PilgrimsPride Corporation LimitedDuration Waiver Agreement

 

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”).

 

 

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.  

 

3.Limited 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.

 

6.Limited 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]

 

This Limited Duration Waiver Agreement is entered into as of the date and year first above written.

 

Pilgrim’s Pride Corporation, as Servicer

 

By/s/ Richard A. Cogdill

Name:Richard A. Cogdill

Title:CFO, Secretary & Treasurer

 

Pilgrim’s Pride Funding Corporation, as Seller

 

By/s/ Richard A. Cogdill

Name:Richard A. Cogdill

Title:CFO, Secretary & Treasurer

 

Accepted and agreed to:

 

BMO Capital Markets Corp., as Administrator

 

By/s/ Brian Zaban

Name:Brian Zaban

Title:Managing Director

 

 

BMO Capital Markets Corp., as Purchaser Agent

 

By/s/ Brian Zaban

Name:Brian Zaban

Title:Managing Director

 

 

 

Fairway Finance Company, LLC, as Uncommitted Purchaser and as Related Committed Purchaser

 

By/s/ Lori Gebron

Name:Lori Gebron

Title:Vice President