LIMITED DURATION WAIVER OF
POTENTIAL DEFAULTS AND EVENTS OF DEFAULT UNDER CREDIT
AGREEMENT
Parties:
Greenwood
Village, Colorado 80111
“Borrower”: Pilgrim’s
Pride Corporation
“Syndication
Parties”: Whose
signatures appear below
Execution
Date :
September 26, 2008
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September 26,
2008 (Subject to satisfaction of conditions as set forth in Section
2 hereof)
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Recitals:
A. CoBank (in its
capacity as the Administrative Agent (sometimes also referred to
herein as the “ Agent ”), the Syndication
Parties signatory thereto, and Borrower have entered into that
certain 2006 Amended and Restated Credit Agreement (Convertible
Revolving Loan and Term Loan) dated as of September 21, 2006, that
certain First Amendment to Credit Agreement dated as of December
13, 2006, that certain Second Amendment to Credit Agreement dated
as of January 4, 2007, that certain Third Amendment to Credit
Agreement dated as of February 7, 2007, that certain Fourth
Amendment to Credit Agreement dated as of July 3, 2007, that
certain Fifth Amendment to Credit Agreement dated as of August 7,
2007, that certain Sixth Amendment to Credit Agreement dated as of
November 7, 2007, that certain Seventh Amendment to Credit
Agreement dated as of March 10, 2008, and that certain Eighth
Amendment to Credit Agreement dated as of May 1, 2008 (as so
amended and as amended, modified, or supplemented from time to time
in the future, the “ Credit Agreement ”)
pursuant to which the Syndication Parties, and any entity which
becomes a Syndication Party on or after September 21, 2006, have
extended certain credit facilities to Borrower under the terms and
conditions set forth in the Credit Agreement.
B. Borrower expects
that certain Potential Defaults and Events of Default either exist
or will exist as a result of (a) the Borrower’s Fixed Charge
Coverage Ratio at September 30, 2008 failing to meet the
requirements of Section 10.12.5 of the Credit Agreement, an
Event of Default described in Section 13.1(d) of
the Credit Agreement, and (b) Borrower failing to maintain
compliance with the Fourth Amended and Restated Credit Agreement
dated as of February 8, 2007 by and among Borrower, Bank of
Montreal, as Agent, and the other Lenders party thereto (together
with related loan documents the “ BMO Credit Agreement
”) as required by Section 10.4 of the Credit
Agreement, Event of Defaults described in Section 13.1(d) ,
and Section 13.1(g) of the Credit Agreement (collectively,
the “ Subject Defaults ”). Borrower
has requested that the Agent and the Syndication Parties
temporarily waive the Subject Defaults which the Agent and the
Syndication Parties are willing to do under the terms and
conditions as set forth in this Limited Duration Waiver of
Potential Defaults and Events of Default under Credit Agreement
(“ Limited Duration Waiver ”).
Agreement:
Now, therefore, in consideration of the mutual
covenants and agreements herein contained and other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
1. Limited
Duration Waiver; Related Agreements .
1.1 Borrower
acknowledges that the Subject Defaults cannot be cured, that the
Agent and the Syndication Parties do not waive (temporarily or
permanently) their rights powers and remedies under the Credit
Agreement or the other Loan Documents with respect to any Potential
Default or Event of Default other than the Subject
Defaults. The waiver of the Subject Defaults shall
become null and void on the expiration date of the Waiver Period
and from and after such expiration date the Agent and the
Syndication Parties 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.
