Each Pledgor 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 or the other
Loan Documents 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 14. 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 22. 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. 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 BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 23. Additional Pledgors. Pursuant to Section 5.12 of
the Credit Agreement, each Subsidiary (other than any Inactive Subsidiary) of
the Borrower that was not in existence or not such a Subsidiary on the date of
the Credit Agreement is required to enter in this Agreement as a Pledgor upon
becoming such a Subsidiary (or upon ceasing to be an Inactive Subsidiary) if
such Subsidiary owns or possesses property of a type that would be considered
Collateral hereunder. Upon execution and delivery by the Collateral Agent and
such a Subsidiary of an instrument in the form of Annex 1, such Subsidiary
shall become a Pledgor hereunder with the same force and effect as if
originally named as a Pledgor herein. The execution and delivery of such
instrument shall not require the consent of any Pledgor
14
14
hereunder. The rights and obligations of each Pledgor hereunder shall remain
in full force and effect notwithstanding the addition of any new Pledgor as a
party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PSF HOLDINGS, L.L.C.,
by /s/ X.X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
PREMIUM STANDARD FARMS, INC.,
by /s/ X.X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
THE CHASE MANHATTAN BANK,
as Collateral Agent,
by /s/ Xxxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
15
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name Address
---- -------
16
2
Schedule II to the
Pledge Agreement
CAPITAL STOCK
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Shares of Shares
------ ----------- ---------- ------ ---------
DEBT SECURITIES
Principal Date of Maturity
Issuer Amount Note Date
------ --------- -------- ---------
17
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the
PLEDGE 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")
and each subsidiary of the Borrower listed on
Schedule I thereto (each such subsidiary individually
a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; the Guarantor, the Borrower
and Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and THE CHASE MANHATTAN
BANK, a New York banking corporation ("The Chase
Manhattan Bank"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred
to 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 Lenders
(such term and each other capitalized term used but not defined herein having
the meaning assigned to it in the Credit Agreement or, if not defined therein,
in the Pledge Agreement) and The Chase Manhattan Bank, as issuing bank (in such
capacity, the "Issuing Bank"), as administrative agent (in such capacity, the
"Administrative Agent") and as Collateral Agent for the Lenders, (b) the Parent
Guarantee Agreement dated as of September 17, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee Agreement") among the
Guarantor and the Collateral Agent and (c) the Subsidiary Guarantee Agreement
dated as of September 17, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Subsidiary Guarantee Agreement") among the Subsidiary
Guarantors and the Collateral Agent.
The Pledgors have entered into the Pledge Agreement in order
to induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary
(other than an Inactive Subsidiary) of the Borrower that was not in existence
or not such a Subsidiary on the date of the Credit Agreement is required to
enter into the Pledge Agreement as a Subsidiary Pledgor upon becoming such a
Subsidiary (or upon ceasing to be an Inactive Subsidiary) if such Subsidiary
owns or possesses property of a type that would be considered Collateral under
the Pledge Agreement. Section 23 of the Pledge Agreement provides that such
Subsidiaries may become Subsidiary Pledgors under the Pledge Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "New Pledgor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Subsidiary
Pledgor under the Pledge Agreement in order to induce the Lenders to make
additional Loans and the Issuing Bank to issue additional Letters of Credit and
as consideration for Loans previously made and Letters of Credit previously
issued.
18
2
Accordingly, the Collateral Agent and the New Pledgor agree as
follows:
SECTION 1. In accordance with Section 23 of the Pledge
Agreement, the New Pledgor by its signature below becomes a Pledgor under the
Pledge Agreement with the same force and effect as if originally named therein
as a Pledgor and the New Pledgor hereby agrees (a) to all the terms and
provisions of the Pledge Agreement applicable to it as a Pledgor thereunder and
(b) represents and warrants that the representations and warranties made by it
as a Pledgor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Pledgor, as security for the payment and
performance in full of the Obligations (as defined in the Pledge Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns,
a security interest in and lien on all of the New Pledgor's right, title and
interest in and to the Collateral (as defined in the Pledge Agreement) of the
New Pledgor. Each reference to a "Subsidiary Pledgor" or a "Pledgor" in the
Pledge Agreement shall be deemed to include the New Pledgor. The Pledge
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Supplement shall become
effective when the Collateral Agent shall have received counterparts of this
Supplement that, when taken together, bear the signatures of the New Pledgor
and the Collateral Agent. Delivery of an executed signature page to this
Supplement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants
that set forth on Schedule I attached hereto is a true and correct schedule of
all its Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the
Pledge Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the remaining
provisions contained herein and in the Pledge Agreement shall not in any way be
affected or impaired. The parties hereto 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.
19
3
SECTION 8. All communications and notices hereunder shall be
in writing and given as provided in Section 14 of the Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to it at
its address set forth under its signature below, with a copy to the Borrower.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent
have duly executed this Supplement to the Pledge Agreement as of the day and
year first above written.
[Name of New Pledgor],
by
----------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
----------------------------------
Name:
Title:
20
Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
CAPITAL STOCK
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Shares of Shares
------ ----------- ---------- ------ ---------
DEBT SECURITIES
Principal Date of Maturity
Issuer Amount Note Date
------ --------- -------- ---------