1.2 Except as provided
in this Subsection 1.2 of this Limited Duration Waiver, the Agent
and the Syndication Parties reserves the right to exercise any and
all of their rights, powers and remedies under the Credit Agreement
and the other Loan Documents, including the right to cease making
Loans, and the right to accelerate the maturity of all outstanding
Bank Debt. Provided that the following conditions are
satisfied and/or remain satisfied, as the case may be, the Agent
and the Syndication Parties agree to waive the Subject Defaults and
shall, with respect to the Subject Defaults (but not with respect
to any other Potential Default or Event of Default that may be
existing or that may occur), not exercise their rights, powers and
remedies under the Credit Agreement or the other Loan Documents
through and including October 28, 2008 (the “ Waiver
Period ”):
(a) The
Agent (or its counsel) shall have the right to engage on behalf of
the Syndication Parties a financial advisor, selected by the Agent
and acceptable to the Syndication Parties, to review, evaluate and
advise the Agent and the Syndication Parties as to the reports,
analyses and cash flow forecasts and other materials prepared by
Borrower’s financial consultants relating to the financial
condition, operating performance, and business prospects of
Borrower and its Subsidiaries and to perform such other information
gathering or evaluation acts as may be reasonably requested by the
Agent, and the reasonable costs and expenses of such financial
advisor shall be borne by Borrower and constitute part of
Borrower’s obligations outstanding under the Credit
Agreement. The Company 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 Borrower and its
Subsidiaries as may be reasonably requested and shall make
Borrower’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) Borrower
shall provide to the Agent and the Syndication Parties a 13-week
cash flow forecast (the “ Forecast ”) showing
projected cash receipts and cash disbursements of Borrower and its
Subsidiaries over the following 13-week period, together with a
reconciliation of actual cash receipts and cash disbursements of
Borrower and its Subsidiaries from the prior week against the cash
flow forecast previously furnished to the Agent and the Syndication
Parties and showing any deviations on a cumulative basis), prepared
by Borrower and in form and substance, and with such detail, as the
Agent may request. The first Forecast after the date hereof shall
be provided to the Agent and the Syndication Parties no later than
5:00 p.m., Central time, on Monday, October 6,
2008. Thereafter, each Forecast shall be provided to the
Agent and the Syndication Parties 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 Lenders and the
requisite number of lenders under the BMO Credit Agreement,
Borrower shall have at all times undrawn commitments under the
Credit Agreement and the BMO Credit Agreement in an aggregate
amount not less than $100,000,000.
(d) No
later than the 14th day after the date the BMO Intercreditor
Agreement is executed and delivered by the parties thereto,
Borrower shall grant to the Agent for the benefit of the
Syndication Parties, valid, enforceable liens and security
interests on all of the collateral securing the BMO Credit
Agreement, subject to the liens and security interests granted to
BMO in such property. This additional collateral shall
be Collateral under the Credit Agreement and subject to the terms
of the Credit Agreement applicable to Collateral
generally. The Company shall pay all taxes, costs, and
expenses incurred by the Agent in obtaining and perfecting such
security interests and shall supply to the Agent at
Borrower’s cost and expense such board resolutions and other
instruments, documents, certificates, and opinions reasonably
required by the Agent in connection therewith.
(e) During
the Waiver Period Borrower shall obtain loans under the Credit
Agreement and the BMO Credit Agreement, and shall repay loans under
the Credit Agreement and the BMO Credit Agreement, only on a pro
rata basis, determined on the basis of the undrawn amount of the
commitments under each of the two credit agreements at the close of
business in Chicago, Illinois, on September 24,
2008. During the Waiver Period Borrower shall use its
best efforts to fully utilize the funding available under the
Receivables Purchase Agreement.
(f) No
later than October 24, 2008, Borrower’s senior
management and its financial advisors shall meet with the Agent and
the Syndication Parties and their financial advisors to discuss
Borrower’s business and financial affairs and such matters as
the Syndication Parties or the Agent may request.
(g) None
of the following shall have occurred: (i) the Limited Duration
Waiver by and among Borrower, Bank of Montreal, as agent under the
BMO Credit Agreement and the other parties thereto, of
substantially even date with this Limited Duration Waiver (the
“ BMO Limited Duration Waiver ”) 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 Bank of Montreal or any other
party to the BMO Credit Agreement takes any action for the purpose
of terminating, repudiating or rescinding the BMO Limited Duration
Waiver or any of its obligations thereunder;
(ii) the
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